Capitalising on e-Commerce
10 years after the initial hype of the dot.com boom, many of that period’s fledging businesses can no longer be found. In fact, such is the nature of the fast moving world of e-commerce that the executives behind one such catastrophic failure – online clothing retailer boo.com – have already written a best-selling book (Boo Hoo: From Concept to Catastrophe) documenting the company’s brief rise and infamous fall from grace. However, while the Internet’s virtual streets may not always paved with gold, they are not destined to failure either. On the contrary, they present abundant opportunities for shrewd businesses. Internet auction site, eBay, and the Google search engine are two of the Internet’s leading lights, exemplifying just what is up for grabs. In only 10 years these companies have grown from being relatively unknown into two of the most influential companies in e-commerce. According to Nasdaq.com, eBay and Google’s market values now equate to a staggering $53.6 billion and $51.3 billion respectively.
“But what has all this got to do with me?”, you might be asking. In short, tyre industry professionals can learn a lot from these two companies – eBay shows just how much demand there is and how willing Internet users are to purchase from small businesses; and the world of Google provides a lesson in online marketing. The knock-on effect If you are still unsure of the Internet’s relevance to your business just take a look at the facts. Since it was set up 10 years ago, eBay has swollen in size and now has 157 million users in 34 countries, with annual profits expected to reach $1 billion this year. So, what are the most commonly sold items on eBay and who buys them? You might think that e-auctioning is confined to geeky students selling computer components to each other. In fact nothing could be further from the truth. A recent report compiled by Internet media market research agency, Nielsen//NetRatings, found that the most visited part of the eBay system is its Automotive sub-section. Of the 11 million potential customers that visited eBay.co.uk in July 2005, over 3.2 million visited the Motors channel, a clear 400,000 above the next most popular section. Furthermore, the bargain hunting mentality is not restricted to the young computer-nerd stereotype. Instead 37 per cent of users were aged 35-49, with nearly a fifth aged 50-64. This is obviously good news for tyre and wheel businesses, because it is exactly these age groups that are likely to own the kind of vehicles that require high value replacement products.
“Everyone seems to be using eBay: The site has a broad appeal which is probably responsible for attracting large numbers of first-time users to the e-commerce aspect of the Internet – hopefully providing a positive knock-on effect for all companies operating in the realm of e-commerce,” observed NetRatings analyst, Alex Burmaster. All this means there is a lucrative market for selling tyres and/or wheels online and that it is important that existing dealers get their slice of the pie before someone else does. Of course eBay is as aware of this as anyone and no doubt sees it as another potential opportunity to increase its own burgeoning bottom line. Charles Abrams, research director for technology analysts Gartner, believes the old view of eBay as the preserve of individuals selling collectables is increasingly out of date.
“Sixty per cent of eBay postings today are being done programmatically – that is, by machines,” he told BBC news online. This means that small businesses are playing a growing role in this part of e-commerce. For eBay the next step is to add a business–to-business platform. eBay spokesman Richard Ambrose confirmed that the company intends to make the site more user-friendly for bulk business trading: “If you want to sell, say, 50,000 Jiffy bags or 25,000 bricks, you can do it, but it’s not a great experience. “In the next few years, we will be making it easier to wholesale items on the site.” And for members of the tyre and/or wheel trade this means it is only a question of time before this and other companies are encouraging online sales with or without the cooperation of conventional market participants. Going it alone on the web But not everyone it pleased about they way eBay conducts its business. The online auction house has been criticised for being too lax when it comes to trademark and copyright infringements. And then there are the stolen goods horror stories. For example one Australian eBay user was recently charged with more than 30 offences relating to allegedly selling stolen rims. The 27-year-old man is accused of selling high performance tyres and wheels allegedly stolen from a number of Subaru vehicles in Sydney.
Away from the world of tyres, US jeweller Tiffany’s has even tried to make eBay liable for the sale of counterfeit goods in its auctions, by suing for damages of up to $1m for every counterfeit Tiffany’s item sold. South West Tyres is one example of a company that has left eBay to its own devices, deciding to find its own path. After significantly revamping its own website (worldwidewheels.co.uk), the company now receives 2800 hits a day. On top of this the business receives 40 – 50 email enquiries, each day, converting 70 per cent of these into sales. The key? Offer something that eBay-only companies can’t compete with – service. “We as a company have moved away from eBay. People don’t know what they are buying. It might be big, but it’s a minefield. You have to trawl for hours before you get to the good stuff,” says owner Stewart Auty adding: “For new products why shouldn’t customers, who we think are more discerning, come to us?” And that’s the point, in Mr Auty’s words, “people are using eBay because they don’t know where to go.” South West Tyres aims to help motorists make that decision of where to look by actively marketing its web presence. The company is even running a national magazine advertising campaign that capitalises on the strength of its website. Searching high and low While computer jargon like hits, unique visits and SEO (search engine optimisation) might sound alien to an Internet novice, there is no need to overcomplicate the situation. And this is a philosophy that is obviously shared by influential executives at Google. Speaking to an aftermarket e-commerce forum in Chicago, Denise Chudy, US head of Google Automotive said: “I must admit, I still don’t know what a jobber is, I don’t understand supply chain management issues, but I do know that last year 13 million auto parts were sold online. And on Google, we had 30 million searches for auto parts and accessories.”
Now it is an oversimplification to say that just because you have a website, you will automatically be able to make money. There are a number of obstacles between the browser (and potential customer) and your website. Some are administrative – how do customers pay for the products once they have chosen what they want? Others are logistical -do you offer mail order, mobile fitting or invite customers to collect tyres and have them fitted at your outlet? But perhaps the greatest of these remains in the virtual realm. With such an overwhelming number of potential customers available online, how will your target customers find your site? A recent NetRatings survey found that three of the five most visited sites in the UK are search engines like Google – programs that scowl the Internet looking for web pages that contained particular keywords. This means the average Internet user is very likely to use Google, MSN or Yahoo’s websites when they look to buy tyres or wheels online. On a national front, the online retail market is dominated by a handful of major players including, Autothek.com, Blackcircles.com, Etyres.co.uk, Mytyres.co.uk and Tyresdirect2u.com.
So, when Joe Public types ‘tyres’ into his favourite search engine, it is most likely to return results from one of these or one of the large manufacturers. Regional and particularly local businesses may be tempted to question whether they can compete with the large, national, solely online businesses. And the answer is on that level it would be extremely difficult, so why not work smarter instead of working harder? As all the figures show, there is plenty of potential with the Internet. Another of the web’s strengths is its role as an equaliser, giving relatively small operations the opportunity to sell their wares to vastly increased audiences. If, for example, Joe Public types tyres and the name of his hometown it is a different story – the large companies mentioned above are nowhere to be found. Thinking smart in this respect and maximising your website’s presence on the net and amongst the local population could increase business or at least safeguard it from being poached by another online company. After all, the kind of consumer that is bothering to spend time researching prices through the Internet is also likely to have the time and inclination to seek out your business, if the price is right.