Blackcircles Partners With RAC in Online Tyre Deal

Leading motoring organisation RAC has teamed up with Blackcircles.com to create RAC Tyres, an online tyre retail portal offering “hassle free online tyre service” to RAC’s seven million members and any visitors to the RAC website. Blackcircles.com will power the motoring organisation’s new tyre retail operation, RAC Tyres (accessible at both www.rac.co.uk and www.ractyres.co.uk). The service will enable visitors to order tyres through the website and have them fitted at any of the over 900 garages in the Blackcircles network.

Announcing the news, company representatives described the agreement as a “landmark deal” and pointed out that the move follows a period of sustained growth for Blackcircles.com. According to an interview with the Financial Times published in early April, company founder Mike Welch believes the recession could benefit Blackcircles as customers seek a lower cost tyre alternative.

Blackcircles.com has grown to a turnover of in excess of £10 million since it was launched in 2001. In the earlier report, FT quoted Welch as saying sales were as much as 80 per cent up year-on-year. While year-on-year sales growth is currently quoted at 60 per cent it remains nonetheless impressive.

One reason for this sustained growth has been significant reductions in outgoings – acquisition costs per customer are said to have been slashed from about £12 to 12p through earlier partnerships and affiliations with well-known brands, such as Tesco, the AA and Barclaycard. The latest deal Blackcircles has struck (with RAC) appears to be the biggest of its kind and if sales were already up by two-thirds or more based on the previous partnerships, it will be interesting to see the impact the new deal will have on the company’s full year results.

According to the April FT interview Blackcircles made turnover of £11 million in 2008 and the company is expecting sales to hit as much as £17 million this year. However, Tyres & Accessories understands that the company has a more cautious official target of between £13 million and £14 million of turnover. As far as market share is concerned, Welch has a clear goal of 10 per cent of the approximately £1.3 billion market. (As an aside, the company’s daughter sites in France, Germany, the Netherlands and Belgium are said to contribute about 10 per cent of overall sales.)

Commenting on the RAC tie-up Mike Welch said: “This deal is a major milestone in the growth of the business and another significant step towards our goal of capturing £100 million of the UK tyre market. We share RAC’s commitment to customer service and helping UK drivers reduce the cost of running a car. Now more than ever, motorists are being turned off by the over inflated prices of high street tyre retailers. Blackcircles.com offers the best deal in terms of price, choice and service.

Gavin Talbot, RAC senior business manager, added: “The relationship with Blackcircles.com is an exciting new venture for RAC, introducing a compelling new service for our members and all consumers. And, at a time when consumers are increasingly shopping around they can be confident that our new proposition with Blackcircles.com offers a great price combined with a trusted quality service.”

Headquartered in Peebles in the Scottish Boarders, Blackcircles.com reportedly employs 35 people and serves around 300,000 customers per year through its website and audited network of 955 franchised garages. However the most impressive statistics relate to just how many customers have been in touch with Blackcircles. Two years ago the company communicated with 400,000 potential customers through its partnerships. Last year it was 4 million and this year it is expected to be around 22 million.

Mike Welch reportedly owns a 50 per cent shareholding in the company and is backed by four private investors who were selected on the basis of their backgrounds in retailing, law and accountancy. The company was recently named as a winner at the BT Business Essence of the Entrepreneur awards, where Mike Welch also received the award for Most Outstanding Entrepreneur of the Year.