Delticom CEO talks e-commerce and fleet business with Tyres & Accessories
Online tyre business is the future, according to Delticom CEO Rainer Binder. With more people buying tyres online than ever, it might not take a futurist or e-business whizz to make such a predction, but in this recent interview with T&A Binder share more about Delticom's approach and new European, fleet and global business strategies.
Tyres & Accessories: What proportions of tyres are now sold online in Europe, Germany and the UK?
Rainer Binder: Establishing figures for the percentage of tyres sold online is difficult, but it is growing at a fast pace…There are no reliable figures available giving the proportions of tyres sold online. Experts estimate that from five up to six per cent tyres are sold online across Europe. The share in each of the countries depends amongst others on customer habits, internet access and density of cars.
Tyres & Accessories: How is this developing?
Rainer Binder: More and more motorists are waking up to the time and money saving opportunities of buying also tyres online. We continue to refine and extend our services and, in common with other industries, buying online is the future.
Tyres & Accessories: In terms of competing online retailers where does Delticom see itself in the UK?
Rainer Binder: We believe that with mytyres.co.uk we are one of the leading online retailers in the UK and our sales are growing progressively. Furthermore I think that this is because of our product mix and the very competitive prices we are able to offer. During the last cold winter for example we were able to provide UK customers with winter tyres, when they were most needed. For the coming winter season we are very well positioned. Moreover, we have expanded storage capacity in order to be able to provide product during future season peaks. By stocking early we have created the conditions for an attractive price-performance ratio and high availability of goods in our online shops.
Tyres & Accessories: I heard one suggestion that 50 per cent of tyres could be bought online by 2020, do you agree? Why or why not?
Rainer Binder: Clearly it is difficult to predict the scale of the percentage that online tyre sales will have in the future, although the share of online tyre sales is in comparison still low. Increasing pressure on costs will lead to more and more motorists to search value for money alternatives such as the benefits of purchasing tyres online. I believe that sales growth will continue.
Tyres & Accessories: Is Delticom the largest online tyre retailer and wholesaler in the world? What is the secret to this success?
Rainer Binder: That is only partly correct. In regard to online retailing in Europe you are I think right; our wholesale volume is very small. The secret of Delticom’s success is having the right product at the right time and at the right price. Equally providing a quality service is key to the company’s success. Understanding the needs of the customers and exploiting the considerable potential of the internet has contributed to Delticom’s growing business success.
Tyres & Accessories: What proportion of sales are repeat businesses versus new customers?
Rainer Binder: The customers appreciate our services, which [is reflected] in a very high retention rate. In addition we are attracting new customers all the time. In the first half of 2011 the company was able to acquire a total of over 410,000 new customers. During the same period almost 260,000 existing customers made repeat purchases at Delticom.
Tyres & Accessories: How do you attract these customers?
Rainer Binder: We use a variety of techniques to [lead] potential customers onto our websites, however, we believe that word of mouth is one of the strongest “promotional techniques”, but we also use advertising, e-newsletters and PR.
Tyres & Accessories: How do you keep customers?
Rainer Binder: By offering an excellent responsive service, an unrivalled range of tyres and very keen prices. Moreover customers can rely with our online shops on a high availability of tyres, even in niche sizes, also in peak seasons and also for tyres, which then are very high in demand – for example winter tyres.
Tyres & Accessories: What proportion of your sales are winter tyres?
Rainer Binder: The proportion of winter tyres varies from country to country. In Germany for instance and in the alpine regions of Europe as well as in Scandinavia and other countries, which have a regulatory requirement for winter tyres, a lot of motorists traditionally switch to winter tyres. In the UK for instance we are seeing a growing trend for drivers to switch to winter tyres–this has been driven by the two very cold winters over the past couple of years.
Tyres & Accessories: Following the appointment of Mike Wise as head of your new fleet division (see textbox), what is Delticom’s fleet strategy?
Rainer Binder: The UK is unique in having a very large fleet/business car market. It therefore seemed logical to us that we should put in place a business solution to exploit this market. Key to this was finding an executive who understood the market and I am particularly pleased that Mike Wise joined us. He has the skills and the deep understanding of the fleet market and contacts second to none. Mike will be responsible for developing our strategy in UK and other countries progressively. We have [already] opened other fleet shops in Germany, Switzerland and Austria.
Tyres & Accessories: How will this strategy be rolled out across Europe?
Rainer Binder: We are working on the fleet strategy at present and will be making announcements once we are ready to progress.
Tyres & Accessories: How many tyres do you intend to sell to the fleet channel in the UK/Europe?
Rainer Binder: It is a little premature to talk about sales numbers in fleet at this stage, we have only just embarked on what we believe will be a very interesting market. We are targeting small and medium size fleets.
Tyres & Accessories: How does the relatively recent Tyrepac deal fit in with your global strategy?
Rainer Binder: Tyrepac provides consumers in Asia with a central platform to buy tyres online. For us it is an important building block in our long-term Asian strategy and the joint venture will help Delticom to reach into new high-growth, emerging markets.
Tyres & Accessories: Are there more acquisitions on the cards?
Rainer Binder: We are constantly looking at ways of expanding and enhancing our business. This may well include acquisitions as well as organic growth which has always been our preferred route.