Online retailer Tyremarket.com is seeking to establish a market leading position in India through its latest investment drive. With India already the world’s second-largest internet user, and online transactions expected to rise rapidly in the next few years, the company is pursuing a strategy to reach the top spot in what is one of the largest developing tyre markets too. Lead by former Siemens executive Sanjeev Agrawal, and with UK online tyre retailer Blackcircles.com founder Michael Welch OBE on board as strategic adviser and shareholder, Tyremarket.com states that it is “on track for market leading position in the $5 billion plus domestic replacement market.”
Blackcircles.com has announced a growth in revenue of 20 per cent to £27.8 million (versus £23.2 million in 2012). The online tyre retailer said that the latest full year results mean its revenues have a compound annual growth rate of 22 per cent since 2008. EBITDA increased to £1 million. The results follow the announcement of former Tesco chief executive Sir Terry Leahy’s appointment to the Blackcircles.com board.
Blackcircles.com has become the latest tyre firm to share its experience of how the adoption of tyre labelling is (or isn’t) affecting the purchase choices motorists are making. According to Blackcircles’ sales data, consumers are definitely using the EU Tyre Labels when deciding which tyres to purchase. Additionally, data collated by Blackcircles.com suggests shows that tyre safety is of more importance to motorists than fuel efficiency.
Blackcircles.com managing director Michael Welch has hinted that company may employ a closer relationship with leading supermarket Tesco as one way of moving towards its goal of £100 million (around 10 per cent of the UK market) in the next five year. Welch revealed the plans in an interview with The Telegraph published on 26 February, which also gave details of the guidance the company has received from a number of ex-Tesco executives and particularly former CEO Sir Terry Leahy.
Michael Welch has done very well indeed at the BT Business Essence of the Entrepreneur awards. Not only was the Blackcircles.com managing director named one of the UK’s top 20 entrepreneurs, Welch was voted Most Outstanding Entrepreneur, an honour that comes with a £20,000 business grant. This is, admittedly, a well-deserved accolade – in seven years of business the company has cultivated a customer base of more than 300,000, and annual sales of more than £10 million.
Blackcircles.com has given Liverpool/Manchester based PR agency Paver Smith responsibility for the company’s public relations programme. Following the appointment, managing director Michael Welch commented that “we’re delighted to bring Paver Smith onboard and look forward to developing a successful working relationship.”
Scottish based online tyre retailer Black Circles has been dealt a blow by the unexpected departure of its finance director, Bob Russell. Mr. Russell had been with Black Circles since its early days and in August 2006 had joined the company’s Board of Directors. He reportedly was a key adviser to chief executive, Michael Welch.
Black Circles has over 900 contracted fitting outlets, and the company is currently finalising its plans to double this number, as well as enter the French and German markets. No replacement for Russell has been named at present.
Black Circles is using the Internet as a tool to market tyres in what is a unique route to market. Black Circles is a rapidly growing Internet and mail order tyre operation that carries very little stock and has no in-house retail outlets or warehouses to speak of. It takes on the cost to sell tyres and pays its fitter partners in advance. It offers everyone a better deal from the client buying the tyre, to the retailer getting paid in advance and taking a greater margin. Even the UK tyre wholesalers and manufacturers win for Black Circles has a policy of supporting local suppliers who can offer them repeated standards of high service.
Whilst most tyre purchases remain distress purchases, Black Circles recognise that there is a growing sector of the market where planned replacement of tyres is the norm. Where performance is the key requirement, and we all know that means sales of UHP and higher margin tyres.
Which is where we come to Michael Welch’s Black Circles – the Internet tyre supplier. In actual fact it isn’t quite correct to call Black Circles an Internet Tyre supplier, for the business is as likely to be carried out on the telephone as it is over the Internet. Perhaps a better description would be a remote tyre supply service. People call or use the Internet to request information, obtain a quote, and book a fitting for their tyres.
Now, this is where things start to get interesting. A number of players in the tyre market hold the traditional view that if you don’t buy your tyre from them, they either don’t fit it, or they charge you a premium for fitting the tyre. Which is in some respects short sighted.
Let’s look at this from a consumer’s point of view. He has decided to buy a pair of, or a set of tyres. He has chosen the brand, the size, the pattern and agreed a price. He knows that wherever he goes to collect his tyres they will be what he wants. He books a fitting time and in due course arrives at the appointed time, whereupon the dealer mounts and balances his tyres and sends him merrily on his way. Exeunt one very happy customer.
At this stage in the process the retailer is also a very happy customer because he has gained from the business without having to worry about ordering, about the customer not paying or not arriving, and what is more, he was paid for the job before the client brought his car in.
Let’s look at that from a traditional point of view. The customer wants a set of tyres for a BMW M5 – he has to call in, find out that the retailer doesn’t hold stock of the two sizes required, he has to have them ordered, perhaps pay a deposit, and then return when the tyres are in stock – perhaps the next day. Not an ideal scenario for the client.