{"id":6757,"date":"2015-12-09T22:25:20","date_gmt":"2015-12-10T03:25:20","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/rolling-into-ecommerce-peter-veldman-at-the-tire-rack\/"},"modified":"2015-12-09T22:25:20","modified_gmt":"2015-12-10T03:25:20","slug":"rolling-into-ecommerce-the-tire-rack-pioneers-ecommerce-tire-sales","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/rolling-into-ecommerce-the-tire-rack-pioneers-ecommerce-tire-sales\/","title":{"rendered":"Rolling into eCommerce: The Tire Rack pioneers eCommerce Tire Sales"},"content":{"rendered":"

Tire Rack<\/strong><\/p>\n

Founded as a family business in 1979 in Indiana, the Tire Rack successfully pioneered a shift in the $17 billion tire industry, once dominated by in-person purchases, to mail order and, later, in 1997, ecommerce.\u00a0 In order to achieve this, entrepreneur Peter Veldman devised a clever strategy to enable this novel business model.\u00a0 This strategy, the company\u2019s operating model, has enabled the Tire Rack to grow to $1 billion in sales and one of the most trusted names in the industry.<\/p>\n

Business Model<\/strong><\/p>\n

The Tire Rack\u2019s business model is simple: sell the best performing, correct-fitting tires directly to customers by phone and online at competitive cost, with fast delivery.\u00a0 This isn\u2019t as straightforward as it seems.<\/p>\n

Tires come in various sizes, with different capabilities, and suited for different driving conditions, which makes it hard for the customer to choose.\u00a0 How is one supposed to decide between the \u201cBlizzak LM-32\u201d tires that cost $282 each and the \u201cPilot Alpin PA4\u201d at $301 each?\u00a0 Further, tires are bulky and expensive to ship, placing constraints on price advantage as well as quick shipping availability.\u00a0 Lastly, unlike a local garage or dealership, the Tire Rack cannot also offer installation, leaving it up to the customer to find a trusted tire installer.\u00a0 Yet despite these challenges, Veldman and his team built a tightly-aligned model to deliver the intended value to the customer, and they\u2019ve spent the last two-and-a-half decades improving on this model to maintain their customers\u2019 happiness and their competitive advantage.<\/p>\n

\"\"<\/a><\/p>\n

Operating Model<\/strong><\/p>\n

Informative Sales Reps<\/em><\/strong><\/p>\n

When the Tire Rack first moved towards mail order sales via telephone, they built out a highly knowledgeable sales team who can advise customers on which tires fit their vehicle, as well as which tires would be a good value.\u00a0 Sales reps are auto enthusiasts who are trained for nearly nine weeks both by the books and on the test track, giving them an advantage when advising customers on the right choice for their vehicle and driving needs, and giving customers confidence about buying tires sight-unseen.<\/p>\n

Easy-to-Use Website<\/em><\/strong><\/p>\n

\"The<\/a>
The Tire Rack website provides tools to help customers buy the right tires.<\/figcaption><\/figure>\n

The Tire Rack website serves 50 million visitors each year (with the average visitor browsing 13 pages).\u00a0 The website serves two customer types.
\n“\u2019For those who love to research their purchases, TireRack.com delivers enough tire data, how-to information, consumer feedback and other content to keep enthusiasts engaged for hours. However, for consumers who want to complete the process in minutes, we’ll match their vehicle to the right treads and arrange for local installation quickly with zero hassle.\u2019”\u00a0By optimizing the website for both types of customers, Tire Rack has been able to win the trust of millions of customers when making their tire purchases.<\/p>\n

Customer Reviews<\/em><\/strong><\/p>\n

To provide customers with purchase assurance and aid in decision-making, the Tire Rack has built a robust framework for customers to leave tire reviews.\u00a0 100,000 drivers have logged over 2.4 billion miles on 400 different tire models.\u00a0 These ratings go beyond the simple 1-5 star framework and ask customers to rate performance along dimensions such as \u201cHydroplaning Resistance,\u201d \u201cSteering Response,\u201d and \u201cNoise\u201d using a clearly defined rating scale.\u00a0 This subject-matter-specific context enables researching customers to find the right set of tires according to their performance needs.\u00a0 This impressive data set also creates a hard-to-replicate competitive advantage.<\/p>\n

Testing<\/em><\/strong><\/p>\n

\"The<\/a>
The Tire Rack’s HQ in Indiana includes a test track where experts put new tires through their paces.<\/figcaption><\/figure>\n

In order to complement the customer reviews and provide reassurance that customers are making the best decisions, the Tire Rack built a 5.5 mile \u201cReal World Road Ride loop\u201d where experts can test and analyze tires under repeatable \u201clab\u201d conditions.\u00a0 This resource, along with their tire buying guides, provides direct value to customers as well as a wide moat against competitors hoping to offer similar expert value.<\/p>\n

Distribution Centers<\/em><\/strong><\/p>\n

More than half of the country can receive an order the next day. The rest can be served in two days. To achieve this, the Tire Rack operates seven distribution centers nationwide.\u00a0 They are located strategically in Denver, Colorado; South Bend, Indiana; Windsor, Connecticut; New Castle, Delaware; Midway, Georgia; Shreveport, Louisiana; and McCarran, Nevada.\u00a0 Each distribution center\u2019s inventory is geographically tuned to the needs and preferences of the customers it serves, in order to improve availability of popular tires and support the low-cost strategy by making most efficient use of overhead.<\/p>\n

Partnerships with Installers<\/em><\/strong><\/p>\n

Lastly, in order to complete the purchase loop, Tire Rack has developed relationships with 8000 \u201cRecommended Installers\u201d around the country, each of which has taken a \u201cPrice Pledge\u201d to install tires at a published rate based on the tire size.\u00a0 Customers rate these installers on the Tire Rack website as well, providing a mechanism for ensuring that Tire Rack customers have a pleasant experience from purchase to installation.<\/p>\n

 <\/p>\n

\n

 <\/p>\n

Sources:<\/p>\n

http:\/\/www.prnewswire.com\/news-releases\/new-tire-rack-website-offers-a-fresh-shopping-experience-at-the-worlds-leading-online-tire-resource-center-300088616.html<\/a><\/p>\n

http:\/\/www.bloomberg.com\/research\/stocks\/private\/snapshot.asp?privcapId=4479858<\/a><\/p>\n

http:\/\/www.superchevy.com\/features\/vemp-0801-tire-rack-tour\/<\/a><\/p>\n

http:\/\/usatoday30.usatoday.com\/money\/smallbusiness\/2003-12-07-veldman_x.htm<\/a><\/p>\n

http:\/\/www.southbendon.com\/news\/company-profile\/tire-rack-started-here-staying-here<\/a><\/p>\n

http:\/\/www.moderntiredealer.com\/article\/311835\/is-tire-rack-your-competition<\/a><\/p>\n

http:\/\/www.southbendtribune.com\/news\/business\/pete-veldman-leaves-a-legacy-of-generosity\/article_fbed6cbc-a31e-11e3-a25b-0017a43b2370.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Founded as a family business in 1979 in Indiana, the Tire Rack successfully pioneered a shift in the $17 billion tire industry, once dominated by in-person purchases, to mail order and, later, in 1997, ecommerce. In order to achieve this, entrepreneur Peter Veldman devised a clever strategy to enable this novel business model. This strategy, the company\u2019s operating model, has enabled the Tire Rack to grow to $1 billion in sales and one of the most trusted names in the industry.<\/p>\n","protected":false},"author":1050,"featured_media":6811,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-6757","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nRolling into eCommerce: The Tire Rack pioneers eCommerce Tire Sales - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/rolling-into-ecommerce-the-tire-rack-pioneers-ecommerce-tire-sales\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Rolling into eCommerce: The Tire Rack pioneers eCommerce Tire Sales - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Founded as a family business in 1979 in Indiana, the Tire Rack successfully pioneered a shift in the $17 billion tire industry, once dominated by in-person purchases, to mail order and, later, in 1997, ecommerce. 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