Online Tire Market

Part
01
of three
Part
01

Online Tires - Market Size

The online tire sales market was estimated to be worth $2.23 billion in the United States; this represents 7.18% of the US tire market.

OVERVIEW

  • Online tire sales in the US grew by 34% in the United States in 2018.
  • Consumers who purchased tires represent 7% of all consumers who shopped for automotive parts online. These consumers also bought twice as much auto parts (excluding tires) than the average consumer.
  • The tire market (online and offline including OEM sales) is expected to grow on account of a growing construction sector, expanding automobile fleets, and growth in passenger car sales.
  • E-commerce tire sales accounted for 6.5% of global tire sales in 2018.

FINDINGS/ ESTIMATES

  • The online sales tire market in the United States was valued at $2.23 billion in 2018.
  • The share of online sales in overall tire sales was 7.18% in the United States.

RESEARCH STRATEGY

In order to fulfill this request, we searched research reports by agencies such as NPD, Frost & Sullivan, TechSci Research, Smithers Rapra, Ibis World, McKinsey, and Bonito Research; industry organization portals such as Automotive Aftermarket Suppliers Association (AASA) and US Tires, and media sources such as Tire Review, Tire Business, and Forbes. However, we did not find the required information precompiled in any of these sources. Data we found was specific to the US tire industry and the US auto aftermarket parts market as a whole. We did not look for sources older than two years as our findings suggested that the online tire sales market is growing rapidly, and therefore, older data would be significantly different. Given the above limitations, we used the data points gathered from across sources to triangulate estimates.

TRIANGULATION

Amazon and eBay account for 70%+ of the auto parts sold online. The estimated sales for the two companies is between $7-$7.5 billion. This puts the total market size of auto parts online sales at $10 billion (7B/70%) to $10.71 billion (7.5B/70%). Hedges & Co. valued the United States e-commerce automotive parts market at $10.6 billion in 2018. The Frost & Sullivan and the Hedges & Co. estimates concur. We also found several references to the Hedges & Co. estimates made across sources.

According to the NPD group, the tire category makes up 21% of the e-commerce automotive parts market. Therefore, the market size of the online tire industry in the United States in 2018 was $2.23 billion (21%*$10.6B). The Automotive Aftermarket Suppliers Association (AASA) pegs the total tire sales in the United States at $31 billion in 2018. Correspondingly, the proportion of tire sales made online in the United States was 7.18% (2.23B/31B*100%).
Part
02
of three
Part
02

Online Tires - Industry Leaders

Top 5 online sellers of tires in the US are Tire Rack, Discount Tire, Les Schwab Tire Centers, Pep Boys, and Tire Warehouse.

TIRE RACK

DISCOUNT TIRE

LES SCHWAB TIRE CENTERS

  • Les Schwab Tire Centers has a total revenue of $3.5 billion.
  • PEP BOYS

    TIRE WAREHOUSE

    RESEARCH STRATEGY

    We commenced our research by first looking for some recompiled list of top online tires sellers in the US based on their market share or online tires sales revenue. We searched through magazine articles, US-specific information portals such as PopOptiq, Finder, and Science Mag. We also explored private companies datasets such as Forbes, Investopedia, and Infoplease. We were able to gather two pre-compiled lists for top online tires sellers in the US. However, there was no information on the list regarding why they are top and neither was there any details about their online tires sales revenue. As a result, we decided to use those top specific articles to create a list of 12 most frequently suggested online tire sellers including Tire Rack, Discount Tire, Tire Buyer, Tire Warehouse, Les Schwab Tire Centers, Pep Boys, Simple Tire, Tire Easy, Online Tires, and Amazon. We then searched for revenue information for each of those online sellers on credible companies' analysis databases such as Crunchbase, DB Hoover, Craft.co, and ZoomInfo. However, there was no information about the online tires sales revenue, particularly for most of the companies.

    We then decided to look for the annual reports, investors presentations, press releases, among others for all the top online tires sellers companies in the US that we included in our list. We were hoping to get any breakdown of the company online sales revenue or any statistic related to the total online tires sold or similar data from where we could triangulate their online tires sales revenue precisely. Unfortunately, the majority of the companies didn't disclose their annual reports, and the majority of the companies didn't seem to have any investor presentations or similar information. None of the searches yielded any positive results.

    Next, we looked for researches, surveys and case studies ever done on these companies with the hope to get any percentage regarding their online tires sales or any relevant metric about their market size from where we could conclude their current online tires sales revenue. We searched through research databases such as Research Gate, Research Guides, and Pew Research. However, none of the sources contained any relevant information, most likely due to the unavailability of such data as no previous researches or case studies seem to have been conducted on these companies. Hence, none of the databases yielded any positive results.

    Finally, we decided to make use of the "total revenue" available of the 12 companies mentioned above. Based on those total revenues, we chose the top five online tire sellers in the US. We were able to get only five top sellers because many other companies that we included in our list previously either didn't publicize their revenue or were not fully focused in the US market. However, we still needed two more sellers. Hence, we decided to look for the competitors of the five already found top tires sellers in the US. We searched through companies' analysis databases again, including Crunchbase, DB Hoover, Craft.co, and ZoomInfo. Majority of the competitors were either focused globally or didn't publicize their online tires sales revenue/total revenue, which made them irrelevant to be considered. Hence, we decided to list the top five online tire sellers that we had gathered as they were in the requested range.

    Part
    03
    of three
    Part
    03

    Online Tires - Retail Chains

    Available information on online tire sales in the United States only indicates that independent tire retailers Tire Rack and Discount Tire Direct account for approximately 70% of the country's online tire sales. The distribution of the online sales of performance/special-purpose tires and of off-road/plus-size tires is readily available, but it does not appear to be a good proxy for the distribution of online tire sales. If the distribution of the retail sales of tires is any indication, independent tire dealers dominate the online space, and mass merchandisers and other retailers account for only a small portion of the market.

    DISTRIBUTION OF ONLINE SALES

    • Based on an article published by Modern Tire Dealer, Tire Rack and Discount Tire Direct have the lion's share of online tire sales in the country, as they are widely regarded as the "pioneers of online tire selling." Together, they accounted for around 70% of the more or less 16 million tires that were sold online to consumers in the United States in 2017.
    • Both Tire Rack and Discount Tire Direct, a subsidiary of Discount Tire, are independent online tire sellers with nationwide operations.
    • According to the Specialty Equipment Market Association (SEMA), however, online sales channels accounted for 30% of sales of performance and special-purpose tires in the United States in 2018, and these online sales were distributed as follows: tire shop (26.67%), auto parts chains (16.67%), specialty retailer or installer (16.67%), parts manufacturer (10%), online marketplace or auction site (10%), online-only general retailer (10%), general retail chains (6.67%), and other (3.33%).
    • Also, online sales channels accounted for 32% of sales of off-road and plus-size tires in the United States in 2018. These online sales were distributed as follows: tire shop (37.5%), specialty retailer or installer (18.75%), auto parts chains (9.375%), online marketplace or auction site (9.375%), online-only general retailer (9.375%), parts manufacturer (6.25%), general retail chains (6.25%), and other (3.125%).
    • To distinguish these sales channels, SEMA gave the following examples:
      • Auto parts chains — AutoZone, NAPA
      • Specialty retailer or installer — Truck Accessory Shop, Speed Shop
      • Online-only general retailer — Amazon
      • Tire shop — Firestone Complete Auto Care, Discount Tire
      • General retail chains — Walmart, Target
      • Online marketplace or auction site — eBay

    DISTRIBUTION OF RETAIL SALES

    • According to Modern Tire Dealer, retail sales of consumer tires in the United States in 2017 were distributed as follows: independent tire dealers (61.5%), mass merchandisers (11.5%), warehouse clubs (9.0%), auto dealerships (9.0%), tire company-owned stores (6.5%), and miscellaneous outlets (2.5%).

    PREFERRED PURCHASE CHANNELS

    • Based on a survey conducted by Consumer Reports, the tire stores that shoppers frequent the most are independent retailers (21%), Discount Tire (15%), Costco (15%), and car dealerships (14%).

    RESEARCH STRATEGY

    In finding the requested information, we first checked if reports or articles on the distribution or segmentation of online tire sales by channel are readily available in the public domain. This strategy led us to (a) Modern Tire Dealer's articles covering the leading sellers of tires online and the market share of the two biggest players in the space and (b) SEMA's report covering how the online sales of performance/special-purpose tires and off-road/plus-size tires are distributed by channel. SEMA's report provides a detailed breakdown of online tire sales, but we learned that specialty tires may not be a good proxy for tires in general. Modern Tire Dealer's articles indicate that independent online tire sellers Tire Rack and Discount Tire Direct together account for 70% of online tire sales in the country, yet none of the percentages indicated in SEMA's breakdown is even close to this percentage.

    Online sales of performance/special-purpose tires, for example, are distributed as follows:

    Tire shop: 8%/30% x 100% = 26.67%
    Auto parts chains: 5%/30% x 100% = 16.67%
    Specialty retailer or installer: 5%/30% x 100% = 16.67%
    Parts manufacturer: 3%/30% x 100% = 10%
    Online marketplace or auction site: 3%/30% x 100% = 10%
    Online-only general retailer: 3%/30% x 100% = 10%
    General retail chains: 2%/30% x 100% = 6.67%
    Other: 1%/30% x 100% = 3.33%

    And online sales of off-road/plus-size tires are distributed as follows:

    Tire shop: 12%/32% x 100% = 37.5%
    Specialty retailer or installer: 6%/32% x 100% = 18.75%
    Auto parts chains: 3%/32% x 100% = 9.375%
    Online marketplace or auction site: 3%/32% x 100% = 9.375%
    Online-only general retailer: 3%/32% x 100% = 9.375%
    Parts manufacturer: 2%/32% x 100% = 6.25%
    General retail chains: 2%/32% x 100% = 6.25%
    Other: 1%/32% x 100% = 3.125%

    Since it appears we could not assume that the distribution indicated in SEMA's report applies to tires in general, we proceeded to check how the broader retail sales of tires are distributed by channel. From a report published by Modern Tire Dealer, we learned that retail sales of tires in the country (i.e., online and in-store sales) are distributed as follows: independent tire dealers (61.5%), mass merchandisers (11.5%), warehouse clubs (9.0%), auto dealerships (9.0%), tire company-owned stores (6.5%), and miscellaneous outlets (2.5%). This distribution is more consistent with the previous finding that independent online tire sellers Tire Rack and Discount Tire Direct account for 70% of online tire sales, so it is likely that the channel distribution of online tire sales is more or less the same as the channel distribution of tire sales.

    We looked for consumer surveys as well to gather insights about consumers' preferred online tire stores, but we were unable to find any survey specific to online tire purchases. All we were able to find was Consumer Reports's survey indicating that the tire stores shoppers frequent the most are independent retailers (21%), Discount Tire (15%), Costco (15%), and car dealerships (14%).

    Based on these sources, the only thing we can be certain of is that independent retailers hold the biggest share of the country's online tire sales and their share of sales is at least 70%.

    Sources
    Sources

    From Part 01
    Quotes
    • "The value of online sales of tires grew 34 percent throughout 2018 and the category now accounts for 21 percent of total e-commerce automotive dollars spent, according to research from NPD Group Inc."
    Quotes
    • "NPD also found that consumers ages 35 and older represent the highest population of heavy online buyers in the market (5+ purchases annually), while the majority of millennials tend to be light buyers (1 purchase annually). This is in line with NPD’s findings in its 2018 Consumer Outlook Survey, in which a high percentage of younger (43%) and older (51%) millennials reported having no plans to purchase automotive products online in 2018."
    Quotes
    • "Accounting for an estimated at 6.5% of global tire market volume in 2018, the business-to-consumer (B2C) e-commerce channel is the fastest growing."
    Quotes
    • "In the U.S. alone, Amazon and eBay together account for over 70 percent - an estimated value of $7-7.5 billion - of all car parts sold online, according to Frost & Sullivan estimates published in its recent report titled, Competitive Profiling of eRetailers in Americas."
    Quotes
    • "United States tire market stood at around $ 52 billion in 2017 and is forecast to grow at a CAGR of over 4.80%, to cross $ 68 billion by 2023, on account of expanding vehicle fleet and growing construction industry in the country. Moreover, production and sales of passenger cars and light commercial vehicles in the US is consistently increasing, thereby augmenting demand for tires."
    Quotes
    • "The U.S. tire manufacturing industry is a $148.4 billion dollar industry that is responsible for more than 737,000 jobs in the U.S."
    Quotes
    • "According to the Automotive Aftermarket Suppliers Association (AASA), the total U.S. automotive aftermarket value grew by $9 billion in 2017 to $286 billion and is expected to grow to $296 billion in 2018."
    • "This $286 billion includes $31 billion in tires sales and $89 billion in labor. "