Tire e-commerce platforms such as “Tai Da Wang”“Mai Lun Tai” and “Tuhu Yang Che” have come out in China in recent years, while some of them have died after a short life.
The number of cars in China keeps increasing quickly, suggesting the country has a great demand for tires.
In physical stores, costs of rents and labor force were transferred into the tire prices, while in online stores such costs can be saved to enhace services for customers. For that reason, the online tire business has become a must choice for many industry participators.
However, “Mai Lun Tai,” an online tire-selling platform has shut down earlier, and Bridgestone and Dunlop also closed their Tmall stores in 2016.
Bridgestone only sold 107 pieces of its best-selling tire in its Tmall store in nearly three years.
“Mai Lun Tai” failed because it did not find a workable and profitable business model; instead, it over-relied on capital inputs and price wars.
The tire business has three characteristics: transparent prices, thin profits and low repurchase rates. With the prices and profits falling further, the e-commerce platform cannot survive when it fails in financing money.
E-commerce platforms should properly handle relations of the Internet, customization, chain stores, crowd funding and financing, said Zhu Yuncheng, president of tire e-commerce platform “Tai Da Wang.”
The tire industry is going through a tough period with many participators being kicked out. It is hard for a tire firm to keep alive via merely competing with price wars, Zhu said.
