Used tire seller finding business doesn’t revolve around Internet
Brad Rea is rethinking his business, ChampTires.com , an online retailer of used tires.
Although Internet sales account for about 70 percent of the West Mifflin-based company’s revenue — and are growing — Rea is discovering that many people who might be open to shopping for used tires online still want to “kick the tires” before they buy.
“When we started, I wanted to be like the Tire Rack for used tires,” Rea said, referring to the popular South Bend, Ind.-based online retailer of new tires. “I can’t believe I didn’t realize how big the (in-person) retail would be.
“I was definitely surprised by the number of local people wanting to pick up the tires,” the 32-year-old former minor league baseball player said in the company’s warehouse in the South Hills Industrial Park.
With that trend in mind, Rea and business partner Bryan Corbett are taking the model from Pittsburgh to other large cities around the country. Last spring, ChampTires opened a warehouse just west of downtown Chicago. It distributes tires nationwide to online customers but allows shoppers to come in to see tires before they buy. Corbett runs the Chicago operation.
ChampTires is seeking financing — from investors, banks or both — to expand into markets such as Los Angeles, New York City or northern New Jersey, and the Carolinas, Rea said.
“I think if the business works in Pittsburgh, it’ll work anywhere,” he said.
Results have been encouraging since the company began in the summer of 2009. It recorded $1 million in sales in 2010 and $2 million last year. This year Rea expects ChampTires to log sales of more than $2.5 million. That figure could rise, depending on results from the Chicago warehouse, he said. It’s in a high-traffic area in a major market, which could translate into far more in-person sales than those in Pittsburgh.
The company could have a lot of room for growth. The Rubber Manufacturers Association estimates that 30 million to 35 million scrap tires re-enter the market and are sold as used tires. ChampTires last year sold about 30,000 tires, or 0.1 percent of the market.
It’s difficult to track exact sales of used tires, and no one keeps data on the industry’s growth, said Dan Zielinski, a senior vice president for the Rubber Manufacturers Associationin Washington.
“Anecdotally, we think it may be expanding, especially through the recession,” Zielinski said.
New-tire shipments decreased during the past several years, he said. Part of that trend may be drivers putting off purchases, and part of it may be growth in used-tire sales.
The association, which represents tire makers, warns consumers to be careful when buying used tires. Zielinski recommends carefull inspections by professionals because a tire’s damage might not be readily apparent.
Rea said ChampTires inspects tires for leaks, broken belts, dry rot and cracking inside and out. The company sells only tires that would pass Pennsylvania state inspection for tread depth of at least 3/32 of an inch, he said.
“We have an extensive inspection process,” he said. “There’s no way we could sell as many tires as we do online if they were unsafe.”
Although ChampTires is looking at building out its bricks-and-mortar presence, online sales of tires and auto parts likely will continue to grow with Internet-savvy consumers, said Ron Rossi, director of market intelligence for the Automotive Aftermarket Industry Association in Bethesda, Md.
The association doesn’t keep solid market and growth data but, Rossi said, “This is a moving market, and it’s only going to get more attention.”
The notion of buying used tires might seem strange to some people, but Rea said drivers don’t always dispose of tires simply because they’re worn out. Sometimes only one of four tires is damaged when a car owner buys a new set, leaving three tires in good condition.
For competitive reasons, Rea declined to discuss how ChampTires procures its tires.
“Getting inventory hasn’t been a challenge yet,” he said.
The biggest hurdle is making consumers aware of the industry and the company, he said.
“Advertising is expensive, but it’s essential,” he said. “That’s the key to our growth.”
What: Online retailer of used tires, with in-person sales at two warehouses
Where: Headquarters and warehouse in West Mifflin; second warehouse in Chicago
Employees: 15 total, eight in West Mifflin
Sales: $2 million in 2011
Owners: Brad Rea and Bryan Corbett