Don’t Mention the War

When online tyre retailer Blackcircles.com launched its new Meinreifen.de website for German consumers this month, you could be forgiven for interpreting the move as a strategically aggressive act. Hannover-based Delticom AG has been selling tyres online in Germany (and 29 other countries) for years and if its latest financial results are anything to go by, they have been making a rather good job of it. However, Tyres & Accessories has learnt that Blackcircles has been researching a possible entry into the German market for the last three years. So, could we be witnessing the start of an online tyre war?

Blackcircles’ launch publicity was certainly forthright in its approach: “The decision to enter the German market was very much driven by what we were seeing amongst competitors who are growing on the back of offering customers an inferior deal,” an official statement read. Touche!

By naming its new German site mein reifen – meaning “my tyres” – together with the company’s comments about its competitors’ “inferior deal,” Blackcircles certainly appears to be taking a swing at Delticom. Looking at the two companies’ published figures, in financial terms, it’s a technical mismatch. Delticom, which trades as mytyres.co.uk in the UK, recently reported 2007 revenues of 215 million euros – more than 20-times Blackcircles’ £8 million.

There’s no question that Blackcircles is an ambitious and growing company (last year’s Plimsoll analysis rated the firm as the 32nd fastest growing tyre company in the UK business), but why would it want to pick a David and Goliath scale fight like this one? It could also be something as simple as the fact that, with annual passenger car replacement sales in the region of 47 million units (roughly half of which is winter tyres), Germany is the largest tyre market in Europe. A comment in meinreifen.de’s launch press release hints that the company has got its commercial sights set on winter tyre sales: “German motorists are very particular in their choice of tyre, usually opting for Winterreifen…Our aim in Germany is to set a new standard for low cost tyres combined with high quality service.”

Perhaps Blackcircles isn’t looking to attack Delti head-on after all. In the UK, Blackcircles’ customer service has ensured that 40 per cent of its monthly business comes from customer referrals. And the company has achieved this by targeting a particular type of consumer. While you might expect internet sales to be “cheapest tyre wins,” Blackcircles has made its money catering for a particular clientele. This directed approach is reflected in meinreifen.de’s site design, which is completely different to Blackcircles.com. Both Blackcircles sites put more of an emphasis on aesthetics than Delti’s sites, which on the other hand, look very similar in all thirty countries the company operates in.

Naming a winner in this situation would be a mistake. It is clear both Blackcircles and Delticom are innovators in online tyre sales, albeit with two quite different business models. So, while I would love to say: “may the best e-tailer win,” it could be that this “war” won’t be an out and out scrap after all.