Black Circles, the Peebles-based online tyre retailer established by Michael Welch, turned a profit in 2011 results. 10 years after it began trading, Blackcircles reportedly made a retained profit of £2295, according to The Herald newspaper.
According to The Independent, former Tesco chief executive Sir Terry Leahy is providing “mentoring services on an ad hoc basis” to Blackcircles.com. Leahy, who the newspaper describes as being an “acquaintance” of Blackcircles.com managing director Mike Welch, also disclosed that he owns a stake in the online tyre retailer. Yet while admitting being a shareholder for some three years now, Leahy stressed to the newspaper he had “no hand” in orchestrating the Tesco Tyres partnership between Blackcircles.com and the supermarket giant. Further distancing himself from potential mutterings over conflicts of interest, Sir Terry reports he informed Tesco chairman David Reid upon acquiring his share in Blackcircles.
Following a gestation period of some five years, a new retail venture entered the UK tyre market in January 2011. Blackcircles.com has announced the launch of Tesco-Tyres.com in partnership with Britain’s leading retailer, a venture that offers access to Tesco’s massive nationwide customer base – including its 13 million Clubcard holders. Speaking with Tyres & Accessories, Blackcircles.com founder and managing director Mike Welch reflects on what the realisation of this long-held goal means for his company and what the future for Blackcircles may look like.
Persistence has paid off for Blackcircles.com. The online tyre specialist has been courting Tesco, Britain’s largest retailer, for around three years and the two companies have now finally reached an agreement under which Blackcircles.com will sell its products through a Tesco operated website. The Tesco tyre site is expected to go live in February; Blackcircles.com’s managing director and founder Mike Welch – who in former times packed shelves for the retail giant – commented that Tesco’s marketing clout “will be great for us.”
In January this year, online tyre retailer continued its strategy of merging traditional and online marketing methods by delivering promotional material to 20 Tesco Petrol Stations around the UK. According to the e-tailer’s website, the company’ s communications and promotion manager covered over 1000 miles in five days, visiting selected Tesco stores. His objective was to introduce the company to Tesco Staff, while delivering A5 fliers, putting up posters and checking air pump advertising fascias which had been put up the previous week.
Blackcircles.com is aiming to increase its garage network by 30 per cent by the end of 2009, adding as many as 400 garages. Announcing the news the company vowed to help independent garages “fight back”, saying it offers “additional revenue, customer footfall and national marketing, helping [independents] compete with major high street brands.”
Blackcircles.com has appointed two new senior managers as part of the company’s ongoing expansion plans. The Peebles-based business has recruited Alan Littlewood as head of network and supply and Peter Nowell as head of commercial operations. The appointments follow the announcement of a major partnership deal with the RAC, enabling Blackcircles.com to sell tyres directly to the motoring club’s seven million members through a new venture, RAC Tyres.
Peter Nowell will be responsible for developing mutually beneficial relationships with Blackcircles.com’s suppliers. He has previously held senior marketing roles at both Kwik-Fit and ATS Euromaster. Alan Littlewood joins Blackcircles.com from car dealership operator Pendragon Plc. His role will be to expand the company’s network of franchised garages and develop its servicing offer through its partnership with Unipart.
On April 22 the European Parliament approved – by a large majority – a number of draft measures that will see tyre performance in fuel efficiency, wet grip and noise levels explained on a standardised label attached to new tyres. The new rating system, pencilled in for implementation by late 2012, will use a scale similar to that utilised on the EU Energy Label or “fridge mark” as it has affectionately been dubbed.
Now that the tyre labelling measures first published in November have been approved, it has been proposed that tyres generating particularly low levels of noise be given an extra insignia, imprinted on the outer sidewall. Another proposed change is an upping of the level of information provided in tyre advertisements – the aim is to better inform consumers and provide a stimulus for the development of safer and more environmentally friendly tyres. However, specific details of the labelling scheme have yet to be finalised, and the draft text still awaits the scrutiny of the Council of Ministers, the body representing the 27 EU member states.
Leading motoring organisation RAC has teamed up with Blackcircles.com to create RAC Tyres, an online tyre retail portal offering “hassle free online tyre service” to RAC’s seven million members and any visitors to the RAC website. Blackcircles.com will power the motoring organisation’s new tyre retail operation, RAC Tyres (accessible at both www.rac.co.uk and www.ractyres.co.uk). The service will enable visitors to order tyres through the website and have them fitted at any of the over 900 garages in the Blackcircles network.
Announcing the news, company representatives described the agreement as a “landmark deal” and pointed out that the move follows a period of sustained growth for Blackcircles.com. According to an interview with the Financial Times published in early April, company founder Mike Welch believes the recession could benefit Blackcircles as customers seek a lower cost tyre alternative.
Blackcircles.com has grown to a turnover of in excess of £10 million since it was launched in 2001. In the earlier report, FT quoted Welch as saying sales were as much as 80 per cent up year-on-year. While year-on-year sales growth is currently quoted at 60 per cent it remains nonetheless impressive.
Leading tyre retail websites tyre-shopper.co.uk and kwik-fit.com have been rated as amongst the top 10 automotive shopping and classified websites in the UK. In the research kwik-fit.com came fifth, while tyre-shopper was ranked in ninth place. However it is also interesting to note that the success of first placed ebaymotors.co.uk and sixth-placed 247spares.co.uk, which both sell tyres, means 40 per cent of the UK’s leading websites in this category are also online tyre distribution channels.
The survey was carried out by Experian research company Hitwise, which monitored 8.43 million UK Internet users and how they interact with more than 1 million websites, across more than 165 different industries. The ranking didn’t include details of the relative performance of alternative leading tyre retail websites such as blackcircles.com, mytyres.co.uk or bestbuytyres.co.uk.
Michael Welch has done very well indeed at the BT Business Essence of the Entrepreneur awards. Not only was the Blackcircles.com managing director named one of the UK’s top 20 entrepreneurs, Welch was voted Most Outstanding Entrepreneur, an honour that comes with a £20,000 business grant. This is, admittedly, a well-deserved accolade – in seven years of business the company has cultivated a customer base of more than 300,000, and annual sales of more than £10 million.
Blackcircles.com has given Liverpool/Manchester based PR agency Paver Smith responsibility for the company’s public relations programme. Following the appointment, managing director Michael Welch commented that “we’re delighted to bring Paver Smith onboard and look forward to developing a successful working relationship.”
Online tyre retailer Blackcircles has appointed Unipart Automotive as its preferred parts supplier. As part of the new partnership it will promote the Unipart brand and product range to its network enabling the garages to tap into better pricing on parts which can be passed on to customers. Revenue is reportedly up 40 per cent this year while visitors to its website are said to have increased by 55 per cent.
The partnership agreement also has benefits in terms of customer confidence, a key area for online businesses. Under the new deal, Unipart will conduct a 10-point quality check, on behalf of Blackcircles.com, for all garages within the network, which will provide a mark of excellence designed to create a new consumer confidence and encourage greater use of independent garages.
Mike Welch, managing director of Blackcircles.com, said: “In Unipart we are partnering with a proven and trusted name that will enable us to support our garage relationships across the UK at a crucial time for the industry. Block Exemption creates an excellent opportunity that will ultimately benefit consumers. We are confident that this new deal will increase consumer confidence and highlight the many benefits of using local independent garages to the general public whilst educating people about Block Exemption.”
Unipart Automotive marketing director, Wendy Williamson, commented: “By sourcing our service products, the garages can be more confident about the quality they are offering their customers. This will increase customer satisfaction, generating higher sales for the garages involved.”
According to the company, Blackcircles.com has developed the largest network of fitting outlets in the UK during the course of the last six years and is currently recruiting more garages to join its UK network.
In recent years the online tyre market has swollen in size (as observed in other retailer sectors). Whilst the proportion of the total market controlled by this sector remains limited, the fact that the number of different e-tail platforms is continually proliferating means online sales could already account for as much as 3 per cent of the European replacement market. With this in mind, knowing more about how these businesses operate is of interest to everyone in the tyre trade.
The latest insight is that the average tyre offered for sale online costs consumers around £69.14, meaning the myth that ‘virtual’ margins are too thin to make business sense could be evaporating. However, the most commonly offered tyre online is characterised as a mid-range brand costing around £60. It seems making money online is all a question of business model.
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?
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