Forklift dealers are not in agreement when it comes to tire sales. What role a distributor should play in the forklift tire business remains a divided topic. Some distributors feel that tire distribution and service is a highly profitable market, while others are convinced that dealing in tire sales and service remains a waste of time and money.
Forklift distributors are extremely undecided on the tire topic. The majority feel that it is valuable being the customers one-stop service shop and therefore, do perform tire service, repairs and sales. One distributor boasted that tires became the single highest volume aftermarket merchandise he sells. Being such a high volume, tires could be an extremely profitable margin item to sell for distributors.
Within the last few recessionary years however, many clients put less wear on their forklifts and consequently, their tires do not wear out as fast. This lack of need makes the distributor unable to maintain enough volume to maintain profitability. There is a huge overhead cost for distributors to carry the inventory and machinery required for tires. The tire press, the transport trailer required for delivery of stock, the cost of hiring an employee to maintain and operate these sales, along with tire inventory can easily be more than $50,000. Retail stores who can sell tires below the distributors‚?? cost can become stiff competition. Many distributors recognize the only reason they deal with the forklift tires is to maintain a level of customer service to their end-users, otherwise they would not join into the tire debate at all as it is not very profitable.
The lowest tire price is often the deciding factor for many forklift customers. A good salesperson who has product knowledge can easily explain why a better tire is necessary, although especially in this economy it seems to be the lowest price that is requested the most often. Many distributors are locked into aftermarket deals with specific tire manufacturers, but others are allowed to source tires from the manufacturer they choose.
Tire availability is another concern the distributor must take into account. As one distributor estimated, approximately 1/3 of his tire sales are directly related to having a tire in stock immediately when a customer requests it. The cost of downtime to have a customer wait days in order get a forklift back up and running can devastate an operation. There is no loyalty within the forklift tire industry. If one distributor is out of a particular tire, the customer will call somebody else who does in order to get his machine back running in the shortest amount of time.
As one distributor summed up the inconsistencies and obstacles in the tire market by saying, ‚??I‚??ve been there, done that. I don‚??t think we‚??ll ever go back into that segment of the business again. It‚??s too much of a hassle and there‚??s too much competition from independent tire companies.‚?Ě Some distributors feel the potential to earn a profit is there when the circumstances are right, but it can be a complex and lucrative part of the forklift industry.
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