Mobile Automotive Tool Sales Franchise Demise

8:40 am Auto Shop Tools, Consumer

Snap On Truck
DenLorsTools.com Summary: This article is on the evolving tool industry. There’s been many industries that have experienced change over the years. More on that in this article. Franchise tool sales companies like Snap On, Matco, Mac, Cornwell and USA Tools are currently feeling the squeeze due to many reasons, but primarily because of online tool sales. As an automotive tech for many years, I’ve seen a lot of tool truck franchise owners come and go. The most dependable one that I can remember was the Snap On guy. The next was USA Tools, which was basically an independent truck that sold many of the same tools that we sell on our websites today at DenLorsTools.com and WiseAutoTools.com.

I remember the Matco tool truck came around very seldom. Whenever, they did come by, the word spread quickly throughout the shop that I worked at (Carmax in Tampa). Hey Matco Tools is here! Get your broken tools out so you can get them warranteed. You could see the Matco Tool guy’s facial expression sink when he saw us coming to him with all of our broken Matco tools. Since we all knew that this was a rarity that Matco was even showing up, no one wanted to make any new purchases – just get the broken tools replaced before he stopped coming around. I was amused yet still felt a little sorry for the guy. I thought about how having a tool truck franchise was such a huge investment. You’ve got the truck expense, whether it’s leased or purchased. There’s the initial tool inventory; which the majority of the tools may only be on standby inventory for a long time. Waiting for that one special occasion when someone was in a bind for a particular tool. So you could be “Johnny on the spot”. There’s also the fuel expense, which goes on, if anything is sold or not… the truck has to make its rounds. There’s always some of the mechanics that will inevitably retreat to the restroom stall when they see the tool truck guy entering the shop, or head out on a really long test drive to avoid making a payment. Those were the guys that couldn’t manage their money, which owed money that they didn’t have. We actually had a guy that would “buy” tools off the truck on truck credit and almost always offered those tools to other guys in the shop for cash a few weeks later. His name was Ruben. Some of the guys would balk at the prices on the truck and say “I’ll wait for the Ruben cash price”.

I remember over the years that most tool truck guys didn’t have much knowledge of the tools they sell. Countless times I would educate them on certain repair job’s and why a certain tool was needed. Not surprisingly, a recent video that I watched; a Mac Tool franchisee and his wife, that was about to lose everything, gave testimony on how they thought they were ripped off. He stated that part of the sales pitch to buy in to the company was that “you don’t need to know anything about tools, they sell themselves”. Well if it sounds too good to be true it usually is. No one should invest $100,000 without having some experience in a particular business. But even with some knowledge of the tool business, it’s changing. It’s not good enough to have knowledge of the tools and ignore the fact that every tech has a smart phone and with that, easy access to the Internet – all while standing in his service bay. Sure Snap On may have a lock on their products but there are many similar products that are available. Take for instance the Snap On FRT10. We sell the same product under different labeling at about half the price – Calvan 38900. See the video below for more info on that and the replacement inserts.

Just as many other industries have either evolved or gone away – the old way of selling tools will too. There will be some tool truck sales that will hang around a while longer. In fact I’m surprised with how many tool manufacturers still resist the Internet in favor of tool truck sales. Some tool manufacturers hate having their tools sold online. They’re obviously old school. I think one reason is that the tool trucks, that drive from shop to shop, over the years have sold the largest percentage of their tools compared to online sales (that’s changing). And when the tool truck franchisees complain that techs in shops are Googling and finding lower prices on the same tools, it hurts their relationship with them. So some tool manufacturers say that their tools cannot be sold online. Or they mandate what price the tools must be sold at. This is called MAP pricing. Minimum Advertised Price. The MAP pricing prevents competition from diminishing the profitability of their brand. I get that to a point. But when competing brands are willing to evolve and offer similar products online, there will be a breaking point.

Mac InsideThe price difference is huge. With much lower overhead, online tool sales will definitely win out over tool truck sales that depend upon physically showing up at each individual repair shop. It just makes sense that driving a stocked air-conditioned truck, burning lots of fuel with a driver that has to walk into each shop; cannot compete in price with an online company that can reach many more techs without the same expense or need to physically walk through each shops door. I credit the Smart phone with the recent increase of online sales compared to tool truck sales. We have had an increase of mobile customers finding our websites and blogs. Once the tool manufacturers see online tool sales companies like ours surpassing tool truck sales, they will be forced to change their way of thinking. There are also younger guys starting to take over some of the tool manufacturers and distribution warehouses that don’t need convincing. Therefore, when the older guys retire, the change in favor of Internet Tool Sales is inevitable.

More on pricing. Here’s a little about how the general rule of thumb for tool truck pricing is to routinely double or almost double their cost to arrive at the retail price. That’s the price that’s charged to hard-working mechanics. Back when I worked at Carmax and was looking into the possibility of selling tools online; I spoke with the Snap On guy. He candidly spoke with me when I was the only guy on the truck. He knew I was not going to be a technician until I retired. And therefore not his customer for much longer. He told me the mark up should be 40-50% on the top figure. To easier illustrate we’ll use 50% and $100 as the cost. So a 50% mark-up on $100 is $150 right? NO. The tool truck way of thinking is 50% mark up on the top number. So it would have to be $200 retail and $100 cost. A hundred dollars is 50% of 200 I thought, wow that seems a lot like 100 percent mark up to me! I also thought to myself about how I used to bargain with this guy and pay cash sometimes to get a measly 10% off a purchase, all the while he’s got this huge mark-up!

I have nothing against a company making a profit. However companies that resist change and continue with antiquated methods are destined to fail. You can see this with other business models that have faded in the past. Because of plentiful grocery stores, electricity and refrigerators there’s no need for door to door deliveries of ice and milk. Because of less carpet in our homes today and so many retail options, long gone are the vacuum cleaner salesmen that used to visit each house. There will always be a need for mechanics tools, but by purchasing them online the tech has a far better selection and price.

2 Responses
  1. Debra :

    Date: October 14, 2016 @ 8:55 am

    I agree things are cheaper on-line but what about when this item needs to be repaired – where do you go?

  2. dennisb - Auto Tool Sales :

    Date: October 14, 2016 @ 9:20 am

    Warranty on items, whether purchased online or not have a manufacturer’s warranty.

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