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I found it very interesting to read the below article in Bio-Mechanics latest e-newsletter.
I'm as guilty as anyone trying to save a few $$$ by buying bits and pieces from wiggle, chain reaction etc. but when I read this it made me realise it's not the retailers that are making a huge profit but the importers who are taking their cut which drives the price up, combine this with the economies of scale and it puts LBS owners in a no win situation.
I personally believe that the whole retail buying landscape is changing rapidly and will never be as it was, and it's not just the bike industry that is experiencing this.
Unless LBS owners can start to compete at some level they will continue to lose business to the internet, I have started to see some changes in this regard at a couple of shops I go to but how far it goes will be interesting to see.
They say competition is good but when the business is going overseas instead of supporting our local economy I think it raises some moral issues also.
Anyway that's my 2 cents worth and I hope you find the article as interesting as I did.
"We've hemmed and hawed about bringing this issue up before, however, lately it's been in the news too much for us to ignore. We refer, of course, to online buying. Indulge us, if you will, with the view from the small retailer's side of the fence. (We'll keep it brief. If you want the long version, come in and talk to us!)
Most people already know that an online retailer operating out of a warehouse in an industrial area doesn't have anywhere near the same sorts of operating costs as a bricks-and-mortar store based in an Australian capital city. Some people also know that even a small store like BMCR has nearly $200,000 worth of stock in it at any time, all of which has to be purchased up front (and then we have to cross our fingers we can sell it). The main problem we experience with the online issue is the misconception about pricing. In a nutshell: if you see a product online for $50 and the same product in our shop for $100, we are not making a $50 (or more!) profit on it. It means the $50 online price is well below even our wholesale cost - basically you're buying it for cheaper than we can. Yes, it's weird and it sucks. The main reason for these kind of discrepancies is because online retailers potentially have 6.5 billion customers while a local importer has 21.5 million - there's a huge difference in scale of economy here. Because of this, online stores seem to hold huge sway over manufacturers and can almost dictate their pricing.
We understand that most people have a budget they have to work to, which is why we will still fit groupsets or other bits people buy elsewhere/get sent over from a "friend in England". (On average, bicycle retail store owners earn between $35-50,000 per year on a 60+ hour working week, so we really do understand the budget thing. We're not drying our tears on $1000 bills, exactly.) However, until manufacturers give importers competitive pricing (and price isn't an issue with all items, by the way - not everything is cheaper online), please remember that LBS prices are not a result of the owner deciding to add a hefty mark-up so they can afford another ivory backscratcher. We try to make up for any price difference through our customer service, attention to detail and expertise: we've got 40 years' worth of experience between us, and talking to us about gear ratios, etc., is certainly easier than stabbing in the dark online or relying on contradictory (and possibly inaccurate) forum opinions. Whenever you make a purchase from us, you're letting us continue to provide these services to you.
So we'd like to say a huge 'thank you' to all of you who support us - every time you buy something at our shop, we appreciate your custom more than you can imagine!"
"Don't Wish It Were Easier... Wish You Were Better!"
I don't understand why LBS don't buy their parts & accessories from CRC or Wiggle. LBS that act as if the internet doesn't exist will quickly go bust. I have had at least one LBS tell me to buy so and so part overseas and he'll fit them. I wait for the day where an LBS actually has a computer instore that allows its more experienced customers buy directly overseas sites but also provide advice this part is better or not AND have the part/accessory delivered to the LBS so the LBS can fit it. Instead the LBS and customer is being funnelled to one particular brand where the quality is actually and particularly inferior. A lose-lose situation for both sides.
as for the comment about confusing advice on forums, unless you really know what you want I get the feeling that some LBS can easily take advantage of this knowledge deficit and speak for a brand over another.
Amateur oenologist and green-friendly commuter.
If an LBS starts buying from OS three issues plus another with customers having delivery to the store.
1. They become classed as an importer and duties and GST will be applied. Customs have tracking capability and will even start to levy duties and GST on individuals if their volume of arriving goods begins to exceed reasonable levels. The LBS has now just become another importer/distributor.
2. Warranty becomes an issue, how do they handle it? Do they have to send everything back OS to say C.R.C, who then send it to the supplier, time delays will become very significant. Its bad enough now dealing with local warranty issues without complicating it with an additional layer.
3. The local distributor will cut of all supply of all parts to the LBS, not just what they are sourcing from OS, so an LBS has to be able to source everything from OS which is not always easy or timely, refer point 1 as they are now an importer.
4. Allowing customers to order in shop is good, it would work, but the the goods need to be delivered to the customer to avoid the LBS looking like they are an importer (refer point 1 above).
Building more roads to prevent congestion is like a fat man loosening his belt to prevent obesity.
- Lewis Mumford
Personally I used to care about retailers, now? Not so much and it's mainly because I walk into a store and I'm told that the product I want isn't what I want... Or I go ask where trail runners are one day and I'm shown x-trainers. Or I'm looking at a new frame and they quote the WSD frame price without asking.
So, dear bike retailers, stop assuming I'm stupid and then maybe I'll start spending money in this country!
That's fine with me. If my LBS says - ok here you are, this and that is good from CRC/Wiggle and I can fit it for you for X amount of $ BUT I don't cover warranty issues etc. I can offer you what my distributor gives me etc for X amount of $ and I cover warranty for it and I can order it for you within 2-3 days or I have it in store. Your choice etc- then I can make a decision about whether the extra time of waiting for CRC delivery is worth the mark-up cost of the distributor-backed product.
I think it really is about ensuring the decision-making is still with the consumer and that's why online bike stores are beating the crap out of LBS. If LBS were more upfront about their set of problems with their distributors instead of living and operating as if forums like these don't exist or websites like CRC don't exist they may as well close up shop.
As a customer, I don't like that I have to insist on getting so and so product that is of superior quality than what the LBS can lamely offer and generally put up with the limited range they have available.
Amateur oenologist and green-friendly commuter.
As a counter to this argument, I'd ask why, if online is such an issue, there seem to be new bike shops opening fairly regularly? In my area in the last few years we've had at least 3 open and they're still all doing well.
The one I use, in the run up to Xmas last year, was so busy that he was open every day for a month! I asked him about how online affects him and he said his model, which primarily focuses on family cycling (kids and parents) hasn't really been affected. If I am going to buy a bike for either of my kids I'm not going to buy online. The consumables, I'll buy online.
Speaking to another bike shop owner who opened a couple of years ago about how he handles online competition got a similar response. He doesn't stock high end because that space is already covered and/or people who know what they want will buy online. In addition there are some things he doesn't bother stocking because he knows he'll never be able to compete.
Look at Cell as yet another model for selling bikes. They don't seem to be suffering too badly either.
The key is looking at your business model and understanding what moves and what doesn't.
I heard stories of LBS's that won't do work for people who bring in parts bought online. Why not? Parts you can buy online and as an LBS you can't compete but you can't buy service online so, in that, you have a market. Why not encourage it? Do a deal with the online retailer for directing traffic to their site.
With respect to the warranty and returns argument, that comes down to a risk assessment on the buyer's part. A bit of research and contact with the online guy can give you enough of an understanding to make a choice.
For example, why would I buy a Schwable Durano Plus locally for $80 when I can buy 2 from Wiggle for less than that? It's not even a question of budget when the price differential is that big. If the Distributors start suffering enough then they'll be forced to change their tune (or not).
This is not the first time there have been paradigm shifts in the way that markets operate and it won't be the last. Adapt or die!
Surely you make this decision without the help of the LBS. The LBS's involvement is not really relevant. Unless you expect to also lean on the LBS's for their more experienced opinion, then what do they get out of it?
this boggles the mind. I believe the particular store mentioned (bmcr) have a price per hour of labour for parts sourced by them and price per hour for parts sourced from someone else.
Personally the price per hour is not really something I like, I'd like to know a fixed price or a approximate price at least.
I actually just had a positive experience with a LBS mechanic who gave me 5 mins to double check the bb cups I got from someone on this forum wouldn't need spacer washers on it.
Also gave me some advice on fitting it too as he knew I was going to.
While I tend to buy from that store when I can, he didn't have to give me those 5 mins.
Avanti Plus (AT) Robina. Probably the best service I have had so far from an LBS.
2013 Malvern Star Oppy Di2
A few weeks back I contacted a not so LBS to me which is one of the biggest in the state chasing an item. For a change the young lad did his part and chased up the item but I did all the leg work giving him part numbers etc. He contacted the Australian Distributor/supplier and got back to me about 4 days later. This poor chap had such sad news and a hard time he felt bad ringing me. The distributor wouldn't give him a price nor do anything about ordering the part in he just wanted to sell what he had and wasn't interest in this young chaps inquiry. The guy at the not so LBS was so apologetic and offered an alternative but because this wasn't his field of skill and I knew that things wouldn't work with his suggestion for my needs but at least he did his best in chasing things up anyway.
I feel sorry for the LBS but that night I was placing my order with a UK Distributor/Bike shop and the item the lazy Butt lick of a distributor here in Australia wouldn't do so the LBS's also need to raise hell. While the LBS don't seem too raise hell over these problems they loose as I will continue to buy from OS because not only did I waste his time the end result was the same I'm back buying OS again for this item. Keep it up you greedy/Lazy and unhelpful Australian distributors the gravy train is well and truly ended and folks are wise to the net and there shopping habits of how to save money and get better customer service online.
Last edited by }SkOrPn--7 on Fri Jun 03, 2011 6:01 pm, edited 1 time in total.
Repeat custom from me and recommendations to my growing circle of bike commuter friends.
Amateur oenologist and green-friendly commuter.
Fixed that for ya
Plug the good ones people, they deserve it!
...whatever the road rules, self-preservation is the absolute priority for a cyclist when mixing it with motorised traffic.
London Boy 29/12/2011
Good points gr. Actually I have noticed that more and more LBS are emphasising their friendly service and they are becoming helpful and friendly So if internet bike stores get rid of the surly bike shops that just want to compete on their exclusive brand distribution or because they have a monopoly in the area (sorry country folks) then I don't think they'll last. I know now which bike shops to avoid and I have no compunction telling others their lack of service.
Re: market segmentation, that is v. v. Important. Know thy customer retailers!
Amateur oenologist and green-friendly commuter.
It certainly is a problem for LBS's, but not for innocent reasons. Recently I wanted to order a Ridley X-Fire, cyclocross bike. I live about 400 k's from a capital city so I got on the Ridley Aus website. I got the name of a LBS in Melbourne and when I was in the city, I had a talk with the manager. I knew that Ridley Aus was not importing this particular bike (only the most popular cross bike made), but I wanted to know if they /would/ order one for me. I knew what I wanted, I knew my size, I had the money. Sales don't get any easier. I wasn't asking for a deal, I simply wanted the bike. The price they came back with was absurd, eight to ten weeks and $4500 v. $2500 in the US, delivered in two weeks but no duty). There was nothing he could do. I told him how much I was quoted in the US and even gave him the website. He said that this price was less then his wholesale price. Yet it was the MRSP in the US. Here is the catch, the US retailer is making a profit selling me the bike. I ordered the bike from the US, the next day they contacted me, asking if I wanted to get the X-Night frame at no extra charge. Two weeks later my bike arrived, after I paid the appropriate taxes, total cost just under $3000.
Last year I wanted to order a bike stand, I contacted the importer and was told to expect a price of about $550. I contacted the retailer he suggested. They quoted me around $550 plus or minus for shipping, and a 6-8 week wait. An hour on the net and I got that exact bike stand for $198 delivered from Europe in two weeks. How can these differences in prices be rational? We are not idiots. I know that the LBS gives advice and technical information and I'm willing to pay for that. However, I spent a total of 10 minutes in the shop and I'm expected to pay right at 50% more for the bike and over 150% more for the stand? I would love to support the local industry but the prices are not even close, the importers don't even let them in the game.
I used to do ALL my shopping at the big bike shop in the CBD (on halifax) whom advertise on TV AND I enjoyed every minute in the store.
BUT the prices were at the top end and the stock was always the same, BUT the service was pretty good, and I wasn't made to feel like a tard........Until they changed hands!!! THEN I could no longer warrant the TLC which I was paying for, but was no longer receiving.
The servicing was pricey, and after trying a few other stores, I soon realised they were the best of the worst, and although the advice was one sided, it was certainly better than any others I had experienced around town.
THEN I found BMCR. They sure didn't seem to have much of a Roady focus, BUT looks can be deceiving!!! The service was exceptional, response times awesome, the workmanship was by far the best I'd experienced to date, and I even had to find myself going back to them to fix up other LBS cock-ups.
I have no issue paying for good service if that's what I get, and lets face it, TRUST is something you cannot buy, but if a service provider provides efficiency, honesty, transparency and good ole fashion customer relations, then trust can be earnt with little effort and provide the business with repeat income.
Buying parts online will always be cheaper, but its always safe to put a little aside incase something goes wrong because the law of business prevents you from paying little, and getting alot.
I recently spent some considerable cash on my recent bike $8000+ and the service was completely average, and probably because they knew they had exclusivity for that particular product (apart from online). I didn't feel welcome, and given the size of the transaction was simply expecting a friendly and warm reception, but was seriously dissapointed.
MAYBE the perfect LBS is actually not a shop but a "service centre" without all the bells and whistles, simply somewhere to take your bike to get the best possible service (and advice) and a niche market of products on the side and an association with an online shop where people can source their own bibs and bobs.
Well I think 1 shop already has that wrapped up (and a German Sheperd to boot)
COLNAGO 2008 CLX - CAMPAG RECORD ROLLING ON ZIPP 404's
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