Aussie Importer Euride Challenges OS Retailers

[AUbicycles]

On the discussion of OS pricing, this may be of interest to anyone following this topic.
The importer Euride (Cinelli, Bottecchia, De Rosa, ITM, Diamant DMT and Catlike) is taking on the overseas competition with the bottom line that overseas prices are not necessarily cheaper. Before you grill me on that, best to read the article and interview first (all of it) though welcome discussion.

Interview: Aussie Importer Euride Challenges OS Retailers

I have a few comments though will hold off first to give you a chance to read and hope that you find it as positive and interesting as I do.


Cheers
Christopher

[Baalzamon]

I notice they are directly comparing Wiggle to their pricing and factoring in shipping costs. It does not factor in the user buying all those pieces and spending $88 or more to qualify for free shipping. And Wiggle is no longer the cheapest. CRC is commonly more cheaper than Wiggle, and Ribblecycles just smashes both of them but you do have to pay for postage. They have to widen their scope off one webshop and look at them all.

[MarkG]

Be interesting to see what their prices on the 2012 DMT shoes is like - as they are one item that's significantly cheaper on line!

[Ozkaban]

I have a few problems with that article, though in general I understand that importers and retailers in Aus are finding it pretty tough.

1. Wiggle is far from the cheapest OS website
2. Wiggle offer free shipping from a relatively low threshold. To include shipping on individual items for the comparison just to claim you're cheaper is disingenuous.
3. The article isn't dated but 'exchange rates that make it expensive to import' is the complete opposite of the current situation. I appreciate that an importer must buy items at the prevalent exchange rate and then store them (paying for storage and finance) while the exchange rate steadily climbs which devalues their stock. This goes the other way too when the exchange rate is falling.

I have bought, and will continue to buy items from local businesses. He's right that part of the 'value equation' that consumers apply includes local service. I ride with DMT Kyoma shoes which I bought locally and quite like which I guess were supplied through this importer. This only goes so far though. A LBS quoted my $360 for a 105 crankset. I paid $125 OS. An extra 20-odd % I can understand and will support locally if possible, but double and even triple on most items is not uncommon. It becomes a pretty difficult sell at this point...

Cheers,
Dave

[RonK]

Nick di Lorenzo: The need to educate our staff, dealers and in time the community, that we offer very competitive pricing with essentially overseas web-only operators. There is a myth out there that they are cheaper.

You need to demonstrate this, not just make bald assertions - savvy buyers are aways going to check prices widely, and it's convenient and easy to do that on the web, while at the same time as avoiding the kind of high -pressure sales tactics advocated "to make a sale to a Customer who’s in store, “here and now”". Local retailers also need to get their best offers out on the web, not just price match, or they will definitely miss out on my business. For me the retailer who advertises the best price gets the sale - end of story.

Nick di Lorenzo: Deal with facts. The web is here to stay, and as stated above, it will be a critical part of the distribution mix, and people will get sick of sitting there and just clicking on a computer.

Quite right, the web is here to stay, but no, people are not going to get sick of "sitting there and just clicking on a computer". Its convenience is a big part of the attraction, so don't get your hopes up that'll change anytime soon.

Nick di Lorenzo: Our view is simple, there needs to be a level playing field but this will clearly take time to resolve. Our focus is to deliver the experience customers want, and if we do that, the GST issue becomes a non-issue.

The reality is, a reduction in the GST threshold will not make local retailers competitive or reduce online shopping. Not one bit, and we all know that. Don't pin your hopes on it.

Nick di Lorenzo: Yes, very much so, and we have and will continue to have constructive discussions with our suppliers so we can have a level playing field without putting all consumers (including us) at a disadvantage.

This really sounds like an attempt to restrain parallel imports. Australian courts do not offer much support for such restraints.

Shops need to “value add” service, provide peace of mind, and train staff so they can provide advice that added value to the Customer.

There will always be customers who need the added value a local retailer could (but often fails to) provide. But there are many experienced customers who don't need this "added value" - they know what they want, and they want it at the very best price. I don't see the mix changing.

Personally I whilst I have sympathy for the individuals involved in the local retail trade, I have little sympathy for the Australian retail/distribution model - I feel as a customer I have been ripped-off and treated with contempt for years, and all the bleating and cries for protection only make me angry and more determined to seek out the best value I can find, wherever it may be. Most of my online spending simply would not have happened if I'd had to pay local prices. I won't be curtailing my web purchasing habits any time soon.

[Nikolai]

This is clever - I want a level playing field but please impose a tax levy on my competitors who outperform me by a mile.

[AUbicycles]

Let go easy as I was interested in this as it was not a flat out 'buying overseas is unpatriotic and the GST threshold is the problem' rather a more genuine look at the issue and push for understanding and alternatives.

On Wiggle as the reference - they are the biggest international online retailer and I feel a fair point of reference. There is always competition in a price war. In The Ultimate Guide survey (link below), buyers were prepared to pay a certain percentage extra to buy locally. We are talking ball park figures / trend.

On the shipping costs - yes true and a valid point. I spotted this though also recognise different scenarious, for accessories, where most of the online sales are, the differences are bigger. Take a look at the Mystic Rats bike which doesn't qualify for free delivery plus being valued at over $1000 you would also be hit for GST and Duty - these costs are not reflected in the price comparison. So the item value, shipping and total purchase value could need to be factored - creating an algorithm would give you theoretically more accurate point of general reference.

On the exchange rates - the scenario is ordering but having to pay up front with the delivery due months down the line. You win and you loose and is just another factor to put into the equation that is almost a non-issue for a private small volume purchase online.

RonK.. onto you…

Staff education - all of this ties into the customer service. The importer can encourage their dealers, can train them though the dealer themself is responsible and customer service has become a forgotten art in some shops... just check out the number of women in the forum who post that they are looked down upon or not taken seriously. There are good shops out there and these ones are doing well.

Different people shop differently, some compare prices methodically while others make spontaneous purchases or purchases at a price they know is higher because in the long run their shop looks after them (discounts on other things or free service). Price is one part of the equation, it is a big motivator I agree however other factors tie in. I don't recommend that all LBS's get an online shop, many wouldn't know where to start and would blow a fortune before realising they don't have the know-how, manpower and logistics to run it properly and compete. Some LBS's are cut out for it - and one example is a shop I know that setup an online shop and find they are selling to exisiting customers. The convenience of online shopping means they can still shop there.. and get service and support, but the gear is delivered directly and it saves them a trip.

GST - Nick di Lorenzo's answer, as I understand, is that they would like it though are not expecting the GST threshold change anytime soon hence the other strategies.

@Nikolai, The GST threshold is not a tax levy on competitors in this sense, rather as Australia has this threshold there is a small but real price advantage for overseas retailers selling into Australia. I understand the UK don't have this threshold (correct me if I am wrong) so all goods irrespective of value are taxed.

attempt to restain parallel imports - not at all, instead brands sell to suppliers who sell to large retailers. If the brand doesn't control their distribution then it means that for a single product, their importer is facing competition. Some brands ignore this and the importers are stuck - and import volumes are so small (comparatively) that they have no power. So it is a matter of trust and communication where a brand supports their importers worldwide and aims to eliminate an unfair disadvantage. You will notice on the online retailers that you just can't get certain brands, or can only get run-out, surplus or old stock.

Shopping habits - I agree that there is a diverse mix of people out there - when I was living overseas I went through 7 bike stores in my area before I found the right one. I am not a difficult customer but after getting parts, a service and speaking to staff you can quickly judge whether you are a valued customer or not. 16% of sales (source: BIA) in cycling retail are apparantly overseas and my survey (link below) and numerous discussions show that it is largely parts and accessories.


A majority of people like the idea of buying locally. Cycling Express was well received when they launched. I am all for customers getting the value - as well as local industry being able to better serve there customers. Some brands / importers are still fighting but others are learning and adapting. The change is not easy, it's not comfortable but in the long-term it makes sense.


So that was an essay and a half, thanks for reading

[Nikolai]

@Nikolai, The GST threshold is not a tax levy on competitors in this sense, rather as Australia has this threshold there is a small but real price advantage for overseas retailers selling into Australia. I understand the UK don't have this threshold (correct me if I am wrong) so all goods irrespective of value are taxed.

You can rephrase it anyway you like. What Mr. di Lorenzo is asking is to tax goods that are not taxed at the moment. And he calls it a level playing field. If he really wants a level playing field, he needs to lobby for import restrictions to be removed to allow all willing market participants to compete on equal terms for our dollars. Admittedly, even though I don't know all the details, Australian retailers in the bike industry are not at the level playing field with the UK online stores. This situation, however, has nothing to do with the $1,000 import threshold. The price advantage of UK stores is such that even 10% GST will make it worthwhile to buy from the UK. It's not only the price, it's a variety of stock too that Australian online retailers lack.

[AUbicycles]

Though for clarification on the level playing field, the importer imports 100 tyres and tax is levied. A consumer buys (imports) 2 tyres and as they are under $1000 tax/duty isn't levied. The volume of untaxed imports is seen as a threat so the move is to close this 'loophole'. A number of Australian importers are part of Bicycle Industry Australia which is lobbying, as part of the Fair Imports Alliance for the reduction or elimination of this threshhold.

On the one hand the $1000 is being argued by some as the be-all and end-all in the OS online shopping - though a poll I ran in this forum showed, as you rightly suggest, that the addition of 10% GST on ALL imports would have little overall effect. It is one part of cost issue... but addressing and resolving this alone won't have the effect required.

Would a 10% GST surcharge stop you from buying overseas?

[antipodean]

IMO the importers/distributors are the main reason the local stuff is so expensive.
These middlemen do nothing but order the goods in bulk then send it out to stores - easy money.
CRC, Wiggle etc deal direct with manufacturers and can therefore offer the prices that they do.
I find eBay the cheapest anyway but recently have got some excellent deals locally from TBSM.

A couple of comments from AUBicycles I found somewhat bizarre where "Staff education - all of this ties into the customer service. The importer can encourage their dealers, can train them though the dealer themself is responsible and customer service has become a forgotten art in some shops... just check out the number of women in the forum who post that they are looked down upon or not taken seriously." How does the bit about women on this forum relate to this thread?
And this "On the exchange rates - the scenario is ordering but having to pay up front with the delivery due months down the line" seriously how often does anyone wait months for an OS delivery?

Rant over, I'm recovering from a 90k hilly ride in Van Diemens Land so forgive my rambling

[il padrone]

Nick di Lorenzo: Yes, very much so, and we have and will continue to have constructive discussions with our suppliers so we can have a level playing field without putting all consumers (including us) at a disadvantage.

This really sounds like an attempt to restrain parallel imports. Australian courts do not offer much support for such restraints.

Seems like some overseas on-line stores are now being constrained by their suppliers. Just trying to buy an Ortlieb seat bag from Woggle. 10 in stock, but as soon as I indicate 'Australia' for shipping, it disappears from my shopping basket - "not in stock". When I log in I get told "We do not ship this item to Australia"

W!ggle sucks IMHO!!

[HappyHumber]

Wiggle sucks IMHO!!

Maybe you shoulda obfuscated that, Pete...

W!ggle sucks IMHO!! perhaps? It wouldn't have provided them another free link

[Baalzamon]

Seems like some overseas on-line stores are now being constrained by their suppliers. Just trying to buy an Ortlieb seat bag from Woggle. 10 in stock, but as soon as I indicate 'Australia' for shipping, it disappears from my shopping basket - "not in stock". When I log in I get told "We do not ship this item to Australia"

W!ggle sucks IMHO!!

Last time I shopped at wiggle was back in October. Last order was with cellbikes, before that a few ribble orders. But yep noticed that wiggle no longer sell Ortlieb to Australia. Evanscycles, bike24, sjs still should

[Nikolai]

Though for clarification on the level playing field, the importer imports 100 tyres and tax is levied. A consumer buys (imports) 2 tyres and as they are under $1000 tax/duty isn't levied.

You can't compare the two (in this context). We pay retail prices while importers do not. There's no playing field to speak of. Even the purpose of buying is different - we buy for consumption purposes while importers for resale (business) purposes. There are different tax laws applied too to these different groups. And so on.

[il padrone]

Seems like some overseas on-line stores are now being constrained by their suppliers. Just trying to buy an Ortlieb seat bag from Woggle. 10 in stock, but as soon as I indicate 'Australia' for shipping, it disappears from my shopping basket - "not in stock". When I log in I get told "We do not ship this item to Australia"

W!ggle sucks IMHO!!

Last time I shopped at wiggle was back in October. Last order was with cellbikes, before that a few ribble orders. But yep noticed that wiggle no longer sell Ortlieb to Australia. Evanscycles, bike24, sjs still should

Same now applies for Brooks saddles from Woggle "Not available for despatch to Australia"

My above statement stands

[RonK]

Seems like some overseas on-line stores are now being constrained by their suppliers.

W!ggle sucks IMHO!!

Not sure how this is Wiggles fault. No doubt the suppliers can leverage even Wiggle. This is exactly the scenario I was thinking of in my comments - collusion between the supplier and the local importer to block parallel imports by Aussie buyers. Same with Star Bike and Rohloff. I think it's a short-sighted move that ultimately will cost the supplier sales, but for now they may have obligations under distribution agreements. The way around it may be to use a freight forwarder.


Posted via Tapatalk

[toofat]

it is possible that because only because of wiggle etc that groups like
Euride have come out with a somewhat competitive recommemded retail
i dont think my lbs has been overcharging me for all these years
its going to take a fair while for people to forget the high prices the had to pay and are still being asked to pay through
the Australian distribution system
at least Euride is moving in the right direction
trying to stop the big online shops shipping to Australia is futile
if there is a demand for your product at a reasonable price, restricting suppy only encourages another company to copy your product,udercut you or fake your product.
I built my latest bike with frame and parts for $5000 less that the perth shop price.
If I were not able to do that online I would have flown to europe, even with airfares and import duty I would have still been $3000 in front.
As the CEO of wiggle said in a recent interview there was nothing to stop a wiggle type operation being started in australia years ago, apart from the fact that most of the players were very happy with the existing system and saw no reason to change

[Xplora]

Though for clarification on the level playing field, the importer imports 100 tyres and tax is levied. A consumer buys (imports) 2 tyres and as they are under $1000 tax/duty isn't levied.

You can't compare the two (in this context). We pay retail prices while importers do not. There's no playing field to speak of. Even the purpose of buying is different - we buy for consumption purposes while importers for resale (business) purposes. There are different tax laws applied too to these different groups. And so on.

You CAN compare the situations. The importer has to charge 10% more than CRC/Wiggle/Ribble. If you can't see this as a gigantic problem, you really have no business commenting in this thread. Only a foolish country wilfully penalises their citizen's businesses to help their foreign competitors. Australia is a very dumb country for levelling that against local importers and retailers.

GST isn't the reason our local shops can't compete properly, but it doesn't help, because retailing has very thin margins despite all the markups. There is a reason there are few billionaire retailers - there is no money in selling products to the public. 10% penalty on price, PLUS a poor delivery culture, makes it incredibly hard for a local retailer to compete. Bear in mind that word - compete. They don't have to win... but their offering has to be comparable and reasonable. I'm noticing that I am really only interested in premium products, but how many stores have a good range of Selle SMP saddles to try instore? I don't need the excuses about cost of stock. Australian cyclists have a lot of money to burn, and really there should be more rationalisation of available brands. Everyone's trying to outsmart each other, but they've only tricked themselves. Some people don't want to try 5 different brands. I already know what a decent brand is - I just need to try the different models, and honestly, it's a mountain too high for the LBS.

[Ozkaban]

You CAN compare the situations. The importer has to charge 10% more than CRC/Wiggle/Ribble. If you can't see this as a gigantic problem, you really have no business commenting in this thread. Only a foolish country wilfully penalises their citizen's businesses to help their foreign competitors. Australia is a very dumb country for levelling that against local importers and retailers.

GST isn't the reason our local shops can't compete properly, but it doesn't help, because retailing has very thin margins despite all the markups. There is a reason there are few billionaire retailers - there is no money in selling products to the public. 10% penalty on price, PLUS a poor delivery culture, makes it incredibly hard for a local retailer to compete. Bear in mind that word - compete. They don't have to win... but their offering has to be comparable and reasonable. I'm noticing that I am really only interested in premium products, but how many stores have a good range of Selle SMP saddles to try instore? I don't need the excuses about cost of stock. Australian cyclists have a lot of money to burn, and really there should be more rationalisation of available brands. Everyone's trying to outsmart each other, but they've only tricked themselves. Some people don't want to try 5 different brands. I already know what a decent brand is - I just need to try the different models, and honestly, it's a mountain too high for the LBS.

If there was only 10% difference between OS sites and local, I'd buy local. I just did with Pro-lite wheels that were slightly cheaper Os, but I bought locally.

All too often though, as my example of the crankset, where the difference is 100-200%. Knock 10% off and you still have 90-190%.

IMO, GST doesn't impact the situation much as the prices usually just aren't that close.

[AUbicycles]

How does the bit about women on this forum relate to this thread?

The customer service part where customers don't feel weclome.

seriously how often does anyone wait months for an OS delivery?

Suppliers order in bulk and it takes months for containers (shipping) to arrive.

On Wiggle and Ortlieb - it is Orlieb dictating the terms, there are a few other brands with restrictions.

You can't compare the two (in this context)

If you shift the focus you can compare. The overseas retailer sells to a customer and the importer sells to a LBS who sells to a customer.
Not to forget that overseas retailers are not necessarily getting their goods direct and may also deal with local suppliers.

That said - I am not siding for one or the other, I love to support local business but am certainly aware of the price gap and that the market is changing.

@toofat thanks for your comments.

Regarding GST - link to the poll is on the first page of this thread and Ozkaban I agree. Australian's (based on my survey results in The Ultimate Guide - link in signature) are prepared to pay a little extra when they buy locally, but there is a cut-off point.

[RonK]

Can we presume that the said importer will read the feedback posted here even if he prefers his own version?

[Xplora]

IMO, GST doesn't impact the situation much as the prices usually just aren't that close.

It's not the entire picture, of course, but it's a big deal - it shows that the retail landscape isn't a level playing field and it discourages retailers from attempting to compete. They get drilled with paperwork administering the GST, they get punished if they don't pay it, and their wiggle/crc competitors aren't required to deal with it at all. IMO 100 tyres isn't enough to get good discounts, and if that is the best that the importer can manage, then Conti/Schwalbe aren't going to be offering discounts that make competition possible.

[AUbicycles]

RonK - yes. It is no surprise that importers and wholesalers are aware of the situation and you will find Local Bike Shops seeking answers from their wholesalers.

Xplora, 100 is just an example though even for high volume imports, the size of the Australian market is still tiny compared with the UK, many mainland European countries and the US. So with the open dialogue between importers and the brands - it goes a long to make sure the brands are looking after all of their markets an not inadvertently creating competition.

Competition is healthy and the current market changes make it interesting for all, even if 'change' is not the most attractive and comfortable option.

[il padrone]

They get drilled with paperwork administering the GST, they get punished if they don't pay it, and their wiggle/crc competitors aren't required to deal with it at all.

Umm, yes they do. It's called VAT (now taxed at 20%), and as with our GST it only applies to local sales. If Aus retailers want to avoid GST it's pretty easy - develop an overseas market

It's what wiggle did.

[rkelsen]

Some shops are getting the message, and some aren't.

Went into an LBS in June last year for some replacement tyres for my commuter. They wanted $90 each. Without tubes.

Have a guess what I did...