Ridiculous Prices (rant thread)

[mezla]

So, I mostly do my shopping online because LBS prices are so out of touch with online prices that it's ridiculous.

Recently, I destroyed my Ui2 RD. Local quotes: $420 and $400 from two of the bigger and more reputable bike stores in Canberra. I got it shipped from the UK for $215 (Evans Cycles). A 48% saving online.

Called a couple of stores (Trek Retailers) for a quote on a saddle yesterday. One said $299, the other said $229. I can buy it from the Trek web site for $180, and I got it brand new from Germany including shipping for $145. A 37-52% saving online.

A few months ago I bought a Dura-Ace 7900 C35 wheelset... the Australian prices for this are completely outrageous. I paid $1070 including shipping from the UK (Ribble). Cycling Express is selling them at $1,499 (a claimed 38% discount and almost a decent price). Another Aussie retailer has them at $2279.20 (also at a discount they claim). I've seen them priced even higher in local Canberra shops (~$2.5k). Admittedly the prices for these wheels vary wildly online, but they're just another example. A 29-53% saving online.

High quality knicks and Jerseys are similarly overpriced... as are tyres, pumps, and from what I can see... everything else.

When it comes to buying parts, if you shop locally, you're probably paying 1.5-2+ times the prices you can find online. This all makes me a bit sad, and a bit angry. I wish I lived somewhere that I could buy things from a local shop, but sadly I do not. I'd even be happy to pay 10/20% more if it meant supporting my local cycling scene

What the fudge causes these hugely inflated prices? Is it really the distributors? If so, is there any end in sight?

MEH! /endrant

[gabrielle260]

I agree. I'd love to support local bike shops but that level of surcharge for doing so is ridiculous!

[g-boaf]

If I buy jerseys or other gear like that, I get it from Wiggle and save heaps. Local stores are too costly. Saddles as well.

[__PG__]

What the fudge causes these hugely inflated prices? Is it really the distributors? If so, is there any end in sight?
MEH! /endrant

You have to remember that much of the components you get from Wiggle/Pro Bike Kit etc is excess OEM stock dumped by Giant, Trek etc. It is not bought from Shimano/SRAM/Campag directly by Wiggle. Rather, Giant and other big OEMs will sell excess components. The overseas retailers put a small mark-up on the components and then ship it to you.

You can image that the price that Giant buy 10,000 Shimano groupsets is vastly different from the price your LBS gets.

Electronics/lighting etc seem very competitive in Australian LBSs. Components aren't (for the reasons given above).

[yarravalleyplodder]

What the fudge causes these hugely inflated prices? Is it really the distributors? If so, is there any end in sight?
MEH! /endrant

You have to remember that much of the components you get from Wiggle/Pro Bike Kit etc is excess OEM stock dumped by Giant, Trek etc. It is not bought from Shimano/SRAM/Campag directly by Wiggle. Rather, Giant and other big OEMs will sell excess components. The overseas retailers put a small mark-up on the components and then ship it to you.

You can image that the price that Giant buy 10,000 Shimano groupsets is vastly different from the price your LBS gets.

Electronics/lighting etc seem very competitive in Australian LBSs. Components aren't (for the reasons given above).

well what ever it is the price difference can be quite significant and when its so important to get the most for every dollar you spend. Even if they add gst the savings will still be to big to send me down to my LBS, which is a shame but I dont have cash to throw away

[AndyRevill]

You can image that the price that Giant buy 10,000 Shimano groupsets is vastly different from the price your LBS gets.
).

I suspect the LBS can't buy from Shimano, they'll have to go through a distributor - seems to be a common setup in Aus. So it's easy to see how prices get inflated once there's an extra mark-up and lower volume sales.

Andy

[Mrfenejeans]

I recently went to buy a pair of Conti Gp4000's in a bike shop and found that they only had one left for $80 and they wouldn't have anymore for 2-3weeks because they were being mucked around by there suppliers.

Ordering online i can get 2for the same price and have them in less than a week.

[__PG__]

I suspect the LBS can't buy from Shimano, they'll have to go through a distributor - seems to be a common setup in Aus. So it's easy to see how prices get inflated once there's an extra mark-up and lower volume sales.

Andy

Probably right. A local bike manufacturer in Australia said if I wanted to put Shimano components on the bike I'd be better off buying them myself as he wasn't able get competitive pricing. He makes about two bikes a week. He said his pricing on SRAM was much better and competitive (and it was).

[antipodean]

You have to remember that much of the components you get from Wiggle/Pro Bike Kit etc is excess OEM stock dumped by Giant, Trek etc. It is not bought from Shimano/SRAM/Campag directly by Wiggle. Rather, Giant and other big OEMs will sell excess components. The overseas retailers put a small mark-up on the components and then ship it to you.

First I have ever heard of this and I trawl most of the bike forums, any evidence that this is correct?

[zero]

What the fudge causes these hugely inflated prices? Is it really the distributors? If so, is there any end in sight?
MEH! /endrant

You have to remember that much of the components you get from Wiggle/Pro Bike Kit etc is excess OEM stock dumped by Giant, Trek etc. It is not bought from Shimano/SRAM/Campag directly by Wiggle. Rather, Giant and other big OEMs will sell excess components. The overseas retailers put a small mark-up on the components and then ship it to you.

You can image that the price that Giant buy 10,000 Shimano groupsets is vastly different from the price your LBS gets.

Electronics/lighting etc seem very competitive in Australian LBSs. Components aren't (for the reasons given above).

Going to have to call BS on that story. I've bought shimano components from CRC. Major components like cranksets come in shimano retail boxes. ie they are selling retail shelf product. There is no way they could keep a comprehensive product line based on over-estimates by bicycle manufacturers.

Bicycle manufacturers overshoot groupsets by 20, not by 20,000, and they buy components in box loads for each assembly point on their line, not as complete groupsets. That is why when 20 OEM groupsets turn up on ebay, its in some plastic bag, unless its coming out of a shop liquidation.

if you are trying to figure out why accessories are cheap, its because there are 50 manufacturers, not 3, and the manufacturers are far more willing to assist parallel importation, because they need the sales more than they need to prop up a distribution chain, and accessories need less advice for selection and no qualified ability to fit.

[The 2nd Womble]

Regardless of how many middle men can be reasonably be expected in Oz between manufacturer and LBS, anything up to and often beyond the 70% markup over and above ebay prices is simply unjustifiable. Gerry Harvey owns a few LBS franchises I'm guessing.

[adrian_d]

I feel the same way, as much as I would like to support the LBS I find myself financially not able or willing to spend twice as much for the same item that could be delivered to my door. I am also able to window shop as much as required without being a nuisance. I spend ages on my favourite online stores browsing and drooling over parts, once i'm ready I can go for it.

With a lot of things in my life I can't see myself buying certain parts new, and often support the second hand market just as much.

[Bentnose]

A lot of Shimano stuff I've bought recently came in plastic bags at great prices. That would be an Ultegra and XT cassette in CRC plastic bags and an OEM XT crankset from Evans cycles in a plain cardboard box. A large proportion of the Shimano stuff I buy seems to come like this.

I'd like to buy from lbs's but the price difference and lack of range/availability just puts me off, actual bicycle purchases are probably worthwhile though.

[ldrcycles]

Another example, i was looking at Shimano RS80 C24 wheels and when i got some tool from a LBS (probably a crank extractor or something, those sorts of things there's hardly any difference in price) i asked if they could get them and at what price. After a few minutes out the back the bloke said "a bit over $1,000".
I got a set on ebay from a seller in victoria, brand new for $410.


Just as an aside, re knicks and jerseys, i reckon cell are the bomb, great quality and crazy cheap.

[__PG__]

Bicycle manufacturers overshoot groupsets by 20, not by 20,000, and they buy components in box loads for each assembly point on their line, not as complete groupsets. That is why when 20 OEM groupsets turn up on ebay, its in some plastic bag, unless its coming out of a shop liquidation.

How many components do you think Shimano make in one production run?

Have a read of this Cycling IQ series about the modern bicycle industry.

This article gives an idea of the amount of bicycles Giant sells annually.

I'm sure some websites sell 'boxed' components, but a lot sell old OEM stock.

[jcjordan]

I am also a bit skeptical about the whole OEM excess from Wiggle, ProBikeKit, etc.
I have never recivieved anything but retail boxes.

More likely it has to do with buying power and low margin high turn over selling.

Unfortunately we have to purchase through a middle man (distributer) who adds a second level of profit and can't purchase enough product to get a real discount from such a small market.

Sent from my HTC Sensation Z710a using Tapatalk 2

[jacks1071]

A lot of Shimano stuff I've bought recently came in plastic bags at great prices. That would be an Ultegra and XT cassette in CRC plastic bags and an OEM XT crankset from Evans cycles in a plain cardboard box. A large proportion of the Shimano stuff I buy seems to come like this.

I'd like to buy from lbs's but the price difference and lack of range/availability just puts me off, actual bicycle purchases are probably worthwhile though.

The stuff that comes without the packaging is OEM. Shimano give special pricing to OEM (Bike Manufacturers) to use their groupo and it comes like that - they sign a contract stating NOT to sell the loose components. It seems that Shimano don't police the policy. The people who play by the rules have higher pricing which is part of what is seen. The price difference for OEM groupset is a significant discount over components destined to be sold (in retail boxes).

Do I care if I get the box or not? No, couldn't care less - in fact I'd prefer there was less or no packaging, just providing a little industry insight.

[zero]

Bicycle manufacturers overshoot groupsets by 20, not by 20,000, and they buy components in box loads for each assembly point on their line, not as complete groupsets. That is why when 20 OEM groupsets turn up on ebay, its in some plastic bag, unless its coming out of a shop liquidation.

How many components do you think Shimano make in one production run?

CRC and wiggle will turn over £200m ($325mil usd) this year combined. Their distributors essentially wield their buying power. Giant revenue reported in Taiwan for 2011 was $627.9 million USD, and giant has significant internal R&D, fixed, manpower, and raw material costs and will thus have have a substantially smaller proportion of their turnover applied to oem parts purchasing.

Have a read of this Cycling IQ series about the modern bicycle industry.

There are plenty of grains of truth in the articles (ie the groupset+frame valuation, and the existance of off-the-pegs), but he studiously avoids numbers. Most importantly he can never place a scaling number against any of his factoids or strawman examples. ie for all we know, "systemic problems" with shimano oem grey parts could be 25% or 15% or 5% of the total shimano parts market, and could even be less by value, as more attention inevitably occurs on flagship products.

I also think that the opportunity he identifies is multi year cyclic (ie was available in 2009, but probably difficult to achieve in 2010-11 due to rising cycle production). I also think that the major e-tailers set the upper bounds for grey market prices, rather than the grey market setting a serious bar for the serious e-tailers.

[DW260]

You have to remember that much of the components you get from Wiggle/Pro Bike Kit etc is excess OEM stock dumped by Giant, Trek etc. It is not bought from Shimano/SRAM/Campag directly by Wiggle. Rather, Giant and other big OEMs will sell excess components. The overseas retailers put a small mark-up on the components and then ship it to you.

First I have ever heard of this and I trawl most of the bike forums, any evidence that this is correct?

Evidence is anecdotal at best, but two independent lbs's have mentioned to me that's what goes on.

[Xplora]

I had a chat with a LBS a while back who decided to pricematch online prices.... and proceeded to lose 100,000 dollars in a year.

Do you realise how much money that is? For many of us, that's 2-3 annual wages after tax... two people would need to be laid off to break even, and these places aren't hiring extra staff without cause.

If you can afford to wait for all your stuff, if you can afford to buy in advance, if you can afford to take chances with misfitting product, if you can be bothered fitting all your stuff yourself, then perhaps the LBS isn't for you. You have the flexibility to decide for yourself, you aren't in Communist Russia.

I don't think I'm patient enough to wait for the current place I'm buying from if they were missing a mechanic and salesperson from their staff. They are a shopfront, and those things cost time and money. You're entitled to think it's BS; perhaps you need to build better relationships to get better discounts. They can move if they know you will buy your next 3 bikes from them. Are you buying your bikes from them? Servicing? Maybe they know you're an internet !! BAN ME NOW FOR SWEARING !! with no shop loyalty?
These places DO NOT compete on price.

I'm not much different mate - I buy on price too... but we have to look at the REAL market reality, and if you can only see yourself in that picture, then you don't see it.

[ball bearing]

Geez! Electronic components are very expensive.

[usernameforme]

My RBS always seems to be within 15% of the online price, guess I'm just lucky. I saw a set of Reynolds Attack's going for $699... makes me wonder how they manage to almost match online prices (occasionally beat it) and still make a profit. Their pricing on shimano components however, usually seem to have a 50% markup, perhaps its their choice of importer that allows them to be competitive with OS pricing

[biker jk]

A lot of Shimano stuff I've bought recently came in plastic bags at great prices. That would be an Ultegra and XT cassette in CRC plastic bags and an OEM XT crankset from Evans cycles in a plain cardboard box. A large proportion of the Shimano stuff I buy seems to come like this.

I'd like to buy from lbs's but the price difference and lack of range/availability just puts me off, actual bicycle purchases are probably worthwhile though.

The stuff that comes without the packaging is OEM. Shimano give special pricing to OEM (Bike Manufacturers) to use their groupo and it comes like that - they sign a contract stating NOT to sell the loose components. It seems that Shimano don't police the policy. The people who play by the rules have higher pricing which is part of what is seen. The price difference for OEM groupset is a significant discount over components destined to be sold (in retail boxes).

Do I care if I get the box or not? No, couldn't care less - in fact I'd prefer there was less or no packaging, just providing a little industry insight.

Sorry but that's not the case. Bike 24 (and a host of others ) sell Shimano groupsets in the boxes (not OEM) and are often cheaper than CRC (they do sell OEM groupset parts). The problem is that Shimano Australia are making unreasonable markups over the cost of production. Take the Shimano RS80 C24 wheelset as an example. They're made in Malaysia but the LBS price is close to double the overseas online price even after shipping costs.

[ColinOldnCranky]

I bought a giraffe about four years ago for $180 from Ace Cyclery in Palmyra. I rang htem about six months ago on behalf of someone else to see what he could the same one for then, I was quoted either $200 or $220.

It is now $299. Similar price at CircusShop in Maylands.

I looked on unicycle.com and it is $320 via their Oz presence. I look on unicycle.coms US presence and it is only $half that price.

In the time since I bought mine the Oz buck ahs gone from buying around 70 cents US to fifty percent more than that. Certerus parabus i would expect that landing things from overseas should be around a third cheaper. Yet my mates now have to spend about 70% more. Simplistically my $180 unicycle should now be costing around $110, not $300.

Something stinks and the Gerry Harveys of the world wonder why their buyers are now shopping overseas via the internet.

(To be clear - this is the identical model to mine. In model number and in actual build.)

[JustJames]

LBS's can't compete on price with the big online brands.

Online brands can't compete on service.

My LBS - in walking distance, and I would dearly like to use them - have goofed up with me twice in the last few weeks. First they told me that a Shimano seven speed trigger shifter would not work with my son's twist-shift equipped seven speed bike. Well, that piece of expert advice was flat out wrong. And yesterday they didn't have a headset. Nothing exotic, just a regular 1 1/8" external headset. There is another LBS, but they are not in walking distance...they had no problem supplying. Unsurprisingly, LBS #2 was heaving with punters and LBS #1 was very quiet.

To add something a bit more on topic: Aussie distributors seem to be used to having an "Australian market" to operate in. I work in an unrelated industry, and have given up trying to source product from local distributors, and have become a grey importer. Whenever I've tried to support Aussie distributors, their price to me has been in excess of what I can charge my (online savvy) customers. The reality is that there are no more local markets, there are local patches of the global market, and if local distributors can not supply into local patches of the market, they will disappear.