Questions about purchasing bicycles and parts
If cheaper international prices did not stimulate increased consumption, brands would have stomped it out by now. It's the local retailers who get the pointy end of the stick.
I would own 1/3 of what I do if I had to buy locally.
Mavic et. al. are trying to re-instate traditional distribution boundaries........ which is fine if their pricing is more realistic and products are actually available.
Bought a new smartphone. JBHIFi says their cost price was $702. Can buy a "grey" import at $550. Hmmmmmmm.
I preface this with the disclaimer that its just my opinion and a bunch of hot air. Think big ideas (I.e talking !! BAN ME NOW FOR SWEARING !!) round the BBQ.
If one or two big players came in, there would be some short-medium term incentive to drop prices to win market share and push out smaller shops. But I'd argue that longer term, they will trend back upwards as the big retailer(s) cash in on market power.
Why? Because they are operating to make a profit (as opposed to the greater good of the cycling community), and because they can.
Look at the UK, they have a bunch of MASSIVE shops that would probably eclipse the stock levels that our distributors carry. It's a competitive market.
If we had two big players (think Coles and Woolworths) there is way less incentive to compete.
It all comes back to being too small and too far away.
It's probably worth noting the play that Coles and Woolies are making right now. Noticed all the nice looking Woolworta brands stuff? The plan is to get people to switch over by offering a cheap price, drive consumption of brand names down, later on down the track jack prices up and cash in.
Tiny? Perhaps, but no longer so remote, and significant enough that the online stores have noticed, and specifically targeted, if Wiggle's sales to Australia are any guide.
Cycle touring blog and tour journals: whispering wheels...
Think of recreational cycling like delicatessen food consumption.
Now, if you fancy some nice air cured ham, a proper knackwurst sausage or a tangy salami you can indeed find things that answer loosely to these descriptions in a Coles or a Woolies. Or you could seek out a proper deli. At the deli, the "same" items will be more spendy. They will also be a lot nicer.
Same deal with buying cycling stuff from a mass market retailer.
In fact, it happens already...you can buy bike stuff from Aldi. The bike stuff that Aldi sells is igzackerly the kind of bike stuff that Coles or Woolies would sell.
ETA: The future of the LBS is not in trying to win the race to the bottom. The future of the LBS is in positioning itself as a premium service (and crucially, delivering a premium service) and attracting loyal customers by doing all of the warm fuzzy stuff that an online retailer can not do. In every line of business, it is always easy to do it cheaper. And often difficult to do it better.
My bike blog. Long on rumination, rambling and opinion. Why let facts ruin everything?
Unrelated but I visited a bike shop on Thursday evening to schedule a test ride of a $4k bike for Saturday morning, today.
This afternoon I waltz in ready to rock and roll with, $4k in my pocket in rolled up 50's, I don't like hitting shops with merchant fees and you can get a better price with cash.
No bike. Still in a box at their storage site.
Whilst it is fantastic that the bike shop was buzzing, they were visibly being run off their feet I wanted to race the new steed tomorrow.
Anyway I'll roll in tomorrow see if they want my money.
Wiggle / CRC et al are all close to the worlds major markets. I wouldn't say that Australia is an afterthought.... Our market is not to be sneezed at... But you certainly could not sustain a Wiggle-esque scale / price-point operation owned/run within Australia.
Just further to my previous comment - brand to store is probably the strongest move for the brand, because they can then simply cash in on the cream that is the Aussie LBS market. I can't imagine many companies would not want to add another 10-15% to their margin in this environment. You're still cutting the distributor out - but it's a brand benefit, not a customer benefit. Honestly though - after losing an afternoon trying to make my fenders fit the front fork and attach a bike computer, I can see a LOT of value in standardising for the Giants and Meridas... if people know they can get a fender that would definitely fit within 10 minutes for their 2013 bike, they would spend the extra money. I would.
Speaking of standard - when you buy say a Giant TCR 0, 1 or 2 they have the same frame. It is standard.
So why can't I choose say the TCR Advanced 2 frame with the Di2 Ultegra frame for my $
If your getting a Giant your budget or the groupset you want decides the colour of your bike. Why not ships frames and groupsets, and the bike shop let you choose frame.
Or am I missing something? Seems like an opportunity to me.
I think two things, maybe.
Firstly, logistics and cost. Who's time is going to be used to put the bike together, presumably from scratch. I believe that currently, bikes are assembled in Taiwan (or China, or wherever they are made) where the cost of labour is much, much cheaper.
Although happy to stand corrected on that first point. I know that is how it works for other segs of the bike industry, I am not super familiar with roadies.
Secondly, marketing. Makes it much easier to differentiate a $800 bikes from a $1500 bike from a $3500 bike and so forth. I totally understand where you are coming from, from a customer perspective, but it isn't in a brand's interests to let you pick and choose.
An innovative direct to market manufacturer could probably pull that sort of model off. I am pretty sure that at the low end, some of those 'clone' brands are offering customizable (in terms of colour, at least) fixies. For roadies I could imagine something like the DELL model working, but I don't know about through the existing supply chain, and I can't see the established MFG's changing their practices unless necessity requires so.
I've been at a bike shop where they were swapping a groupset for a customer at time of purchase. So some will do it, in a round-about way.
Trek are a bit interesting like that - it isn't possible to do this with the Domanes because as you can change from 3 to 4 to 5 you start getting internal gears, internal brakes, different frame material, fundamentally different finishing kit (Blade vs IzoZone etc). The groupset is only part of the picture at Trek... you are getting a lot of upgrade for your dollar, and it is not just the colour.
Moving over to Aus from the UK last year I straight away picked up that prices in general are higher than those in the UK. Not just in comparison with online shops, but in comparison with shops where I used to live. And it's not just bike bits, work shirts are 50-100% more expensive than UK (comparison between M&S and Meyer), and if I dare buy the cheap ones from BigW they start falling apart after a week. Books, music, even iTunes is more expensive!!! Fair enough if the stuff is produced locally and carries a "Made in Aus" tag, but when it all comes from the same factory in China/Taiwan/Thailand/Indonesia/(Insert Asian Tiger country of choice here) it's a bit much when it costs twice as much here than in Europe.
Result of the above is that my bike bits come from Wiggle, CRC, ProBikeKit and Evans, and that unless it's something that can only be bought locally because of silly regulations (Helmet standards) or quarantine laws, the LBS's lose out on my custom. Ditto for shirts (M&S Online), books (Amazon), and just about anything else I need if it can be found online. I even use my old UK iTunes account linked to my UK credit card, but I guess that options only available to expats.
BTW, to those who have said the onlike bike stores get "blow outs" from Giant/Trek, etc. That's not the case as these shops are competitive across all items, not just what would be sourced from OEM overshoots. And in the conflict between online store and LBS, while prices in UK LBS's are higher than the online stores, they are not in the range where I was quoted $199 for a Saris Bones one bike carrier from an Aussie LBS, yet bought it for $59 from Wiggle who also delivered said item within a week of pacing the order. Customer service is not worth $140...
Is that shop in a reigonal NSW town starting with G not that far from Canberra?
You can pretty much order whatever parts combinations you want when buying a bike. If you want the entry level frame but want Super Record group they will swap all the bits and charge accordingly, usually a pretty competitive price.
no. was in Brisbane earlier this year
Your probably spot on that the bikes are assembled and it would add a bit of stuffing around - still it would net a few more sales and be a handy little value add for the larger brands.
Especially for Giant that would help them further dominate.
Well that's me fresh out of ideas to help the LBS/bike brands! lol
Everything is more expensive here than UK / Europe / United States. I don't mean to patronise but you should do some reading on economies of scale and buying power.
The weather is much nicer here anyway.
I overheard a pitch from a salesguy in the Trek store regarding the kids bikes. Parts built in Taiwan, but assembled and built in Australia. Really stuck with me because I think I'd hesitate at building a Kmart special for my boys when they hit 10... they are going to THRASH the bike to the ground, and there is peace of mind having an Aussie put the thing together
I bought an Avanti for my 4 year old recently. It just feels well built. Couldn't bring myself to get her a BSO.
You are patronising me
I'm well aware of the principles economies of scale and buying power thank you very much, but that does not in itself account for why in many instances prices for the same goods obtainable elsewhere are in some instances as much as 300% more expensive. That's down to a supplier milking its cash cow for all it's worth.
I agree that the weather here is much nicer though
Apologies. I do think you are discounting the effect that scale has on manufacturing cost.
Having some experience running a business that designs locally and manufactures off-shore, here's a neat, real world, example.
In 2011, I bought 200 beanies in two styles for $1000.
But in 2012, I wanted to customise them further in three different styles. To do so, I had to buy 900 beanies. The cost of 900 beanies was $1000. I didn't think I could sell anywhere near 900 beanies but the cost was such that I bought them anyway.
Stuff gets exponentially cheaper as you make more of it.
Think Big W / Kmart / Target vs Primark. In terms of scale, Primark eclipses anything we've got!
If you're still skeptical... Think about it this way. If it could be done cheaper, someone would be doing it cheaper!
Bikes tend to be cheaper in Melbourne than Sydney - larger market, moving more bikes?
The other issue is the wholesaler/distributor have exclusive deals with the bike makers. How many people import and distribute say Shimano in Australia?
I know Casio watches come in (or used to) via a single importer, which is why a Gshock costs about double in Australia than it does overseas, or on eBay.
So if there is one importer of Giant Bicycles in Australia then they effectively control the price of the bike in the shop. The shop needs a certain markup to stay afloat, and may be able to give small discounts if they shift a lot of units.
So monopoly on importing/distributing brands and size of market may be in play
You can carry on about scales of economy add much as you like.The fact is we are in a global economy so the price differences are just rubbish.
Don't believe me! Buy a part from elsewhere you just became global. The sooner the suppliers realise this and stop gouging markets the better it will be for all concerned.
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The economies of scale argument falls down when the cost of manufacturing is zero. If economies of scale were an explanation as to why things cost more in Australia, why does it cost more to download the same programme from Adobe to Australia than it costs to download to the USA? It's gouging and the gouging is coming from the distributors. If I was a bike shop I would seriously think about grey importing. If they can get a part for 66% of the price they purchase it from the distributor then they would need a failure rate over 33% to make this unviable. Parts are more reliable than this. I wonder if it would be possible to set up a distributor of grey imports? I really think that if bike shops want to survive then they need to confront the distributors and the companies making parts.
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