Is the internet killing bike shops?

Questions about purchasing bicycles and parts

Re: Is the internet killing bike shops?

Postby outnabike » Thu Jan 31, 2013 8:11 am

I am looking for a starter bike for my wife. I had a look at importing something from china, and they look similar to what is in the supermarkets. I went to some LBS's around the place. To be honest there they were , the same Chinese models at hugely marked up prices.
Either they are buying the cheap stuff to compete, or don't realise that in the mind of the public, we want some thing better, I just don't know.
I still find the giant dealer to be good local value and a fair bit of choice. But I can understand folks frustration over cost of end product.
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Re: Is the internet killing bike shops?

Postby rpmspinman » Thu Jan 31, 2013 10:15 am

what is the average mark up for bike and bike products these days? (ball park figure) 30%? Does this translate to what you see online in comparison?
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Re: Is the internet killing bike shops?

Postby dynamictiger » Thu Jan 31, 2013 10:26 am

rpmspinman wrote:what is the average mark up for bike and bike products these days? (ball park figure) 30%? Does this translate to what you see online in comparison?

I am unsure of bikes, however in the products we sell retail which would be similar in many ways we need 55% to break even.
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Re: Is the internet killing bike shops?

Postby boss » Thu Jan 31, 2013 11:03 am

rpmspinman wrote:what is the average mark up for bike and bike products these days? (ball park figure) 30%? Does this translate to what you see online in comparison?


Traditional bricks and mortar shops typically want 50%, I wouldn't say that's an unfair markup either. It just is what it is.

Most of the 'fat' in prices lies in between the manufacturer and retailer, a.k.a distributor.

Part of the answer is adopting a direct to manufacturer purchasing route (I believe Cycling Express are doing this, at least to some extent) but this doesn't make sense for shops unless they're moving high volumes quickly.

The real issue here is that most shops are unable to hold/move large volumes of stock and the cost associated with doing so, which is why distributors do provide a valuable service. I think some of that 'service' gets lost in translation, as distributors and shops (distributors especially) get so caught up in the day to day machinations of business that they forget that they're here to serve an end customer. That results in stories going around not unlike those before... waiting 4 days to hear availability from a distributor via a bike shop.

So that pretty much leaves us at square one - shops not getting product for the prices that enable them to be competitive. Where do we go from here? Who knows. What I do know is that the problem isn't going to be solved discussing things on a forum, and I'm sure there are at least a couple of movers and shakers that own bike shops and they're out there attempting to solve the problem. I do hear Claude at Megabike/Euride in Adelaide has attempted a top-down (manufacturer>distro>shop) integration... will be interesting to see how that plays out.

As I said earlier these threads go around and around in circles and cover the same ground, only reason I replied is cause you're from Adelaide Shav and you seem like a nice guy :D
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Re: Is the internet killing bike shops?

Postby MarkG » Thu Jan 31, 2013 11:33 am

Until the bike stores here can go straight to the manufacturer and avoid the ridiculous importer / distributor costs that they have to currently pay, they'll never be able to compete.
There's a person on here who works for one of the larger shops (don't want to name him without permission) but they no longer sell Shimano in their Aussie stores for the simple fact that the cost he must pay for say 1 x pair of Dura Ace C24 wheels (this was the example he gave me) was more than me and you could buy them from Wiggle etc for, and not just by $50 mind you.
So by the time he puts his shop mark up on there and pays the postage to freight the wheels to his shop from the importer, he's already $300 behind the price the customer can buy them for in the UK.
It's a typical vicious circle

- customer wants the local product at a similar-to-internet price.
- shop can't sell for that price as it's costing him at this point.
- customer buys them online.
- shop complains to importer that his high buying price is costing him sales as the customer is buying off the net for heaps less.
- importer says he can't drop the price as he only brings in 'x' amount at once, so doesn't get the same sales discount as Wiggle / CRC etc who buy in bulk.
- importer can't / won't buy in some large quantities for the simple fact that he doesn't want to be left with excess stock, knowing that most people will still buy online.
- shop says as a result, they won't carry their line any more.
- customer goes online and pays $40 for a DA chain, not $100 here.
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Re: Is the internet killing bike shops?

Postby jcjordan » Thu Jan 31, 2013 11:41 am

MarkG wrote:Until the bike stores here can go straight to the manufacturer and avoid the ridiculous importer / distributor costs that they have to currently pay, they'll never be able to compete.
There's a person on here who works for one of the larger shops (don't want to name him without permission) but they no longer sell Shimano in their Aussie stores for the simple fact that the cost he must pay for say 1 x pair of Dura Ace C24 wheels (this was the example he gave me) was more than me and you could buy them from Wiggle etc for, and not just by $50 mind you.
So by the time he puts his shop mark up on there and pays the postage to freight the wheels to his shop from the importer, he's already $300 behind the price the customer can buy them for in the UK.
It's a typical vicious circle

- customer wants the local product at a similar-to-internet price.
- shop can't sell for that price as it's costing him at this point.
- customer buys them online.
- shop complains to importer that his high buying price is costing him sales as the customer is buying off the net for heaps less.
- importer says he can't drop the price as he only brings in 'x' amount at once, so doesn't get the same sales discount as Wiggle / CRC etc who buy in bulk.
- importer can't / won't buy in some large quantities for the simple fact that he doesn't want to be left with excess stock, knowing that most people will still buy online.
- shop says as a result, they won't carry their line any more.
- customer goes online and pays $40 for a DA chain, not $100 here.

Summed up nicely.
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Re: Is the internet killing bike shops?

Postby rpmspinman » Thu Jan 31, 2013 12:11 pm

boss wrote:
rpmspinman wrote:what is the average mark up for bike and bike products these days? (ball park figure) 30%? Does this translate to what you see online in comparison?


Traditional bricks and mortar shops typically want 50%, I wouldn't say that's an unfair markup either. It just is what it is.

Most of the 'fat' in prices lies in between the manufacturer and retailer, a.k.a distributor.

Part of the answer is adopting a direct to manufacturer purchasing route (I believe Cycling Express are doing this, at least to some extent) but this doesn't make sense for shops unless they're moving high volumes quickly.

The real issue here is that most shops are unable to hold/move large volumes of stock and the cost associated with doing so, which is why distributors do provide a valuable service. I think some of that 'service' gets lost in translation, as distributors and shops (distributors especially) get so caught up in the day to day machinations of business that they forget that they're here to serve an end customer. That results in stories going around not unlike those before... waiting 4 days to hear availability from a distributor via a bike shop.

So that pretty much leaves us at square one - shops not getting product for the prices that enable them to be competitive. Where do we go from here? Who knows. What I do know is that the problem isn't going to be solved discussing things on a forum, and I'm sure there are at least a couple of movers and shakers that own bike shops and they're out there attempting to solve the problem. I do hear Claude at Megabike/Euride in Adelaide has attempted a top-down (manufacturer>distro>shop) integration... will be interesting to see how that plays out.

As I said earlier these threads go around and around in circles and cover the same ground, only reason I replied is cause you're from Adelaide Shav and you seem like a nice guy :D


Thanks mate. Yeah I too have heard Claude is looking to revamp things with Euride. I hope that works out. It would be good to have an all in one shop that can cater to all those things we want and more.
Cheers
Shav

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Re: Is the internet killing bike shops?

Postby rifraf » Thu Jan 31, 2013 1:20 pm

Even if the store prices were the same as online, why would I go to a store if the customer service is under par.
All this focus on price is not showing the complete picture.
Stores need to invest in staff training as many of the staff couldn't sell a puncture kit to a cyclist in a hurry with a flat tyre. I suspect Aussies who've never been out of the country just expect and put up with rubbish service.
When I stayed in NZ for a number of years (Levin) the LBS staff made a point of trying to get you to talk and they wanted to know your name so
they could remember it for next time.
The focus was on repeat business and thats a foreign concept to many here.
On the odd occasion I get good service here it comes as a shock, but I do reward it by coming back. If everyone just puts up with it, then positive reinforcement
wont work.
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Re: Is the internet killing bike shops?

Postby dynamictiger » Thu Jan 31, 2013 1:50 pm

rifraf wrote:When I stayed in NZ for a number of years (Levin) the LBS staff made a point of trying to get you to talk and they wanted to know your name so
they could remember it for next time.
The focus was on repeat business and thats a foreign concept to many here.
On the odd occasion I get good service here it comes as a shock, but I do reward it by coming back. If everyone just puts up with it, then positive reinforcement
wont work.


I must admit I am a kiwi by birth and did my 'time' in kiwi land before moving here in my 30's. I was shocked by the lack of client focus and customer service in my industry.
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Re: Is the internet killing bike shops?

Postby jacks1071 » Thu Jan 31, 2013 4:12 pm

MarkG wrote:Until the bike stores here can go straight to the manufacturer and avoid the ridiculous importer / distributor costs that they have to currently pay, they'll never be able to compete.


That'll never happen. Manufacturers don't do "small" orders and most of them carry little if any stock on hand. Everything is built to order usually requiring substancial production runs.

Bike shops should look to move to a services model. They'll always have a place selling complete bikes since these are difficult to freight and require assembly which not everyone can do.
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Re: Is the internet killing bike shops?

Postby MarkG » Thu Jan 31, 2013 4:20 pm

Yeah Deon, no doubt.

Big manufactures like Shimano aren't fussed about the 'small' Aussie orders either. Stores like the big UK and US ones keep their coffers full, and they know that they make money regardless of where the consumer buys their product..
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Re: Is the internet killing bike shops?

Postby Tbird » Thu Jan 31, 2013 9:29 pm

Like a few of us I began buying most of my parts from online stores as the prices were ridiculously cheaper than most LBS

So far I have only had to send my Look pedals for a warranty claim and that was dealt with within 2 weeks which was fair considering that travel time back and forth.

Have always said that I would purchase my bikes locally and that's been true of all of my bikes as I would rather send it back to a shop than overseas if something needed repairing /upgrading etc

I understand the frustration LBS encounter with pricing especially when the official pricing can't compete with online retailers but more often than not I'll always give first go at the local shop and have been pleasantly surprised with their competitiveness.

Find a shop that listens and understands what you require before making a decision I do understand that they run a business so I can't expect insane reductions on everything that they sell but have peace of mind that if I need support they are there.
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Re: Is the internet killing bike shops?

Postby ColinOldnCranky » Thu Jan 31, 2013 10:29 pm

For what is worth two weeks ago I experienced what the difference between buying online and buying retail can be.

My wife sought a replacement lamp for our home theatre system from a local showroom/retailer. They quoted around $480, did not have it in stock and would take about thee weeks.

We knew that when we bought it lamps were an expensive thing but this still seemed a bit stiff. So she went online to a dot-au site. She placed the order at $78 including delivery.

That extra $400 would have bought us nothing. We would have had to wait a similar or longer time than we expect from the online source. We did not get any advice as it is a simple catalog item with a part number stated in the owners manual. We required no demonstration or explanation. The only thing $400 would have paid for was a barrier between us and supplier and a need for us to make two or more journeys.

While bricks and mortar places often claim they provide a service, I have heard commentators opine that so do online. It is just not the same service. For many purposes it is a service that the customer is maybe more interested in. I have also heard opinions that the bricks and mortar retailers need to start screwing their landlords for floor rates more in line with what apply in similar overseas place rather than simply accepting oligopoly gouging and passing it onto the hapless end-customer. Competition from online could force some to do so.

Put in simple terms:
Retailer $400
Online $78
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Re: Is the internet killing bike shops?

Postby jacks1071 » Thu Jan 31, 2013 10:33 pm

rpmspinman wrote:what is the average mark up for bike and bike products these days? (ball park figure) 30%? Does this translate to what you see online in comparison?



When I was working on a dealer model with Pro-Lite most stores were asking for 75%

I abandoned that business model pretty quickly since giving a dealer 75% margin meant I would need to sell items well below cost.
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Re: Is the internet killing bike shops?

Postby ozzymac » Fri Feb 01, 2013 8:17 am

It seems it's not just the local lbs who will be disappearing..

I was checking out accessories for a Telstra wireless modem, the manufacturer had an external antenna for $34.90usd the Australian distributor retailer had the same thing for $99,

How much profit do Australia stores think they need to make?

Or do they have there heads in the sand hoping customers don't know about the internet and hoping it will go away?


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Re: Is the internet killing bike shops?

Postby dynamictiger » Fri Feb 01, 2013 8:25 am

ozzymac wrote:It seems it's not just the local lbs who will be disappearing..

I was checking out accessories for a Telstra wireless modem, the manufacturer had an external antenna for $34.90usd the Australian distributor retailer had the same thing for $99,

How much profit do Australia stores think they need to make?

Or do they have there heads in the sand hoping customers don't know about the internet and hoping it will go away?


Cheers

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I do wonder what we are wishing for though...A few years ago like maybe 10 I started buying my clothes overseas online as I generally couldn't find my size/quality for price.

Now when I look about I still can't find my size as apparently I have grown since I left school or they don't make kids like me anymore or something...however I have noted the pricing has come down but so has the quality offered at places I used to rely on for having reasonable items for sale.

Yes I can understand like for like for ridiculous price differences etc are not in this group of observations. However I do wonder what we will do if the retailers start to stock brands never seen on line and so forth and so on which must be their eventual logical outcome. Or worse some sort of fruit works around the fair trade practices act to fix prices as they want them to be fixed and this is the only choice for consumers.
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Re: Is the internet killing bike shops?

Postby simonn » Fri Feb 01, 2013 8:38 am

dynamictiger wrote:
ozzymac wrote:It seems it's not just the local lbs who will be disappearing..

I was checking out accessories for a Telstra wireless modem, the manufacturer had an external antenna for $34.90usd the Australian distributor retailer had the same thing for $99,

How much profit do Australia stores think they need to make?

Or do they have there heads in the sand hoping customers don't know about the internet and hoping it will go away?


Cheers

Sent from my GT-P5110 using Tapatalk 2


I do wonder what we are wishing for though...A few years ago like maybe 10 I started buying my clothes overseas online as I generally couldn't find my size/quality for price.

Now when I look about I still can't find my size as apparently I have grown since I left school or they don't make kids like me anymore or something...however I have noted the pricing has come down but so has the quality offered at places I used to rely on for having reasonable items for sale.

Yes I can understand like for like for ridiculous price differences etc are not in this group of observations. However I do wonder what we will do if the retailers start to stock brands never seen on line and so forth and so on which must be their eventual logical outcome. Or worse some sort of fruit works around the fair trade practices act to fix prices as they want them to be fixed and this is the only choice for consumers.


Online retailers will get better with sizing. I imagine something like an app on a phone which uses the camera to measure you and recommend/tell you your size for a specific garment (note specific, not a general size). In the UK and US, apparently, a lot of online clothing retailers include postage paid return envelopes so you can return things at no cost due to fit (or whatever). With wiggle you can take things to a 3rd party returns place to return it for free. In fact, wiggle provide an Australian address for returns too.

I'm sure a lot of tailors were saying similar things when factory made clothes started being manufactured (which was not that long ago either - 100 years or so).

Best of all for you, you will probably find it much easier to buy clothes in your size as you will not have to traipse around to find a shop which stocks it.

All these things are solvable. The best/cheapest/most efficient way of doing so has not been worked out yet. I love it. I hate shopping.
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Re: Is the internet killing bike shops?

Postby The_Eggman » Fri Feb 01, 2013 10:23 am

RonK wrote:But you did forget to mention one old chestnut - the attempt at emotional blackmail by claiming that by buying on the internet will be no "jobs for your kids/Aussies".


Drifting OT, but I do think this is a serious long term issue for the country.

It's not just the LBS, or even just retail that's going offshore. Manufacturing is largely already gone, and big dents are being made in IT and Accounting. The move to a global economy could leave Australia as the big loser - we're one of the most expensive places to do business in the world.

The notion though that we'll fix this by paying over the odds at the LBS is a joke though
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Re: Is the internet killing bike shops?

Postby MarkG » Fri Feb 01, 2013 1:15 pm

FWIW I just went to my LBS and got a new Scicon saddle bag for more or less the same price as Wiggle.
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Re: Is the internet killing bike shops?

Postby petal665 » Fri Feb 01, 2013 2:58 pm

MarkG wrote:Yeah Deon, no doubt.

Big manufactures like Shimano aren't fussed about the 'small' Aussie orders either. Stores like the big UK and US ones keep their coffers full, and they know that they make money regardless of where the consumer buys their product..
Rumour has it Shimano Au will soon be selling direct to the public. That'll upset no end some LBS owners.
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Re: Is the internet killing bike shops?

Postby Bentnose » Fri Feb 01, 2013 4:32 pm

I find it generally takes a lot longer to get parts from your lbs, generally find either they order the wrong item or the distributor sends out the wrong item or it just isn't available and they rarely call to let you know what is happening. I bought a bike last week from an lbs but the experience has convinced me I will build my next bike as I have done in the past.
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Re: Is the internet killing bike shops?

Postby InTheWoods » Mon Feb 04, 2013 1:52 pm

I bought a new bike last week from a LBS. But I wanted to know a bit more about tapered steering tubes and non-standard stem sizes and asked.

So the bike shop assistant said it was no big deal, it just meant that I could flip the stem either angled up or down depending on how aero I wanted to be... :roll:
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Re: Is the internet killing bike shops?

Postby RonK » Mon Feb 04, 2013 2:19 pm

InTheWoods wrote:I bought a new bike last week from a LBS. But I wanted to know a bit more about tapered steering tubes and non-standard stem sizes and asked.

So the bike shop assistant said it was no big deal, it just meant that I could flip the stem either angled up or down depending on how aero I wanted to be... :roll:

Hehe...good one Danno. :lol: :lol: :lol:
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Re: Is the internet killing bike shops?

Postby jacks1071 » Mon Feb 04, 2013 9:28 pm

petal665 wrote:
MarkG wrote:Yeah Deon, no doubt.

Big manufactures like Shimano aren't fussed about the 'small' Aussie orders either. Stores like the big UK and US ones keep their coffers full, and they know that they make money regardless of where the consumer buys their product..
Rumour has it Shimano Au will soon be selling direct to the public. That'll upset no end some LBS owners.


Thats a joke. If they try sell their parts to consumers at their current wholesale prices it'll still be cheaper to buy from overseas at retail...
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Re: Is the internet killing bike shops?

Postby petal665 » Mon Feb 04, 2013 9:34 pm

jacks1071 wrote:
petal665 wrote:
MarkG wrote:Yeah Deon, no doubt.

Big manufactures like Shimano aren't fussed about the 'small' Aussie orders either. Stores like the big UK and US ones keep their coffers full, and they know that they make money regardless of where the consumer buys their product..
Rumour has it Shimano Au will soon be selling direct to the public. That'll upset no end some LBS owners.


Thats a joke. If they try sell their parts to consumers at their current wholesale prices it'll still be cheaper to buy from overseas at retail...


I didn't say it was a good idea. :) I doubt it's true anyway.
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