Ridiculous Prices (rant thread)

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Re: Ridiculous Prices (rant thread)

Postby boss » Mon Oct 08, 2012 8:32 pm

richbee wrote: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...


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.
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by BNA » Mon Oct 08, 2012 9:25 pm

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Re: Ridiculous Prices (rant thread)

Postby Xplora » Mon Oct 08, 2012 9:25 pm

Sydguy wrote: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

JM

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 :idea:
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Re: Ridiculous Prices (rant thread)

Postby jasonc » Tue Oct 09, 2012 7:15 am

Xplora wrote:
Sydguy wrote: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

JM

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 :idea:


I bought an Avanti for my 4 year old recently. It just feels well built. Couldn't bring myself to get her a BSO.
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Re: Ridiculous Prices (rant thread)

Postby richbee » Tue Oct 09, 2012 8:17 am

jimboss wrote: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.


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
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Re: Ridiculous Prices (rant thread)

Postby boss » Tue Oct 09, 2012 9:34 am

richbee wrote:
jimboss wrote: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.


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!
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Re: Ridiculous Prices (rant thread)

Postby Sydguy » Tue Oct 09, 2012 12:54 pm

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 :D

JM
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Re: Ridiculous Prices (rant thread)

Postby Marty Moose » Tue Oct 09, 2012 8:28 pm

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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Re: Ridiculous Prices (rant thread)

Postby DavidS » Tue Oct 09, 2012 9:23 pm

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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Re: Ridiculous Prices (rant thread)

Postby richbee » Wed Oct 10, 2012 8:10 am

Marty Moose wrote: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.


Wot he said
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Re: Ridiculous Prices (rant thread)

Postby mezla » Wed Oct 10, 2012 12:39 pm

Yes, exactly. The reasons/excuses are completely irrelevant.

We live in a capitalist world (unfortunately?)... compete or die...
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Re: Ridiculous Prices (rant thread)

Postby Xplora » Thu Oct 11, 2012 2:44 pm

mezla wrote:Yes, exactly. The reasons/excuses are completely irrelevant.

We live in a capitalist world (unfortunately?)... compete or die...

Somewhat related - but your signature proves that there is more than just survival of the fittest at play in life. Why should you give a free kick to cancer sufferers? Pay your way, hospital bludgers! :shock: :shock: :shock: :shock:

There is more risk in dealing with Australia versus USA or EU - a container load of cassettes is cheaper to send to those places. The cost of the ship is cheaper because there are more boats going to the same place and they can use bigger boats to do the shipping (plus they will have more efficiency in delivery, you ever seen a queue of ships for Newcastle coal??)

If you have 200 11-21 DuraAce cassettes then you bear a lot less risk in warranty claims than for 5 cassettes which are sold in a week and then you have to ship warranties by air freight to keep your seriously wealthy customers happy (I imagine that the shops moving a lot of DA parts are higher on the distro's list to make sure that the end customers are happy to keep them off Campy and SRAM). This happens at a brand, distro and LBS level. If you are OK with your countrymen living in 3rd world conditions, then just cutting the throat of the distro chain would be a good idea - but you would probably end up with the situation that occurred 50 years old where OS products were hard to come by, and shipping was expensive to boot. It's not like you could just pop down to the local to pick it up, right? :mrgreen:
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Re: Ridiculous Prices (rant thread)

Postby JustJames » Thu Oct 11, 2012 3:04 pm

Xplora wrote:...If you are OK with your countrymen living in 3rd world conditions, then just cutting the throat of the distro chain would be a good idea...


Turn that logic on its head: Are you prepared to pay over the odds to keep your countrymen employed where they add no value?

If you answer "yes" to that question, then a career in the Politburo Central Planning Office awaits, comrade.
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Re: Ridiculous Prices (rant thread)

Postby Carriage » Thu Oct 11, 2012 3:30 pm

If you answer "yes" to that question, then a career in the Politburo Central Planning Office awaits, comrade.


Because political and economic opinion is black and white, yeah?
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Re: Ridiculous Prices (rant thread)

Postby JustJames » Thu Oct 11, 2012 6:15 pm

Carriage wrote:
If you answer "yes" to that question, then a career in the Politburo Central Planning Office awaits, comrade.


Because political and economic opinion is black and white, yeah?


Opinion? No.

But I like to keep my charitable giving and rational, economic purchasing separate.

The fact that chainwigglereaction sell as much as they do tells me that many other people think the same way.
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Re: Ridiculous Prices (rant thread)

Postby biker jk » Thu Oct 11, 2012 6:41 pm

Xplora wrote:
mezla wrote:Yes, exactly. The reasons/excuses are completely irrelevant.

We live in a capitalist world (unfortunately?)... compete or die...

Somewhat related - but your signature proves that there is more than just survival of the fittest at play in life. Why should you give a free kick to cancer sufferers? Pay your way, hospital bludgers! :shock: :shock: :shock: :shock:

There is more risk in dealing with Australia versus USA or EU - a container load of cassettes is cheaper to send to those places. The cost of the ship is cheaper because there are more boats going to the same place and they can use bigger boats to do the shipping (plus they will have more efficiency in delivery, you ever seen a queue of ships for Newcastle coal??)

If you have 200 11-21 DuraAce cassettes then you bear a lot less risk in warranty claims than for 5 cassettes which are sold in a week and then you have to ship warranties by air freight to keep your seriously wealthy customers happy (I imagine that the shops moving a lot of DA parts are higher on the distro's list to make sure that the end customers are happy to keep them off Campy and SRAM). This happens at a brand, distro and LBS level. If you are OK with your countrymen living in 3rd world conditions, then just cutting the throat of the distro chain would be a good idea - but you would probably end up with the situation that occurred 50 years old where OS products were hard to come by, and shipping was expensive to boot. It's not like you could just pop down to the local to pick it up, right? :mrgreen:


I don't think your comparison of the metaphorical death of a business to a human dying of cancer is appropriate. Somewhat insensitive to say the least.

The example you provide of transport costs seems odd. Most of the cycling products are made in Asia which is much closer to Australia than the US or Europe.

I don't see how a cut in Shimano Australia's distribution margins would result in "3rd world conditions".

The small percentage of imports 50 years ago was due to protectionism (high tariffs) and thankfully this has ended.
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Re: Ridiculous Prices (rant thread)

Postby Xplora » Thu Oct 11, 2012 7:19 pm

biker jk wrote:I don't think your comparison of the metaphorical death of a business to a human dying of cancer is appropriate. Somewhat insensitive to say the least.

The example you provide of transport costs seems odd. Most of the cycling products are made in Asia which is much closer to Australia than the US or Europe.

I don't see how a cut in Shimano Australia's distribution margins would result in "3rd world conditions".

The small percentage of imports 50 years ago was due to protectionism (high tariffs) and thankfully this has ended.


Insensitive, but true - business is not some amorphous beast, it is the livelihood of real people. People that I would hope you care about. What do YOU do for a living? Do you think the LBS owner should care about you? :wink:

The shipping costs are two fold - distance, and volume of freight. It is cheaper to go to USA because there are more/bigger/more efficient ships out there... there are more containers, and more stock in them. Over an entire year with 20 ships, that adds up. A LOT. Fuel isn't the biggest cost to a brand.
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Re: Ridiculous Prices (rant thread)

Postby JustJames » Thu Oct 11, 2012 8:22 pm

The relationship between BSG and punter is a commercial one.

Punters spend where they get best value. (Note: Not necessarily lowest price.)

Over time, BSG and punter may begin to care about one another's wellbeing beyond the commercial relationship, but I can't see that care extending to a hand in a pocket if the LBS can't afford the rent or if the punter can no longer afford to buy bike bits. If the care does extend to that level, then either it is no longer a commercial relationship or the nature of the relationship has changed. F'rinstance, the erstwhile punter may become a part owner of the LBS or the BSG may sponsor the punter.
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Re: Ridiculous Prices (rant thread)

Postby Xplora » Thu Oct 11, 2012 10:53 pm

JustJames wrote:....if the punter can no longer afford to buy bike bits.
If the care does extend to that level, then either it is no longer a commercial relationship or the nature of the relationship has changed.

All GOOD brands these days attempt to engage their customer base, and connect on an emotional level. Professional and A grade amateurs NEED DuraAce/Super Record for that little bit extra, but a lot more than these groups use DuraAce. There is more to that product than just its function. There is a certain mystique as well. Campagnolo is an ABSOLUTE CLASSIC with this. "True Religion" as the meme goes.

Cycling is NOT an unemotional product for the majority of the big spenders, the people who are heading overseas to save 1000 bucks a year. These people have money, and they choose to spend it on bikes. When I sunk 3K into a bike I wasn't going to ride to work on, I realised that I have been an unnecessary tightass in the past. I need more support than I have gotten from CRC and Wiggle. A LOT more. I am a good enough rider that I'm hitting roadblocks in the gear... and I need an LBS to fill that gap. I need a specialist to help.

Everyone can afford a bike. Even a homeless guy can get a bike. They just can't afford a Dogma2 with SR EPS. But there is no point complaining about price gouging by the LBS on this product, because Pinny and Campy are already gouging you. And they should, to maintain their mystique.

If you can't appreciate this level of marketing, I am guessing you don't have good relationships with the people you spend money with. It is worth noting that NO ONE survives long term by being the cheapest, because price isn't the only thing you consider when buying. (which was noted before)
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Re: Ridiculous Prices (rant thread)

Postby Ross » Fri Oct 12, 2012 7:58 am

Xplora wrote:
But there is no point complaining about price gouging by the LBS on this product


I thought it was the distributor adding the extra cost layer was the main reason for higher LBS prices?
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Re: Ridiculous Prices (rant thread)

Postby boss » Fri Oct 12, 2012 9:45 am

Ross wrote:
Xplora wrote:
But there is no point complaining about price gouging by the LBS on this product


I thought it was the distributor adding the extra cost layer was the main reason for higher LBS prices?


The extra layer is one half of the problem, but the price that they are able to purchase it at (i.e. their purchasing power) is the other.

I dare say that Wiggle et al is purchasing their product at prices our distros dream of.

Xplora wrote:If you can't appreciate this level of marketing, I am guessing you don't have good relationships with the people you spend money with. It is worth noting that NO ONE survives long term by being the cheapest, because price isn't the only thing you consider when buying. (which was noted before)


Low price / high volume is a proven business strategy, you just need the market slash customers.
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Re: Ridiculous Prices (rant thread)

Postby jasonc » Fri Oct 12, 2012 9:49 am

jimboss wrote:Low price / high volume is a proven business strategy, you just need the market slash customers.


that's how JB HiFi started
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Re: Ridiculous Prices (rant thread)

Postby boss » Fri Oct 12, 2012 9:55 am

jasonc wrote:
jimboss wrote:Low price / high volume is a proven business strategy, you just need the market slash customers.


that's how JB HiFi started


And it works cause most people buy electronics / music / DVDs / whateverelsejbhifisells

But most people aren't bicycle enthusiasts. And this is where the issue arises with a locally owned low price high volume bike store.
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Re: Ridiculous Prices (rant thread)

Postby ldrcycles » Fri Oct 12, 2012 11:18 am

Xplora wrote: NO ONE survives long term by being the cheapest


I dunno, Cell bikes seem to be making a pretty good go of it.
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Re: Ridiculous Prices (rant thread)

Postby Xplora » Fri Oct 12, 2012 12:13 pm

ldrcycles wrote:
Xplora wrote: NO ONE survives long term by being the cheapest


I dunno, Cell bikes seem to be making a pretty good go of it.

Cell is good at getting runout specials going, but they aren't the cheapest every time I go to their site. Far from it. They are an LBS with a strong internet presence - but they are, at best, only equal to the best UK price.

They also are prepared to sell BSOs. No one is talking about BSO level stuff. 200-300 for a bike isn't what people are complaining about - it is the people paying 200-300 for a cassette or a pair of shoes that aren't happy.

Low price high volume IS a proven business strategy, and consider how much "hobbyist/amateur" grade stuff these shops sell. Is it basically nothing? That's right. DuraAce isn't a high volume product. Even 105 isn't high volume... maybe Sora or Tourney :idea: Campy clearly doesn't care that their stuff is always more expensive. If price is your only concern, then you will only get a price. At the level many of us are at - 50-100kms on the weekend a couple times a month - we are well beyond the "BSO" stage. There is no Kmart for DuraAce. :idea:
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Re: Ridiculous Prices (rant thread)

Postby RonK » Fri Oct 12, 2012 12:28 pm

Xplora wrote:Everyone can afford a bike. Even a homeless guy can get a bike. They just can't afford a Dogma2 with SR EPS. But there is no point complaining about price gouging by the LBS on this product, because Pinny and Campy are already gouging you. And they should, to maintain their mystique.

Gouging us? We all understand that premium products attract premium prices. The gouging persists even for premium products. Your comment is irrelevant.

This is gouging - Colnago CX-1 Evo Ultegra Di2:

FRF Sports RRP = $5999
Wiggle Price = $4331

True, the CX1 is not exactly a premium model, but Colnago is a premium brand.

Yes, that is the distributors RRP, but it's unlikely to be discounted much. On the other hand, even in the unlikely event that shipping and GST costs amount $1000 you'll still be well ahead buying from Wiggle.
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