Unless you have been sleeping under a log, you will have noticed the trend in shopping online from local and overseas businesses. You will have also noticed that traditional retailers haven’t been very happy about it. In the cycling industry, many of the retailers and importers see this as the most significant business challenge and Bicycle Industries Australia which represents the cycling industry has been a vocal member of the Fair Import Alliance which is lobbying against the $1000 tax free threshold on imports.
Despite the success of the Australian economy, exchange rates that make it expensive to import, lower order volume price disadvantages, taxes, duties, transport and storage costs, Cycle Retailers are first in line when consumers criticise the local prices. If a bike shop points out that they pay the same or more than the overseas retail price, the fingers then point to the importers. But is it really as simple as that?
This week, Nick di Lorenzo, the Operations Manager of Euride who import well known brands such as De Rosa, Bottecchia, ITM, Catlike, Diamant DMT and Cinelli provided a price comparison for the dealers showing how competitive their retail prices actually are when shop customers ‘threaten’ to buy on the internet.
*Prices applicable on 28.03.2012 and subject to change
Nick di Lorenzo tells his dealers “We are trying very hard to make it a level playing field for our retailers”. This approach recognises the changing market and concentrates on price rather than pushing the ‘better service and support and local warranty’ line. If price is a primary motivator for customer, the customer can’t assume that it is cheaper overseas, and if the retailers can then also provide better service and satisfy their customers, the Local Bike Shop purchase is the more attractive option.
I asked Nick di Lorenzo of Euride a few questions about their approach for Bicycles Network Australia (BNA).
BNA: You have just provided a price comparison to your Cinelli dealers that compares the Wiggle overseas price and your in store Recommended Retail Price (RRP). What has motivated this?
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. This is not the case. All sales staff, need to embrace all forms of distribution but also need to be able to point out the benefits of advice, not just price. Sales staff, needs to understand the significant benefits of getting the correct frame for the Customer body, the right helmet, the right ongoing service for their needs. They need to have the confidence, to make a sale to a Customer who’s in store, “here and now” and wants a reason not to buy from a faceless web page, somewhere in another country.
BNA: What factors do you feel have been influencing the pricing so that overseas retailers are able to undercut Local Bike Shop prices.
Nick di Lorenzo: As can be seen from our recent prices, they can’t actually undercut us most of the time, it’s a fallacy and a myth that needs to be broken. Many times they are selling out of date stock, low volume products that suppliers can’t shift, and they are taking out the most important part of any sale, the advice component that is provided by caring shop owners. Many suppliers see it as quick fix to sell products, particularly during the current economic malaise, and GFC. This will change, and the long term new model, will be an effective combination of retail advice, experience with on line shopping as an integral part.
BNA: What strategies are you undertaking to challenge or counter a changing market place?
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. Getting the right advice, the right bike for you, the tyres that suit your use, the seat that fits your bone structure, and importantly, ongoing service with passion and leadership, will always stand the test of time. Shops need to “value add” service, provide peace of mind, and train staff so they can provide advice that added value to the Customer. From a structural perspective, shops need to address their distribution models, and ensure they are dealing with a distributor, that can support their shopping and Customer model.
BNA: Euride is a member of Bicycle Industries Australia who in turn are a member of the ‘Fair Imports Alliance’ which seems to be tackling the sole agenda of reducing the GST threshold on imported goods. What is your take on this? If GST is applicable on lower value items, will this change consumer spending habits?
Nick di Lorenzo: GST and other taxes are a complex issue, and not one that we can change any time soon. 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.
BNA: One of the topics often overlooked when comparing pricing for a brand/model is that the brand themself have sold goods to a retailer overseas who is directly able to compete on price, not only in Australia but worldwide. Is this a topic which you feel your brands are aware of and are supporting you?
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. We are working with our suppliers to develop an international price model, one that respects all business models, and provides a consistent level playing field across the world.
BNA: Do the current changes in the retail landscape also mean you have new or different opportunities – for example retailing online from within Australia – or working with local online retailers?
Nick di Lorenzo: Yes, we have already recognised the new opportunities, and working towards taking advantage of them. Certainly too early to be discussing this, but I look forward to the exciting launch of a new model which addresses many of the issues we’ve been discussing. Meantime our negotiations with our Suppliers are well advanced. Our new website and shopping cart will be launched soon, and negotiations with Retailers are scheduled to take place to sell our message, new distribution model and philosophy
BNA: Moving on to your brands – what are the most exciting announcements that you can share on your brands – what is going to excite your dealers and your customers this year?
Nick di Lorenzo: A significant Joint Venture with a current major Supplier, a market leading model that has exclusive products from quality Suppliers, expanding the range of Euride distributed products, the continuation and expansion of Euride racing, our race brand which was one of the best performed teams in 2011 in South Australia. We will look to expand this nationally in the years ahead.
Importantly, we want to support our Retailers through this difficult time, provide them with the knowledge and Training necessary to be competitive in changing shopping environment. We will continue on our journey to become one of the best suppliers of quality European cycling products, not necessarily the biggest.
Thank you kindly for your views and sharing the strategy that Euride is taking.
Euride is online at www.euride.com.au and in the dealer locator you can find your closest shop for De Rosa, Bottecchia, ITM, Catlike, Diamant DMT and Cinelli.
