Since publishing the original article asking whether Wiggle is buying out Chain Reaction Cycles, Wiggle has confirmed the merger with CEO’s of both companies commenting that their product ranges ‘complement’ each other.
It now means that this new force, in which ever format they choose to unite and compete, will make competition even tougher for their nearest competitors internationally and also leading national online retailers.
Original Article
Is Wiggle about to Buy Chain Reaction Cycles?
The most popular overseas online bike shop for Australians is Wiggle (UK) and they are closely followed by Chain Reaction Cycles (UK). According to Carlton Reid (BikeBiz), a well known UK cycling journalist and bike advocate, insider information suggests “Wiggle is on the verge of absorbing its main retail rival Chain Reaction Cycles. It’s said to be highly likely that the sale will go through next week.”
Wiggle are the top online bike retailer though have much smaller inventory (range) than CRC. Internationally Wiggle have a much stronger investment in external projects such as the racing team, events and donations for cycling advocacy groups. Chain Reaction Cycles have dabbled in various external projects though in Australia have been largely absent.
In e-commerce, CRC have a stronger and more effective website. Wiggle have set the bench-mark for customer service in recent years and CRC are not far behind.
Carlon Reid notes that “Nobody at Wiggle or Chain Reaction would confirm a sale is imminent” though that is irrelevant as they wouldn’t confirm anyway until they are ready.
Speculation and Truth
Phil Latz, founder of the Bicycling Australia family of magazines (which was recently sold to Yaffa Publishing) is the editor of the Australian bike trade magazine, Bicycling Trade and asked the question in his latest newsletter whether this is just clickbait.
Clickbait has become standard practice for in online publishing as media push sensational headlines for content poor articles to get more viewers and clicks. In online cycling media, CyclingTips founder, Wade Wallace has publicly voiced his concerns with clickbait and sensational content – it is inferior to quality content, but it gets attention and traffic.
We will have to wait to see whether or not Wiggle will buy-out Chain Reaction Cycles (CRC) as suggested, but it is certainly feasible and would impact the market.
What will become of Wiggle and Chain Reaction Cycles?
Would they merge and become one brand? Or would Wiggle and CRC remain separate and continue to capitalise on their individual strengths. In this case they would continue to be the 1st and 2nd choice for customers? I would expect that they remain separate (in the face of the customer) but collaborate behind the scenes.
If the sale is imminent, it would likely take years until customers recognise any changes though there is potential to streamline the businesses by consolidating and centralising stock. They would increase their buying power and be able to get better pricing from bike brands – and pass on lower prices to customers and provide strong competition against other online retailers. A potential side effect could be lost jobs in the UK for roles that are merged.
A buy-out and collaboration could impact smaller brands who supply Wiggle and Chain Reaction Cycles and may feel the pinch if they are compelled to reduce their wholesale prices and their margins.
Online bike shops with strong sales to Australian customers, both international and the local shops should also be concerned if Wiggle and CRC collaborate – these big retailers are no longer competing against one another, rather they will be a stronger combined force looking to grow their market share.
The impact on customers
In the immediate future, customers would likely experience no changes if Wiggle and CRC were united. Over time, I would expect that the would choose to differentiate their product ranges with only some overlap and thus provide a far greater (combined) pool of brands and products. The alternative is to consolidate and offer the same brands and prices although they would not be utilising their power to capture a greater market share.
Customers may however be offered more competitive pricing as Wiggle and CRC draw in customers from other online retailers. This would would impact many of the other large online retails such as Evans Cycles, Bike24 (Germany), ProBikeKit and Competitive Cyclist.
Australian online retailers are still growing in strength and have become increasing competitive in price, plus have generated loyal followings as they prioritise customer service and satisfaction. Australian bike shops can remain competitive though will need to continue to carefully monitor the market and adapt quickly to changes.
