Wallmart has built an empire from undercutting local business. It sucks for the small businesses, but in general consumers still get lower prices. Lower prices are generally linked to more purchases, so if prices of bikes are lower, more people will buy bikes, and more often. That sounds great. Similarly with Amazon. Currently, I rarely buy from Exclusive Books because my Kindle is good enough, and I get the book immediately, and I can read ratings. I suspect the social and local organisation of bike-related industry will change as this filters from the relative cycling insiders to everybody. When your mom knows she can get a cheaper bike on CRC, it's pretty much a new world. Those local-organising services might just move to different industry bodies. However, not all is lost: Firstly, some functions just won't work over the web. Can't get advice about which brands have the best local service. Can't get bikes serviced online. Can't feel it, and try it out. I remember doing a project on a LBS, and services seemed to be great income. A business focused mainly on that could probably fly. I forget the numbers, though, but obviously less floorspace, holding cost, salespeople. Just good solid bike services from great mechanics that care about bikes. Secondly, economics also provides for self-selection, where someone who values things other than money will want to get a bike from Pricy Cycling. They want an exact fit, maybe an integrated seatpost, maybe the bike today, maybe a couple upgrades. Fashion is important to many, as with cars and clothing. Local advice from the race snake who knows which bike will suit your wife, or who knows how you ride and can make suggestions. The customer wants to feel good about their purchase, as if they're buying a luxury good. This traditionally wanes when the economy is low - people get more price sensitive. Luckily, when the economy improves people want luxury and good service again. So as a bike-shop, you need to know how to weather the tough times by e.g. changing the product mix, or upping your marketing game to look after the big spenders. Personally, I like supporting the LBS. When they do a good job and build trust, I send them my own work and take friends to look for bikes. I've done that for lots of people. When they treat me like a commodity customer and just want the sale, they lose out in the end - I move LBS'. There are still ways to combat the move to bikes-as-commodity, but the way to do it is to know where the market is going and have a plan for that, rather than putting all your eggs in the basket of combating the change. You can fight it with emotion, marketing, calls to "our local industry", but that industry will change. Find the real underlying advantages you have (or build some), and leverage those.
