Open letter to Chain Reaction Cycles

[TimW]

Hope this has not been posted before, but and interesting viewpoint on CRC and other online shops ...

An open letter from Matt Holmes of 2020 BMX Magazine to Chain Reaction Cycles, the largest online retailer in the cycling industry (in response to Chain Reaction Cycles enquiring about advertising in his magazine).

Hey Ged,

thanks for getting in touch with the magazine.

So firstly, I may as well get this out of the way. Chain Reaction will never have a place in 2020, BMX on these shores or (if i have it my way) any Australian cycling media.

To take on advertising from you would signal the death of not only my publications, but the DVD’s, TV productions, events I’ve put years into building up. I’d go as far as to say the industry I know here as a whole would be in jeopardy. How you honestly think you can expect me to work with Chain Reaction is beyond me? Arrogant is the only word that I can think of to describe the way Chain Reaction works.

Chain Reactions presence is one that I’ve seen begin to destroy the industry I have lived and breathed amongst as a rider and beyond for more than 25 years. Luckily BMX is not yet under your thumb like the road and MTB worlds on these shores and thats something we’re working very hard to ensure never changes. At ground zero within the BMX community here and hopefully the larger BMX industry world wide. I can add you to the likes of Dans Comp in the way your business model takes from our scene locally.

Taking dollars and jobs from a scene that is small to start with is something I now have to take personally for my own survival. But to add the real truth, your avoidance of Australian Goods and Services Taxes, import duties and warranty costs by your offshore business model, the industry here is simply unable to compete. So not only do you take dollars from the bike industry on an unfair playing ground, you’re taking dollars from our economy at every level. Freeloading on an industry and a country thats been built over years of hard work.

While the big picture paints a grim outlook, on a local scale, it becomes even more apparent. For example. Are Chain Reaction going to be there on a Saturday morning to help a rider with his bike? Are Chain Reaction employing Australian mechanics, sales people, or people to take care of warranty on these shores? Are Chain Reaction going to support grass roots events, large events, sponsor riders or be a part of a scene beyond your massive warehouse? There’s no need to add that your one advertisement (should I choose to take it) would not support the publication I’ve made for 13 years.

All I see is a company with absolutely no interest in anything but taking from the scene I love here. When you’ve undercut every Australian shop and distributor and all local distributions chains and shops are closed, who will be there to help a rider? Who will be the one to give a rider a chance to possibly work in a shop to chase his dream of travelling with his bike? It ain’t Chain Reaction who’ll offer support and knowledge on how to build a bike? To be part of a local skatepark event? It goes further, there will be no avenue for photographers and filmers, to no designers and artists, no one having any kind of support, the scene will have nothing left.

And from there, your sales will drop, as will the parent BMX company you bought from in larger numbers than the local distributor could at the time. Just like the mining industry on these shores, you’ll take all you can and when nothing is left you’ll walk away leaving a shadow of a former scene.

I have to say though, in your defence, I’m impressed with Chain Reactions aggressive move into the United States. To sell there cheaper than the shops can access product from their own country is a brave move. It could just be the impetus the BMX industry as a whole needs to realise the way you do business is leeching the life blood from our scene. And I hope this move is the beginning of not just local distributors and shops in every country that has a small industry being unable to compete against you, but those in the US. The birthplace and core of BMX. As it will be they who make the noise that brings your way of business into the limelight and sees the BMX companies take note. With any luck stopping supply to those that sell beyond geographical boundaries. Your business model in no way supports or grows a brand locally. It’s that simple.

While you may have decimated much of the MTB and road distribution chains and shops here in Australia, the BMX industry here on these shores will go head to head with you. Win or lose it’s a fight both I and the 20inch industry here is willing to take on, and at present there is no choice, we’re in the corner. And I can only hope the world’s BMX industry takes our lead.

Lastly, this and all communications between you and I will be printed online, in print and cc’d to all those that need to know as part of a bigger piece and movement that speaks out against the likes of your employer.

Cheers.

Matt Holmes

2020bmxmagazine

www.2020bmxmag.com.au

[Tumbleweed]

Some hectic stuff in there. Love this bit: "Freeloading on an industry and a country thats been built over years of hard work."

[P.A.K.]

I don't get it. CRC is a business, not a club

[GLuvsMtb]

This letter got me thinking whether CRC had any new toys for me. I also hope that the local BMX scene take the same stance. We don't need more people on small wheels being a menace on pavements in shopping centre parking lots. I'd be very happy if the BMX scene is happy to bend over like we all had to bend for many years before we could access a wide variety of goods at reasonable prices. CRC would do well not to respond. This was clearly done as a marketing stunt to keep his other advertisers happy and would be even more effective if CRC actually did respond.

[M L]

Competition is never a bad thing for the consumer.

[Bianchi]

I don't get it. CRC is a business, not a club

 

I think what it comes down to:

Distributor imports product and gives local warranty. Retailer buys from them, sells to you.

CRC advertises in magazine. You buy from CRC. CRC is cheaper than Retailer (duh). Retailer loses lots of business and dies out.

Retailer dies out, distributor makes less money, stops importing. Local importing dies.

[Stretch]

I also dont get it. as far as i see it, it is not CRC that is affecting local sales and development, but rather the suppliers who supply local shops. If CRC are able to source parts and still make a profit then surely local suppliers can still do the same. I think the whole model here in SA especially needs to be rethought.

 

Secondally, with regard to development, sure some local shops provide development and event sponsorship, buton the whole, it is independant skills courses, and event organisers who are responsible for the events.

 

that said i only buy major parts from CRC - everything else is from my LBS

[P.A.K.]

I think what it comes down to:

Distributor imports product and gives local warranty. Retailer buys from them, sells to you.

CRC advertises in magazine. You buy from CRC. CRC is cheaper than Retailer (duh). Retailer loses lots of business and dies out.

Retailer dies out, distributor makes less money, stops importing. Local importing dies.

 

I see what you mean. But these guys (CRC) thought of a business model that works very well. Being angry at them for doing good business... it just doesn't compute.

[Bianchi]

I see what you mean. But these guys (CRC) thought of a business model that works very well. Being angry at them for doing good business... it just doesn't compute.

 

No, but it does hurt, and eventually kill off, the local business model.

[forkie]

I also dont get it. as far as i see it, it is not CRC that is affecting local sales and development, but rather the suppliers who supply local shops. If CRC are able to source parts and still make a profit then surely local suppliers can still do the same. I think the whole model here in SA especially needs to be rethought.

 

Secondally, with regard to development, sure some local shops provide development and event sponsorship, buton the whole, it is independant skills courses, and event organisers who are responsible for the events.

 

that said i only buy major parts from CRC - everything else is from my LBS

I may be wrong, but I think the difference comes down to duties and taxes which the locals have to add to their cost base and CRC doesnt.

[divernick]

If the likes of many of OUR local distributors took a look at their huge margins and passed on more profit to the shops, I'd be less likely to order from CRC.

 

At the end of the day, your LBS is there for service, advice, day-to-day parts and accessories and coffee.

CRC is there for the big parts purchases and for goods not available locally.

 

I believe that CRC and the LBS can co-exist. All the LBS has to do is keep healthy levels of stock at fair prices and do what they can to get people in the door.

[GLuvsMtb]

No, but it does hurt, and eventually kill off, the local business model.

Its the age old dilemma of supporting local and paying more or supporting a cheap import (in this case the exact product) and pay less. The gist of the "open letter" is that its cheap publicity. I wonder if the writer has the same moral stance with online publication. This would also put the local printer out of business because it costs less to manufacture and distribute electronically.

[Gunzo]

Adapt or die.

 

I can see some cycling shops surviving in RSA and others will be closing in due time. It all comes down to what your LBS can give you, the customer, that will add value to your cycling. Things like SERVICE, clubs, rides, backup and support.

 

Not everyone will buy online, the customers without proper knowledge of their bikes wil still trust the LBS Mechanic's to give advise. And again, If the LBS makes you feel like a Pro, and don't BS you for your money, they will have a base of returning customers.

[Stretch]

I may be wrong, but I think the difference comes down to duties and taxes which the locals have to add to their cost base and CRC doesnt.

 

we pay duties and taxes when we order from CRC. The local suppliers will also be exempt from duties for spares just like we are. I have by chance seen the actual cost that a certain supplier pays fro items and it is significantly lower than what you get at CRC and your LBS

[Big H*]

It all makes sense to me, the letter was written by a skaapsteker suurtiet ozzie!!!!!!!!

[D-Mike]

CRC is doing good business and does have a very effective business model. Essentially CRC is all about money, nothing more and nothing less.

 

The author does have a valid point in that CRC does nothing for the local cycling community, except supply cheaper components to the cyclists. They do not provide technical assistance, sponsor events, etc. Whether this is right or wrong... Each to his own.