Online vs. LBS and Shimano's latest moves

[Paul Ruinaard]

Now this is a perspective on the eternal debate.

 

Add value or go out of business.

 

Hope Coolheat is listening.....

 

http://yourbikehatesyou.blogspot.co.za/2016/04/shimano-giant-angry-blue-smurf-thats.html

 

 

 

Shimano. The giant, angry, blue smurf that's dismantling the cycling industry....part 1

 

     In case you have been living with your head in the clouds, Shimano is making headline after headline these days, and it has nothing at all to do with the fact they still make a front derailleur. I will first begin by saying I feel that Shimano does make some, if not the very best, in cycling components. I used to be a full SRAM guy. As I progressed in my career, I made the move to Shimano. You can blame Juicy's, and every front derailleur, and every Hydro recall.

     Not that it is anything new, but many throngs of retailers are bemoaning Shimano's pricing structure as it pertains to IBD's vs. internet sales. It has become common knowledge that Shimano components are priced at or below dealer cost online. Consumers know it, and retailers are demanding change. Shimano has no plans to change, and is pretty honest about it when facing dealer complaints.


 

      Shimano dropped its pricing structure earlier this year. Not, as you would think, to help support IBD's in their competition against online shoppers. It came without a notice or heads up to many IBD's. Again, the IBD was left a little angry and pained, blue balls if you will. It just takes a quick glance at Bicycle Retailer's comment section to see this ager is widespread, with many dealer's throwing the rep out under the bus in the process.

low cost smurf's     head down to the comments to get a Tapas of dealer frustration. Pay attention to article publishing date.

     Now, I work for an IBD. I have friends, many of them actually, who own, run, and buy for IBD's. Many of my colleagues have called for a ban on buying Shimano product. That will get them to listen they say. Sadly, I feel these friends have no worldly idea of what they are talking about. In fact, many of them are running an antiquated business model that has been around for decades. Decades without change. Decades without forward thinking. Decades without a single ounce of prediction, only head in the sand reactionary bellowing from the same internets people are using to shop online. Meet your competition, it is the world, and you are staring at it right now. Perhaps you didn't notice the grimy handshake. Meet the internet, here since 1990ish. Crazily enough the whole selling online thing started decades earlier, and the first item sold was something anyone could grow themselves, weed. So this is Shimano's fault right?

     Shimano is not around to subsidize the local IBD. They are a business. A fairly healthy and well run business that is multifaceted. You know they don't only sell cycling right? I mean they are healthy in that they have a diverse business profile that branches out to gain other sources of income. But most IBD's only sell cycling. As if every IBD is immune to winter. I mean it's spring now, and sales are healthy. You do remember January and February right? That was about the time you were wise enough to save a few dollars and lay off your second technician. ( Oh don't fret dear reader, there is another piece coming on that bull****.) How's that working out for you now?

     Shimano. Well, Shimano not only cut it's price structure. It also announced it was up 14% . Is your business up? Notice the date stamped on that article. Yup same day as the price cut. How many times do you as a dealer, cut prices without losing margin, while you are up? Not many. Instead you wait for the big brothers to allow you to cut margin, mostly your margin by the way. SPRING SALES ON 2016 product??????????? Uh, that seems super healthy. What are you looking forward to when your terms are due and you still have floored 2016 product that was already on sale before spring?

     Maybe this is your fault. Yup. Read that again. It is your fault IBD. I have been working in very healthy retail stores that have shelves of black and blue boxes on hand. The same boxes that are cheaper online. A lot cheaper. I have sold XT brakes all day long as replacements for Elixirs and Juicy's. Why? Not because they are cheaper, but because I have them on hand and have technicians who can install externally routed brakes properly in under an hour, on top of their regular work load. I work in healthy IBD's who can make that sale happen. What about your shop?

      " I can order it for you"

     " It'll be four days before we can get those installed"

     " I have so many excuses for not making this sale happen its stupid. BUY LOCAL"

     " There was a delay in shipping, not sure when they will arrive "

     I'm pretty sure the customer has heard all that, and THAT is why they buy online. It's not them, its YOU. It's not Shimano. It's YOU. YOU the IBD. Your outdated, antiquated, surly business model is turning away clients. How may of you are welcoming of clients who bring their online purchases for you to install and don't complain about the cost of labor ? Very, very, very, few. That is pure profit. You didn't waste time ordering. You didn't shelf the product and have no carrying costs. Shops tend to charge $20-$40 per line to install disc brakes. If you maybe didn't lay off one of your technicians and get caught out when the season snuck up on you, you'd be glad to bank that $40-$80. If you are not happy to bank that, then you WILL go out of business. If you give that client the stink eye, you WILL go out of business.

    Quite frankly, you should.
 

[KingTJ]

Finding it hard to follow this guys writing style, or maybe its the font...gave up halfway....but i get the point.

[divernick]

In summary - as a bike shop you'll never be able to compete on price for parts against online shops. To be competitive - or to actually survive - bike shops need their own value proposition and SERVICE.

[shaper]

Was also under the impression that Shimano only dropped the prices in USA, rest of the world they have not done so.  Thought had read that somewhere?

 

Also sounds like the writer has an axe to grind with LBS, even though he says he owns one.. Maybe he just feels LBS should be doing more to compete against online shopping.

 

Edit link : http://www.bicycling.com/bikes-gear/news/shimano-lowers-component-prices-in-the-us

[usxorf]

Was also under the impression that Shimano only dropped the prices in USA, rest of the world they have not done so.  Thought had read that somewhere?

 

Also sounds like the writer has an axe to grind with LBS, even though he says he owns one.. Maybe he just feels LBS should be doing more to compete against online shopping.

LBS shouldn't compete with online shopping is the point. They need to drive service and product availability.

[Long Wheel Base]

I also never read the whole long drawn out article but if cool heat actually had stock I wouldn't be forced to go CRC or CWC route. I really would prefer to support my LBS and they do keep stock of the more popular things like chains and a few cassettes BUT when I got a new bike 2 years back and wanted to dump the compact ultegra 6800 for normal size 6800 ultegra they said I needed to wait 2 months. CRC-3 days the crank was on my bike. Then got a new set of wheels for same bike and wanted a 25-11 11 speed ultegra cluster and again they had nothing and I would need to wait a few weeks. the only thing in ultegra they could offer was 25-12(I think) or 105 with the ratio I wanted. I wanted to keep everything ultegra so passed on the 105. Again CRC and a few days later my new wheels where on the bike. Now I don't mind waiting a few days but when I live about 10km from coolheat and my LBS is like 4km from them then if they got stock its next day and its there. BUT THEY DON'T HAVE STOCK.

[Albatross]

How may of you are welcoming of clients who bring their online purchases for you to install and don't complain about the cost of labor ? Very, very, very, few. That is pure profit.

 

Always felt like a criminal when I did this, maybe I shoudn't .

[rock]

isn't it more a case of online retailers usually selling OEM parts and the local bike shop is stuck selling legit aftermarket components sourced from a middleman......

[Edge_Design]

There are plenty of very successful bike shops out there, but the days of every half-decent cyclist taking a loan and starting a shop to support his cycling habit are probably over. Unfortunately it is now a highly competitive industry and you need some business skills if you are going to create a unique value that draws people to your store over and over again.

 

I guess Olympic Cycles in Cape Town is a great example of this - they have always been well known to be highly incompetent, but they are very successful by catering to the wealthy family man/woman by holding huge volumes of stock so you can walk out after 1 quick visit with the bike you want in your size. Surprisingly it is quite unique in the cycling industry to hold real stock (and yes I do understand that might mean R10m+ investment).

[Bobbo_SA]

Judging by the font it looks like the "article" was written in the '90s.

[Eldron]

 

Hope Coolheat is listening.....

 

 

 

Probably a Friday question but why should Coolheat be listening?

 

What can they do to change the landscape?

 

Edit: They partially the victim of the parallel/grey imports brought in by some SA onliners.

[divernick]

Probably a Friday question but why should Coolheat be listening?

 

What can they do to change the landscape?

 

Edit: They partially the victim of the parallel/grey imports brought in by some SA onliners.

Them listening to the main article - meh.

 

Them investing in healthy stock levels is what's to be expected of an official importer.

 

As mentioned above, keep stock in the shops so we don't have to buy online. I would also much rather support the local shops and local economy by buying from my LBS but I'm also not going to wait for weeks.

[Shebeen]

What's an IBD? I know it means LBS, but what does the acronym stand for - independent bike douchestore?

 

Another thing in the states is that shipping can be cheaper to the end customer as you don't pay state taxes. My gripe in this ordeal is when an LBS says buy from me - support local. If we're looking at an identical product, then the only 'local' part of it is essentially inefficiency. I don't support inefficiency.

[Eldron]

 

Them investing in healthy stock levels is what's to be expected of an official importer.

 

Agreed. It is an issue in SA though - most agents keep too little stock.

 

Not sure if it's a risk thing, small market thing or supplier (as in supplier to our local agents).

 

Most agents have to order in quantity and with quite long leads times - tough to make big bets like that - glad it isn't me making those kinds of decisions!

[Hairy]

was recently looking at CRC pricing (Discount / sale on now) for an XT cassette and compared to CWC (Std Pricing on site).

 

CRC after shipping was around R26 cheaper ...............BUT at my usual LBS I can get a Deore 10spd cassette for just about R100 less ..... so the poor LBS who is carrying the new stock is sheepishly appologising (Don't know why those poor guys have to) for the steep increase in the Deore cassette (Works out a little more than one would have paid for a SLX cassette about a month ago)

 

Solution ..... riding my SS now till CWC run a sale again

[Frank.Hutt]

How may of you are welcoming of clients who bring their online purchases for you to install and don't complain about the cost of labor ? Very, very, very, few. That is pure profit.

 

Always felt like a criminal when I did this, maybe I shoudn't .

My lbs is very happy to do this. They even fix my mistakes....costs me but the service part of the deal is what I'm after