PhilipV Posted July 4, 2016 Posted July 4, 2016 I'm not talking about discounts I'm talking about retail prices. You show me 30% markup at big chain bicycle shop, more like 70% at least, and that's on top of the over inflated wholesale price the shop gets.I've worked in the bike industry, in both wholesale and retail, and I can honestly say that this statement is bovine excrement.
the nerd Posted July 4, 2016 Posted July 4, 2016 I've worked in the bike industry, in both wholesale and retail, and I can honestly say that this statement is bovine excrement.So explain how the prices can vary so vastly from A) distribution level in SA to same level in USA taking into consideration exchange rates. B) two shops selling the same product at 50% price variance? Somewhere in the line someone is pulling a fast one.
jcza Posted July 4, 2016 Posted July 4, 2016 Everything boils down to value add. If the lbs isn't adding any...well then they won't be around for very long in the age of the interwebs. I love the crc's / cwc's / easybike's of the world. They keep lbs honest from that perspective. Only a couple of shops that add value in my life and thus the only ones I will visit and spend my money at. This. There is also the perception that the customer must be nice to the LBS owner. WTF? Deliver professional service and I'll gladly pay for it. I don't need to be your friend or listen to what a great rider you used to be. Do you sit down with the dealer principal when taking your car for a service? Thought not.
PhilipV Posted July 4, 2016 Posted July 4, 2016 So explain how the prices can vary so vastly from A) distribution level in SA to same level in USA taking into consideration exchange rates. B) two shops selling the same product at 50% price variance? Somewhere in the line someone is pulling a fast one.Supply chain differences. SA sadly has more middle men (each taking their cut) and we are at the bottom of Africa. And the American suppliers have way more buying power than the local guys do, and thus bargain for lower prices. We are but a drop in the bucket compared to US and EU markets, and our volumes reflect that. I agree with you on our supplier service levels, eg it irks me that a warranty is not applicable to a 2nd owner.
rouxtjie Posted July 4, 2016 Posted July 4, 2016 Supply chain differences. SA sadly has more middle men (each taking their cut) and we are at the bottom of Africa.And the American suppliers have way more buying power than the local guys do, and thus bargain for lower prices. We are but a drop in the bucket compared to US and EU markets, and our volumes reflect that. I agree with you on our supplier service levels, eg it irks me that a warranty is not applicable to a 2nd owner.And that is all she wrote. Retailers need to adapt and not fight it.
nonky Posted July 4, 2016 Posted July 4, 2016 That's a bit of a blanket statement.... Google the price fixing / competition commission thread...and look at how many shops pleaded guilty to avoid prosecution.
GrahamS2 Posted July 4, 2016 Posted July 4, 2016 I've worked in the bike industry, in both wholesale and retail, and I can honestly say that this statement is bovine excrement.Maybe not 70%, but 50% margins are not unheard of in the cycling industry. I know enough bike shop owners (across multiple brands) to know that the margins are large. That is also why the price of a specific item can differ by 40% between 2 retailers who are less than 5km apart...
Eldron Posted July 4, 2016 Posted July 4, 2016 Google the price fixing / competition commission thread...and look at how many shops pleaded guilty to avoid prosecution. Read the whole article and do some research - none of the collusion ever turned into actions... Either way - as far as I'm concerned there is space for everyone in SA. As Rouxtjie says - the onliners keep the brick and mortar retailers in check. Online is great is you know all the specs and are happy to install it yourself - winner.LBS is great is you need advice on bike sizing, like to see your products in person, hang out and drink coffee, need some work done that you can't do yourself.The rise of "specialists" is cool too. Wheelbuilders, servicers etc are popping up all over. Me - I like the freemarket principle - viva competition! It doesn't have to be one OR the other.
Eldron Posted July 4, 2016 Posted July 4, 2016 Maybe not 70%, but 50% margins are not unheard of in the cycling industry. I know enough bike shop owners (across multiple brands) to know that the margins are large. That is also why the price of a specific item can differ by 40% between 2 retailers who are less than 5km apart... And so it should vary - proof that there is no price fixing and free market exists. The key to the entire customer versus bike shop equation is knowledge - people should know more or less what an item costs and if it is the right option for them. The internet has everything available - use it :-)
rouxtjie Posted July 4, 2016 Posted July 4, 2016 Read the whole article and do some research - none of the collusion ever turned into actions... Either way - as far as I'm concerned there is space for everyone in SA. As Rouxtjie says - the onliners keep the brick and mortar retailers in check. Online is great is you know all the specs and are happy to install it yourself - winner.LBS is great is you need advice on bike sizing, like to see your products in person, hang out and drink coffee, need some work done that you can't do yourself.The rise of "specialists" is cool too. Wheelbuilders, servicers etc are popping up all over. Me - I like the freemarket principle - viva competition! It doesn't have to be one OR the other.yea cant agree more. Competition is good for everyone. What people perceive to be the value add's are totally up to them and there is no wrong or right here.
nonky Posted July 4, 2016 Posted July 4, 2016 Read the whole article and do some research - none of the collusion ever turned into actions... Either way - as far as I'm concerned there is space for everyone in SA. As Rouxtjie says - the onliners keep the brick and mortar retailers in check. Online is great is you know all the specs and are happy to install it yourself - winner.LBS is great is you need advice on bike sizing, like to see your products in person, hang out and drink coffee, need some work done that you can't do yourself.The rise of "specialists" is cool too. Wheelbuilders, servicers etc are popping up all over. Me - I like the freemarket principle - viva competition! It doesn't have to be one OR the other. What the huh? Coolheat and Omnico fined ZAR4mill EACH for price fixing this year. In 2010, the following happened The Commission has asked the Tribunal to levy an administrative penalty of 10% on the annual turnover of each of the firms involved. The firms facing these allegations include retailers Fritz Pienaar Cycles, Cycle Lab, Hotspot Cycles, Maverick Cycles, Dunkeld Cycles, Summit Cycles, Bester Cycles, Johnson Cycle Works, Salojee’s Cycles, West Rand Cycles, Bowman Cycles and Winners Cycles. Wholesalers facing the allegations include Thule, The Just Fun Group, Omnico, Cytek Cycle Distributors, Cape Cycle Systems, Silverback Lab, Shimano, Emotion Cycling, International Agencies, J&J Cycling, Le Peleton, Ravx Design, RFA Distributors, Supersport Cycling, Maillot Juine Trading and Bicicletta. http://www.sport24.co.za/othersport/price-fixing-in-bicycle-market-20100628
PhilipV Posted July 4, 2016 Posted July 4, 2016 Maybe not 70%, but 50% margins are not unheard of in the cycling industry. I know enough bike shop owners (across multiple brands) to know that the margins are large. That is also why the price of a specific item can differ by 40% between 2 retailers who are less than 5km apart...On some accessories and clothing yes. But it's not across all the items in the shop. Not even close. That being said, I see the next growth area for the industry to be in accessories and servicing. People don't replace bikes so easily, but it still needs to go for a "wash and lube" on Monday, and you can't ride a red bike without the obligatory special onderbroek and funky socks.
NotSoBigBen Posted July 4, 2016 Posted July 4, 2016 This. There is also the perception that the customer must be nice to the LBS owner. WTF? Deliver professional service and I'll gladly pay for it. I don't need to be your friend or listen to what a great rider you used to be. Do you sit down with the dealer principal when taking your car for a service? Thought not. Being 'nice' to someone be it a stranger or someone that you are buying from has less to do with being a customer and more about being a decent human being but maybe that's just me and how I was brought up ... as my father taught me 'you get what you give'
nonky Posted July 4, 2016 Posted July 4, 2016 Read the whole article and do some research - none of the collusion ever turned into actions... Either way - as far as I'm concerned there is space for everyone in SA. As Rouxtjie says - the onliners keep the brick and mortar retailers in check. Online is great is you know all the specs and are happy to install it yourself - winner.LBS is great is you need advice on bike sizing, like to see your products in person, hang out and drink coffee, need some work done that you can't do yourself.The rise of "specialists" is cool too. Wheelbuilders, servicers etc are popping up all over. Me - I like the freemarket principle - viva competition! It doesn't have to be one OR the other. Sorry, and this: "The other 17 companies who settled early with the Commission were not fined for the offence as they had admitted they had contravened section 4(1)(b) of the Competition Act. The Commission had withdrawn its case against one of the companies, Fritz Pienaar Cycles, because the business was liquidated." http://www.bdlive.co.za/business/trade/2016/05/31/wholesalers-fined-for-bicyle-price-fixing
jcza Posted July 4, 2016 Posted July 4, 2016 Being 'nice' to someone be it a stranger or someone that you are buying from has less to do with being a customer and more about being a decent human being but maybe that's just me and how I was brought up ... as my father taught me 'you get what you give' Nice and professional are two different things, but I'm sure you know that nsBB.
Eldron Posted July 4, 2016 Posted July 4, 2016 Sorry, and this: "The other 17 companies who settled early with the Commission were not fined for the offence as they had admitted they had contravened section 4(1)(b) of the Competition Act. The Commission had withdrawn its case against one of the companies, Fritz Pienaar Cycles, because the business was liquidated." http://www.bdlive.co.za/business/trade/2016/05/31/wholesalers-fined-for-bicyle-price-fixing No proof of price fixing in the market place was ever found. All the prosecution happened because of a price fixing meeting. Most shops settled/rolled over because the fine of 10% of turnover would have scuttled their businesses. There was controversy over the agenda of the "collusion" meeting - some of the attendees were told it was just a general industry meeting. Was it wrong? Sure. Did it ever lead to retail prices increasing? Not that I ever saw or was ever proven by the government.
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