Indoor trainer price GOUGING during / after lockdown...

[Robbie Stewart]

Hello NINER_Boy, and readers, 

 

Christian here, managing director at Ikhambi Distribution/Wahoo Fitness South Africa. 

 

Thanks for starting the topic and it is a very important point to answer as the Wahoo distributor in SA. 

 

It was undoubtably the toughest month to make decisions for both myself and my sales management team... Our greatest concern was that we seem to be profiteering due to the demand for trainers. 

 

I would like to take this opportunity to give some background to the past couple of weeks:

 

The week before lockdown we landed some stock at a reasonable exchange rate of R15/usd and with a healthy 150 trainers in the warehouse we were on par with our sales forecasting. Needless to say that as soon as the lockdown was announced these units evaporates into thing air in a single day. 

 

I estimate that if we had 3,000 trainers we would sell every single one in the week the announcement landed. 

 

During the lockdown our next shipment arrived early in April, and became payable in the last week. The assumption that distributors pay months earlier or always take forward cover does not apply to all brands, and with a fast moving product like Wahoo we did not have the luxury of either options. Cashflow is a challenge, many debtors has started to delay outstanding payments since end of March. 

 

We ended up paying at an average of R18,50/USD for our shipment. The compound effect hit us extra hard on shipping line charges and to add insult to injury SARS is not paying additional demurrage charges due to their instruction to not inspect non essential goods. 

 

These costs were mostly unplanned, but has to be absorbed by our business using our dwindling margins. 

 

Our planning the past couple of weeks revolved around how we implement price increases without making it seem like we are price gouging. The best way to view this is to take the US prices and do the conversions:

 

KICKR 4 - $1,200 * R19 (spot rate average) + VAT = R26,220 

This places South Africa below the international price. Even if you take the past 4 months of trade Wahoo South Africa has sold the KICKR 4 at a price in Rand below the direct conversion. 

 

A price increase is even harder since we are not blind to the fact that many cyclists, Hubbers and enthusiasts will not only lose a part of their income, but many will lose their jobs. 

 

If anyone has any questions pertaining to the Wahoo brand, our price increases or even criticism in general please do not hesitate to send me a direct message and I'm happy to answer. 

 

Your local Wahooligan 

 

Christian 

 

Christian, thank you for your perspective. I am sure many people who were moaning have now seen the light, so to speak. It saddens me though that you had to be brought to a point to explain your pricing strategy, as I really can't see what that has to do with anyone not part of your inner circle.

 

I work on the ICT side of retail, and perhaps I have a different, more open view to all the hidden costs as it relates to calculating markups and profits. Either way, it would not have taken much for anyone to understand the rapid devaluation of the rand and the disappearance of importing streams to have an effect on pricing without so called price gouging coming into play.

 

What irks me is that retailers are left scrambling to "explain" themselves to the paying baying public, and people feeling it's their civic duty to report such companies supposed exploitation without a shred of evidence to back up these distorted perceptions.

 

I trust that you will come out stronger on the other side. Strongs to you and your team.

[DieselnDust]

Worked for a certain inporter in Landsdowne...

 

You are correct in saying all shipments is payed before it goes onto the water.

 

We are being screwed with importers telling us they pay exchange rate on landing the shipment here.

 

With regards to your Durban harbour importer, i have purchased a trainer from him due to mine having a problem that cant be fixed( emailed parent to confirm this), money has been payed and thus far he hasnt even asked for a shipping adress...

 

PS.. to make matters worse, I was never informed that he does not currently have stock when he quoted me.

 

 

I feel your frustration but not every cycling import operates on the same model of paying upfront. That model carries a lot of risk. Most operate on the model where they pay when the liability of the risk changes hands and that's the offloading port. It really depends on the cash flow of th ebusiness and the volume of goods being imported. Many distributors can't fill a container so have to share containers with other businesses in other industries. Since the ship may stop at a few other ports on its journey the container owner has the ability to take on goods in those ports. Not all goods will be offloaded at the destination port either so transport costs cannot be apportioned unilaterally. 

The distributor you worked for placed large orders and always filled containers of goods hence the transport costs were negotiated and fixed.

[Muttley]

Hello NINER_Boy, and readers, 

 

Christian here, managing director at Ikhambi Distribution/Wahoo Fitness South Africa. 

 

Thanks for starting the topic and it is a very important point to answer as the Wahoo distributor in SA. 

 

It was undoubtably the toughest month to make decisions for both myself and my sales management team... Our greatest concern was that we seem to be profiteering due to the demand for trainers. 

 

I would like to take this opportunity to give some background to the past couple of weeks:

 

The week before lockdown we landed some stock at a reasonable exchange rate of R15/usd and with a healthy 150 trainers in the warehouse we were on par with our sales forecasting. Needless to say that as soon as the lockdown was announced these units evaporates into thing air in a single day. 

 

I estimate that if we had 3,000 trainers we would sell every single one in the week the announcement landed. 

 

During the lockdown our next shipment arrived early in April, and became payable in the last week. The assumption that distributors pay months earlier or always take forward cover does not apply to all brands, and with a fast moving product like Wahoo we did not have the luxury of either options. Cashflow is a challenge, many debtors has started to delay outstanding payments since end of March. 

 

We ended up paying at an average of R18,50/USD for our shipment. The compound effect hit us extra hard on shipping line charges and to add insult to injury SARS is not paying additional demurrage charges due to their instruction to not inspect non essential goods. 

 

These costs were mostly unplanned, but has to be absorbed by our business using our dwindling margins. 

 

Our planning the past couple of weeks revolved around how we implement price increases without making it seem like we are price gouging. The best way to view this is to take the US prices and do the conversions:

 

KICKR 4 - $1,200 * R19 (spot rate average) + VAT = R26,220 

This places South Africa below the international price. Even if you take the past 4 months of trade Wahoo South Africa has sold the KICKR 4 at a price in Rand below the direct conversion. 

 

A price increase is even harder since we are not blind to the fact that many cyclists, Hubbers and enthusiasts will not only lose a part of their income, but many will lose their jobs. 

 

If anyone has any questions pertaining to the Wahoo brand, our price increases or even criticism in general please do not hesitate to send me a direct message and I'm happy to answer. 

 

Your local Wahooligan 

 

Christian 

 

Thanks for this feedback - really informative.

 

I'd like to know how you guys deal with retailers who purposefully inflate the RRP to make their discounts seem larger. I posted this on the CWC lockdown sale page which seems to have gone very quiet - not sure if it's a coincidence of my post and others calling them out but anyway. 

Here's the images and caption which I posted, obviously I didn't get a response from them:

 

"Thought I'd share this.... CWC, please let me know where the integrity is?

 

21% saving on an inflated price...!

 

Bike-Mob, Buycycle and even your parent company have it listed at usually being R9999".

 

 

 

 

The price on their website no longer mentions the inflated RRP and it's being sold for R9499.99. I for one will never buy from them after this.

Edited April 22, 2020 by Muttley

[Wannabe]

So glad that I placed an order and paid a deposit, for a wheel on smart trainer just as the lockdown hit. My supplier (LBS) has vowed to supply it to me for the price at the time I ordered, rather than the new post lockdown price. (about 5k difference)

Therefore I will wait for my unit, albeit not very patiently, as I'm chomping at the bit to try this smart trainer experience. (not even owned a dumb trainer / IDT in my life before)

 

I just hope our parole conditions is relaxed a bit, so that "my" unit can be delivered and the training can commence. PLEASE UNCLE CYRIL.........

[Captain Fastbastard Mayhem]

Thanks for this feedback - really informative.

 

I'd like to know how you guys deal with retailers who purposefully inflate the RRP to make their discounts seem larger. I posted this on the CWC lockdown sale page which seems to have gone very quiet - not sure if it's a coincidence of my post and others calling them out but anyway.

Here's the images and caption which I posted, obviously I didn't get a response from them:

"Thought I'd share this.... CWC, please let me know where the integrity is?

21% saving on an inflated price...!

Bike-Mob, Buycycle and even your parent company have it listed at usually being R9999".

 

CWC Climb.JPG

 

Clab Climb.JPG

 

The price on their website no longer mentions the inflated RRP and it's being sold for R9499.99. I for one will never buy from them after this.

That's RRP for you. If you sell items for less than the "RRP" just include the RRP in your marketing to make it look more attractive. Let the buyer beware.

[no calves]

Thanks for this feedback - really informative.

 

I'd like to know how you guys deal with retailers who purposefully inflate the RRP to make their discounts seem larger. I posted this on the CWC lockdown sale page which seems to have gone very quiet - not sure if it's a coincidence of my post and others calling them out but anyway. 

Here's the images and caption which I posted, obviously I didn't get a response from them:

 

"Thought I'd share this.... CWC, please let me know where the integrity is?

 

21% saving on an inflated price...!

 

Bike-Mob, Buycycle and even your parent company have it listed at usually being R9999".

 

CWC Climb.JPG

 

Clab Climb.JPG

 

The price on their website no longer mentions the inflated RRP and it's being sold for R9499.99. I for one will never buy from them after this.

The picture sums up their sales tactics.

 

https://community.bikehub.co.za/topic/185213-rrsp-of-so-called-sale-items/page-4

 

Also started a topic about similar sales tactics after some clothing RRSP also skyrocketed

 

they have blocked and reported me so many times because i post this picture...

 

Edited April 22, 2020 by no calves

[karnuffel]

Thanks for this feedback - really informative.

 

I'd like to know how you guys deal with retailers who purposefully inflate the RRP to make their discounts seem larger. I posted this on the CWC lockdown sale page which seems to have gone very quiet - not sure if it's a coincidence of my post and others calling them out but anyway. 

Here's the images and caption which I posted, obviously I didn't get a response from them:

 

"Thought I'd share this.... CWC, please let me know where the integrity is?

 

21% saving on an inflated price...!

 

Bike-Mob, Buycycle and even your parent company have it listed at usually being R9999".

 

CWC Climb.JPG

 

Clab Climb.JPG

 

The price on their website no longer mentions the inflated RRP and it's being sold for R9499.99. I for one will never buy from them after this.

 

I see that the price is listed as R9499.99 and the sale banner and saving xxx has been removed.  

 

note: I included my PC time in the screenshot just as a reference 

[Cyclewizz]

As some of you I'm waiting for September / October when the IDT will just be in the way and will be put on sale.

Hopefully I'll pick up a direct mount for a very good price.

 

My small Wahoo Snap has been working overtime but it's working 100%.

 

As for the shops, some are just out to screw people.

Look at all the instant price hikes when lockdown was announced and some people lost their minds.

[MTB-More]

I think this is a 2 fold discussion. Christiaan has given his input into the price increase but at the end of the day from a consumer point of view Wahoo as a brand will need to understand when you price yourself out of the market at R25k you should ask yourself if its in the best interest of the brand and company to want to sell 5 Ferraries a year or 20000 Polo's expanding the brand laterally

 

I would consider the previous price point at R15k even a bit high when you have to compare price vs value and the current R25k makes me look for a alternative outright.

 

If there is none I will buy a 2nd hand one for R8k considering the 1st owner only paid R13k less than a year ago.

[Cookie88]

So glad that I placed an order and paid a deposit, for a wheel on smart trainer just as the lockdown hit. My supplier (LBS) has vowed to supply it to me for the price at the time I ordered, rather than the new post lockdown price. (about 5k difference)

Therefore I will wait for my unit, albeit not very patiently, as I'm chomping at the bit to try this smart trainer experience. (not even owned a dumb trainer / IDT in my life before)

 

I just hope our parole conditions is relaxed a bit, so that "my" unit can be delivered and the training can commence. PLEASE UNCLE CYRIL.........

 

I am in exactly the same boat as you although I wasn't fortunate enough to secure Pre-Lockdown prices... Getting helluva anxious about losing fitness - it's been tough going from 11 hours a week on the bike to just body weight exercises at home...

[no calves]

I am in exactly the same boat as you although I wasn't fortunate enough to secure Pre-Lockdown prices... Getting helluva anxious about losing fitness - it's been tough going from 11 hours a week on the bike to just body weight exercises at home...

Resistance bands, a broomstick cut to lenth and LOADS of creativity. Changed my whole outlook on going to a gym

Edited April 22, 2020 by no calves

[Jewbacca]

I think this is a 2 fold discussion. Christiaan has given his input into the price increase but at the end of the day from a consumer point of view Wahoo as a brand will need to understand when you price yourself out of the market at R25k you should ask yourself if its in the best interest of the brand and company to want to sell 5 Ferraries a year or 20000 Polo's expanding the brand laterally

 

I would consider the previous price point at R15k even a bit high when you have to compare price vs value and the current R25k makes me look for a alternative outright.

 

If there is none I will buy a 2nd hand one for R8k considering the 1st owner only paid R13k less than a year ago.

I get what you are saying BUT exchange rate is still a factor whether you like it or not.

 

While I agree with the 'inflated prices' sentiments, I am reminded of a few things... Jaegermaister. 20 years ago they couldn't give the stuff away selling it as an after dinner apertif.... Some clever product placement, celeb endorsement etc and boom, massive sales at 300% more per bottle.

 

Avocados are another product that had a massive price inflation over night due to the hipster/vegan avo smash toast and craft beer movement.

 

The fact that the shops sold out in a day and continue to sell at inflated prices just tells you that the consumers driving the market are still interested in the product.

 

It sucks for the average joe, but we create our own monsters especially in conjunction with a spiraling economy.

 

I bought a 2nd hand kickr gen1 for more than I wanted to spend at the time but peanuts in hindsight in Jan. I am somewhat happy with that decision...

[dave303e]

Once you have owned a Kickr you will know that even at R26k it is not a bad price for what you get. I certainly haven't found fault in mine.(Price a power meter alone for comparison)

 

I overheated and wrecked our little treadmill during lockdown. (apparently running it at it's max pace for more than an hour is not suggested)

 

Anyway go look at the equivalent industrial treadmill (R50k +) or wattbike (±R60k)

 

Even a top end non industrial treadmill is more expensive, with no smart technology, no power meters and fancy electronics etc.

[MTB-More]

I get what you are saying BUT exchange rate is still a factor whether you like it or not.

 

While I agree with the 'inflated prices' sentiments, I am reminded of a few things... Jaegermaister. 20 years ago they couldn't give the stuff away selling it as an after dinner apertif.... Some clever product placement, celeb endorsement etc and boom, massive sales at 300% more per bottle.

 

Avocados are another product that had a massive price inflation over night due to the hipster/vegan avo smash toast and craft beer movement.

 

The fact that the shops sold out in a day and continue to sell at inflated prices just tells you that the consumers driving the market are still interested in the product.

 

It sucks for the average joe, but we create our own monsters especially in conjunction with a spiraling economy.

 

I bought a 2nd hand kickr gen1 for more than I wanted to spend at the time but peanuts in hindsight in Jan. I am somewhat happy with that decision...

 

Yes true. But its only true under this exact circumstances. When the lockdown is over most of those scrambling to buy a IDT will realise they hate a IDT as being honest its not for everyone and requires a very diciplined individual to do it day in and day out. I personally hate riding a IDT and will ride in the rain in the middle of winter at 4am outside instead.

 

In 6 months from now there will be 100's on the market. Wahoo will need to deal with zero to no sales during that time too due to the overflooding now resulting in to many white elephans in to many houses as who in their right mind will buy a new one at R30k+ when you can get a minimal used one for 12-15k due to the 2nd hand market.

[MTB-More]

Once you have owned a Kickr you will know that even at R26k it is not a bad price for what you get. I certainly haven't found fault in mine.(Price a power meter alone for comparison)

 

I overheated and wrecked our little treadmill during lockdown. (apparently running it at it's max pace for more than an hour is not suggested)

 

Anyway go look at the equivalent industrial treadmill (R50k +) or wattbike (±R60k)

 

Even a top end non industrial treadmill is more expensive, with no smart technology, no power meters and fancy electronics etc.

 

 

https://www.bicyclepower.co.za/product/cycleops-phantom-3-indoor-cycle/

 

Just saying

[Captain Fastbastard Mayhem]

Gah. I need more coffee. 

Edited April 22, 2020 by Captain Fastbastard Mayhem