Indoor trainer price GOUGING during / after lockdown...

[Christian van Zyl]

 

Hi Hubbers

 

As I am sure everybody has been doing, I have been keeping an eye on indoor trainer prices, as the cabin fever is getting to me.

 

A week ago, most online retailers had the Wahoo Kickr 4 at R19 999.

This week, it is priced at R24 999.

 

That is a 5k jump.

 

I understand the R/$ exchange rate and then some, but in the last month (I take it that stock will be ordered systematically), the exchange rate only changed around 12%, and that is far from the 25% on the trainer price jump.

 

16th of March 2020 it was R16.63 to 1$

16th April 2020 it is R18.74 to 1$

 

Seems excessive.

 

Anyone else noticed?

 

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 

[Cookie88]

This is good deal, now.  A Kickr Snap 2 retails on CWC for R9,999. If able to, share the Retailer selling for R7,700.

 

Few weeks before lockdown Cyclelab ran a special for Kickr Snap 2 for R5,999 - how sorry I am I didn't buy one.

 

Rather conflicted with Winter coming up, but hopefully some relief around training will be announced soon.  Once lockdown is lifted, will the market be flooded with smart trainers (taking Winter and economic conditions into account)? 

 

I don't know if I should:

1. Wait for and snap up any Kickr Core (or Snap) for a decent price in the second hard market.  Decent being pre-lockdown, new price, less a R2/1k?

2. Attend Winter spinning classes - if allowed?

3. Be a man and just ride into the cold (and darkness)?

 

I have had a very expensive Virgin Action membership running for a while now and have primarily used the Wattbikes to do some structured training sessions.

 

I don't see Gym/Studio's opening again from 1 May the way things are going... So decided to pull the triggerm order a Kickr Core. Will be canning my Virgin membership to save some moolah going forward... Would rather have the option within my control than rely on my access to gym to get structured training done...

 

So out of your options - I would pick up something post-lockdown - you don't know how long it will take for you studio to open up again and who knows... We might be faced with another lockdown in a couple of months...

[Cookie88]

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 Christian, 

 

This provides some good context - kudo's to you and the team and all the best for the months ahead as you guys navigate the waters! 

[Rowl]

I have had a very expensive Virgin Action membership running for a while now and have primarily used the Wattbikes to do some structured training sessions.

 

I don't see Gym/Studio's opening again from 1 May the way things are going... So decided to pull the triggerm order a Kickr Core. Will be canning my Virgin membership to save some moolah going forward... Would rather have the option within my control than rely on my access to gym to get structured training done...

 

So out of your options - I would pick up something post-lockdown - you don't know how long it will take for you studio to open up again and who knows... We might be faced with another lockdown in a couple of months...

 

Ja, sadly I foresee lockdown restrictions being in place for a while.

[slickjay007]

Globally demand is up, but supply is low. Price goes up.

 

secondly our distributors in SA don't know where the Rand is going to end up by July. Pessimistic view is R20 to the US$ Optimistic view is R13 to the 1US$. Most are taking forward cover for the pessimistic view and will therefore profit is the optimistic view pans out.

But demand is going to remain low for some time. Right now so many small businesses are on the ropes, an IDT is not going to be a necessity if you have to lay off staff, even less if you getting laid off.

 

Twelve months from now the prices may be more normal anyway as I can't see the world returning to what we considered to be normal, for a t least the next 2-3 years. Discounted prices now are really just to clear stock and have cash on hand to pay staff and rentals and place orders for replenishment so that retailers and distributors can retain their businesses. I'm trying to support as pragmatically as I can

 

I was sent an email yesterday from the sales team at Easybike indicating that price on the Tacx range of IDT's are going up on the 1st of May and that they currently have stock reserved for them at the old price.

[Captain Fastbastard Mayhem]

@ Captain Fastbastard Mayhem...was merely making reference to this hubbers post.

Yeah dude. Sorry about that.

[Focusspeed1]

Hey cookie88, yes i canceled my gym membership last year july... Infact my gym closed down and i was forced to shop around...i coudnt get myself to paying R400 to R600 a month for gym fees... Even with or without vitality its all alredy worked into the price so you defn not saving... Trust me. I ended buying a tacx flow wich i abssss love. I use it regularly even before lockd. Also bought a excellent cond treadmill off gumtree for R2k... All you need.

[slickjay007]

I have been chatting to a bike shop owner throughout the lockdown - he buys his stock directly from the distributor of a certain indoor trainer brand.

 

Two weeks into lockdown the distributor quoted us RXXX the week before Easter weekend - the stock was 'sitting in Durban harbour' so all sorted and delivery would be able to be made post Lockdown.

 

Surprise surprise (forgive me being skeptical here) the distributor comes back and informs us that the prices have all gone up 20-25%. I am in Asset Management so I have no idea how these things work - in my mind when you place an order you pay upfront for that order of say 300 units, so the price of the goods can't jump 20-25% while the container is on the water. Since I imagine that VAT & duties are charged on the purchase price surely these duties haven't gone up over lockdown?

 

Maybe an experienced Hubber with some insight into Import/Export can shed some light?

 

Remember the distributor has had to pay for the storage cost on the container for 5 weeks and most likely needs to make that cost back somehow? just my opinion

Edited April 21, 2020 by slickjay007

[hansolo]

Really glad I bought a Kickr Core on sale during the lockdown but hope I can pick it up soon. I’ll have to see if I “enjoy” it but I suppose it will come in handy on those cold/wet winter days.

[stringbean]

It’s easy from armchair to comment about price increases until we get full behind the scenes info.

Thanks Christiaan for info.

As mentioned in previous post NOTHING is going to get cheaper.

At best you could perhaps get a trainer second hand from someone selling it at what they paid for it.

[no calves]

I have been chatting to a bike shop owner throughout the lockdown - he buys his stock directly from the distributor of a certain indoor trainer brand.

 

Two weeks into lockdown the distributor quoted us RXXX the week before Easter weekend - the stock was 'sitting in Durban harbour' so all sorted and delivery would be able to be made post Lockdown.

 

Surprise surprise (forgive me being skeptical here) the distributor comes back and informs us that the prices have all gone up 20-25%. I am in Asset Management so I have no idea how these things work - in my mind when you place an order you pay upfront for that order of say 300 units, so the price of the goods can't jump 20-25% while the container is on the water. Since I imagine that VAT & duties are charged on the purchase price surely these duties haven't gone up over lockdown?

 

Maybe an experienced Hubber with some insight into Import/Export can shed some light?

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.

Edited April 21, 2020 by no calves

[ChrisF]

Try to order a slightly custom VW (add most other brands in here ...) and you SIGN that the cost is an ESTIMATE based on the current exchange rate.  The exchange rate at DELIVERY is the one used for the final price.

 

 

The exact same applies when we order expensive engineering equipment.

 

 

Thus we use "forward cover" on many such purchases.

 

 

This was hardly an expected event, and there was no way for Christian and his team to even consider spending a considerable amount on forward cover - remember many of these transactions transpire 8 to 12 weeks before delivery.

 

 

extra storage fees etc must be a real killer at this time !!

 

 

 

Now in all fairness to Christian and his team.  They kept the Wahoo prices constant for about two years already, at least that is how long I have been watching their products.  GLAD I bought late last winter.

 

 

 

This may just be the first of MANY such price hikes we are about to see .... not just in cycling.

[Eddy Gordo]

I have been chatting to a bike shop owner throughout the lockdown - he buys his stock directly from the distributor of a certain indoor trainer brand.

 

Two weeks into lockdown the distributor quoted us RXXX the week before Easter weekend - the stock was 'sitting in Durban harbour' so all sorted and delivery would be able to be made post Lockdown.

 

Surprise surprise (forgive me being skeptical here) the distributor comes back and informs us that the prices have all gone up 20-25%. I am in Asset Management so I have no idea how these things work - in my mind when you place an order you pay upfront for that order of say 300 units, so the price of the goods can't jump 20-25% while the container is on the water. Since I imagine that VAT & duties are charged on the purchase price surely these duties haven't gone up over lockdown?

 

Maybe an experienced Hubber with some insight into Import/Export can shed some light?

Beats me man. I see this every couple of weeks, for a few years now. Even when fuel comes down, rand gets stronger, pricing almost never changes. The minute the petrol goes up, then the cost of products goes up. Somehow, along the line something is not right.

What I have observed is that pricing is more or less, mainly a little bit more than most overseas markets for similar items. However, the cost of the item is less, so they get sold locally for a similar price as overseas. This is including shipping and duties.

We have cut importing goods by 3/4 over the last 5 years, so now we have the same stuff everyone else is selling. You even see this in many stores, similar items re branded, even flea market stalls are no longer unique for the majority. The downside is that now we do not get unique items any longer, but the plus side is that SARS does not nail us on imports!!

[CAAD4]

Not only trainers. Expect consumer electronics to go up at least 30% in the next quarter, unless the rondt recovers dramatically.

[Veebee]

I have been chatting to a bike shop owner throughout the lockdown - he buys his stock directly from the distributor of a certain indoor trainer brand.

 

Two weeks into lockdown the distributor quoted us RXXX the week before Easter weekend - the stock was 'sitting in Durban harbour' so all sorted and delivery would be able to be made post Lockdown.

 

Surprise surprise (forgive me being skeptical here) the distributor comes back and informs us that the prices have all gone up 20-25%. I am in Asset Management so I have no idea how these things work - in my mind when you place an order you pay upfront for that order of say 300 units, so the price of the goods can't jump 20-25% while the container is on the water. Since I imagine that VAT & duties are charged on the purchase price surely these duties haven't gone up over lockdown?

 

Maybe an experienced Hubber with some insight into Import/Export can shed some light?

So all Non-essential items are not allowed to be on to roads, or delivered to customer to be unpacked.

What this means is that all non-Essential containers are being moved into storage and can only be delivered after lockdown.

 

Most shipping companies are offering a 50% reduction on their costs, but these are soo heavily inflated that even with a 50% reduction you still in for a huge amount.

Average storage rate with a few shipping lines are around +/- R600 day/container + another $25 detention [R450] + transport from port to storage of around R1250. So additional R38k just on 1 container.

 

I have a client who is fairly new in business and importing, he does aluminium profiles and imported a 12m container with MSC, 25 days in storage and we sitting with a total bill of R150k, how does he recover from this ?

 

Another client imports raw materials for the paint industry - 86 containers currently in storage with charges of around R450k.

 

How does one recover from this ?

 

This forms part of the total shipping costs and these charges will have to be added into the sale price of the item, why must the importer be liable for the additional costs ?

 

So prices can change while the goods are still on water if you had to take into account all these additionals once it lands in SA.

[madmarc]

It also depends what the payment terms are with the supplier - some importers might have a 60 - 90 credit line so when they order and the dollar is at 14:1 but when they pay its at 20:1.