Start a Bike Shop

[Hairy]

6 minutes ago, Mountain Bru said:

 

I'm confused by this R8000 thing....

Are people saying that a first off purchase of R8000 is too much? 

Personally, I can't believe a first purchase is as low as R8000 if you want to be a retailer. I mean realistically, what can you even buy for R8k? Maybe 1 groupset? The cheapest frame a manufacturer makes? A few sets of box section wheels? For a bicycle/component brand, I would have expected the initial purchase to need to be well over R100 000 if not more. 

Average Joes are spending R50k plus once off on a bicycle, and they're not allowed to buy at wholesale prices. If you claim to want to own a shop, and can't spend R8000 once off to buy stock, I really don't think you're in a position to open a bike shop.
(Yes, I get that you might need to spend R8000 at more than one supplier, but the point still stands even if the value was R50k)

Last time I chatted to someone the feeling was to drop 1mil on the table and then start from that point on.

Besides stock one has to fit out a store, secure rentals, then insurance, security, etc and money does not go far.

[Eddy Gordo]

I find whatever the number is these days to be ridiculous. The bike industry certainly keeps would be startup bike shop owners away or make it very difficult. 

The industry that I am currently in does not have any minimum order requirements. As long as you pay them. There is not even bulk pricing, however one can ask for a discount when buying huge quantities.

[DieselnDust]

14 minutes ago, Mountain Bru said:

 

I'm confused by this R8000 thing....

Are people saying that a first off purchase of R8000 is too much? 

Personally, I can't believe a first purchase is as low as R8000 if you want to be a retailer. I mean realistically, what can you even buy for R8k? Maybe 1 groupset? The cheapest frame a manufacturer makes? A few sets of box section wheels? For a bicycle/component brand, I would have expected the initial purchase to need to be well over R100 000 if not more. 

Average Joes are spending R50k plus once off on a bicycle, and they're not allowed to buy at wholesale prices. If you claim to want to own a shop, and can't spend R8000 once off to buy stock, I really don't think you're in a position to open a bike shop.
(Yes, I get that you might need to spend R8000 at more than one supplier, but the point still stands even if the value was R50k)

 

its varies from distributor to distributor. The truer value is around R40k ave. 

[DieselnDust]

9 minutes ago, Hairy said:

Last time I chatted to someone the feeling was to drop 1mil on the table and then start from that point on.

Besides stock one has to fit out a store, secure rentals, then insurance, security, etc and money does not go far.

Yip R1mil to R1.5mil is par for the course and that's wot set up a modern trendy airy low stock millenial styled store.

[Hairy]

1 - 1.5mil, Still cheap compared to setting up something like an engineering or specialist fabrication shop from scratch?

[Mountain Bru]

2 minutes ago, Hairy said:

Last time I chatted to someone the feeling was to drop 1mil on the table and then start from that point on.

Besides stock one has to fit out a store, secure rentals, then insurance, security, etc and money does not go far.

That sounds realistic to me (and a horrific way to invest R1mil).

But if you've got a million to start with, I doubt R8k minimum orders will bother you.

 

[Mountain Bru]

11 minutes ago, Eddy Gordo said:

I find whatever the number is these days to be ridiculous. The bike industry certainly keeps would be startup bike shop owners away or make it very difficult. 

The industry that I am currently in does not have any minimum order requirements. As long as you pay them. There is not even bulk pricing, however one can ask for a discount when buying huge quantities.

What industry is that?

[Mountain Bru]

1 minute ago, Hairy said:

1 - 1.5mil, Still cheap compared to setting up something like an engineering or specialist fabrication shop from scratch?

Difference is you might actually make money off the engineering shop.... 

[Hairy]

1 minute ago, Mountain Bru said:

Difference is you might actually make money off the engineering shop.... 

Or loose a lot of money very quickly

[Hairy]

5 minutes ago, Mountain Bru said:

What industry is that?

Eddy is a male stripper!

[PhilipV]

8k minimum order isn't a lot. 

I remember in my youth when I was involved with wholesale  the initial order on cycling apparel was set high enough to buy a decent size curve in two three basic styles. ie Full curve of Bibs, shorts and shirts. 

If you made the investment they were willing to provide branding etc to help make it look good in store. And yet there was grumbling from stores. WDF  Frikkie, as jou rakke sleg lyk en jy het nie iemand se grootte gaan jy niks verkoop nie. 

One thing I can say, dealing with the Mom's and Pop's Store type of small business can be very satisfying, and very frustrating. 

 

[MarcHD]

Some really interesting opinions and/or experiences here so may as well add to the fire lol.

 

I've been in the industry for just on ten years as of this August.

Spent five of those ten in retail (two as the manager of a bike shop) 

One year as a sales rep for a distributor 

Last four years as a director of a distribution company I co-own, founded as a result of my decision to NOT start my own bike store after my final stint as a manager of a bike shop. More on why I didn't later...

 

Below are some insights, anecdotes and experiences that I hope are of some use to people looking to start any business or just for interest to those on the consumer end of this market.

 

Loyalty

One thing nobody touches on, probably because it's not common knowledge in the service industry is that of the cause for customer loyalty. That is to say: the reason they would come to your store instead of another or buying online. Most people tend to think it's about customer service or customer experience (CX) and as a result I see a lot of new and/or well meaning store owners bending over backwards to please customers thinking this is the answer. 

They're not completely wrong. For sure you cannot have terrible service, and it's a combination of aspects, but statistically speaking, the leading cause for customer loyalty is convenience. Yes, it's a tough pill to swallow, but the sooner people understand that most end consumers just want frictionless transactions that are on their way to work or delivered to their door for example, the less store owners will be so upset when their customer of 10 years who they thought was loyal had no problem going to another store or buying online without batting an eyelid.

Please don't get me wrong, I am not saying convenience is all that counts, I am merely saying it is the primary reason for loyalty in our current market. This is why, for example, when I was the manager of a bike shop that was located on a trail network farm and we wanted to attract repeat customers (and not just rely on post ride foot traffic), I made it clear to my staff that we need to offer the best service the customer's have ever seen due to the fact that they had probably passed 4 other bike shops on their way to us (convenience) and if they do not get the best service ever (service) while creating a memorable experience (CX) there was no way they would come back for anything other than perhaps a post ride tyre or bomb.

Long story short here is that convenience is the driving factor for a lot of consumer behavior and is both a limiting factor (bad location) but also a good motivator such as in my example above.

 

Professionalism

Before you tell me a story about how you prefer customer service and think it's essential for stores to always bend over backwards and that's why you visit store X, it's important to remember that a professional is someone who is consistent. There is no use offering 11/10 service on Monday if you are burnt out and offer 4/10 by Friday... This is the trap many smaller, inexperienced bikes shops fall into as they are [understandably] fighting for market share from the slower moving, poor service bigger stores, and this might be the case, but many of the larger stores with a good following understand this principle of being professional. That is to say consistently good.

 

Customer Experience

There is a great lesson from a book called the Power of Moments, for which the following hypothesis has since been turned into theory by further studies and data which goes something as follows: If you were to rank all your customers from a scale of 1 - 10 with 1 being the most dissatisfied and 10 being the most satisfied. It is proven that attempting to convert a customer who is a 6, 7 or 8 on this scale to a 9 or 10 is literally 9x more profitable than trying to please the 2, 3 or 4 customers and converting them to a 10.

Yes you read that right. Nine times more profitable....

The moral of the story? Again, I have seen many smaller or less experienced stores exclusively adhering to the mantra "the customer is always right" and worrying and slaving and toiling over the 2, 3 and 4's out there when in reality these people will likely be unhappy with your service and life in perpetuity. Don't waste too much time on them. You sanity, motivation and bottom line will thank you for it.

 

Price

Price is not just about price... more often than not what it really is about is value, and when customers are more and more frustrated with lack of value from dealers that offer a mediocre experience, limited knowledge, average or bad service and charge premium prices, all because it's been easy to own a bike shop with this attitude in the past.... who would blame them for buying online? Now add to this that online is increasingly more convenient AND better service (get back to you asap etc) then you can understand why it's not just about price for a lot of people. 

 

Buy ins/MOQ/Opening orders

This is common in lots of industries and as an astute/realistic Hubber pointed out already, is perfectly understandable and should be expected by prospective store owner. I won't say much more on this subject as I know it is bound to offend some people, but I do agree that some of the opening order expectations are truly obscene and one must remember that every business starts somewhere so you cannot be too demanding on the new guy. 

 

So why didn't I open a bike shop of my own? I managed a bike shop for two years with the express purpose of seeing if the experience would make me confident enough to know I could do it my self, after all, if you can manage something you can own it.

This ended up not being the path for me, mainly due to the constraints of being in a fixed location. I would still one day love to open a bike shop that uses the concepts laid out above and with perhaps delusions of grandeur I think I could change the way retail is seen in South Africa, but that is a dream for future perhaps. 

 

Hope this post was of interest to those who read it. please remember the above are relating to bell curve behavior and OF COURSE there are loads of exceptions to what I have said. If you are one of the exceptions, that's great, you're probably helping a little store grow and provide education for their kids, but please remember people are people and bell curves are bell curves for a reason. Failing to recognize consumer behavior is something one does at their peril. 

 

Cheers 

 

[Prince Albert Cycles]

Finding all the discussions interesting . Just reading this saying came up in my mind . How do you make 5 Million Rand in a bike shop ? You start off with 10 million????

[ChrisF]

6 hours ago, splat said:

That sounds like a giant really big mess

Somehow its less funny when these spanner wrenchers cant maintain the new bike you bought there ....

 

 

Ooooo well .... life moves on ....

[Eddy Gordo]

1 hour ago, Hairy said:

Eddy is a male stripper!

You forgot to mention prvt ladies masseuse

 

????????????

[Hairy]

1 minute ago, Eddy Gordo said:

You forgot to mention prvt ladies masseuse

 

????????????

Sorry ... must have been a typo .. did I say male stripper ... I meant to say a paint stripper!