Raleigh lowers prices

[Jan Begemann]

Rand/$ at 8.45 today if I add 30% to that I get R10.985 and the rand was trading at over 11.00 at the end of last year. So if your next shipment is coming at at 30% cheaper' date=' droping your prices by 25% probably take into account the dollar base pricing and passes that onto the consumer! Probike still are probably making the same margins - and they need too! Do any of you guys work for free? Why should they!

 

 

 

Who I do feel for is the LBS who have stock at the old prices - will Pro bike credit them for this or are they going to have to sell this at a loss? Remembering they would have at it on the floor for about 3 months - and that in itself cost! Or will this just mean more shops close?[/quote']

 

 

 

It's not that we have sold all bikes we bought at 10.20 per USD, and it's also not that all our dealers have hundreds of Raleigh bikes in their shops and already paid for those. Fact is, we are the ones, who have to pay for all our bikes, before the first one is even close to a shop, we are paying interest on the bikes in our warehouse, and we are paying interest for all the bikes in the shops, that haven't been paid yet.

 

At the end Probike and the shops have to work on a average markup. If you work out the profit on each single bike, then I agree with you, on bikes bought at the old price the dealer will make a loss. But at the same time it gives him the opportunity to sell many more bikes at a better price, make up that loss and get marketshare from his competitors.

 

And unfortunately this means, other shops and bike distributors will lose marketshare. But if sales drop countrywide obviously there will be less money to make for everyone, and some might not make it and close their business.

 

I've seen many threads at the hub (and even this one) where people feel ripped off by the bike industry (distributors and shops) assuming we work on super high margins. But what I see is, that many dealers are already suffering, and winter hasn't even begun. As you said we don like to work for free, but for some reason I ride a Chinese Vespa-copy scooter to work, I don't have a maid, my house only has 2 bedrooms and I couldn't afford the bikes I ride if would have to pay the full price - which is probably the real reason why I work in this industry :-).

[AndreZA]

Jan, does this mean that the bikes already in the shops are also selling at the new prices even though you brought them in at the old prices? If they do not, then can you ask the shop not to sell you the one on the floor but yo order you a new one at the better price?

[dirtrider]

Jan I find it surprising that you still want to try and explain to some of the rocket scientists we got on here on how it all works ! It sounds like you have been around the hub a few times and should know that you are most probably wasting your time talking to a small part of the cycling community who thinks they rule the roost . I say F@ck the poor and the stupid .

[Jan Begemann]

I know, I know...

 

Even though I don't post much on the hub I watch it a lot as this is one of many ways to get a impression about what people like or don't like, what their experiences are and what they think about the market. And I know I should better not take every post too serious. But sometimes I just can't hold back...

 

 

 

Mampara,

 

at the end all we can do is lower our prices and and gives new suggested retail prices. If a dealer follows our suggestion and how he handles the combination of bikes with old and new prices, is up to the dealer. But I think by making the new RRPs public we make our position on this very clear :-).

[Slowbee]

 

Jan I find it surprising that you still want to try and explain to some of the rocket scientists we got on here on how it all works ! It sounds like you have been around the hub a few times and should know that you are most probably wasting your time talking to a small part of the cycling community who thinks they rule the roost . I say F@ck the poor and the stupid .

 

you risk getting swine flu ..

 

[Icycling]

Jan - as mentioned to you when I was in PE earlier this year I foresee 50% of Cycle shops country wide closing their door. As part of the bigger picture of world ecconomics. Some more thing have added to this prediction:

 

 

 

1. The weather at the Cape Argus cycle tour - normally after the Argus the shops are still doing good trade untill about now - but not this year - most people were just pissed off about thier time! Not to mention because of the slower times it ended up been thankfully a lot safer - so not to much crash business!!

 

 

 

2. Recession - SA is now in it!

 

 

 

3. Deflation - people will now ask themselves why buy now when in a months time it may be cheaper - so this winter could be very quite for the bike shops esp. now that it has become clear in the bike industry their is deflation.

 

 

 

4. Normally the rand does not improve as quickly as it has after a drop like it did last year (It does normally drop very quickly however). The last time round ?2002 it took about 18 months this time 3 to 4! But this impact on the depression side as thing come down in price - where as in the past their were improvement in the product i.e. 9 to 10 speed which meant items more or less stayed the same price instead of goig up! The other side of this is it seem possible to say with some degree of certainty that the trading range for the rand is between 6 and 12 rand to the dollar. A large range! So below 8 you buying on the cheap side and above 9 reduce the orders for the smallest stock holding possible.

 

 

 

5. Price fixing cases - which may amount to nothing!

 

 

 

6. The only plus side is what is happening to the interest rates and 1 more % today!

 

 

 

So the bottom line is if your LBS is not their next summer don't be too suprized as if my prediction is correct their is only a 50% chance that it will be!

 

 

 

Yes this impacts the importer and price again as their are less people to sell bike and thus less bike are sold and this in turn means less bike been ordered from china etc which means the Local importers may be put into a different price buying bracket and so the cycles starts all over!

 

 

 

Probike is just part of the mix! Nothing wrong with that is their? We all trying do stay open till the next sunny days which will arrive eventually.

[linnega]

 

 

 

1. If this funny "Bungy-currency" called Rand drops from 7.3 per USD to 10.2 per USD in only 2 weeks and all your bike price calculations are suddenly fu..ed' date=' what are you going to do: Increase the prices as much as necessary at lowest possible margin or increase the price even more than necessary to let your competition take over the market or keep prices as they are and ruin your business by losing money with every bike sold?

 

2. If then a few months later the Rand is slowly getting stronger again, and luckily there are still bikes in containers on the way to your warehouse, that can be paid at a much better exchange rate than previous shipments, and if also bike sales countrywide over all brands has slowed down that much, that you run into overstock problems at year end if bike sales don't improve, what would you do? If you see any other option making sense than what we did now, please let me know, I would love to hear that.

 

I also must say I really don't appreciate you saying we don't care about our customers. Apart from the fact, that a business never works, if you don't care about your customers, how can you say that? Did you ever meet me? Did you ever speak to me? Come to PE and spend 1 day in our office. Look at what we do and how we treat other people. After that you can judge and say whatever you think is right. I take my job very serious. Caring about and listening to dealers and consumers is one of the most important parts of my work. I might not always be right in what I believe in, and no matter what I do, some people will never appreciate our bikes as long as there's a Raleigh sticker on the downtube, but please never ever say again, that I don't care about our customers! At least unlike you I have the balls to post under my real name. What is yours?

 

[/quote']

So what you are basically saying is that you took a risk by not taking out forward cover when the sun was shining and then expected the consumer to be happy with having to pay more than the market was willing to accept.  Once that blew up in your face with significantly reduced volumes you've been forced into a corner and lowered your prices.  A suggestion - fix your orders in ZAR or take out forward cover.  In the long term it may be a little more expensive, but the benefits in terms of proper pricing and decent merchandise planning are significant.

 

[Jules]

Good point Linnega. I think the rand is sometimes used as a convenient scapegoat. Even without forward cover, you have to be extremely unlucky to buy at the absolute top and sell at the absolute bottom.

 

 

 

There was no doubt that Raleigh had to do something about its RRPs. It's not as though consumers don't have a choice. If we don't like Raleigh's prices, there are competing brands (some of whose prices weren't that insane), the internet (long live CRC) and the second-hand market (which has some financially distressed sellers looking to convert non-essential assets into quick cash).

 

 

 

 

 

 

[porky]

 

Porky' date=' please tell me what you actually want. If we have to increase our price it's wrong, and if we lower the price it's wrong either.
You say you are a business man, maybe you should help us here and tell us how to run our business. So let me ask you a few questions, and I would like to hear your answer:
1. If this funny "Bungy-currency" called Rand drops from 7.3 per USD to 10.2 per USD in only 2 weeks and all your bike price calculations are suddenly fu..ed, what are you going to do: Increase the prices as much as necessary at lowest possible margin or increase the price even more than necessary to let your competition take over the market or keep prices as they are and ruin your business by losing money with every bike sold?
2. If then a few months later the Rand is slowly getting stronger again, and luckily there are still bikes in containers on the way to your warehouse, that can be paid at a much better exchange rate than previous shipments, and if also bike sales countrywide over all brands has slowed down that much, that you run into overstock problems at year end if bike sales don't improve, what would you do? If you see any other option making sense than what we did now, please let me know, I would love to hear that.
I also must say I really don't appreciate you saying we don't care about our customers. Apart from the fact, that a business never works, if you don't care about your customers, how can you say that? Did you ever meet me? Did you ever speak to me? Come to PE and spend 1 day in our office. Look at what we do and how we treat other people. After that you can judge and say whatever you think is right. I take my job very serious. Caring about and listening to dealers and consumers is one of the most important parts of my work. I might not always be right in what I believe in, and no matter what I do, some people will never appreciate our bikes as long as there's a Raleigh sticker on the downtube, but please never ever say again, that I don't care about our customers! At least unlike you I have the balls to post under my real name. What is yours?
[/quote']

 

Jan, Jan Jan, your post was very difficult to read as it appears you forgot to punctuate it, but worse than that you didnt read my post very well and got me mixed up with other posters, and on top of that you are trying to goad me into an argument, tsk,tsk,tsk ............never the less, I am a patient man, so I will answer you as if I was not wrongly implicated.

 

I will break down your post into sections as I see it, -

 

a)The currancy did not drop from R7.00 to R10.00 odd in two weeks, the decline was far more gradual over a period of around two months - check your bank statements before you reply - dramatic to the western world, Yes, I will admit, but not something importers in SA have never seen before.!!

 

So, what should you do - (you asked this) - well, like most importers (ourselves included) when we saw the rand dropping, and we had about R3 million in future orders on the line for importation, we grabbed forward cover at the rate of the day, protecting our cost of imports and maintaining a stable price to our clients for the next 6 months - why did you not do that.?

 

"Whats that Jan"??................... Oh, yes, like lots of businessmen out there you played "the spot market", gambeling the rand would stabilise or improve??

 

Bad mistake, thats your brokers job, not yours................... and consequently, not one the customer should be forced to pay for by increased prices.!

 

b)Basically your second point (rand improving) is a moot one, because had you forward covered (like a good boy), the increase and / or decrease would be negligable - thats the beuty of forward cover Jan, use it.!

 

c)Now we get to overstock issues - Hmmm, I hear you, stock is money, so you need to convert it quick - no problems, "have a sale", dont play yo yo with your price and my pocket!.

 

d)Now the point on my alledged comment that "you need to care for your customer".

You took exception,........... and I would too,............ trouble is you attributed that comment incorrectly to me, "when in fact another poster made the comment". Go check.!

 

Even though you made a long drawn out diatribe, with various veiled warnings to me about the issue, its no problem, "An apology is not necessary".!

 

e) I have no issue with Raleigh as a brand, show me one post where I have said anything controversial about the brand.

 

Take that as a challenge.!

 

f)My name has no importance to you, I am not in the industry (thank goodness) and I dont visit PE regularly enough for you to have met me - (terrible weather and a piss poor airport make it uninviting to me) I could be anyone, in the grocery que or behind you at the bank, it makes no differance....................what the hell, I shall tell you anyway.............its "Joe Soap."! 

 

Well Jan, its been fun, no hard feelings and if you are in JHB, PM me and I will show you how hard I work at my business as well.!

    

porky2009-04-30 08:24:14

[madmarc]

I have it from good authority that a Raleigh RDS frame only sells to the dealer for R 600.00 ronds. I ever bought one from a LBS so i have no idea what they sell for but it would be interesting to find out. I would think a realistic selling should be 1200 ronds = 50% margin. Anyone have any idea what one really cost????

 

BTW - With Raleigh's old prices they should be throwing in a free Colnago - anyone paying that kind of money for a slant eyed manufactured bike obv. has rich parents.

[Iwan Kemp]

At least unlike you I have the balls to post under my real name. What is yours?

 

Iwan Coenraad Kemp. Thanks for asking

The Crow2009-04-30 08:32:00

[Jules]

I dont visit PE regularly enough for you to have met me - (terrible weather and a piss poor airport make it uninviting to me)

 

 

 

[Overlord]

Could this sudden drop in prices have something to do with the "investigation" into price fixing?

 

And before anyone feels like jumping down my throat I want you to read the question again and notice that no NAMES are mentioned. Its a straight forward question.

 

[Icycling]

Price fixing - yes the reserve bank drop the REPO rate today by 1%. Most business need money and thus most business suffer from price fixing.

 

 

 

This intern should mean the rand will becomes stonger as overseas markets see RSA too is part of the globle ecc, and thus are more willing to invest in RSA. So its a double benefit easier for you guys to spend money and easier for the importers to buy stock at cheaper prices.

 

 

 

Gov. should stop fixing the price of petrol etc before they look at the cycle industry - where even if they take 10% of the profits they may have to paying in certain cases!

[Slowbee]

 

At least unlike you I have the balls to post under my real name. What is yours?

 

Iwan Coenraad Kemp. Thanks for asking

 

can you please I deemand you buy me a new screen, keyboard and tin of paint.

 

wall (s) 'n all, covered in tea

 

[Guest Agteros]

 

 

Remember this:

 

From: Brandon Els [mailto:brandon@probike.co.za']

Sent: 03 November 2008 09:09 AM

To: zoon@silverback.co.za

Cc: 'Dave Wyatt'

Subject: FW: Key Model Comparison 2009 V1 from Silverback

Please

ask our permission before you send out info like this in future.

Probike has the capitalization and financial resources to wipe out your

company today by selling every model you do below our cost and to

import 5 times the volume you do. Would you like me to do that?

I

can amend our pricing and issue the comparative charts and pricing

today to all dealers. You are looking for attention from Probike that

you really do not want!

 

 

I think it just happened.

 

I love capitalism, go Probike!

 

 

Does the threat contained in this  alleged email , allegedly attributed to one Brandon Els not smack of anti-competitive behaviour?

 

Should the competitions board not be interested in this (as well)?

Agteros2009-04-30 14:00:40