Lets compare LBS to CRC

[madmarc]

Someone posted the idea of opening a CRC support business in SA earlier. Its only a matter of time and something like this will happen. Someone will design a business plan around the idea and make it work.

 

Here is an example

 

My wife runs a hair salon from home, she has 2 sources of income.

1. form actually doing hair

2. markup on the products she buys and uses.

 

over the last few years she has found that a lot of the products she uses can be puirchased at various stores direct to the public. All be they at higher prices than what she pays, becuas she buys in bulk and is not simplya dealer - she is on their books as a stocking dealer.

 

So she starts to lose some business because customers can buy tints, perms etc and think they can do their own hair. Not just the money made on products, but also the hair because customers stop coming to her.

 

Whats the response - she agrees that customers can bring their own tints etc and she will do it for them. (No other hairdresser would allow this) and only charge them for doing their hair.

Today she has even more clients than before, many of which now use her products because they couldn't be bothered shleping to Dischem to buy a tint and save 10 ronds

 

Reaction to a threat could cost you in the short term but will pay back in the long term. No reaction will cost you in the short term and dust your business in the long term

[GoLefty!!]

As I have made many comments on this topic in the past. Please remember for each rands spent our of RSA well certainly in the cycling circles it probably equates to 1 less R1 spent in the local economy. So directly you may be saving 50c but indirectly you are eroding the RSA economy - which in turn may cost even you your job if you work in RSA a part of the RSA economy and certainly reduces the TAX collection in RSA' date=' which is I think, the government is the biggest employer in this country. Jobs get lost crime increase - that's been shown.

It was the US presidents mission last year to get the US people spending again to boast the US economy. But if their spent all their money in China for argument sake it would have nothing for the US economy![/quote']

 

But Icycling, you buy your stock from Europe to avoid the local distrubutors?

 

 

 

 

Ok I;'m not going to answer for him. What I will say is that, Icycling and CWC still do their business locally so they pay tax locally.

 

With CRC, the Gov gets its VAT at 14% but the Rep.of Irelands goverenment gets the company tax so we're making the Irish richer.

 

Spend the money locally and the SA government gets the company tax + the VAT.

 

So even though the distrbutor or Icycling spends the cash overseas initially, the value add still takes place in SA which means more money in government coffers that does not get spent.

 

 

look at least its our government ok...

 

 

Jules,

 

you raise an interesting point.

 

the voluem for the cycling industry indeed lies with the infrequent cyclist at a particular time of year. Lets call them fair weather riders.

the rest of the year, the enthusiasts keeps the lower volume ticking over.staining volume and the demand curve for a distributor is now skewed toward periods in a year which means infrequent ordering from a manufacturer which means a higher unit cost.

Higher unit costs willl drive more people away since this leads to higher overall costs.

So the downward spiral continues. Eventually the spiral impacts the fair weather weather riders and they turn to running instead. Crash, goes the industry.

 

Right your enthusiasts will now buy from CRC all the time, so now numbers are reduced but perhaps the fair weather people switch over to buying from CRC as well.

 

So now not R4million a month leaves SA, but R100milllion.

Government sees this and says right, 60% import duty on imported cycle goods, boom down goes the cycling industry again.

 

[Colin H]

Ok so picture the scene:

 

Clever dude in SA decides to go the virtual shop/crc agregator route. Prices now rise by about 20% as he has to make a reasonable markup. Dude publishes this plan on the hub.

 

New thread starts up about this new rip off and hubbers go back to informal pooling of orders.

 

Gotta love the circle of life!

[wildroadie]

Someone posted the idea of opening a CRC support business in SA earlier. Its only a matter of time and something like this will happen. Someone will design a business plan around the idea and make it work.

 

Here is an example

 

My wife runs a hair salon from home' date=' she has 2 sources of income.

1. form actually doing hair

2. markup on the products she buys and uses.

 

over the last few years she has found that a lot of the products she uses can be puirchased at various stores direct to the public. All be they at higher prices than what she pays, becuas she buys in bulk and is not simplya dealer - she is on their books as a stocking dealer.

 

So she starts to lose some business because customers can buy tints, perms etc and think they can do their own hair. Not just the money made on products, but also the hair because customers stop coming to her.

 

Whats the response - she agrees that customers can bring their own tints etc and she will do it for them. (No other hairdresser would allow this) and only charge them for doing their hair.

Today she has even more clients than before, many of which now use her products because they couldn't be bothered shleping to Dischem to buy a tint and save 10 ronds

 

Reaction to a threat could cost you in the short term but will pay back in the long term. No reaction will cost you in the short term and dust your business in the long term

[/quote']

 

Now there's a smart LADY!!!  Yes I am sure it was her that came up with the idea and well done!  I hope her business carries on brilliantly! 

[Capricorn]

i'm wildroadie: props to your wife madmarc. She saw the writing on the wall, and went where most were slow to venture. question is: Can she fix bicycles too?

[Li Mu Bai]

 

Definately a lot cheaper with out question.

One of the catches are if the components give you hassles or are defective you have a little problem on your hands & I think this also makes problems for the local suppliers as they are now stuck with carrying out the manufacture warranty.Another issue is' date='what if the parcel arrives in South Africa & it has been damaged in transit or the wrong spec parts have been shipped.

Its a sticky situation as you can save a fair ammount from buying from CRC.

[/quote']

 

not really, CRC has a return policy in which they sort out 'problems' that may arrise thru no fault of your own. You have to post the item back to them and they repost you the correct/fixed item. Time is the biggest issue now, as they refund your postage cost.

If bought from the LBS, the LBS would simply take the faulty part, call the distributor to sort it out, and IF he has stock, you would get a speedy exchange if deemed necessary.

 

Getting a warrenty honoured nowadays is an issue wherever you go.

 

 

[Icycling]

But Icycling, you buy your stock from Europe to avoid the local distrubutors?

 

 

 

Incorrect - I get some of my stock from the local agents!

 

 

 

Shimano, I believe, I probably pay less from my European suppliers than the RSA Shimano agent does direct from Shimano due to the nature of Shimano price structure! If this is correct then still less rands leave the country!

[Gasping]

So I had a look at the simplistic financial calculations and came up with something far scarier than presented here.

 

I will in all likelihood continue to buy from my LBS, but look at the compounded problem described below.

 

Assumptions:

a) The product costs R1.00 from CRC and includes shipping to RSA.

b) VAT is 14%

c) Duties for SARS is 15%.

 

Assuming that on average the Gross Profit made by each party is 25% (not markup), then the following table applies. I have used running totals to simplify.

 

Part Cost = R1.00

Include VAT = R1.14

SARS = R1.31

25% GP (markup of 34%) = R1.76

 

It is not quite R1.00 becomes R2.00, but here it starts getting interesting.

 

Part cost to Distributor = R1.76

VAT = R2.00

25% GP (markup of 34%) = R2.68

 

Part cost to Distributor = R2.68

VAT = R3.06

25% GP (markup of 34%) = R4.10

 

Also bear in mind that the VAT charged by SARS to the Distributor is refundable because it is for resale not use by the business. In this same way, the VAT payed by the Retailer to the Disty is also refundable.

 

I can make it cheaper by charging 20% GP. Then the whole calculation comes out to a Retailer price to me of R3.33. The VAT reimbursement still applies.

 

Everyone will plead poverty here and claim lower GP margins, but in all reality when you are not in the FMCG business where you can charge lower margins because of the volume being moved (read CRC) then the going rate is 25% GP plus.

 

I do not deny anyone making a profit - please do not make a "killing" on my purchase.

 

 

[madmarc]

i'm wildroadie: props to your wife madmarc. She saw the writing on the wall' date=' and went where most were slow to venture. question is: Can she fix bicycles too? [/quote']

 

I fix all my own bikes - I sometimes let her wash them though

[MadScientist]

I will also support my LBS as i'm at the stage where they know my preference and that you won't get from CRC. I'm not the type of guy to shop around and thus far i've been lucky in not needing a replacement now but rather later so i'm able to wait for the order should stock issues arise.

 

But then on the other hand some of the other "locals" i've been to would have pushed me to CRC if i've known about them earlier, as the service and manners from these where terrible to say the least