'Bicycle prices fixed'

[Lucky Luke.]

Sorry to be naive but can anyone enlighten me as to what value a distrubutor adds for the consumer? Seems to me they are the redundant link that drives prices up and encourages consumers to vote with their clicking fingers at CRC.

 

Our local bike shops have value to add as the knowlege-base and as a cultural touchpoint for the bike fanatic, but as long as their prices cannot compete with dependable online stores they are going to lose out. That's basic economics, supply and demand (respect to CWC, don't know how they do it).

 

Shop owners can offset this problem by getting involved with clubs, group rides, events etc and generally having a cool shop, good staff and supreme product knowledge. Managing bulk CRC orders for customers and then charging for labour / adding a small markup has also been suggested.

 

Ultimately though, if the distributors control the flow of stock, enforce inflated pricing and encourage price fixing the retailers themselves are going to suffer the most in the long run. CRC is just one international site. Local online business are starting to pop up in it's wake. The market is small in SA but I think it is evolving out of necessity and those who cannot adapt will die.

[mikkelz]

Glad to see that Bridge Cycles aren't on that "alleged" list.

[agentorenge]

Johan

If I supplied you a frame and you painted it I would not support the warranty. There are bikes that some people are not capable of washing, let alone allowing them to attack it with thinners or DK stripper.

Do a search on the net and see what paint liquids can do to resins/carbon layups and you will understand why they have that policy. I am aware of one manufacturer that has replaced countless frames even i the paperwork was not 100% in order.

[Swart Skaap]

Its funny how the cycle shop owners and wholesalers are always the bad guys. What about people doing the buying for big clothing chains? (personally told me they buy jeans for R17 and sell in store for R300) This is one of many. But people are happy to get ripped off when buying clothing name brands.

 

Lets look at a average cycle shop. Rent R20000, mechanics R9000, phones, electricity, useables R5000, shop van to collect + deliver R3500. Total=R37000. Thats overheads EXCLUDING salaries for sales personel or managers or advertising or sponserships. So lets add sales personel for another R10000. We round it off at R50000. To break even at 35% margin, you need a approximate turnover of R150000. Try not selling anything, and covering your overheads doing only workshop jobs at R300 a service. Thats 500 services a month. Okay, services have a bigger profit (and higher taxes to SARS) So lets say 250 services a month??? Thats 125 services per mechanic, and thats 6.25 services a day.

 

Please go open a bike shop, then we will see how quick you understand the CRC etc problems.

[Swart Skaap]

Now heres another scenario.

 

Everyone supports the local "proudly South African" trade. Wholesalers gets more buying power. Wholesalers get bulk discount and company incentives from the international suppliers. Sponsors get back into the sport, shops get more involved. Shops gets better deals from wholesalers and pass it on to the consumers. SA bike trade doesnt lose millions (approxemitely R100 million last year) to international trade, and starts to boom! We have trails everywhere, we have more products in SA and stock is easy to get, because our wholesalers can afford to carry more stock. Local employment goes up, we have race support at all the races, maybe even some small stores or dispays at the races?? The possibilities are endless.

 

But i guess CRC and all the others out there does the same. I mean, why would you support the local trade if its fun complaining and being unhappy about it?

[dirtrider]

Jaco no point in wasting your time . I see our dear friends also want to change their new bikes to suit them and then expect everybody to honor the warranty !! Shame maybe he should upgrade the brakes on his car , then respray it and take it back to the dealer because something is wrong and see how far they get . F#ck i know stupid comments gets made by us on here more often than needed but this has far exceeded what we previously seen as being stupid . Mr Bornman got his workshop where he works on new bikes and then after he worked on them expects the original warranty to still be valid . Well it does not really work that way in the cycling industry or any other one for that matter , unless you are authorized by the manufaturer of the product to service the product ?

 

Ok now back to the price fixing joke .

[Guest Big H]

Its funny how the cycle shop owners and wholesalers are always the bad guys. What about people doing the buying for big clothing chains? (personally told me they buy jeans for R17 and sell in store for R300) This is one of many. But people are happy to get ripped off when buying clothing name brands.

 

Lets look at a average cycle shop. Rent R20000, mechanics R9000, phones, electricity, useables R5000, shop van to collect + deliver R3500. Total=R37000. Thats overheads EXCLUDING salaries for sales personel or managers or advertising or sponserships. So lets add sales personel for another R10000. We round it off at R50000. To break even at 35% margin, you need a approximate turnover of R150000. Try not selling anything, and covering your overheads doing only workshop jobs at R300 a service. Thats 500 services a month. Okay, services have a bigger profit (and higher taxes to SARS) So lets say 250 services a month??? Thats 125 services per mechanic, and thats 6.25 services a day.

 

Please go open a bike shop, then we will see how quick you understand the CRC etc problems.

 

Jaco, your comparison is not valid. This whole scenario and the ensuing case enamated from a secret meeting where the minutes was leaked.

 

The following is applicable here.....

 

collu´sion, geheime verstandhouding, kollusie; heuling, samespanning.

[Guest Big H]

Jaco no point in wasting your time . I see our dear friends also want to change their new bikes to suit them and then expect everybody to honor the warranty !! Shame maybe he should upgrade the brakes on his car , then respray it and take it back to the dealer because something is wrong and see how far they get . F#ck i know stupid comments gets made by us on here more often than needed but this has far exceeded what we previously seen as being stupid . Mr Bornman got his workshop where he works on new bikes and then after he worked on them expects the original warranty to still be valid . Well it does not really work that way in the cycling industry or any other one for that matter , unless you are authorized by the manufaturer of the product to service the product ?

 

Ok now back to the price fixing joke .

 

Dirt Rider is suurtiet because Jay Bee put him in his place a few times and he also has a infatuation with a certain bike shop near TUKKIES in Pretoria....... o ja ..... he is also to skuitbang to buy from www.chainreactioncycles.com

[Guest Big H]

Glad to see that Bridge Cycles aren't on that "alleged" list.

 

You will also note that not many cycle shops outside Gauteng are named in the news report. The secret meeting where this whole issue enamated from was a locally arranged affair. The list is also not "alleged".

[Big Til]

All I'm saying as that to call what the shops did "a mistake" is as far from the truth as anything. I mean, ringing up two energy gels on the cash register instead of one is a mistake. Knowingly colluding in order to fix prices and therefore secure margins on your products is just plain rubbish. There's a reason we have a competition commissioner in this country, because this kind of thing is ILLEGAL! , at this stage it is of course all just a bunch of allegations

[Squier]

Its funny how the cycle shop owners and wholesalers are always the bad guys. What about people doing the buying for big clothing chains? (personally told me they buy jeans for R17 and sell in store for R300) This is one of many. But people are happy to get ripped off when buying clothing name brands.

 

Lets look at a average cycle shop. Rent R20000, mechanics R9000, phones, electricity, useables R5000, shop van to collect + deliver R3500. Total=R37000. Thats overheads EXCLUDING salaries for sales personel or managers or advertising or sponserships. So lets add sales personel for another R10000. We round it off at R50000. To break even at 35% margin, you need a approximate turnover of R150000. Try not selling anything, and covering your overheads doing only workshop jobs at R300 a service. Thats 500 services a month. Okay, services have a bigger profit (and higher taxes to SARS) So lets say 250 services a month??? Thats 125 services per mechanic, and thats 6.25 services a day.

 

Please go open a bike shop, then we will see how quick you understand the CRC etc problems.

 

I'm sorry but I don't see your point. This has absolutely no relevance to the consumer. In the real world; If I lose a tender due to price I don't go back to the company that put out the tender and explain to them that my water & electricity account is very high and give them a breakdown of all my overheads. I also don't go to my competitors to fix our prices. In any business, your overheads is your problem, manage it like the rest of the world.

 

Every business has overheads. That doesn't give you the reason to go and fix prices. Like mentioned before, it's not about the % markup. It's about everyone having exactly the same markup!

[YUMEYA]

http://www.youtube.com/watch?v=sVGqVj4bIxQ

[Johan Bornman]

All I'm saying as that to call what the shops did "a mistake" is as far from the truth as anything. I mean, ringing up two energy gels on the cash register instead of one is a mistake. Knowingly colluding in order to fix prices and therefore secure margins on your products is just plain rubbish. There's a reason we have a competition commissioner in this country, because this kind of thing is ILLEGAL! , at this stage it is of course all just a bunch of allegations

 

I agree with you. This thing was pre-medidated and malicious. Two weeks before the meeting one of the dealers on the list told me how they (the dealers) are going to get together and "**** up these guys that think they can just come in and start a bike shop and do what they like." At the time I thought it was the most extraordinary anti-competitive, anti-free market behaviour imagineable and that it was all talk. It wasn't all talk. That was exactly what they tried to do.

 

Some of them went futher and entered into bi-lateral pacts. Example: one dealer phoned up a distributor and said: "If you supply X I will stop supporting you and switch allegances." The distributor complied.

[agentorenge]

Quite interesting, I see a number of items on CRC are now only available in the EU. Just like a lot of Specialized items are only available in the States as with Apple products. Makes you think that the LBS and distributors do have some serious clout. I think that we will see more and more of this as everyone tries to protect their market.

 

Price discrepancy is not only found in the cycling industry between countries.

[MobileBikeTec]

I'm so glad to see that Bruce Reyneke Cycles isn't on that list! GO BRUCE!

There's not a lot of shops that can mach Bruce Reyneke Lynwood!

Champion owner, employees and main supplier... Dragon Sports (Giant) also not on the list!

[Guest Anon(yMous)]

To all of those who want to change bike brands / LBS because of this referral to the Competition Tribunal: Who of you still use / consume products from Tiger Brands?