'Bicycle prices fixed'

[Swart Skaap]

Ok so a shop does a R200000 turnover with an average mark-up 0f 35% that gives them a profit of R70 000. They then still have to pay salaries, say its R25000(for four employees)which is ridiculous. Rental for 200 square metre shop at R160 per square works out to R32000.00 again below market. Add operational costs to that for water, lights, telephone,internet, insurance etc. +- R5000. So that leaves R8000 profit or salary for the owner to survive on. For an average bicycle shop with start up costs of R1 000 000 its really a bad return on investment with allot of risks.

 

 

Thank you! At least there is another hubber with a healthy brain.

[GrumpyOldGuy]

Ok so a shop does a R200000 turnover with an average mark-up 0f 35% that gives them a profit of R70 000. They then still have to pay salaries, say its R25000(for four employees)which is ridiculous. Rental for 200 square metre shop at R160 per square works out to R32000.00 again below market. Add operational costs to that for water, lights, telephone,internet, insurance etc. +- R5000. So that leaves R8000 profit or salary for the owner to survive on. For an average bicycle shop with start up costs of R1 000 000 its really a bad return on investment with allot of risks.

 

Well, then open a hot dog stand on the corner and sell sausages and rolls for a 200% mark up with an investment of 10k.

 

Surely, opening a bike shop was your own decision, and if you went into it without investigating the apparently poor margins and low profitablity before hand then I say you only have yourself to blame, why do you expect others to feel sorry for your business decision when they played no part in it?.

 

All industries have issues, but the cycling industry is the only one I know of that laments them daily.....but maybe thats another thread.

[Edge_Design]

A few of my meaningless thoughts on the interesting comments made... Why are SA employees any more important than CRC's employees (and they employ lots more ppl because of our support). This is a stupid, meaningless South African view on justifying bad business practice and should never be used in an educated debate. This whole debate on margins, profits etc with someone explaining why it is so difficult for bike shops: You have concluded that the average bike shop owner makes R8k per month profit, surely they would sell the shop and become a mechanic rather if this really was the case? If you honestly believe that k@k then, once again, you should not be involved in an educated debate. Furthermore, if they aren't making a reasonable profit then it means the supply is exceeding demand and a few shops should be failing and closing their doors to improve the industry as a whole.

 

I completely agree it isn't the shops fault in all cases, the existence of a middle man is a major cause of the problem (and I guarantee they are not putting 7 - 8% mark-ups on their products!). On the whole issue of shipping, import duties, VAT etc., as someone who imports bike parts, I promise you they pay lower costs than you would to import from online shops around the world. There is no possible way that the cost to the local importers can be materially higher than those paid by European/American etc. importers. They will get slight quantity discounts, but that's about it. I also seriously don't care about distributors being able to sponsor riders and events, those are marketing costs which every company incurs, it is not about 'giving back to your customers'. If your product is doing exceptionally well, you possibly have even less incentive to spend on marketing.

 

It's also great to say we should know the prices before going to a shop, but how do the 99% of cyclists whose only knowledge of bikes is what their LBS tells them know what a fair price is? How do you justify them getting nailed just because they didn't know they should have checked CRC before going to buy new tyres for their kids bikes?

 

And to put it all in a real-life scenario which will be very difficult for these economists to explain:- I should hopefully be landing a product here next week which I am aiming to sell for R1100 (including what I consider a fair profit margin). I saw the exact same item in a shop on the weekend for R2500. Please can one of these pro-LBS economists explain that to me!?

 

Retail price - R2,500

Mark-up - 50% (as claimed in the article)

Cost - R1,650 (rounded)

Distributors cost - <R1,100

Distributors mark-up - > 50%

 

I don't know if it's the shops or the distributors, but it appears to be a lot more than the figures mentioned by the pro-LBS people either way.

[Pot Hole]

really thought this had been swept under the carpet. thankfully the wheels of justice were turning.

 

don't feel much for the two main instigators. ignorance of the law is not an excuse*. look forward to seeing them defending their honour back here again.

 

*i really liked that bit in the minutes "don't worry guys, price fixing is not illegal, we've checked with the lawyers"

he he hoo hoo!

[Skott5]

Well said Shaun 231.

 

Morewoodkid, would you say that your international market is more important than the local market, hence the premium for morewood products here ?

[rouxtjie]

Well, blow me down!

They did discuss it. Very quickly...

Really, dammit i missed it

 

What happened and did they ask you-know-who to comment

[Gillie]

Just another way for government to in some cash, seeing that the recession has diminished their tax revenue. Look at the MILLIONS of rands they received with the whole bread cartel story.

[Caerus]

The problem is that the sport becomes a very elitist one, what with the cost of bikes, spares ans services, a lot of people are turned off by the cost, I know since being back from the UK(I lived there for 10 years) the cost of parts, bikes etc is way over the top compared to what I was paying in the UK. The LBS rerally do take the piss. I would love one of the implicated parties grew a set of balls and replied to this thread/forum.

 

Was the any discussion on SuperCycling abpout all this?

[AndreZA]

Hubbers at the end of the day LBS's are a business and in business your idea is to make a profit, heck the bike industry has some of the lowest mark ups in the retail industry, the food industry has alot higher mark up go check by how much food prices go up each year. All the other industries also have to be checked in my opinion

 

That is true but how many other industries do you have the option of buying items cheaper from abroad? I would buy my groceries from overseas if I could be guaranteed it would get here before the expiry date. The guys here at work buy some IT stuff online and I have bought some x-box games from the UK. All much cheaper then locally. Talking about games, a while back the gamers in Natal had a problem that all their imported PS3 games from Shopto.net were confiscated at customs because Ster-Kinekor lodged a complaint.

[GrumpyOldGuy]

Some countries have introduced very high import duties on online shops like CRC (up to 80%).

 

I find that hard to believe.!

 

Actually, from my experience its never been the case.

 

I would dearly like to read these cases,can you post some verifiable case studies where countries have raised protectionist duties to 80% against requests for relief from the local cycle industry.?

[Sharkie 2]

What has happened to innocent until proven guilty?

Plus just remember our local suppliers can't compete with the amount of purchases CRC does to be able to offer those prices. I read an interesting statistic the other day on the internet, Texas sells more Trek bicycles in one month than we do in the whole of SA in a year, and the whole of Africa represents a mere 1% of GT's global sales

[Johan Bornman]

I find that hard to believe.!

 

Actually, from my experience its never been the case.

 

I would dearly like to read these cases,can you post some verifiable case studies where countries have raised protectionist duties to 80% against requests for relief from the local cycle industry.?

 

A little birdie told me a delegation of local, lets call them stakeholders in line with the current jargon fashion, have approached the DTI to request just that - higher duty on specific imports from specific overseas retailers such as CRC.

 

I don't know enough about the DTI's mechanics to verify this or to know whether or not such a request is put in the public domain. I'm itching to know though.

[BrendonMyb]

What has happened to innocent until proven guilty?

 

well thats not going to happen & ill tell you why.

 

Supercycling was on last night & there was a direct admittance that discussions happened of what RRP should be & was not right on their part. Yes some of the bike stores & disties were implicated under fauls pretences who joined the meeting, but as someone earlier said. Keeping quite about the whole thing & not bringing it to light makes you just as guilty - this means in my mind that you were definately thinking of doing it not to say you have/have not already if said stores just kept quite. There will be as said aswell, a tribunal to dispute their alleged role in it but as a whole those that were actively involved will have to wait for the outcome

 

a while back i read someones comment here on the hub saying that this person has done a lot for SA cycling regardless of what we think. Well blow me down with a feather.I could swear im being taken for a ride

[Mongoose!]

Somebody has to pay for all the new expensive bikes Andrew McLean is riding........

[BrendonMyb]

What has happened to innocent until proven guilty?

Plus just remember our local suppliers can't compete with the amount of purchases CRC does to be able to offer those prices. I read an interesting statistic the other day on the internet, Texas sells more Trek bicycles in one month than we do in the whole of SA in a year, and the whole of Africa represents a mere 1% of GT's global sales

 

 

haaaa haaaa, once again ill tell you why. Clever marketing to get the fat ass americans off the burgers & pizza, i swear they have a eating disease. My aunt & uncle bought their bikes for this precise reason. Because they became lazy fat ass, dikgat whatever you wanna call it americans. This living off burger king & macdonalds, not to mention pizza hut.

 

Nothign wrong with the take out food, but that nation just doesnt know what the words - in moderation means

[BrendonMyb]

A little birdie told me a delegation of local, lets call them stakeholders in line with the current jargon fashion, have approached the DTI to request just that - higher duty on specific imports from specific overseas retailers such as CRC.

 

I don't know enough about the DTI's mechanics to verify this or to know whether or not such a request is put in the public domain. I'm itching to know though.

 

I thought this was going to happen, it was or just is a matter of time. The fat cats are still scoring all the way. Very clever & alas we get nailed once again as the consumer & freedom of choice is taken away from us, because lets face it. Who is going to spend at CRC if duties are skyrocketted through the roof. Its amazing what greed turns people into. Selling souls comes to mind

 

This is when i say, let the local industry vergaan & run its course. We all say the local industry will fail due to us spending money elsewhere overseas & im not denying that whatsoever.But when you out & out to screw me with whichever means then i say &%#! you. Hence my purchasing from CRC.

 

Now this ?. Its pathetic to say the least & that my dear friends is what we call utter childish nonsense & greed.