Distributors what they do for us

[divernick]

The reason why distributors exist and will always continue to do so is because the manufacturers don't/can't deal with thousands of retailers. The manufacturers also benefit from pushing some of the working capital requirements onto the distributors. It's the same in most industry supply chains. Only when the players are quite substantial do they benefit from dealing with each other directly. Add in issues like returns, guarantees,s and country specific complications and you can see why OEM's(who's core competence is usually design and manufacturing) doesn't want to get into the nitty gritty of the distribution and sales end. Distributors exist in high tech industries like networking and software where you can be pretty sure that any online benefits have been untilised.

I suspect that the reason why SA prices are so high is a mindset from the old closed economy days. Retailers knew that consumers had no option but to pay the prices asked. And some of our retailers have simply not cottoned on to the logic that if they lower their margins they will sell more units and profits might even rise.

 

The problem with doing that is most retailers ahve small shops and small cashflow. One can't expect them to drop their GP's to gain market share. They'll close down before this price advantage benefits them. From my experience, the distributors need to drop their prices and this will ensure them a volume advantage over their competitors. The retail price will also drop and benefit us all.

[Guest coenie]

I Agree here. I bought a pair of Specialized S-Works MTB shoes from R&A in New York. Took the FedEx option that said 10 working days delivery.

Received them in 4 days, paid import duties and VAT.

Selling price at FPC or others in SA R4200.

My price R2032 with all duties.

 

In the US you can get deals where they include a Cervelo P2C or P3C, Plus helmet, wetsuit, shoes and race kit for the same price the guys sell the frame only for in SA.

 

I import and only sell direct to public as the stores never have stock. They get their information ot "technical know how" from books or the net. So no point in charging premium prices for it.

 

Will happily bank with CWC or CRC.

 

 

Hmm seems like you just disproved some other comments here, about why we pay more...import duties etc..

 

But you said that with the import duties and the shipping it still came out cheaper than here?

[live2ride]

It all comes down to price and service at the end of the day no matter whether you have or don't have distributors in the chain. There is no excuse for inflated prices (least of all to justify your distribution chain) and as for service (using IT as an excuse is well just plain ridiculous in 2011).

 

A quick scan of recent hub posts gives a glimpse into the future of our cycling industry. A regular stream of posts from discontented customers centered around high prices and poor service vs novel specials and promotions by the likes of CWC.

 

Hopefully natural selection will prevail and those who get it will survive and those who don't will just die a slow and painful death.

[Bat-ass]

i dont mind paying a slight premium to walk into a shop, and walk out with what i want. but when the shops dont have, and they order, which takes forever.. then i give up!!!

i do all my importing from CWC!!!!!

[DaLoCo]

What do you base that on, a generalised statement like this shows us whats wrong with the world today, there are retailers asking 15% and making fortunes becuase they get the volumes because of a lower price.

 

The flip side is a company like cycle lab that grossly overcharge since they target the niche high end market with a client base that dont care about price.

 

A few years working for a major retail chain (which has proper buying power), and being involved in a few startup businesses. I am not sure what is needed for a shop to survive in the USA or Europe. To run a business in South Africa is very costly. If we suffer as much, then spare a thought for those in neighboring countries (add 50% onto my recommended retail to buy a Fender Strat in Windhoek)

 

If you are in a mall you can count on at least R230 per sq meter for rent. For my shop that would be around R23 000 per month in rent. No shopfitting is accounted for, and no staff have been paid.

 

An online store cuts most of this out. normally there is a PFY (Pimply Faced Youth) handling the online store, and passing the shipping info to either the warehouse(low rent, sometimes mom's garage) or the manufacturer. A lot of the stuf we oerder online comes from central warehouses in the East (not all)

[TriGuru76]

Hi Coenie

 

Yes, I am on the net on most days and if you have to go and really compare prices with guys like CRC, you will see that the prices in SA is crazy.

10 years ago, i started an import business. I started Northwave shoes, Powerbar, Cube bikes, and a few other brands in SA.

 

The price i bought stock at from the manufacturer was very low.

I.E. top of the range Northwave shoe - My price R450 landed cost.

Sold it to the dealers at R750 and they sold it for R1500.

When i gave up the business and the brands were taken over by another distributor, the same shoes prices in stores shot up to R4500.

 

Another I.E.

 

I bought a pair of SRAM TT shifter from CRC (Cost R1100 - Local Price R2500). the bolt to install them did not want to release. SRAM SA (Cape Cycle Systems) refused to assist as they say it was not baought from them. Now the product guarantee says WORLD WIDE support. CCS did not manufactor it so they were suppose to support the product.

 

Needless to say, i sent it back to CRC (Cost R80). one week later received new set.

Total cost including headache tablets and trip to Postnet. R1180.

Still way cheaper than local stores.

 

Bike shops say they offer a service. to some extend yes, but i dont go and spend 2 hrs brouwsing through the shop to see what i want (and not see what they dont stock but just order). page through international magazines, go to the net and read up what will work for me.

I have learnt how to service and build my own bikes.

We can all do it, really not that hard.

LBS also charge more for a bike service than most car manufacturers do????? NOW whats up with that?

[Vetseun]

So it goes in the good old RSA. Service is never an issue

[divernick]

So as much as we'd like to support the local economy and local shops, it's way more cost-effective not to...sad really.

 

I'd like to hear from some local distributors on this topic.

 

Will it become a case of distributors selling to the public as is happening in the diving industry?

Edited January 6, 2011 by divernick

[DaLoCo]

Hmm seems like you just disproved some other comments here, about why we pay more...import duties etc..

 

But you said that with the import duties and the shipping it still came out cheaper than here?

 

It will be cheaper....a lot cheaper, and the risk factor is diminishing

 

and there are also some online retailers that offer exchange if you are unhappy, as well as warranties like CWC does

[TriGuru76]

One company i can commend on taking initiative is Omnico.

They have their own website call www.obike.co.za

So they offer some bikes or products from last season at a very reduced price.

 

They do support the LBS but they can then "dictate"the price.

Seeing that they are the ones carrying most stock.

 

I wouldn't go and buy my Connoncale online overseas but some parts and equipment that is a clear rip off i no issues with.

 

Maybe more distributors should follow in Omnico's footsteps.

Go and check what US or EU prices on Cannondales are and look at the local prices.

Cannondales have become far more affordable since they took over the agency.

 

So hats off to them for taking the initiative.

Oh and Polar HR monitors too.

[Minion]

Hmm seems like you just disproved some other comments here, about why we pay more...import duties etc..

I don't dispute that we pay more in many cases (even with duties etc. the R&A price for the Cervelo is about 20% cheaper than local). I'm pointing out that it's not as simple as comparing the retail price oversees to the retail price locally. When including duties etc., some items e.g. the Specialized gloves, work out similar to local. In that instance, it's unfair to blame the distributor for the price when most of the difference is due to an unavoidable, universally applicable, government-imposed tax.

[Guest coenie]

 

I bought a pair of SRAM TT shifter from CRC (Cost R1100 - Local Price R2500). the bolt to install them did not want to release. SRAM SA (Cape Cycle Systems) refused to assist as they say it was not baought from them. Now the product guarantee says WORLD WIDE support. CCS did not manufactor it so they were suppose to support the product.

 

I feel your pain, when I spoke to Specialized regarding getting a certain bike from overseas they said that they do not really do special imports, I told them but it is availeble...and they said they did not order it for SA...so I asked if I can order it from another site, and if they would honor the warrenty...Response...HMM well , Hmm depens who assembles it and who does the service...All I want to know is if the frame cracks if they will assist and no clear answer.

 

Then when I tried to order one from another site I saw that their is a notice that according to their aggreement with Spez the can not ship to any other country...

 

Nice one....

[Bat-ass]

One company i can commend on taking initiative is Omnico.

They have their own website call www.obike.co.za

So they offer some bikes or products from last season at a very reduced price.

 

They do support the LBS but they can then "dictate"the price.

Seeing that they are the ones carrying most stock.

 

I wouldn't go and buy my Connoncale online overseas but some parts and equipment that is a clear rip off i no issues with.

 

Maybe more distributors should follow in Omnico's footsteps.

Go and check what US or EU prices on Cannondales are and look at the local prices.

Cannondales have become far more affordable since they took over the agency.

 

So hats off to them for taking the initiative.

Oh and Polar HR monitors too.

 

I agree with you on Omnico. When i shop at my LBS, i almost always buy Omnico related products where i can.

In fairness to Shimano (i think it Cool Heat) they have sharpened there pencil big time in the last few months.

[Thug]

I've just purchased a set of deep section tubbies from CRC. Once I've paid VAT (free shipping), my landed price will still be 66% of the local retail price of a new online cycle store.

[GrumpyOldGuy]

So as much as we'd like to support the local economy and local shops, it's way more cost-effective not to...sad really.

 

I'd like to hear from some local distributors on this topic.

 

Will it become a case of distributors selling to the public as is happening in the diving industry?

 

The distributor is not only been removed in the diving industry, its a huge number of industries, take the white goods market, taps, basins, tiles are mostly all distributor to customer, take the engineering industry the local distributor has a retail presence and you just wonder in off the street, take the plastics industry, Maizey (for eg) sells direct to you and me as well as the retailer down the road who makes your sign - Pure distributors with the "stand back I only talk to the trade" attitude are as prehistoric in todays enviroment as the dinosauer.

 

Most people with a position to defend will use scare mongering about warranties, supply, returns etc to back up their argument, however these can (and are) handeled as effeciently by an agent in an office somewhere as a huge distributor adding only cost and little value to the product.

[Frosty]

Below are prices I've compared with my LBS, CWC and CRC.

- I get 10% on all my purchases at my LBS, and is shown below - must be my charm

- CWC prices exclude shipping costs, about R60-R80 door-to-door (I think)

- CRC prices exclude shipping but include 15% (average payable at PO for last 4 shipments) - I share orders with other friends to avoid paying shipping prices.

 

Ultegra/XT chain (HG93, 9speed)

LBS - R270.00

CWC - R280.00

CRC - R168.86 (if ordering 3 or more)

 

XT Cassette (9speed 11/32T M770)

LBS - R612.00

CWC - R520.00

CRC - R549.18

 

Magura Louise Brake Pads

LBS - R271.00

CWC - don't stock this item

CRC - R126.23 (if ordering 4 sets of more)

 

Lube Finish Line Wet/Dry

LBS - R90.00 each

CWC - R65.00 each

CRC - R41.96 each

 

Continental Race/Mountain King 2.2 UST (1 of each)

LBS - R550.00 each

CWC - R450.00 each

CRC - R390.72 each

 

Chain Ring XT 44T

LBS - R880.00

CWC - R799.00

CRC - R506.97

 

Chain Ring XT 32T

LBS - R550.00

CWC - R360.00

CRC - R348.50

 

Chain Ring XT 22T

LBS - R240.00

CWC - R140.00

CRC - R137.17

 

The totals below excludes the brake pads, to get a direct comparison between the other parts.

Total LBS - R3832.00

Total CWC - R2679.00 (30% less than LBS)

Total CRC - R2323.58 (39% less than LBS)

 

You do the sums... and make your own mind up.

I know where I'll be buying my "consumable" spares from... it starts with a "C"

I can service all these items myself, so I save on the labour costs, but I will take the bike in for

- Fork, Rear shock and BB servicing