pallen

Yeah, something like this may be the future, but if you think retail store competition is tough, think about an environment where checking competitors prices is just a quick Google search away. Having an online outlet might give you more volume, but only if you have the cheapest price online. Otherwise the online shoppers go where its cheaper.

Add to that the fact that most bike shop people I've met are not web programmers or techies and the whole idea of setting up something like that is daunting.

Bob Dopolina 

And there you have it.

There are recognized distribution channels for most every brand found in the US. If your LBS tries to do an end run and the authorized distributor finds out they will be cut off.

It would be one thing if your LBS risked losing a single brand but most distributors carry DOZENS of brands and offer terms. To be shut out of those distribution channels could be the death of that LBS.

With that in mind would it be worth the risk for your LBS just to make $20 on a pair of shorts?

Ultraslide

Mom and Pop shops will slowly be replaced by the PerformanceBikes model that takes advantage of all points of sale and large channels of distribution. Welcome to the 21st century. My favorite LBS wouldn't exist if it weren't tacked on to a large mail order warehouse. Service departments will be larger, and faster or move to someone's garage for those "in the know".

RT

That is why you pay professionals to do it. Bike Stop is my store, and they have a very easy and quick price match on every.single.item. It is a rarity if they cannot match, but they do match.

jon c. 

We own several of the top brands and we have a very strong MAP policy and it protects the local brick and mortar shops plus the online guys love it because they actually get to make some good margin.

There goes the concept of a free market economy though. It really is just price fixing. I understand the justification, but it does really expose the fact that the notion that we have a free market economy is purely a myth.

boze

I understand the LBS is in a tight spot, but they're not a charity and I'm not spending more just to do them a favor. I'll get an adjustment and usually tip the mechanic $5 or $10, but that's about it... maybe a bit of gear from Performance or REI occasionally.

The only other thing I use the LBS for is to convert new roadies: somebody will tell me they want to get their first road bike but add that their budget is like $300. I take them to an LBS where they can test ride some stuff to see what size fits best. In that process they come to understand that even a crappy aluminum bike with Sora costs like $700-$800 and a decent bike is closer to twice that. Then I help them find something in the $500 to $900 range on Craigslist, assuring them that when they want to upgrade in a year they can sell it back on Craigslist for pretty much the same price.

I just came closest to an actual LBS bike sale a week ago: I was test riding a few bikes for myself (before ultimately finding a near equivalent on CL for half the price) and I helped this girl get to the paved path for her test ride. She was leaving for her test ride at the same time as me and riding a Scott Contessa CR1 Team 2011 that was NOS and marked down to $1500. I thought it was awesome that she was entering at such a high level and I explained to her that that bike for that price was as good a deal as she was likely to find new, a real sweet spot for value. Good fit, carbon fiber frame, full 105 group with no Tektro brake stupidness.... She ended up getting it and I think my outside expert opinion made the decision easier.

If an LBS could provide that kind of value reliably then I could steer my converts towards decisions like that one. But their margin is so slim on bikes and it's particularly hard on noobs who have no idea what the pricepoints are. My role ends up being to help folks get that first and second road bike. Once they're in at $500 of Craigslist money and then again at closer to $1k they're at least into cycling and ready to entertain some of the LBS offerings.

The LBS is effed though. I'm amazed they've lasted as long as they have.

Hiro11

I think you're misunderstanding the point that I and most respondants have in this thread. It's not necessarily that I feel my LBS is "ripping me off", it's more that I'd like to support them, feel it's the right thing to do to support them but I can't justify the vast difference in price. This makes me feel a bit guilty.

I certainly get that brick and mortar is never going to be as cheap as catalog/online. We all agree about the cause of the difference in price. I also see huge value in an LBS when I need a shorter caliper bolt than the one I have and my LBS has the exact bolt I need on hand for $0.50, that's not an experience that's easy to replicate online. It's just that when I need an Ultegra chain that costs $35 online, it's awfully hard to convice myself to spend $60 at my LBS.

dissident

bike shop in this town prices their bikes 10% over MSRP from what I've seen. I did not purchase my bike from them.

Bob Dopolina 

I agree. That is perfectly understandable.

Keep in mind who is telling all this - an on-line retailer...

I'm never going to tell anyone where they should spend their money; That's 100% their choice. I was just trying to explain why consumers see what they see in the marketplace and to make the point that the LBS is not evil or dishonest.

pallen

I would never expect anyone to pay more at an LBS out of charity. You should buy from your LBS because its a good value. My only point is to consider the value the LBS may bring beyond the thing you bought at X price. If your LBS brings no other value to you and the cycling community, there is no reason to pay more. The shops I support with my business do a lot more than sell me stuff. Those extras are worth a slightly higher price on merchandise to me, I am happy to pay for them. Its not about charity. Supporting my LBS is doing me a favor. By supporting their business and keeping them around, the cycling community where I live is better.

Bah Humbug

Why is the price difference this big for cycling stuff, though? Running and swimming equipment is a bit cheaper online, but not anything like 50%. If a pair of sneakers is $140 at a running story it might be $130 online. That's a difference I can pay to support a local business. For bikes it's completely untenable.

GP

I don't see a huge difference in shop vs. online prices. I bought a headset last week for $130. I just checked online and the lowest price is $125. I'll have to pay an additional 7.75% sales tax but I don't have to pay for shipping.

Right Said Fred

You can probably blame the manufacturers for this. If they sold to all levels of wholesale distribution at the same price, you wouldn't see the wild fluctuations in prices. Some of it is the lower margin internet retailers are willing to accept, but a big part of it is wholesale discounts for volume buying. I am assuming this happens in the bike industry, but I know fora fact it happens in other categories, like car and motorcycle parts. The big online retailers often sell products at retail for less than local shops pay wholesale through a distributor. The manufacturers are implicit in this by undercutting an entire channel of their distribution network, but they claim to be forced to do it because the big internet players represent a huge percentage of their sales volume.

Tuc

You are right, the pricing is very inconsistent across the spectrum of what you may wish to buy. Things like branded bags, lights, tubes - almost no difference from online. But I have come across a few items in just the last few weeks that got me all worked up over it. I apologize, I realize I am not the customer my LBS wants to serve, they have a ton of college students that either just want the cheapest cruiser bike w or w/o some gears to replace the one that just got stolen. A few are "fixie" gearheads. I want to upgrade older bikes to like new, sometimes with original parts, sometimes with the best quality new design I can find that will fit. I am not my LBS customer target, the fancy places up north only have carbon fiber and top-line ally bikes, nothing for me. Only a two or three LBS guys realize how much I buy there, and only because I occasionally bring one of my collection in to find that correct 50 cent bolt,...

End rant on distribution system of LBS and its future, I will buy local when they let me - and have a clear conscience when I order from the net.

twodownzero

Yes, because if they don't start challenging the distributors and demand competitive pricing, they will go out of business regardless.

And to the person who says a 20% markup sale isn't worth it, I hope you're not in business. A customer like me who enters the store, gets what he needs, and doesn't waste your employees' time is worth his weight in gold. If my business isn't worth it, I'll just keep buying online and laughing at your prices/business model.

Bob Dopolina 

If only it were that simple.

The problem for many products is that there are two channels from the manufacturers: Aftermarket and OE with deep discounts in the OE and leakage to match.

As an example I was given the chance to buy NOS Campagnolo groups from a distributor at a much reduced price (close to their cost). I could buy it on-line from the UK for less. LESS! How screwed up is that?

You're not seeing the big picture with my 20% comment. Margins are different on different items for a variety of reasons. A shop will make barely 20% on a bike and turn that money once in a season. Overall that means selling bikes ties up your capitol and offers a poor ROI. Selling bikes, even high-end bikes, won't keep you in business.

PA runs at a higher margin and you can turn that capitol a few times in a season. You NEED to do this to pay the fixed costs and scrape out a profit for the business. Selling items below the margins you need to sell them at is not a good sale even though, from the consumer standpoint it seems like any money in the till is good money. In the big picture it plays out as a loss.

Does this make more sense?

Also, in case you missed it in my previous posts I am NOT saying people need to shop at an LBS and buying on-line is somehow wrong. Why on earth would I hold a position like that?!? I was just trying to explain why things are as they are and that the problem is not with the LBS but elsewhere.

FYI, I am in business and have worked in this industry since the early '80s. I left brick and mortar retail long ago for a reason.

ConradNaff

How will they find out? Do the distributors send in secret agents to peruse your inventory? If a smallish shop can make more money buying parts from Amazon I think it would be pretty safe to do so. It would be easy to hide, and I don't think a distributor would cut you off because you sold a pair of shorts in a way they didn't like. Could be wrong though.

But really, it's more than $20 for one pair of shorts. If you are selling a lot of shorts, pedals, whatever, and you can get them cheaper from somewhere else, it adds up.

Bob Dopolina 

If a rep walks into your shop and sees product that they distribute and he knows you didn't order from him it is pretty easy to do the math.

Yes, a shop could get away with it but it is a calculated risk.

How could a shop benefit from buying from Amazon, adding their margin and then selling it to you when you can just...wait for it...buy it from Amazon? They need to be able to buy it for LESS than you can buy it for on Amazon. That's the crux of the matter - they can't.

Buying from Amazon and adding a few bucks doesn't solve their ROI problem. They are still tying up capitol and getting a return that is at a rate lower than they need for the overall business to survive.

Last time I'm going to say it, "Not every sale is a good sale." Strange but true.

roadwarrior

Shrugging my shoulders....we can't find enough people that are knowledgable enough about cycling to fill the sales spots we have open....a good Saturday generates about fifty grand and a recent sale generated about three quarters of a million dollars in sales. Point? There are people out there that will pay for expertise to make the best decision on their cycling needs and they don't come here for advice.

Funny how that works...if you are the best at what you do you win.

We are apologizing to customers who have to wait a few minutes for assistance. But then I come out here and I read "industry news" from people that are not in the business. Funny stuff. Personally, I don't compete with the on line sutff because usually the people that think they know what they are doing usually find out they don't once we spend a few minutes with them....then they pay us with a purchase.

BTW...we are up 52% versus the same period last year. That really sucks.

roadwarrior

Well said...but unfortunately wasted bandwidth because, especially here people think they know what they are talking about but truly don't.

If all you folks are so smart, get the cash and show the world how to do it right. Open a shop. Quit complaining. Do it yourself.

roadwarrior

The model is not failing. The good shops with stock in bikes and parts and top mechanics and sales people, like us are way up in sales. We've put two shops out of business because they were close to us and could not compete.

If paying extra for expertise and service was failing, places like Nordstroms would go out of business.

I cannot tell you how many people I have talked to that start out, "I am so frustrated, because I've been to four stores and can't get help or answers to my questions." I patiently answer their questions, show them options, and earn their business. As do all of our other sales representatives and service people. Which contriubutes to the 52% growth we've had this year.

The issue with the retail brick and mortar bike business is that they are owned and populated with enthusiasts or employees they can afford. Personally, I have a job and do bike stuff for fun and I have no pressure on me to make a sale. I just explain, answer questions, and lead them up to the register. Because you like bikes does not qualify you to own a business. In our case, an accountant owns the store.


No matter what business we are talking about, if you don't understand how to run that business you will fail. Every time.

NSpooner

As for shops buying from performance or whatever online store-most distributors have a strict no sub-distribution policy. Meaning they can't sell 20 sets of tire to a shop. The online guys are often times buying from the same distributors as your LBS. In fact I bet there is a maximum of any one product a person can buy-they just don't post things like that on their site but I am betting you would get a call from them asking what was up. I know my online accounts in my field do the same thing because they don't want to get in trouble with the distributor.

And enforcing a MAP policy is not price fixing. Unless you are saying that all the other companies also follow the exact same pricing on everybody's product then you are 100% legal. MAP policies help protect margin for the seller, no matter who they are. That margin is what makes the difference between having a 17 year old punk behind the counter or someone who has real knowledge in the industry-those people won't do it for $8 an hour. I would have loved to have kept working in the bicycle industry but it was pretty apparent early on that you will never make any money doing it because there is basically no protection for the shop's margin.

pgjackson

Nordstrom stays in business because people like to be seen there and like to say that they shop at Nordstrom. Personally, I can't stand that place. Same with Starbucks...people like to be seen with a Starbucks cup in their hand. Harley Davidson is another. Their bikes are no better than any of the Japanese bikes, but people are willing to spend twice as much just to own a Harley. Conspicuous consumption.

pallen

That's very good to hear. At least in your market things seem to be working. I'm guessing you are in a more affluent area. The bike shop I go to most seems to be getting along pretty well for many of the reasons you cite. They aren't raking in millions or anything, but I don't get the impression they are on the edge of failing either.

pgjackson

The shop that started this thread seems to be doing very well. It's literally the biggest shop I've ever seen. It has a very good reputation and people don't seem to mind paying the prices.