rjones28 

My 2014 Specialized Allez has exactly the same number of brand stickers as my 1988 Schwinn Traveler.

wphamilton

I think some people resist changes brought on by technology, and aren't really as unclear on the concept as their objections would seem to indicate. Human nature.

Bacciagalupe

I suggest you read what I actually wrote. I'm not resisting any "technological changes."

I'm pointing out that the management structure, the cost structure and incentives don't make a lot of sense. Technology does not wipe away the fundamental economic issues and conflicts of interest... and this probably explains why we don't see independent retailers constructing systems like these.

badger1

Whoosh!
Ah well; c'est la vie.

Bob Dopolina 

Been out for a bit.

The inventory sharing I experienced through retail ran one of two ways: When I breifly worked at a chain store or when I worked at a store with more than one location we had a central inventory database and shared stock on many items. Or a brand rep, like Trek, would often pull inventory from one store for another in his area if needed. He wouldn't do it without the consent of both shops and he wouldn't pull the hottest item from a dealer to give the sale to another dealer, it was usually a sizing thing or especially later in the season when he could help dealers clear inventory.

I assume this still happens but I agree, having a loose group of shops sharing inventory isn't going to happen and not just for logistical reasons, but more importantly, why would a shop owner allow a competing shop to peer into their inventory, and by extension, their business, that deeply. There would be a huge amount of trust needed to make anything like that work.

Bob Dopolina 

You know, the market has bikes available more to your tastes, I believe. #youshouldgetoutmore

wphamilton

I know - I was giving you an "out" to reconsider those objections. The potential advantages should be obvious. From the above, I don't think that you're grasping the concept, but I didn't want to get into explaining because it's pointless in a hypothetical.

wphamilton

Why would a shop need to? You'd only include some shared volume purchases, or inventory you chose to make available on an equitable basis. If the shop owner really thought it was some kind of state secret.

Bob Dopolina 

You can look at an inventory and make some pretty good guesses at large parts of the rest of the balance sheet and come up with some pretty good numbers about a competitors business.

The only way this works are the two ways I described (unless someone has another example).

Raiden

I think you underestimate the amount of personal relationships, backroom politicking, favor granting, etc. that happens. If these theoretical shops are truly in competition with the same product, it's very likely that one manager/owner is going to have a different sense about a given item or brand; he'll order more of that thing from the source. He'll get a bigger discount on that item/brand than the other guy that buys less. Why/how would you park that item in a communal spot between the two shops? What happens if one shop manager/owner finds out how much the other paid?

I'm sure big chains like Mikes or Performance (especially Performance, since they have a lot of their own Scattante and Forte product that they probably make a killing on) has the setup you guys are asking about- a central warehouse/office or a combination storefront/warehouse, but for smaller shops, the system you guys are asking about already exists: independent shops that order from parts distributors and manufacturers that distribute directly. They have the inventory management systems and shipping specialists already in place. Most of them are very quick and efficient. You can either do web orders, or call them up in person. Its easy.

Many shops these days are running on razor thin margins. It's difficult enough to hire and keep skilled mechanics and salespeople and pay the rent, let alone extra inventory and IT positions with inventory control and shipping software and hardware (computers, printers, scanners). Finding such people with such skills, that will work for bike shop wages, is difficult when you leave the big cities and look out to the suburbs.

I say this as an ex employee of an entity that owns multiple shops and has an online presence.

wphamilton

Generally speaking I've seen several kinds of cooperative buying and storage, and many variations of the central storage and inventory database when all the locations were part of one company. Your "only two ways" is overstating.

Sorry, I didn't mean for it to go onto a tangent this long. Please carry on with how things are done in the bike industry.

Bacciagalupe

Inaccurately calling me a Luddite, instead of responding to my objections, was supposed to change my mind?

And I do grasp the concept. It's not that complex. You're proposing a system where shops can request excess inventory from other shops.


So should the downsides, as I and a few other people are listing.

Again, the economics are all wrong. You'd still need to build out a distributor-like infrastructure; you'd still need to pay someone to set up, manage and maintain the system; someone has to do accounting, payments and collections; it exposes too much information to competitors; shops will have no incentive to trade out items that sell well.


That means the shop manager has to:

1) Hope the in-store inventory is accurate, OR spend more time and effort making sure it's accurate
2) Review the entire inventory on a regular basis, and decide what is the excess (and what doesn't sell well) that she'd be willing to trade
3) Train employees on another stocking system, and hope they actually use it, and hope the customer doesn't mind waiting another 5 minutes to check the additional system
4) Use an inventory system that is compatible with whatever system the Bicycle Borg Collective Inventory Swapper implements

Yes, the benefits are obvious...

seypat

Sharing inventory also brings in the possibility of sharing customers. Not something you want to do. Your competitor across town cuts your price. Then wants the bike out of your inventory to fill the order. The customer won't buy it from you because it is cheaper at the other place. He/she finally relents because you have the product. But he doesn't do any repeat business because he thinks he got gouged on his original purchase. And, he goes around town badmouthing your store to anyone that will listen.

I own a small wholesale/retail operation.(not biking related) A potential customer will make the rounds of me and all of the competitors to try negotiate $20 off of a $1200.00 item. Spend a couple of hours in the car driving around to cut $20. That particular class of item generally has a markup of about $100 on it. It is not quite a loss leader but sold in the same manner. No matter where you get it from. But the customer thinks differently. I tell the customer(as do the rest of the competitors) to get it where it is in stock because nobody will order one in until they have to order something else from that company. The customer then goes around town badmouthing all of the stores in town because he think they won't work with him. Much like some of the people on these bike threads.

Bob Dopolina 

I didn't mean there were only two ways to do this, I meant I only had experience with two and was looking to see if there were others. I've been out of retail far to long to even pretend to be current.

seypat

On the flip side, it is comical how "invisible" a potential customer thinks he is in even a large city. If a person/entity walks in/calls my store looking to purchase multiple skids of something, it means they have been cut off from their present supplier. I can find out in about a minute who their present supplier is even if it is in another state. I will offer them list price and cash only. When they say "I can get them from so and so for this price," I say "that is a good price and you should keep buying them there." They will make the rounds with the other competitors and will either pay a higher price with cash, or go back and pay their current supplier.

Wanderer

Buttttttt, he sure does come up with some nice stuff!

Bacciagalupe

Heh

I don't do retail, but I've concluded from other business ventures that customers like that are not worth having. The ones who berate you to get the lowest prices also tend to be the most demanding. Because they want the most for their money, they will put you through the wringer. Many can be rude and/or disrespectful.

robbyville

First post in this thread and wanted to make sure nobody had already specifically answered some of the questions.

As mentioned the larger shops (chains) have the software to look up each others inventories, transfer, help their customer base out as best as possible to promote their shop brands, keep moving inventory (cash) off the shelves to the betterment of the company's bottom line. The smaller shops often help each other our in our neck of the woods but only to a point. We often receive emails from our reps asking if a particular bike is available for "a customer", it's kept pretty generic, but I know that often enough a shop wants to move inventory even if at direct cost so no margin gains.

Now to the logistics of a co-op, partnership, etc. there are some who do it well with things like cleaning supplies, labor, etc. But all that I've seen still tend to be pretty grass roots.

I deal with QBP a fair bit since my business outside of ski/golf is Mtn Bike rentals, repairs and some specialty retail (mostly downhill related), we purposely do not sell bikes so as to not alienate the regions LBS's who are our best source of referrals and with whom we refer sales to in order to promote dual suspension bikes.

The thing with QBP that takes the onus off a co-op concept is that it's so damn easy. You get online, see what they have in stock, and if you order it by 3pm you generally have the product the next day or sometimes 2 days later. Their margins are low enough to make the distribution channel reasonable but obviously volume must generate enough gross/net dollars to make it worth their while (I'm making an assumption here but they've been in business a long time and have 3 distribution centers nationwide).

For that very reason I'm sure most would not want the brain damage of creating a different partnership that would probably entail more "sharing" of knowledge than some may feel comfortable with. QBP's Prices are reasonable, service is incredible, and technology is up to date for the world we live in. FWIW, the major brands also distribute a fair bit beyond bikes, and clothing, with real time accuracy. In my work and world I would much rather pay a little bit more to have the inventory on someone else's shelves than on my own and too many of my peers are of the same mindset.

To make a short story long, could a co-op or buying group of some sort work? Sure, but I think the time where it would have been impactful for the participants and their customers is mostly gone.

robbyville

Bdop, by the way, I've really enjoyed the thread for the most part. I'm a big fan of the middle ground businesses such as yourself and others a la Boyd, November, etc. who believe in purchasing/building quality products that you take ownership of, testing, etc. with less of the larger hype required of the bigger brands.

robbyville

Ok, one last thing and then I'll shut up (so I say now). By impactful, I mean truly having a price point and level of service for the concept to make sense. The reality is that most items purchased through a group or co-op, even direct from manufacturers (assuming they would take your business some don't) would not have a huge difference on price vs. buying from a good distributor by the time you deal with shipping, quantities, customs, etc. Remember I'm speaking from the concept of a retailer co-op/group and then selling to customer base not as an end user buying from an ebay trading company.

Companies like Shimano have their own distribution program in the America's for retailers so it's not like you can go to the manufacturer there.

One of the companies I worked for had a huge challenge with guest perception on value, our customers would say "you're selling candy bars for $2.50 when the grocery store sells them to me for $1.00, ergo you rip us off with everything you do". Truly candy bars were a high margin item for us whereas other items were not, still we decided to test and lowered our prices on candy bars (but not enough where we would only make a penny or two on each like the grocery stores do). You guessed it, we could not change people's perception of value, because we could NEVER get as low as the large grocery chains, we just could not make an impactful difference to the end user. That's kind of how I feel here, a properly conceived buying group of retail products would doubtfully be able to make a true difference to the end user vs. current distributors. But I have had good success with it with items such as cleaning supplies, and even ski rental equipment, or advertising, where the end user is the buying group.

Bob Dopolina 

^^^ Thanks for the input. I think that pretty much sums up that entire topic.

robbyville

Thanks, I'll tell my wife at least I did something right today ��

BoSoxYacht

That post was a joke at the expense of the industry outsiders posting in this thread.

I have the luxury of buying at dealer cost(or below), but I can assure you that Bob isn't making huge profits at the prices he sells many of "his" components at. Of course he profits, but it's far from ****. Even at dealer cost, his wheelbuilding kits are a steal.

BoSoxYacht

Wow! R A P E is censored?

Falchoon

Good thread, though people seem a bit too fixated on what the profit is of a LBS (and the various distibution levels) and then don't really seem to believe Bob when he tells them.

ANyway, I have some other questions. Following on from zymphad's question on the 2nd page I think about colour option (his q was more about deleting the brand name from the bike). Why don't manufacturers offer more colour choice? Car manufacturers do, so why not bikes? If I want a blue bike I should be able to get a blue one. A lot of manufacturers seem to assign a certain colour to a certain level of bike ie a 105 equipped bike is blue but the Dura Ace version is red. I might not have the budget to buy a Dura Ace equipped bike but really like red so instead of buying say a Cannondale I might go and buy a Trek that has red. Paint is paint, yellow costs the same as red which costs the same as blue. Even if customers were given the option to pay more like you do with cars for some colours, it would be good. Not talking about every colour under the sun, or special custom blends, just a basic range of red, blue, green, black, yellow and maybe a few others.

Also, why don't manufacturers offer to sell more frames only for those that want to do a custom build or perhaps those that can't afford a complete bike and want to transfer the components from their old bike or build the bike up slowly as finances allow? Specialized for example only offer the S-Works version of their Tarmac frame seperately, you can't buy just a normal" non S-Works frame.

Another question, this one is more bike shop specific rather than manufacturer, why don't more shops offer custom builds? Most shops will only sell you a bike with whatever groupset/handlebars/saddle/wheelset that came out on the bike from the manufacturer. There is one LBS (not really a LBS, it's 100km away) that offers this. You can say to the guy "I want this bike but instead of Dura Ace groupset I want Campy Super Record with Zipp 404s and Selle Italia saddle" and he will just swap components with another bike he has on the floor and adjust the price accordingly. I know lots of people that have bought bikes this way from this store.