View Single Post
Old 01-31-19, 09:03 AM
  #48  
kingston 
Jedi Master
 
kingston's Avatar
 
Join Date: Sep 2014
Location: Lake Forest, IL
Posts: 2,542

Bikes: http://stinkston.blogspot.com/p/my-bikes.html

Mentioned: 26 Post(s)
Tagged: 0 Thread(s)
Quoted: 1020 Post(s)
I have no problem with minimum resale price maintenance (RPM) agreements between manufacturers and retailers and donít really care what some judges in two of the least free states in the country think is or isn't legal. The problem I have with Shimano is that they are incompetent. They are trying to execute different pricing strategies in the US and Europe, which clearly doesn't work in a global economy. Then when it fails, they decide to go after the retailers Instead of addressing their own flawed pricing strategy.

My guess is that Shimano makes at least ten times more on OEM parts in the US than what they make on spare parts, so the profit-maximizing pricing strategy for them in the US is to keep the OEM prices as low as possible for the big American bike manufacturers and to keep the spare parts price as high as possible which 1) makes more money when Americans buy replacement parts 2) creates a financial incentive for Americans to buy new bikes instead of upgrading the ones they already have. If this were the only thing going on, I wouldn't have a problem with it, even with minimum RPM agreements.

In Europe I guess the dynamic is different with more smaller bike manufacturers and apparently a higher proportion of sales volume coming from spare parts. To maximize profits in Europe, Shimano keeps the OEM prices a little higher and the spare parts prices a little lower. Again, perfectly acceptable pricing strategy in isolation.

In a global economy, it is impossible to execute these two different pricing strategies simultaneously in the absence of government regulation. Since the bicycle spare parts market is unregulated, Shimano is predictably failing to execute this geographically segmented pricing strategy. So instead of fixing their flawed strategy, they decide to threaten British retailers so they stop shipping parts to Americans and American retailers so they stop trying to compete with the British. Itís a level of management incompetence that I can't support. There are a few companies in the world that I have no choice but to do business with, and Shimano isn't one of them, so until they figure this out, I'm done with Shimano. Technical books and foreign DVDís were already on the list of things I don't buy, so I wonít need to add them. I'm not convinced Assos does anything I object to other than make clothes I would never buy. They certainly don't operate the same way Shimano does.

Last edited by kingston; 01-31-19 at 09:57 AM.
kingston is offline