135crewchief

i am looking for bike store owners to ask simple questions about store sartup. if you are a owner or know one please respond and i will fire away with some of my questions. The first question is estimated, how much it would cost? are there franchise fees to sell brands of bikes? etc....

cryptid01

How much does a house cost?


A question probably better posed to the manufacturer, no?

santiago

I don't have answers but I have questions that I would also like to ask LBS owners that may or may not help 135crewchief.

From what I understand, the LBS has a tough time competing against the PricePoint.com, JensonUSA, etc because these guys buy closeout/gray market stuff. What I've read and understood is that there are manufacturers/wholesalers/brokers in China/Taiwan/Hong Kong who have overstock from production runs. These gray market parts are much cheaper than what a LBS can buy from his local distributor.

Anyway, what I want to know is, why don't the LBS buy directly from these Chinese companies? I can get online right now and find a brand new Fox F80RLT fork on sale from a Taiwanese eBay seller going on average for $300-350. The MSRP on that fork is $675. If I can buy one fork at $350, why can't a LBS buy 10 at $275? Is it because you have signed agreements with local distributors?

I am very curious about this as everyone knows the LBS can't compete against the prices at PricePoint. However, I'm wondering why not? Why not play the same game that PricePoint and company plays? Any info on this, markups, the path parts take (manufacturer, national distributor, local distributor, LBS, etc) would be very helpful.

thejoe

Coming from a computer sales background I can say that grey market is a sketchy buy. Russians, bad returns, bad parts, no warranty's, etc.

Pricepoint and Jensen make their money selling a part they get for $36, and sell to you for $40. They deal in volume, thousands of units. While Pricepoint might sell it for $41, Jensen might be selling it for $40 to try and get the sale and make some money on shipping or return business (they probably both got it for $36). 2,000 $40 tires they got for $36 = $8,000. Online = volume.

LBS's sell at close to MSRP because they know people don't want to wait for stuff and they know they won't sell 2,000. Plus if you buy it at their shop they might get installation fees.

santiago

I agree with what you say, but we're getting to the point that large minimum orders may not be necessary. I just bought an Avid BB7 set (front and back) and paid something like $150. I think the MSRP for both is $200. I saw the same kit from an eBay seller based in Hong Kong for $120 or $130. Assuming a 30% markup this means that my LBS buys the kit for $150 cost. Even paying the Hong Kong seller $130 he comes out ahead. And that's just paying for one, what if he decides to buy 20 kits.

As for warranty, I agree that this may be an issue but the mechanical nature of this stuff is less of an issue than processor/hard drive failure that you have to deal with in your line of work.

thejoe

It all depends on the product, seller, and what cost manufacturer's are giving vendors. Your brakes might cost Avid $15 to make. They may sell them to vendor A for $60 because they sell more than vendor B who gets to buy them for $80.

If I was selling your brakes, I would look around to see where the average retail price was, try and beat it by a few bucks. I would not look at an auction for price comparison.