Actual Cost of a Higher End Bike
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https://www.startribune.com/business/28666934.html
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From its 135,000-square-foot, energy-efficient headquarters and warehouse that border Bloomington's Hyland Park Reserve, QBP employs 450 people and expects another year of profitability on revenue of $150 million, up 20 percent from 2007. If it were publicly held, QBP would rank at No. 71 on the Star Tribune 100 list of the state's biggest public companies.
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From its 135,000-square-foot, energy-efficient headquarters and warehouse that border Bloomington's Hyland Park Reserve, QBP employs 450 people and expects another year of profitability on revenue of $150 million, up 20 percent from 2007. If it were publicly held, QBP would rank at No. 71 on the Star Tribune 100 list of the state's biggest public companies.
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#77
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Last I heard nobody is flocking to the bike industry because of record high profit margins. It's not like people are lining up to buy stock in bike companies. But the thought of a bike priced higher than a motorcycle doesn't pass the goofy test. Obviously the money is going somewhere. IMO it's in efficiency. The bike supply chain seems horribly inefficient. LBS, distributor, heck probably an importer, the actual manufacturer, and probably a similar chain for the components. Everyone in the industry is used to asymmetric conditions so they're used to locking out buyers via distribution agreements, etc. It's high time for a little revolution in the industry. That middle group of distributors needs to be overthrown!
Grab your pitchforks, let's go burn down a warehouse!
Grab your pitchforks, let's go burn down a warehouse!

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I am certainly not arguing that distributors do not contribute to the value chain. I am just saying they charge too much for what they bring to the table. If independent bicycle shop owners were smart, they would have formed a co-op years ago.
Always follow the money. Bike manufacturers and retailers are not getting obscenely wealthy as far as I can see. Distributors, on the other hand are cleaning up. This is partly the reason I can buy Shimano groupsets cheaper from PBK than at my LBS. PBK buys excess inventory directly from bike manufacturers. No distributors involved.
Markets are great, but they are not always perfect. Especially with relatively low volume items like bicycles.
Always follow the money. Bike manufacturers and retailers are not getting obscenely wealthy as far as I can see. Distributors, on the other hand are cleaning up. This is partly the reason I can buy Shimano groupsets cheaper from PBK than at my LBS. PBK buys excess inventory directly from bike manufacturers. No distributors involved.
Markets are great, but they are not always perfect. Especially with relatively low volume items like bicycles.

Maybe the problem simply isn't bad enough to need new business, or maybe no one has tried it.
I agree that markets aren't perfect. I'm not sure the distributors are cleaning up, I haven't heard any substantiated reports of their profits.
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Uncle Pcad, this is one of your funniest posts in some time. Well, that I've read...
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I love all of the distributor bashing going on. Until very recently, I worked in high-end audio - not dissimilar from high-end bikes. Distributors aren't walking around with bags of money on their feet, instead of shoes. In fact, a lot of big-name audio distributors have gone under in the last 3 years. As a salesman, I can tell you this - someone has to sell the people that sell the people. This, in addition to buffering inventory distribution, is the main role filled by distributors.
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I love all of the distributor bashing going on. Until very recently, I worked in high-end audio - not dissimilar from high-end bikes. Distributors aren't walking around with bags of money on their feet, instead of shoes. In fact, a lot of big-name audio distributors have gone under in the last 3 years. As a salesman, I can tell you this - someone has to sell the people that sell the people. This, in addition to buffering inventory distribution, is the main role filled by distributors.
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Prices are set at what people would pay - plain and simple. If products are too expensive, less people buy, prices will come down. Supply and demand. And thank God for profits - that's what drives innovation. No profit, no innovation. Capitalism at it's best.
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Without a middle tier of distribution the VP of Sales for Trek would have to deal with every LBS from bum****, IA to NYC. They're obviously not interested in doing that and it's more efficient to have one central distributor deal with all the LBS's. The bicycle distribution model is very similar to any other retail product.
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If it's too pricey for you, don't buy it. Is that too complicated for some of you imbeciles?
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They obviously serve a purpose otherwise they wouldn't exist and remain profitable.
Without a middle tier of distribution the VP of Sales for Trek would have to deal with every LBS from bum****, IA to NYC. They're obviously not interested in doing that and it's more efficient to have one central distributor deal with all the LBS's. The bicycle distribution model is very similar to any other retail product.
Without a middle tier of distribution the VP of Sales for Trek would have to deal with every LBS from bum****, IA to NYC. They're obviously not interested in doing that and it's more efficient to have one central distributor deal with all the LBS's. The bicycle distribution model is very similar to any other retail product.
When some bicycles cost much more than motorcycles, then there must be some level of inefficiency in the distribution system.
Bicycles are not that complicated to manufacture. Certainly not more complicated than motorcycles.
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So your complaint is the bike you want is more than you can afford and you think the industry should lower prices to your range
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Bikes are designed using finite element analysis. I am a structural engineer and use finite element analysis daily. It took colnago 4 years to perfect the C59, they would have to sell A LOT of them just to cover my fees if i designed that, let alone all the other costs. and how much does it cost to ship the thing from Italy to Australia, fully insured and boxed - and then the dealer has to assemble. It would cost colnago big bucks just to produce an empty box of that size and quality and send it to me.
Oh and something is worth what someone is willing to pay for it.
Oh and something is worth what someone is willing to pay for it.
Last edited by lazerzxr; 10-07-10 at 08:16 PM.
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Dude, really - you think that it's that simple? Okay, fine - he deals with the collective co-op. Then what? Who IS the governing body of the Borg- er, co-op? How do they communicate with the dealers to know what they need and want? How many staff do they need for this channel of communication? Where are all of these people located? Who takes care of actual shipping, seeing that things go to where they need to go? How many people will that take? Where will they, along with the warehouse, be located? Will there need to be more than one, since the US is kinda big (not to mention the rest of the world)? Now, are all of these jobs performed by LBS owners and their staff in their free time? No? ****, I guess that you'll have to pay all of these people... in any event, looks like we've got it nailed down! Sound good?
More importantly, sound familiar?
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Not really. I end up buying a lot of stuff from PBK, Chainreactioncycles and Wigggle. I feel bad sending my money overseas, but it is just unbelievable the price difference sometimes. How does PBK end up selling stuff for the prices they do and still make a profit? And don't forget that they are shipping accross the ocean. How could that be, if not that we have some inefficiencies built into the distributive system here?
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By Jove, I think you've got it! Why didn't someone else think of such an elegant solution! (Where's that eye-rolling emoticon?)
Dude, really - you think that it's that simple? Okay, fine - he deals with the collective co-op. Then what? Who IS the governing body of the Borg- er, co-op? How do they communicate with the dealers to know what they need and want? How many staff do they need for this channel of communication? Where are all of these people located? Who takes care of actual shipping, seeing that things go to where they need to go? How many people will that take? Where will they, along with the warehouse, be located? Will there need to be more than one, since the US is kinda big (not to mention the rest of the world)? Now, are all of these jobs performed by LBS owners and their staff in their free time? No? ****, I guess that you'll have to pay all of these people... in any event, looks like we've got it nailed down! Sound good?
More importantly, sound familiar?
Dude, really - you think that it's that simple? Okay, fine - he deals with the collective co-op. Then what? Who IS the governing body of the Borg- er, co-op? How do they communicate with the dealers to know what they need and want? How many staff do they need for this channel of communication? Where are all of these people located? Who takes care of actual shipping, seeing that things go to where they need to go? How many people will that take? Where will they, along with the warehouse, be located? Will there need to be more than one, since the US is kinda big (not to mention the rest of the world)? Now, are all of these jobs performed by LBS owners and their staff in their free time? No? ****, I guess that you'll have to pay all of these people... in any event, looks like we've got it nailed down! Sound good?
More importantly, sound familiar?
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When some bicycles cost much more than motorcycles, then there must be some level of inefficiency in the distribution system.
Bicycles are not that complicated to manufacture. Certainly not more complicated than motorcycles.
Bicycles are not that complicated to manufacture. Certainly not more complicated than motorcycles.
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$400 is a huge price-differential.
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Not really. I end up buying a lot of stuff from PBK, Chainreactioncycles and Wigggle. I feel bad sending my money overseas, but it is just unbelievable the price difference sometimes. How does PBK end up selling stuff for the prices they do and still make a profit? And don't forget that they are shipping accross the ocean. How could that be, if not that we have some inefficiencies built into the distributive system here?