Internet claims another LBS

[oldpotatoe]

Originally Posted by SPOKE

Small, low volume shops can't really catch a break. Wholesale prices from the usual US distributors are higher than any of us can buy the stuff for from an online seller. Fortunately there are a few online sellers based in the US that are now somewhat competitive with the online U.K. sellers.

Because they are owned by distributors, who sell to bike shops and to compete, sell direct to consumers also. They get their margin regardless. UK MO can do it because of European law.

[velomonkey]

Shop was open 16 years as per the letter. The internet was around in 1999 and people were doing plenty of online commerce in 1999.

Bethel cycle used to have a great online presence too. I recall reading about a dale 6/13 on his site and about an IF. He dropped the online stuff and now blames the internet for closing the shop.

That shop had a club most shops would die for. Big numbers, fast riders, in an area where there is a much, much higher percentage of disposable income (tons of NYC and CT bankers live there).

Not saying this doesn't add up, but there are plenty of other shops who are making it work with far less.

It was always on my list of shops to see, too bad it's gone.

[jr59]

Originally Posted by velomonkey

Shop was open 16 years as per the letter. The internet was around in 1999 and people were doing plenty of online commerce in 1999.

Bethel cycle used to have a great online presence too. I recall reading about a dale 6/13 on his site and about an IF. He dropped the online stuff and now blames the internet for closing the shop.

That shop had a club most shops would die for. Big numbers, fast riders, in an area where there is a much, much higher percentage of disposable income (tons of NYC and CT bankers live there).

Not saying this doesn't add up, but there are plenty of other shops who are making it work with far less.

It was always on my list of shops to see, too bad it's gone.

I would tend to think in this way.

It's very hard to compete directly with the web. VERY HARD for any retail to do so. You have to find a niche or service that they can't offer. That and manage their cash flow. Anybody that has owned a small retail business will tell you these 2 things. But I'm not in the bike business, so what do I know?

[Mikej]

Yeah, that building is a major expense for a bike shop. As for them going under, its a shame, maybe they could relocate to a smaller - cheaper local? As for the service, There are so many tools and online tutorials out there now a days, that THAT could be the internet claiming another LBS. And as for the team, THAT also is a major expense and PITA -I know - for as fast as I am, I should be getting waaay more..(sarcasm, but you get the drift). Shops are going to have to come up with a side business to run in the space, otherwise they are never going to make it.

[Avincent52]

I'm going to give this guy the benefit of the doubt. If he spent 1/3 of his life building and running a business and he says the internet drove him out of business, I'll respect his decision--and his contribution to the cycling community--by not second guessing that.

The reality is that Ribble is selling Campagnolo parts--at retail including shipping, with little or no "hassle cost"-- for 25 percent below what a U.S. shop pays for the same items.

That's when they're *not* sweetening the deal with a 10 percent off coupon. How do you compete with that?

[jr59]

Originally Posted by Avincent52

I'm going to give this guy the benefit of the doubt. If he spent 1/3 of his life building and running a business and he says the internet drove him out of business, I'll respect his decision--and his contribution to the cycling community--by not second guessing that.

The reality is that Ribble is selling Campagnolo parts--at retail including shipping, with little or no "hassle cost"-- for 25 percent below what a U.S. shop pays for the same items.

That's when they're *not* sweetening the deal with a 10 percent off coupon. How do you compete with that?

You don't. That's the point! You can not compete with things like that.

You have to find other things that the web can not offer. This is not news, retail is HARD and finding a niche is hard, and made harder by the net.

As Old Spud said above, service shops and high end fittings shops seem to be doing alright. I'm sure that their are others as well. If you are trying to compete with the web, it's a race to the bottom that no brick and mortar can win.

[earlfoss]

I'll buy my Campy stuff from Ribble any day too because they have the lowest prices and they have excellent customer service. Velomine seems to have the lowest Campy prices of any seller in the USA and they also have very excellent and knowledgeable staff. The thought of going into any other shop and paying what I think is a price they just made up because they think they have a Campy customer over a barrel just kills me.

[velomonkey]

Originally Posted by Avincent52

I'm going to give this guy the benefit of the doubt. If he spent 1/3 of his life building and running a business and he says the internet drove him out of business, I'll respect his decision--and his contribution to the cycling community--by not second guessing that.

The reality is that Ribble is selling Campagnolo parts--at retail including shipping, with little or no "hassle cost"-- for 25 percent below what a U.S. shop pays for the same items.

That's when they're *not* sweetening the deal with a 10 percent off coupon. How do you compete with that?

As said below - you don't compete with it - there is zero chance you can win. Maybe the guy needed to make 200k to live and if he can't make that the shop closes. I don't know, no one knows. I do know the demographic he is in, I do know the club he has (had), I do know there are plenty of shops who adjusted and are making it fine - so opened before him some after.

The internet is not a new thing, campy variable pricing is not a new thing.

Any bike retailer blaming the internet is simply half a step shy of blaming the customer - the world simply does not work that way and if you think it does you won't be in business very long.

[SPOKE]

Originally Posted by oldpotatoe

Because they are owned by distributors, who sell to bike shops and to compete, sell direct to consumers also. They get their margin regardless. UK MO can do it because of European law.

Old Spud,
What distributors own which online sellers?

[jmal]

I'm not familiar with the area in which the shop was located, but the photos I have seen all suggest it was a small town. It seems like in order to survive these days you have to have a significant population, and then offer/really push services not available online. Having great stock items helps too. Looking at a map it appears that although it is close to other larger cities, it might not have been a destination for residents of the cities nearby. Just a guess. Most successful shops I have had contact with were either in college towns with a revolving population or growing suburbs with plenty of mobility/circulation in the residents. With the right population base you then have a foundation to build upon. Your fitting schedule needs to be booked solid. Your service area needs to be busy, fast, and dependable while at the same time capable of selling further service/parts when necessary. The sales floor team needs to be able to sell bikes on first contact with the customer, and then sell accessories, bike racks, and clothing to augment the purchase. As soon as the customer walks out the door to the next shop to browse, the odds of them returning diminish. These are just some observations I've made working in and patronizing good shops. It's a tall order and in my opinion requires a number of factors that simply do not exist in many regions of the country. With the increasing competition and evolving marketplace, many shops just do not have the ability to serve, or even a market to serve.

[bobswire]

That would have been a great place to have a have shared with a cafe. My guess is he's is tired after 16 years of making ends meet, got an offer for the property that was too good to turn down at this point (that is if he owned the property outright).

[velomonkey]

Originally Posted by jmal

I'm not familiar with the area in which the shop was located, but the photos I have seen all suggest it was a small town. It seems like in order to survive these days you have to have a significant population, and then offer/really push services not available online.

The world HQ of IBM is right there - tons of employees live over there so they don't pay NY property taxes (IBM is in NY). Tons of bankers live there - bankers who go into NYC and bankers who work in CT. Trust me, that part of CT is plenty loaded. It's not a small town, but it's also not a city either - it's a bedroom community for NYC and the corporate park part of Westchester, NY.

[weisan]

This thread sort of reminds me of "Ben & Serotta Co."

Good run.

Knowing when to start is just as important as knowing when to quit.

[benb]

I don't even know how the US online guys are going to survive at the rate things are going...

I just got some shifters, I wanted to order them from Ribble but they were out of stock..

LBS probably would have been $500
I got them on Amazon for $360
Ribble was advertising for $200

I ordered some brake pads yesterday at one of the LBSes, they just moved into a gorgeous new facility and I noticed they are going to have a Cafe section. Smart move. Looked like it was just going to be a Keurig machine though...

[oldpotatoe]

Originally Posted by earlfoss

I'll buy my Campy stuff from Ribble any day too because they have the lowest prices and they have excellent customer service. Velomine seems to have the lowest Campy prices of any seller in the USA and they also have very excellent and knowledgeable staff. The thought of going into any other shop and paying what I think is a price they just made up because they think they have a Campy customer over a barrel just kills me.

Most shops understand margin, they aren't making anything up. They take wholesale $ and divide by .65 or so to get a margin of about 35 points...which is recognized as the minimum to pay your fixed costs and not lose money.

Problem is the wholesale they pay is what uk places sell this stuff for. This idea that they price that way isn't accurate.