Taking a stand against Shimano

[Veloo]

Wonder who else will join in.

http://www.cyclingindustry.news/retail-comment-why-ive-finished-a-long-relationship-with-shimano-until-dealers-take-a-stand/

[Louis]

http://www.cyclingindustry.news/retail-comment-why-ive-finished-a-long-relationship-with-shimano-until-dealers-take-a-stand/

Maybe he should offer something Art's Cyclery can't.

For how long have bricks-and-mortar places been complaining about online retailers? I don't think they're going away any time soon.

[Elefantino]

Maybe he should offer something Art's Cyclery can't.
He does. I've known Drew for nearly 20 years. He's a great guy, runs a great shop where people like to hang out, knows the business, treats his customers like family and with the utmost respect, and generally doesn't ever give "I don't know" as an answer to a problem.

If a guy like Drew Johnson says something like this, it's worth listening to.

[Louis]

He does. I've known Drew for nearly 20 years. He's a great guy, runs a great shop where people like to hang out, knows the business, treats his customers like family and with the utmost respect, and generally doesn't ever give "I don't know" as an answer to a problem.


Well good for him. Sounds like he's doing it right.

[fogrider]

Wonder who else will join in.

http://www.cyclingindustry.news/retail-comment-why-ive-finished-a-long-relationship-with-shimano-until-dealers-take-a-stand/

this is not news. bike shops make it by selling complete bikes with oem parts. manufacturers sell in bulk to large bike names like specialized, trek, cannondale, and giant to name a few. they get a great price because they buy in bulk, how many brakes and cranks can a lbs sell? so is this guy not carrying any shimano parts on any of the bikes he sells? so what's he got? sram? how many guys/gals come in looking for campy?

[smontanaro]

I thought part of the problem was Shimano USA itself. There isn't an equivalent outside the US. All the big overseas vendors buy directly from Shimano. SUSA is just a needles middle man. I think US-based online retailers are able to source grey market parts through offshore channels for less than they can them from SUSA.

I've always thought the whole idea of people using the LBS as just a demo room was pretty disgusting. That has nothing to do with Shimano, and I'm sure it's not limited to the bike industry.

[Cicli]

I know a bike shop that sells alot of Shimano. He gets it online instead of from SUSA.

[oldpotatoe]

He does. I've known Drew for nearly 20 years. He's a great guy, runs a great shop where people like to hang out, knows the business, treats his customers like family and with the utmost respect, and generally doesn't ever give "I don't know" as an answer to a problem.

If a guy like Drew Johnson says something like this, it's worth listening to.

The problem is the manufacturers, and not just shimano. They know distributors that sell direct(Art's? Owned by a distributor? I don't know), they know overseas and US based resellers that sell at what the wholesale pricing is in the US. Just being a great service oriented shop isn't enough because along with service is the need for parts. You need a new DA rear der? Look at one of the 6 or so distributors in the US, and then look at MO, like Art's and you see the problem. BUT Art's has to get their stuff somewhere. I'm guessing they are owned by a distributor, who sells to bike shops, at wholesale but also sells direct to the consumer. They get the same margin.

BUT with shimano(and probably sram), individual bike part sales are probably teeny compared to the HUGE amount of stuff they provide OEM. AND that's another problem. Be a bike manufacturer, buy 5000 Ultegra groups at really low prices, resell 1000 of them to places like Arts and Velomine and Planet Cyclery.

It just isn't in shimano's interest to control this stuff. I think because it's such a small part of their overall, multi $billion business.

BTW-not a lawyer but getting 50 shops or whatever to try to influence shimano or anybody, I think is Collusion and I think illegal.

shimano and others selling direct to the bike shop would make this go away. Controlling OEM would help also.

BTW-2 posters above. shimano USA is not a distributor. They are an office of shimano home company in Japan.

Another BTW-shimano is the big dog but other mostly European companies are also a BIG problem. Look pedals, Conti and Vittoria tires, SIDI shoes, just take a look at the online retailers in the US and Europe.

[54ny77]

I don't know about Art's ownership today, but Art's was very much a local shop, with real people and real bricks and mortar. Always has been. And still is (I was just in the area recently for a visit). And yes there really was an Art, he was highly energetic and seemed passionate about his biz. He was generous in sponsoring my local college cycling team many years ago, we're talking a few decades ago now scary as that sounds. The local shop is still around today, don't know if Art is though. Smartly, they developed a heck of an online component, and I always look to them to see what their price is on something because I like to support their business. I'd say they had the vision to not only survive, but thrive. On a similar regional note, some of you will remember back in the day Cambria Bicycle Outfitters. How about that big print catalog? Talk about pre-internet eye candy. They too have thrived, have a big distribution facility in Paso Robles, and the shop is also very much bricks and mortar (I went into the SLO shop and chatted up the employees about their history).

Obviously, these two shops figured it out.

[ericssonboi]

While this article is aimed at cycling, the problem is that the business model of the lbs has to change. Every industry is affected by online sales with big giant wholesale distributors selling direct to customers like amazon, prime shipping or free shipping if you spend X dollars, free returns; is it a wonder why people use technology to get more out of their dollar. If you don't change your business model, your going to get left behind. In Shimano's point of view, they aare just doing what any business would do, drive sales, increase profits; reinvest in R&D, repeat; is it really Shimano's fault? I've seen companies (watch and jewelry) who do put sale restrictions on items, or don't sell online to make their brand more prestige and at the end of the day, the customer ends up paying more since discounts rarely happen.

[54ny77]

My wife owns a small local biz, retail. No joke, a couple years ago the manufacturer of one of her bigger product lines opened a company store right around corner. I was furious, wanted to retaliate through variety of legal means. Wife was calm, met with Pres. of that co., dealt with it and rode things out like she always does: execute with better service, better service, and even more better service.

That company store closed. She still sells the product line.

Retail's a f^%$#!@! nightmare, but you must adapt, evolve and execute, or you will die a miserable inventory-laden death.

While this article is aimed at cycling, the problem is that the business model of the lbs has to change. Every industry is affected by online sales with big giant wholesale distributors selling direct to customers like amazon, prime shipping or free shipping if you spend X dollars, free returns; is it a wonder why people use technology to get more out of their dollar. If you don't change your business model, your going to get left behind. In Shimano's point of view, they aare just doing what any business would do, drive sales, increase profits; reinvest in R&D, repeat; is it really Shimano's fault? I've seen companies who do put sale restrictions on items, or don't sell online to make them more prestige and at the end of the day, the customer ends up paying more since discounts rarely happen.

[ericssonboi]

My wife owns a small local biz, retail. No joke, a couple years ago the manufacturer of one of her bigger product lines opened a company store right around corner. I was furious, wanted to retaliate through variety of legal means. Wife was calm, met with Pres. of that co., dealt with it and rode things out like she always does: execute with better service, better service, and even more better service.

That company store closed. She still sells the product line.

Retail's a f^%$#!@! nightmare, but you must adapt, evolve and execute, or you will die a miserable inventory-laden death.


This. Good for you and your wife. Owning a business is one of those things that you must adapt and is not easy. Look at Wal-mart, they are going through rough times also and losses are seen through shoplifters. That is one of the unfortunately things of retail. At the end of day the day, the customer is ultimately who pays the bill and will return if they walk out happy.

[AngryScientist]

Every industry is affected by online sales

Correct. I run in Brooks running shoes. This week I went to 4 different sporting goods stores looking for a pair of my preferred model in size 10. Been running in Brooks for years, so I know my size and fit. It's probably the most popular men's size and every store was out of that size. Finally after driving around for a few hours went home and ordered them direct from Brooks. Free 2-day shipping. No sales tax. Why on earth do I ever go to stores anymore?

[AngryScientist]

Also, IMO, shame on the author of that article for calling out Art's directly like that. I'm sure there is more to the story, but this from the Art's site:

Our History
Art's Cyclery has a rich history dating back to 1982 when the first store opened in Los Osos, California. Over 30 years later, Art's Cyclery has evolved into an online resource for everything related to cycling. Our retail store is located in beautiful San Luis Obispo, CA. Halfway between Los Angeles and San Francisco, our town boasts some of the best roads and trails in the world. Just a few miles from the Pacific Ocean, San Luis Obispo is an outdoor Mecca that draws thousands of tourists each year.

In 2008, we entered a partnership with Sports Warehouse which has allowed Art's Cyclery to grow and expand into the global online entity it is today. This partnership offers us every resource available to make our website as comprehensive and user-friendly as possible, as well as lowering our distribution costs so we can offer better prices to our customers.

It sounds to me like the people who own Art's have just figured a way to do things and be profitable. I think it's a bad move to throw daggers at your competition because they can do it better than you.

It's also probably a bad idea to villainize your customers who wind up shopping online. I agree it's totally poor form to try on shoes in a shop and then buy them online, but it's hardly shoplifting. Also, some customers probably legitimately get sticker shock seeing what a shop charges for a pair of Sidi's compared to what they might have been expecting from viewing online.

the bottom line for me is that EVERYONE has access to the internet today, EVERYONE. LBS and others have to expect that when a customer comes through the door for a significant purchase, they know what the real market value is of that item.

[ericssonboi]

To make a comparison and echo what AngryScientist has mentioned, my lbs actually attempts to price match retailers online when a customer asks about it. It may not be a fair comparison, but at least their trying to keep the customer. You get the part right away and It saves you the shipping time. You also get the knowledge of someone at the lbs and their willing to lend you a hand install the part If their not too busy.

[54ny77]

it wasn't the author who pointed out art's, it was the bike shop owner, ironically.

i can speak personally from how much art's helped support local cycling when i lived there. they were the real deal. as local as it gets.

again, have no idea what they do today, but i'd guess after being in biz for almost 35 years they're obviously doing something right.

everyone else seems to b&*^%! and moan.

now that i was thinking about it some more, if i recall correctly, a guy who used to race on the cal poly team and worked at the shop back in the 80's/90's bought the shop from art after many years. anyone local to this forum with that info?

[edit: after a quick search online, i answered my own question. here's the history. http://blog.artscyclery.com/industry/33-years-of-arts-cyclery-a-shop-with-a-history/ the guy i was referring to is eric benson. boy was he fast on the bike, one of the top guys in those days, i think he was part of the national champ collegiate team. those were good years. good for him and their entire crew for growing that biz. ]






Also, IMO, shame on the author of that article for calling out Art's directly like that. I'm sure there is more to the story, but this from the Art's site:



It sounds to me like the people who own Art's have just figured a way to do things and be profitable. I think it's a bad move to throw daggers at your competition because they can do it better than you.

It's also probably a bad idea to villainize your customers who wind up shopping online. I agree it's totally poor form to try on shoes in a shop and then buy them online, but it's hardly shoplifting. Also, some customers probably legitimately get sticker shock seeing what a shop charges for a pair of Sidi's compared to what they might have been expecting from viewing online.

the bottom line for me is that EVERYONE has access to the internet today, EVERYONE. LBS and others have to expect that when a customer comes through the door for a significant purchase, they know what the real market value is of that item.

[oldfatslow]

I don't know about Art's ownership today, but Art's was very much a local shop, with real people and real bricks and mortar. Always has been. And still is (I was just in the area recently for a visit). And yes there really was an Art, he was highly energetic and seemed passionate about his biz. He was generous in sponsoring my local college cycling team many years ago, we're talking a few decades ago now scary as that sounds. The local shop is still around today, don't know if Art is though. Smartly, they developed a heck of an online component, and I always look to them to see what their price is on something because I like to support their business. I'd say they had the vision to not only survive, but thrive. On a similar regional note, some of you will remember back in the day Cambria Bicycle Outfitters. How about that big print catalog? Talk about pre-internet eye candy. They too have thrived, have a big distribution facility in Paso Robles, and the shop is also very much bricks and mortar (I went into the SLO shop and chatted up the employees about their history).

Obviously, these two shops figured it out.

Art's is in SLO and has a really nice store with helpful staff and a really competent set of mechanics wrenching.

[ColonelJLloyd]

He should've had someone more qualified than he to proofread it as well. To boot, he named his shop "World Famous xxxxx". That's nice, guy, but I've never heard of you.

Also, IMO, shame on the author of that article for calling out Art's directly like that.

[Ralph]

Don't mean to sound cold hearted....but current system is just Econ 101 at work. The free market system....all to benefit (usually) the consumer. And there is more goods to be sold than can be channeled thru traditional bike outlets. Times change.

And isn't this Ogden, UT, LBS the same one selling Cannondale frames on E Bay at a pretty consumer friendly price? With no Shimano parts on them. Looks like he's adapting fairly well to the new way of doing things. I bought a CAAD 10 frame from him recently on E Bay. Good price, and a smooth transaction for me. I was impressed with the way he handled it.

[thirdgenbird]

Maybe he should offer something Art's Cyclery can't.

For how long have bricks-and-mortar places been complaining about online retailers? I don't think they're going away any time soon.

He does.

You mean he used to. As a consumer, same day service is something I'm willing to pay extra for. If he quits stocking shimano parts, there in no reason to bother with his "world famous" shop. If I have to wait several days for something, it just as well show up at my doorstep. If his boycott means he won't even order a shimano part, best of luck to him. I doubt he can convince someone needing a shimano rear derailleur to switch to SRAM. If he could, he should be able to sell the price difference on shimano.

That 25% drop in shop sales must not have been all that important if he was willing to give away the remaining 75%. Where does he expect those customers to go?

[oldpotatoe]

To make a comparison and echo what AngryScientist has mentioned, my lbs actually attempts to price match retailers online when a customer asks about it. It may not be a fair comparison, but at least their trying to keep the customer. You get the part right away and It saves you the shipping time. You also get the knowledge of someone at the lbs and their willing to lend you a hand install the part If their not too busy.

And if he buys from normal distribution channels in the US, he is losing money each time he does that. Most shops survive on a minimum overall margin. What is needed to stay in biz with zero net profit and no new debt..and that's about 35points(divide cost by .65)..it is NOT 'markup'...that margin pays for the fixed costs. Labor, rent, utilities, insurance, etc. So, you buy a widget at $6.50..sell for $10.00..You can make do with volume..and less margin, but that means a certain level of volume. If you stay there, groovy, if it falls below that level-OOB. Ask Ultimate Electronics and Circuit City.

I also think the guy making a decision based on emotion isn't going to work. He can complain to Wayne Stetina(shimano USA big boy) until the cows come home..and like Merckx, when asked about steel bikes, 'ya sure'..but shimano isn't going to change. He needs a different biz plan to hang around. One that recognizes the reality of bike retail today. As the 'big boys' evolve to online selling, it won't get better.

Reduce costs, concentrate on higher margin stuff(service-gotta be knowledgable tho, unique soft goods), identify your target market, aggressively pursue that, don't try to be everything to everybody. Being the king of a small segment(Campag pro shop as an example or master wheelbuilder) means your segment is big..who cares what they do down the street.

IMHO, of course.

[CunegoFan]

I find this idea that Art's just does it laughably unrealistic. It is pretending every shop can turn itself into a major internet retailer. It's like telling a small store being run out of business by Walmart, "Hey, Cupcake, turn yourself into another Walmart and you won't have a problem. Until then stop whinging."

I am also struggling to see much of a free market when LBS's wholesale prices are higher than internet sellers' retail prices. If Shimano sold to shops at OEM prices then we would see a free market.

[Hilltopperny]

I do my fair share of online purchasing of bike related goods. I do go to my local bike shop and see what he is willing to sell the same product for the same amount or cheaper before I make the purchase. He usually gives me a great price and I end up buying from him. I always use him for my shipping and packaging needs to assure that things get where and how they are supposed to. I also ask advice and if it is something I am not comfortable doing I bring it in to him. I believe that the in order to stay in business the lbs must provide great service and be willing to match the online pricing whenever possible. After all aren't we in a service based economy now in the US...

[Ken Robb]

And if he buys from normal distribution channels in the US, he is losing money each time he does that. Most shops survive on a minimum overall margin. What is needed to stay in biz with zero net profit and no new debt..and that's about 35points(divide cost by .65)..it is NOT 'markup'...that margin pays for the fixed costs. Labor, rent, utilities, insurance, etc. So, you buy a widget at $6.50..sell for $10.00..You can make do with volume..and less margin, but that means a certain level of volume. If you stay there, groovy, if it falls below that level-OOB. Ask Ultimate Electronics and Circuit City.






I'm confused about this explanation of cost/markup/marginbut it's early and my caffeine hasn't kicked in yet. In the 1960s I sold menswear in nice local shops. We worked on what we called 40% margin. A $10 item at retail cost us $6. There were only two sales a year. After-Xmas to clear winter clothing and after-Independence Day to clear summer clothes. Sale stuff was marked down 20%. Whatever didn't sell went into storage until the next year.

At this time big stores like Marshall Field's typically had a 48% margin but they offered free delivery which was very popular. Shopping malls hadn't been invented until the 1950s and were few and far between. Shoppers went downtown where every major chain had their HQ store, bought their goods, and when they paid were asked if they wanted free delivery to their home. The stores' trucks were seen in my suburban area almost every day. They would also pick up returns at no charge. We could also order by phone and get free delivery. This worked well because shoppers didn't have to limit their purchases to what they could carry.

Then we got discount stores and malls and people voted for them with their wallets so the old full-service model died. Now when I go into Macy's there are always "SALES" going on with shirts "REG." $50 on sale for $20 plus and extra 20% discount from 10am to noon, plus another 15% off if I use my Macy's credit card. How can anyone believe that this shirt was ever expected to be sold for more than $15?

[54ny77]

Well, they've been doing it online for almost a decade.

They occasionally have great sales, and the regular prices are good. By the way they're also one of the few US online vendors that stock Shimano PRO Vibe 7S stuff in my size and spec. I've bought bars/stems/posts from them for several bikes over the recent years.

Again, I'm a fan. Not only because of good prices but because they're a true LBS as well as a US company. I vote with my wallet because they deliver what I need (or want).

Mr. World Famous Cycle owner won't be delivering what customers need (or want), and that's his prerogative. Perhaps his change in business model will be better for him on the bottom line.

Also, Cunego, not sure how familiar you are with fulfillment but retailers can often partner with distributors and/or manufacturers, or other 3rd parties, to handle fulfillment. For a fee, of course. If an online presence in one's respective retail category is something the retailer wants to build & grow, there are ways to make that happen with minimizing the costs. It may be incremental to bottom line, but likely a helluva lot more profitable in % terms since the retailer won't have all the oprating costs & carry costs (inventory) associated with buying a minimum order of stuff. I have no idea if this kind of thing is possible in bike biz, but it likely is in some way, shape or form.

I find this idea that Art's just does it laughably unrealistic. It is pretending every shop can turn itself into a major internet retailer. It's like telling a small store being run out of business by Walmart, "Hey, Cupcake, turn yourself into another Walmart and you won't have a problem. Until then stop whinging."

I am also struggling to see much of a free market when LBS's wholesale prices are higher than internet sellers' retail prices. If Shimano sold to shops at OEM prices then we would see a free market.

[oldpotatoe]

I'm confused about this explanation of cost/markup/marginbut it's early and my caffeine hasn't kicked in yet. In the 1960s I sold menswear in nice local shops. We worked on what we called 40% margin. A $10 item at retail cost us $6. There were only two sales a year. After-Xmas to clear winter clothing and after-Independence Day to clear summer clothes. Sale stuff was marked down 20%. Whatever didn't sell went into storage until the next year.

At this time big stores like Marshall Field's typically had a 48% margin but they offered free delivery which was very popular. Shopping malls hadn't been invented until the 1950s and were few and far between. Shoppers went downtown where every major chain had their HQ store, bought their goods, and when they paid were asked if they wanted free delivery to their home. The stores' trucks were seen in my suburban area almost every day. They would also pick up returns at no charge. We could also order by phone and get free delivery. This worked well because shoppers didn't have to limit their purchases to what they could carry.

Then we got discount stores and malls and people voted for them with their wallets so the old full-service model died. Now when I go into Macy's there are always "SALES" going on with shirts "REG." $50 on sale for $20 plus and extra 20% discount from 10am to noon, plus another 15% off if I use my Macy's credit card. How can anyone believe that this shirt was ever expected to be sold for more than $15?

Yup-divide by .6..40% margin..

I think big stores either operated on a much higher margin, now don't to compete with online and also deal with a lot of volume.

BUT back to Art's..they get their stuff from someplace. I suspect with their $, they either get a lot of unrestricted OEM or perhaps travel to overseas places directly with a suitcase of Euros or Yen..and buy direct OR, as I mentioned, they are owned by a bike distributor.

Arts sells a 9000 rear der for $141, QBP, $129.92...so for Arts to stay in biz, the rear der costs Art something like $92 or so..which is what OE/cost to distributor 9000 rear der costs.

[Ken Robb]

Yup-divide by .6..40% margin..



OK, I have had my coffee and I can't help thinking we have a $10 retail item and we MULTIPLY by .6 to get $6 wholesale cost and call it 40% margin. If I divide $10 by .6 I get 16.6666. and $6 divided by .6=10. I'm not very good at math. What should we divide by .6? :help:

[oldpotatoe]

OK, I have had my coffee and I can't help thinking we have a $10 retail item and we MULTIPLY by .6 to get $6 wholesale cost and call it 40% margin. If I divide $10 by .6 I get 16.6666. and $6 divided by .6=10. I'm not very good at math. What should we divide by .6? :help:

Divide COST by .6=retail at 40% margin. Divide cost by .65=retail at 35% margin. Recognized minimum margin to stay in biz, 35-37%.

[ripvanrando]

It must be tough owning a bike shop. I try to support them as much as I can but truth be told it is a PITA because they never have what I want and if they are willing to order it, I have to wait longer, pay more, and transport my carcass back to the store to get it after having to follow-up multiple times. Specialized is the worst. Saddles not in stock. Evade helmet not in stock. Turbo s-works tires not in stock. S-Works shoes also vaporware. The icing on the cake is there is no internet sales of their junk. I'm not talking about small LBS. It took me months to get the silly looking goose neck seat post. Two weeks for tires to arrive. I can order tires online and they are at my doorstep in one or two days. I feel bad for LBS when Shimano is effectively screwing them on top of market dynamics working against them.

[thirdgenbird]

It must be tough owning a bike shop. I try to support them as much as I can but truth be told it is a PITA because they never have what I want and if they are willing to order it, I have to wait longer, pay more, and transport my carcass back to the store to get it after having to follow-up multiple times. Specialized is the worst. Saddles not in stock. Evade helmet not in stock. Turbo s-works tires not in stock. S-Works shoes also vaporware. The icing on the cake is there is no internet sales of their junk. I'm not talking about small LBS. It took me months to get the silly looking goose neck seat post. Two weeks for tires to arrive. I can order tires online and they are at my doorstep in one or two days. I feel bad for LBS when Shimano is effectively screwing them on top of market dynamics working against them.

I agree with your frustrations about waiting longer to buy something from the lbs and having to go back a second time but I'm lost on your complaint about specalized.

All specialized accessories including shoes, helmets, tires, and seatposts can be ordered online directly off the specalized site. I was able to put every item in your list in my cart. The evade helmet is on sale.

[slidey]

I can begin to understand the frustration that Drew Johnson must be feeling from the competition, but I was left with the impression that his entire article could be summed up in one sentence:
"Everybody/thing else is the problem, i'm just the victim."

And, that leaves me with an impression of him being "a whining, entitled git".

Goodbye, World Famous whatever.

[54ny77]

Yep.

As a retailer, you either figure it out fast, every single day, or you don't.

We were watching the show "Undercover Boss" last night and they were showing a senior exec working in Boston Market. The stuff employees were saying was mind-boggling.

Many folks just don't realize that for the vast majority of the time, you're only as good as your last transaction.

I can begin to understand the frustration that Drew Johnson must be feeling from the competition, but I was left with the impression that his entire article could be summed up in one sentence:
"Everybody/thing else is the problem, i'm just the victim."

And, that leaves me with an impression of him being "a whining, entitled git".

Goodbye, World Famous whatever.

[likebikes]

there are a couple of factual inconsistencies with the bicycle owner's story-

first, there are 6 different shimano distributors in the country, rather than the one that he says.

see: http://www.bicycleretailer.com/north-america/2013/07/12/shimano-slash-number-north-american-distributors?utm_source=twitterfeed&utm_medium=facebook#.VvbhR9UrLnB

also, shimano changed margins to better benefit the dealer and to better compete with online sales:
http://forums.thepaceline.net/showthread.php?t=83138

[dumbod]

I am sympathetic to the plight of the LBS and I think that it's blatantly unjust that the LBS is forced to collect sales taxes when the Internet retailer is not. (NB: The fact that an Internet retailer does not collect sales tax does not mean that we don't have to liable for it. Granted, enforcing this law would be wildly unpopular but....)

HOWEVER

I'm also deeply skeptical about LBS doomsayers. I can't help but compare them to local bookstores. Thirty years ago, Waldenbooks, Borders and B&N were going to drive all independent bookstores out of business. Twenty years ago Amazon was going to drive them out of business. Ten years ago e-books were going to drive them out of business.

In fact, many local bookstores were driven out of business but, in 2015, Waldenbooks and Borders are out of business (and B&N is on the ropes); in 2015, Amazon book sales were flat as were sales of e-books. The only part of book retailing that is thriving? Independent bookstores. Sales in 2015 were up 10%.

The two markets aren't strictly comparable but, if anything, the differences should favor the LBS - a good LBS adds more value than does a good bookstore.

Bicycle retail is changing. The best LBS owners will find ways to adapt to a changing market. Less-skilled owners will find themselves out of business due to "unfair" competition. It's the same way in every business for as long as there has been business.

[bikinchris]

there are a couple of factual inconsistencies with the bicycle owner's story-

first, there are 6 different shimano distributors in the country, rather than the one that he says.

see: http://www.bicycleretailer.com/north-america/2013/07/12/shimano-slash-number-north-american-distributors?utm_source=twitterfeed&utm_medium=facebook#.VvbhR9UrLnB

also, shimano changed margins to better benefit the dealer and to better compete with online sales:
http://forums.thepaceline.net/showthread.php?t=83138

All the Shimano distributors buy from Shimano USA. The six wholesalers you listed in that article are buying from Shimano USA like they always have. Every bike shop pays the same price, except the manufacturers like Trek.
I see Shimano's point. They are trying to level the playing field. They don't like dealers being undercut on price. Except some people are bringing in Shimano parts directly from overseas and undercutting the price, and the manufacturers are clearing out stock often and they sell below wholesale too.

[dzxc]

Also, IMO, shame on the author of that article for calling out Art's directly like that. I'm sure there is more to the story, but this from the Art's site:



It sounds to me like the people who own Art's have just figured a way to do things and be profitable. I think it's a bad move to throw daggers at your competition because they can do it better than you.

It's also probably a bad idea to villainize your customers who wind up shopping online. I agree it's totally poor form to try on shoes in a shop and then buy them online, but it's hardly shoplifting. Also, some customers probably legitimately get sticker shock seeing what a shop charges for a pair of Sidi's compared to what they might have been expecting from viewing online.

the bottom line for me is that EVERYONE has access to the internet today, EVERYONE. LBS and others have to expect that when a customer comes through the door for a significant purchase, they know what the real market value is of that item.

Well I typed out a long response to the original article, but read through this thread before hitting submit and this captures it perfectly.

[oldpotatoe]

All the Shimano distributors buy from Shimano USA. The six wholesalers you listed in that article are buying from Shimano USA like they always have. Every bike shop pays the same price, except the manufacturers like Trek.
I see Shimano's point. They are trying to level the playing field. They don't like dealers being undercut on price. Except some people are bringing in Shimano parts directly from overseas and undercutting the price, and the manufacturers are clearing out stock often and they sell below wholesale too.

I think shimano USA is involved but distributors aren't getting product from some gigantic warehouse in Irvine. Shimano USA does supply some stuff but distributor buys come from Japan or Malaysia or other shimano factories. Pretty sure.

[FlashUNC]

Shimano's effort is a token one. It neither fixes the grey market, nor do them seem particularly interested in doing so because at the end of the day, as long as they're selling parts, the LBS conundrum ain't their problem. And the sad thing is they're probably the only ones that can really push to implement change, seeing how they're the ones at the top of this particular food chain.

I empathize. Brendan Quirk had some interesting thoughts about the subject in a recent interview.

[thunderworks]

Divide COST by .6=retail at 40% margin. Divide cost by .65=retail at 35% margin. Recognized minimum margin to stay in biz, 35-37%.

The discussion about standard margin required to operate a bike store have failed to point out that no one invests in, or operates a business to break even. The economic incentive to risk capital as well as the time to work within a business is the prospect of getting an actual return on both the capital and the time. Business' that have an operating threshold of 35% margin, really need a retail price structure of 45 to 50% in order to actually retain profit.

[54ny77]

I'll guess Shimano is neither incentivized or disincentivized to do anything different than what goes on now, and they know it.

They make top notch stuff, people buy it, manufacturers buy it, and they book gazillions of $ in revenue.

From someone's high perch in Shimano corporate, what's the problem, exactly? That some LBS in Whocaresville can't sell a derailleur? Meanwhile, Ribble just sold a few hundred of them the other day....

[Mikej]

Sorry but this thread is just another reason to never have to step into a bike store unless you have to. Why do I care if Target or Home DEpot or Walmart has what I need? Because I will get the cheapest price - I'm not about supporting pops hardware and pops retirement, I'm about my retirement. It's just the the Union guys at work - everything is Union Union Union, but guess who they shop at? They shop at the biggest non Union stores possible cuz it's cheap. And there is no need to brng bike mechanics a six pack cuz they twisted your barrel adjuster the right way ( ha ha -) and besides since when does your boss want customers giving employees alcohol at work??

[kgreene10]

Shimano may be the focus of Drew's frustration but he sounds like he has bigger problems with his outlook. Calling customers who try and don't buy "shoplifters" should kill the business faster than losing sales associated with one component manufacturer.

Years ago, I bought an expensive Serotta frameset at an LBS. They wanted to charge me double (pre-tax) for the Shimano build-kit compared to Colorado Cyclist online prices. I said I could may 25% more than CC plus tax. The salesperson called me a traitor to my community and balled me out on the sales floor. I e-mailed the owner who backed up the employee.

Other than a spoke, I haven't bought a single thing there in the intervening years, I tell the story to everyone I know, and I've spent literally tens of thousands of dollars at another bike shop in town.

[cinema]

tookt err jerbs!

Do groupsets and singular drivetrain parts really keep the lights on at an LBS?

Pretty sure >1% of the population ride bikes in general, so that must be hard for them too.
I'm boycotting humanity until everyone starts doing their part and buying new carbon bikes every year from specialized and trek at their LBS

Regardless I really do care about my LBS. I figure that at this point a lot of their revenue is coming from service as well, or it should be, so even stuff I know I could do I'll have done there. it saves me time and frustration at home (I like wrenching, but at this point I really value my free time and keeping my 2br clean and not smelling like wd40) and it helps keep the shop open and I enjoy hanging out there as well. I really don't mind spending the money to have a shop install something, bleed brakes, or use shop grade tools for work that would take me some real time and effort at home. plus like i said i really like the shop.

[FlashUNC]

I'll guess Shimano is neither incentivized or disincentivized to do anything different than what goes on now, and they know it.

They make top notch stuff, people buy it, manufacturers buy it, and they book gazillions of $ in revenue.

From someone's high perch in Shimano corporate, what's the problem, exactly? That some LBS in Whocaresville can't sell a derailleur? Meanwhile, Ribble just sold a few hundred of them the other day....

The problem becomes no show room floors to sell bikes with their OEM equipment on it -- which is the lion's share of their business -- and nobody local to support the parts on their bikes should something break or need adjustment.

In the short term, you're totally right. But in the long term, Shimano either needs to consider those very real issues when shops start disappearing in droves. Not everyone can or wants to be a home wrench.

[Black Dog]

Sorry but this thread is just another reason to never have to step into a bike store unless you have to. Why do I care if Target or Home DEpot or Walmart has what I need? Because I will get the cheapest price - I'm not about supporting pops hardware and pops retirement, I'm about my retirement. It's just the the Union guys at work - everything is Union Union Union, but guess who they shop at? They shop at the biggest non Union stores possible cuz it's cheap. And there is no need to brng bike mechanics a six pack cuz they twisted your barrel adjuster the right way ( ha ha -) and besides since when does your boss want customers giving employees alcohol at work??

Sir, excuse me sir! You dropped your tin foil hat. :D

[oldpotatoe]

The discussion about standard margin required to operate a bike store have failed to point out that no one invests in, or operates a business to break even. The economic incentive to risk capital as well as the time to work within a business is the prospect of getting an actual return on both the capital and the time. Business' that have an operating threshold of 35% margin, really need a retail price structure of 45 to 50% in order to actually retain profit.

Not true at all and many big and small business' start and operate with knowledge that they will see losses from the first day.

'No One' is a big word and my business started with the idea that I would not have debt and would accumulate no more. I started with $, and continued for the 13 years I was there, most times breaking even and sometimes operating with a small net profit. BUT I did not take on any new debt and I did pay myself a salary(kinda a form of profit).

BUT you are right, and I mentioned, 35% is kinda the minimum and more than that will = a net profit. BUT my point was, when retailers try to 'match' online prices, even tho they sell for more than the item costs them, they still lose $.

[josephr]

his quote---
"You can buy parts to build a full carbon Cannondale Hi-Mod bike online, with Ultegra parts and wheels, for around $1,500. That is the retail of an Alloy bike with Shimano 105. Consumers feel they are being ripped off by the bike shop."

wow...sounds like he's done his own share of internet research....I'd bet he'd have a line out the door if he built/sold these for $3k.

[Vinci]

Maybe I'm missing something, but if I shop is paying more from QBP/Shimano/whomever than their customers are able to get the same part for online, why doesn't the shop just buy the parts online as well?

I assume there is some sort of agreement in place that a shop will order from their distributors when they need parts or risk losing access to the distributor, but if they are getting hosed on pricing, what's the loss? It seems like there could be an advantage to not being tied to one source, particularly with pricing.

[velomonkey]

Dear LBS owner - move your store to a 'service' model from a 'sell inventory' model.

That is all - anything else is just noise.

[AngryScientist]

Dear LBS owner - your current business model does not work. find one that does.

stated more simply :D

[PaulE]

Maybe I'm missing something, but if I shop is paying more from QBP/Shimano/whomever than their customers are able to get the same part for online, why doesn't the shop just buy the parts online as well?

I assume there is some sort of agreement in place that a shop will order from their distributors when they need parts or risk losing access to the distributor, but if they are getting hosed on pricing, what's the loss? It seems like there could be an advantage to not being tied to one source, particularly with pricing.

The shop won't be able to deal with Shimano on customers' warranty items if it buys Shimano parts through the gray/grey market. The shop also has relationships with certain distributors, maybe a credit line too, and they are buying lots of items on a regular basis - tubes, tires, cables, consumables, and can't waste time looking for the lowest price on components for one customer.

What gets me about the shop owner in the article is that from his website it looks like he is a big Cannondale dealer. I'm sure Cannondale is a player in his issue with Shimano. Cannondale likely buys twice as many Shimano groupsets and components as it needs to build bikes it really expects to sell, to get rock bottom pricing for itself, and then unloads their excess parts into the gray/grey market channels. This may ultimately be the downfall of the big bike brands, that they kill off their LBS dealer network in pursuit of lowest pricing for themselves.

The LBS can always tell its customers who want the online prices to buy their parts online and they will do the installation for them at the shop's labor rate for outside purchases. As long as the customer knows they're not getting any warranty on their parts from the LBS, and that the customer will have to deal with returns and exchanges themselves if they buy the wrong parts or things don't fit.

[benb]

This whole thing has been on my mind a lot this spring.

I dealt with a bunch of shops in the past 6 months as I was trying to do a bunch of test rides and do my homework on a new bike purchase moreso in the past. I went to one shop to test ride a GT grade, one to ride a Spec. Roubaix, another one to try a Seven, and yet another where I ended up buying a Trek.

I just bought a frame so some of this componentry stuff was really visible to me. I thought I was going to buy a Seven and the charges on components were so high I ended up buying my own components on black friday for a song online. No one was really upset about this which was nice. Interestingly it seemed like it was going to cost about 4x more in service costs to hang those parts on a Seven frame vs the Trek I ended up buying.

I had almost a month delay on my Trek because I wanted a Zipp Service Course SL80 bar in the "liquid black" finish. The distributor is/was so bad the shop and I eventually just changed the order to the regular bar with white zipp logos. I could have got the liquid black bar overnight from an online vendor at just about any point. The LBS in question has pretty competitive prices at this point though, they are basically eating the distributor markup I guess and they somehow can do this cause they're big. In general I wish I had been buying a complete bike. The shop was really good about all this and I just felt like they were being treated incredibly badly by the distributor. It's like the system is actually trying to hurt the bike shop.

One thing I did do was buy a bunch of Bontrager accessories rather than more name-brandy stuff as I am under the impression when the shop buys that stuff from Trek or Specialized they are not getting hosed as badly by the distributor. In general this stuff has been great. Bontrager bar cages, mini-pump (great, better than my Lezyne IMO), seat bag (also very nice with waterproof zippers, etc..). I also have Bontrager shoes. I've had Specialized shoes in the past. IMO both were/are better than the Italian name brands i had before. Specialized Helmet. (I like that they have a Snell rating)

The thing I do wish shops would really do if you're spending some solid money is make sure their mechanics are SOLID. I've had a handful of bikes in the $5k range. None of them were ever built up by me, all were built up at shops. Not a single one of them was ever setup perfectly (shifting, brakes, etc.. ) out of the box. I've had cranks come loose, BBs creak cause they weren't installed correctly, and all kinds of other nonsense. The Trek I just got was really well built up with the exception of the derailleur tune. 10-speed and 11-speed shimano stuff is really easy to set up perfectly, whoever set mine up definitely didn't follow the shimano instructions. I was reluctant to put the brand new bike in the workstand but finally did last night. 5 minutes doing things the way Shimano says to and it was perfect. I pulled the rear wheel and checked the cassette and bonus points to the shop, they did correctly torque it down. Cranks & Cassettes that need big torque wrenches and proprietary adapters seem to be the thing that frequently gets ignored during assembly.

The Seven with 6800 I test rode late last season also did not have the derailleurs set up correctly as well. Pretty much inexcusable when they're trying to get you to spend $7k to buy a complete bike with that spec and IME 6800 is incredibly easy to get working perfectly. It didn't drop the chain or anything but the front derailleur was only set up just well enough to get the chain onto the ring you wanted, not correctly to where nothing rubbed for anything.

Actually they really need to even make sure the people getting $300-500 mountain bikes get a bike that is perfectly set up. I've tuned a lot of friend/family members inexpensive MTBs and Hybrids and a lot of those bikes actually shift really well if you set them up well. They never are though, and if I can do it in 5 minutes it shouldn't be losing the shop money, and if the bike works perfectly the casual rider might be a lot more likely to come back and spend more money.

[Mikej]

Margin isn't everything, you also have to take volume into consideration. that's where the LBS has trouble, they just don't move a lot of parts that have to be special ordered.

[MikeD]

Shimano's effort is a token one. It neither fixes the grey market, nor do them seem particularly interested in doing so because at the end of the day, as long as they're selling parts, the LBS conundrum ain't their problem. And the sad thing is they're probably the only ones that can really push to implement change, seeing how they're the ones at the top of this particular food chain.



I empathize. Brendan Quirk had some interesting thoughts about the subject in a recent interview.


I think grey market is a small issue. The real reason is that MAP pricing is illegal in Europe but is legal in the US (in fact, I can't believe it's legal here because it's anti-competitive and hurts the consumer). That's the main reason that parts are so cheap from European suppliers, plus they can operate on a small margin because they do so much more volume. Simple economics. Art's Cyclery prices really aren't that good, compared to Merlin, Chain Reaction, and other UK retailers. It's not just Shimano either. You can get a Continental 400S tire for half of what you will pay in the LBS from one of these UK suppliers.

There is no real answer to the problem. As another poster said, the LBS needs to focus on services, selling complete bicycles, and selling items that aren't normally available online, or maybe helmets, shoes, and clothing.

[FlashUNC]

I think grey market is a small issue. The real reason is that MAP pricing is illegal in Europe but is legal in the US (in fact, I can't believe it's legal here because it's anti-competitive and hurts the consumer). That's the main reason that parts are so cheap from European suppliers, plus they can operate on a small margin because they do so much more volume. Simple economics. Art's Cyclery prices really aren't that good, compared to Merlin, Chain Reaction, and other UK retailers. It's not just Shimano either. You can get a Continental 400S tire for half of what you will pay in the LBS from one of these UK suppliers.

There is no real answer to the problem. As another poster said, the LBS needs to focus on services, selling complete bicycles, and selling items that aren't normally available online, or maybe helmets, shoes, and clothing.

Sure, but isn't a component of service having, yanno, parts on hand for repairs? There's still a basic stock level that needs to happen if shops are going to survive on this "service above all else" notion. We've already seen stories in this thread and others about how grumpy consumers get when they have to wait days and weeks for parts from a distributor to the LBS for a repair. That may be a logjam at the distrubtor/supplier level, but all the consumer sees is a shop that's slow to turn stuff around. So then we're back to the chicken and egg problem created by Shimano's unwillingness or inability to control their supply chain.

And assuming the service-only model works what will they service? Who's going to be selling bikes? Direct to consumer? That's great for the keyboard warriors like us, but it does nothing to grow the pie of new riders substantially.

The only alternative being put forward by many here is "do better." Okay...well...do what better exactly? If service is constrained, if parts supply chains are constrained with price and timing disadvantages, if the pool of new riders isn't growing all that quickly, what can someone do? Close up shop?

[unterhausen]

It's too bad there are so few really good shops out there, this wouldn't be a problem at all. Yeah, I know I'm paying more for parts from my LBS, but they treat me right and save me a lot of money too. They are doing a reasonable amount of high-end work because a lot of people don't want to mess around for a few bucks (in the greater scheme of things) and want to support a very good shop. The vast majority of bike shop customers aren't really comfortable buying bike stuff online at all. So they are not an issue.

I don't see how you can say that a shop is doing things wrong if they have to buy parts wholesale for more than some bottom feeder gray market no warranty place is selling them retail.

[oldpotatoe]

Maybe I'm missing something, but if I shop is paying more from QBP/Shimano/whomever than their customers are able to get the same part for online, why doesn't the shop just buy the parts online as well?

I assume there is some sort of agreement in place that a shop will order from their distributors when they need parts or risk losing access to the distributor, but if they are getting hosed on pricing, what's the loss? It seems like there could be an advantage to not being tied to one source, particularly with pricing.

No, nothing like that. Mostly lack of warranty.

[benb]

They can't sell you stuff off the gray market but AFAICT when the Trek dealer only sells Bontrager tubes and the Giant dealer only sells Giant tubes I think it has something to do with where those tubes come from.. they're not through the same supply chain that an Ultegra derailleur comes through and don't have the huge markups.

[Clancy]

Dear LBS owner - move your store to a 'service' model from a 'sell inventory' model.

That is all - anything else is just noise.

Unbelievably overly simplistic. Often when servicing a bike, replacement components are needed for broken ones. Then what is a "service model" suppose to do?

Retail is constantly evolving, yes that is true but ...

The more one buys, the deeper the discount. No mom and pop anything can buy in the bulk that a big box or online retailer can.

Customers are willing to pay a percentage above what they can buy on line if the service makes up for that difference in the price they pay for whatever it is they are buying.

No mom and pop store can compete with on line if their wholesale cost of any product is more then what an online retailer can sell at retail. Regardless if they provide the best customer service possible.

Whoever is without sin, cast the first stone at others who buy online. If you NEVER go to Walmart, Home Depot, or buy from Amazon, then preach on.

Me? I do my own wrenching and have for 40+ years and living retired on a limited income, hell yes I buy online. But I also try to throw some business to the one and only bike shop in my town that I feel is worth a damn. And I've been supporting him for 25+ years. I love that guy. But his is the only one. There are shops in my town that don't do anything to win customers' loyalty. I don't feel the smallest twinge of guilt not supporting them.

In my mind, support your LBS is an empty slogan. Really, what does that mean?

With that said Shimano has a serious problem they had better fix. Definitely they should have tiered pricing for wholesalers- more one buys, the deeper the discount. But if an online company here or across the waters can sell a product for less then what Shimano sells to retailers then that will lead to all kinds of issues with the end users - parts not properly installed, adjusted, etc. the bicycle industry is both a sales AND service industry. The two cannot be separated.

[livingminimal]

Dear LBS owner - move your store to a 'service' model from a 'sell inventory' model.

That is all - anything else is just noise.

Cant be said enough, but people have been saying it for years and it still isn't sinking in. You better have the best quality (and fast) mechanics available because before long, if not already, 75-80% of your revenue is going to be building canyons and treks, and soon spesh's that people bought direct.

[FlashUNC]

Cant be said enough, but people have been saying it for years and it still isn't sinking in. You better have the best quality (and fast) mechanics available because before long, if not already, 75-80% of your revenue is going to be building canyons and treks, and soon spesh's that people bought direct.

And where will those world-beating mechanics get parts to fix said bikes?

The best mechanic in the world can't repair something with parts that are still at the warehouse.

The parts and the service are inextricably linked.

[livingminimal]

And where will those world-beating mechanics get parts to fix said bikes?

The best mechanic in the world can't repair something with parts that are still at the warehouse.

The parts and the service are inextricably linked.

Oh, I don't disagree with you, and I am not suggesting that a bike shop simply be benches with neatly amassed tools. No, sir.

I am suggesting that people should not be pining their revenue model on sales of bikes, or sales of groupsets any longer. At least not predominately. They should stock consumables, and perhaps select parts, but what I am saying is shops cannot be sustainable if they have five Ultegra 175mm 50/34 cranksets on hand at all times. No, unfortunately they're simply going to have to figure out how to charge $50 to install the crank when someone brings it to them from an online purchase. Right now, smart shops are getting by in that way.

When you think about what "repair" means, correct me if I am wrong, but its typically cables, replacing a chain, replacing a cassette, a tune up, greasing a BB, greasing a headset...nothing in that cadre of "repairs" is expensive. And of course they should stock all the things it takes to do those kinds of things. People walk into my high-end, Time/Pinarello/Parlee/Pegoretti LBS all the time with $150 walmart beach cruisers and ask for a tube to be replaced. And pay 20 bucks to have it done.

However, if I buy my Giant TCR direct and...well, I'd never do that, when someone else buys their Giant TCR direct and it shows up half assembled, they'll need a shop to assemble it. Either Giant will have a concept store close by, or rely on an LBS/Mom and Pop or one of these new fangled remote/mobile bike mechanic guys that seem to be popping up. They'll get 200 bucks for it, and then going forward, replace the chain...the cassette...adjust shifting, etc.

[FlashUNC]

Oh, I don't disagree with you, and I am not suggesting that a bike shop simply be benches with neatly amassed tools. No, sir.

I am suggesting that people should not be pining their revenue model on sales of bikes, or sales of groupsets any longer. At least not predominately. They should stock consumables, and perhaps select parts, but what I am saying is shops cannot be sustainable if they have five Ultegra 175mm 50/34 cranksets on hand at all times. No, unfortunately they're simply going to have to figure out how to charge $50 to install the crank when someone brings it to them from an online purchase. Right now, smart shops are getting by in that way.

When you think about what "repair" means, correct me if I am wrong, but its typically cables, replacing a chain, replacing a cassette, a tune up, greasing a BB, greasing a headset...nothing in that cadre of "repairs" is expensive. And of course they should stock all the things it takes to do those kinds of things. People walk into my high-end, Time/Pinarello/Parlee/Pegoretti LBS all the time with $150 walmart beach cruisers and ask for a tube to be replaced. And pay 20 bucks to have it done.


Which is fine, but given where things are today or even going forward, anything beyond the utmost basic "repairs" leads to agonizing wait times for parts. Is it too much to ask to have a shop with some derailleurs in stock in case something goes squirrely? It is these days.

I don't expect shops to have a warehouse full of spares for any and every contingency, but when you're waiting a week-plus for a derailleur from QBP because someone's waiting to place the order to hit their free shipping minimum, and then it takes another week to get in stock, I get why consumers get angry. It seems anything beyond that tube swap is a multi-day odyssey of a bike sitting in the shop.

I get it, parts stock is expensive and with an industry hooked on changing this crap yearly, floor space already expensive as it is, and an iffy business proposition tying up precious and scarce capital in repair parts stock, LBS aren't making any of their choices in a vacuum.

But just saying "well, offer better service" is patronizing hand-waving to a really important part of the equation. You can't serve someone with parts you don't have, and that the consumer can buy elsewhere at retail for less than your wholesaler -- who is supposed to be your ally in all this -- is distributing it for at cost.

[livingminimal]

But just saying "well, offer better service" is patronizing hand-waving to a really important part of the equation. You can't serve someone with parts you don't have, and that the consumer can buy elsewhere at retail for less than your wholesaler -- who is supposed to be your ally in all this -- is distributing it for at cost.

Oh, no. No no no no. I am not simply saying "offer better service."

I am also not suggesting that this ISNT going to be a total ���� show.

Because it absolutely is. This business diving into a big "reset" of how it does business, and its gonna be ugly as ����. Between technologies starting to come to road bikes (hydro, wireless [supposedly easier] etc), concept stores, more direct sales, you're going to have a huge restructuring of how it all works.

For better or worse, the role of the LBS is going to be about building bikes and doing repairs, and it might make uncomfortable business for some folks. Realistically, the most likely scenario?...

"Dude, you need a new 9000 RD. Yours is shot and warranty wont replace it"
*dude looking down at phone not paying attention*
"dude? sir?"
"It's ordered, had it next dayed from Amazon. Be here tomorrow, can I drop by at 4pm for install?"

That's the future of shops, and it's very, very, very unfortunate. It also gives some legs to the idea of high-end mobile bike building/repair. Drag the bike box to the office, call an Uber-esque dude to come visit you. He sets up a stand and has the tools, you can be doing a lunch ride same day...

[Ralph]

My LBS (Or one I mostly deal with...we have many others) has just announced Amazon type delivery of anything in shop. And he has a large well stocked shop. Cannondale and Specialized stuff. Large assortment of all kinds of clothing, helmets, shoes, accessories, etc. Never went looking for something he didn't have.

I can beat his prices online...but he is in ballpark on price...and he has it in stock. No Campy unfortunately....he says he has no requests for Campy. (I still ride my old mid 2000's Campy stuff)

He built a new building behind shop to do fits...and diagnostic evaluation of riding issues. Beyond fitting really...almost into physical therapy for cyclists and Triathletes. Has a well trained staff. And we are in a large metropolitan area. Plenty of potential clients. Along with local government who helps create a cycling (plus commuting) culture with trails everywhere and all new roads get bike lanes. Most old ones as well when redone.

I think he gets it. He won't try to compete with online, he tries to be in a different business. He started out in a shop in middle of block....now he owns all of the block on one side.

He's been in business over 40 years. He once told me he isn't in the bike business. He's n the business of marketing hi end recreational products to mostly affluent clients.

It's not the small comfortable Mom and Pop shop we all love to hear about....but it might be the kind of shop that can survive.

[oldpotatoe]

Oh, no. No no no no. I am not simply saying "offer better service."

I am also not suggesting that this ISNT going to be a total ���� show.

Because it absolutely is. This business diving into a big "reset" of how it does business, and its gonna be ugly as ����. Between technologies starting to come to road bikes (hydro, wireless [supposedly easier] etc), concept stores, more direct sales, you're going to have a huge restructuring of how it all works.

For better or worse, the role of the LBS is going to be about building bikes and doing repairs, and it might make uncomfortable business for some folks. Realistically, the most likely scenario?...

"Dude, you need a new 9000 RD. Yours is shot and warranty wont replace it"
*dude looking down at phone not paying attention*
"dude? sir?"
"It's ordered, had it next dayed from Amazon. Be here tomorrow, can I drop by at 4pm for install?"

That's the future of shops, and it's very, very, very unfortunate. It also gives some legs to the idea of high-end mobile bike building/repair. Drag the bike box to the office, call an Uber-esque dude to come visit you. He sets up a stand and has the tools, you can be doing a lunch ride same day...

And shops that get all nervous and jerky about this ought to get a clue. I have even sent a customer over to Excel to get stuff. There is at least one shop here in the republic that not only won't use parts brought in, they won't work on a bike not bought there..dum..

In my shop I carried consumables..cassettes, chains(LOTS of chains-YIKES), BBs, brake pads, cables, housing, ders(lower end..no DA or SR/Record..but utegra and Chorus), shifter parts, der parts(like pulleys and barrel adjusters), etc BUT along with this, ya got to pick your battles. Did I carry the rod for a shimano 3spd internal hub? Nope. Lots of other stuff too. BUT, again, the 3 biggies, inventory control, cash flow, personnel management-boo-hiss, takes the fun outta bikes.

BUT, big margin is UNIQUE soft goods, like Vecchio's jerseys/hats/bottles/bibs/vests..I WANT them to come into the shop to drop off and pick up bike.

5 pages and 66 posts show, once again, retail is tough, bike retail is sometimes the best and worst job there is.

[thirdgenbird]

And shops that get all nervous and jerky about this ought to get a clue. I have even sent a customer over to Excel to get stuff. There is at least one shop here in the republic that not only won't use parts brought in, they won't work on a bike not bought there..dum..

Yep...

The local shop here turned someone away that bought a bike online. To make manners worse, he bought his wife a bike there just a few months prior. He has had the bike he bought online for quite a few years. Not only did he come to me to have the bike bought online serviced, but he had me adjust the brakes and derailleurs on the bike he did buy at the shop and told me he wouldn't bother buying himself a replacement from that shop.

The bike shop at the opportunity to fully convert someone who previously went online and blew it. All because they didn't want to replace a broken sora derailleur and a set of tires on a bike they did not sell.

[unterhausen]

Cant be said enough, but people have been saying it for years and it still isn't sinking in. You better have the best quality (and fast) mechanics available because before long, if not already, 75-80% of your revenue is going to be building canyons and treks, and soon spesh's that people bought direct.

the reason it's not sinking in is because most bike shop owners know where their revenues are coming from, and it's not from, and will never be from people that buy the cheapest thing on the internet. If they don't sell hundreds of hybrids a year, nobody comes back for the higher end bikes or service or accessories. Maybe I'm wrong, but I really don't think bike sales are going to go on the internet. The fact that some fairly confused people at Trek and Spesh think differently just reinforces my belief in this matter. Sinyard may have worked in bike shops, but the Burkes were selling toasters when they gave Bevil Hogg the money to start Trek. Bevil was running a bike shop before that, but he left in the early '80s.

To me, the whole 4-tiered retail chain that your LBS has to work with is the thing that has to go away because of the internet. It's very simple math, a U.S. retail bike shop standard pricing is 1*1.5*1.5*2 = 4.5. The UK guys math is 1*2=2.

[livingminimal]

the reason it's not sinking in is because most bike shop owners know where their revenues are coming from, and it's not from, and will never be from people that buy the cheapest thing on the internet.

Except when they have no other choice but to become service-focused because they can't pay 5K rent on 5,000 SQ of retail space to sell one high-end Time per month at only a 10% markup because everyone is asking for at least 20%-30% or they'll take their business elsewhere.

I don't know about you, but I don't really go to the kind of LBS that would floor hybrids.

Also, regarding not thinking online sales will happen...what do you think most of the custom buyers are doing these days? Check that "meet your builder" thread. If you can do your fit and get the right bike with a few emails with a builder, there is absolutely no reason not to think the big-box brands can't deliver the exact same thing, and eventually, will.

To say otherwise is to ignore the change that's already happening. I've said it before, if Canyon gets their logistics sorted, they're gonna ruin a lot of things we hold dear. Or improve it depending on your perspective.

[FlashUNC]

Except when they have no other choice but to become service-focused because they can't pay 5K rent on 5,000 SQ of retail space to sell one high-end Time per month at only a 10% markup because everyone is asking for at least 20%-30% or they'll take their business elsewhere.

I don't know about you, but I don't really go to the kind of LBS that would floor hybrids.

Also, regarding not thinking online sales will happen...what do you think most of the custom buyers are doing these days? Check that "meet your builder" thread. If you can do your fit and get the right bike with a few emails with a builder, there is absolutely no reason not to think the big-box brands can't deliver the exact same thing, and eventually, will.

To say otherwise is to ignore the change that's already happening. I've said it before, if Canyon gets their logistics sorted, they're gonna ruin a lot of things we hold dear. Or improve it depending on your perspective.

But their struggles show that it isn't as simple as flipping a switch either. There are real global supply chain challenges at play here that aren't easily solved.

And again, I'd argue that custom builder or guy or girl who walks in the shop knowing exactly what they want is still a small percentage of the overall bike market. Spesh, Trek and Giant aren't dummies. Its why you're seeing them being very cautious about this direct to consumer bit.

[lucasfarr92]

My shop is doing something similar and ordering most stuff from SRAM if it's the same situation.

You can get a complete groupset from chainreaction for cheaper than the shop gets it at cost. That's hurting shops undeniably.

[chiasticon]

Dear LBS owner - move your store to a 'service' model from a 'sell inventory' model.yep.

[Dustin]

How much of any shop's revenue was really selling aftermarket shimano parts anyway? I mean, I get the inequity of it, but ...