Thoughts on the bike industry...

[Mr. Pink]

I just travelled to Europe, and, I gotta say, the future of cycling for non cyclists is E-bikes, just like the future (and present) for everyday photography is phones. Walked into four or five bike shops in Spain and there was a ton of e-bikes on the floor, mostly mountain. I'm getting old, probably my future, too.

[fignon's barber]

I said this on a forum (not PL) probably 15 years ago: the fundamental problem with the bike industry is that they would rather sell one $10k bike than twenty $500 bikes. It's unsustainable and this is the result.
When I started, a great Italian bike was approx. $800, jerseys were $30, and top of the line bibs were $40. Now those items are, what, $12k/$150/$250.

[Ozz]

Originally Posted by Mr. Pink

I just travelled to Europe, and, I gotta say, the future of cycling for non cyclists is E-bikes, j....

I can't believe (I guess I can...) the number of commuters coming thru my neighborhood on e-Bikes, so I think you are onto something...

Although, I would say they have more in common with Mopeds than bikes.....

[MaraudingWalrus]

Originally Posted by fignon's barber

the fundamental problem with the bike industry is that they would rather sell one $10k bike than twenty $500 bikes. It's unsustainable and this is the result.

This really is true. And it's frustrating. I say that as a person in a shop who has his own side dealio building wheels. I'm moderately disillusioned with the industry and this really does sum it up.

[Mzilliox]

fuel prices have to keep going up before people will ride more. even a lot of you cats dont think of a bike as transport, just some way to get exercise. even my riding buddies here when they see a strava at 14mph at 530am they wonder what the heck i was doing.

well lets see, im slow, its morning, the ride ended not at my house, what might i be doing?

also, the bike industry is sort of eating itself up with all the new crap. they seem to have folks convinced discs and electric are the future, why cant they make money off it? too many folks on the payroll?

[oldpotatoe]

Originally Posted by fignon's barber

I said this on a forum (not PL) probably 15 years ago: the fundamental problem with the bike industry is that they would rather sell one $10k bike than twenty $500 bikes. It's unsustainable and this is the result.
When I started, a great Italian bike was approx. $800, jerseys were $30, and top of the line bibs were $40. Now those items are, what, $12k/$150/$250.

Not really true. The cost to build, inventory, sell...20 bikes is MUCH bigger than the cost to build, inventory and sell..one $10,000 bike. Margin is margin, whether it be $3000 on that one bike or $150 each on those 20 bikes. What you don't get is returning customer numbers..but that's unpredictable. Some just looking at the $10,000 halo bike will return as it's seen as a 'pro' bike vs a 'department store' bike.

[MaraudingWalrus]

Originally Posted by oldpotatoe

Not really true. The cost to build, inventory, sell...20 bikes is MUCH bigger than the cost to build, inventory and sell..one $10,000 bike. Margin is margin, whether it be $3000 on that one bike or $150 each on those 20 bikes. What you don't get is returning customer numbers..but that's unpredictable. Some just looking at the $10,000 halo bike will return as it's seen as a 'pro' bike vs a 'department store' bike.

Much higher chance of getting 5 long term customers when selling 20 bikes than when selling 1 bike. A $60 tune-up is a $60 tune-up on a $500 bike and a $10,000 bike. Rather have 5 or 6 of them than 1.

[oldpotatoe]

Originally Posted by Mzilliox

fuel prices have to keep going up before people will ride more. even a lot of you cats dont think of a bike as transport, just some way to get exercise. even my riding buddies here when they see a strava at 14mph at 530am they wonder what the heck i was doing.

well lets see, im slow, its morning, the ride ended not at my house, what might i be doing?

also, the bike industry is sort of eating itself up with all the new crap. they seem to have folks convinced discs and electric are the future, why cant they make money off it? too many folks on the payroll?

Doubt it..when gas was $4-$5 a gallon, bike use didn't go up much. When fuel is scarce, that's when alternative transportation will happen..but that will be the least of your problems..look up 'anarchy'....

[oldpotatoe]

Originally Posted by MaraudingWalrus

Much higher chance of getting 5 long term customers when selling 20 bikes than when selling 1 bike. A $60 tune-up is a $60 tune-up on a $500 bike and a $10,000 bike. Rather have 5 or 6 of them than 1.

I think the 'sweet spot', isn't a $500 bike nor a $10,000 bike but somewhere in the $3000 or so range. $500 bike buyers ride their bike about 5 times a year..they don't come in for tuneups, bike clothes, etc..not even tires. A $3000 bike buyer is an 'enthusiast', knows something about bikes, dresses the part, rides pretty often...so...3-4 $3000 bikes vs one $12,000 bike but those who sell $3000 bikes will also sell 1-2 $12,000 bikes. Bicycle Village here in the republic(trek store) probably sells about zero $12,000 treks. Vecchio's average bike sale is in the $4500 or so..I was in there the other day where he was delivering a Moots DR and taking a deposit for a Moots RSL DiscRoad from the same guy($12,000..BTW)..it really is about economy of scale as compared to your fixed costs. The gent down the street's rent is about $12,000 PER MONTH(Giant store)..lotsa Giants gotta go..why he opened the front as a bar/coffee shop..

[Elefantino]

When Wiggle and/or Chain Reaction open U.S. operations that will further dent the LBS. It was inevitable, I suppose.

[AngryScientist]

interesting thread.

with regard to specialization of bikes - it's amazing how fast people are swallowing it. even looking at this forum - there is a huge shift right now to fat tire bikes with etap and disc brakes. the "show me your gravel bikes" thread has evolved over the years to much more specialized equipment than it was just a few years ago when we were all riding fattr tire road bikes or cyclocross bikes on "gravel".

i personally have zero interest in swapping out my wheels to disc, or getting rid of my shift cables, etc and it hasnt stopped me, or restricted my riding at all, but the industry has unquestionably shifted away from traditional equipment.

allowing a slight thread veer to a parallel topic, my dad is pretty old now and i'm coordinating some medical care for him. it's amazing what's happening (from my perspective) in the medical community - very similar to the bike industry. Everything now requires a specialist.

There are some heart issues, and now, instead of a single cardiologist - he is seeing a fluid guy, an electro guy, a valve guy, etc etc. there are a dozen specialty doctors who stop in and see him daily now, undoubtedly whacking his insurance for a chunk of change each time. there seems to be no general "doctor" who can do it all managing the whole circus.

personally i think it's ridiculous, the level of specialization that exists (for not too special or serious of a condition, mind you, this is not ground breaking treatment we are talking here).

[JAGI410]

Also consider this...which is a bit extreme, but plausible...

Since Zwift/ECycling is growing rapidly, this means less "in person" group rides. This means less cycling clothing sales, less tubes/tires due to flats, less "if I only had carbon wheels like Tom up there I could go faster", less exposure to new gear/accessories. It means less exposure to bike shops.

Think about it. If you're only riding at home, you no longer have the safety concerns. You no longer need a bike rack to transport your bike to a ride. The effects of the growth of ECycling will potentially be felt all across the industry.

[Mr. Pink]

Originally Posted by MaraudingWalrus

Much higher chance of getting 5 long term customers when selling 20 bikes than when selling 1 bike. A $60 tune-up is a $60 tune-up on a $500 bike and a $10,000 bike. Rather have 5 or 6 of them than 1.

Dude, 90% of those cheap bikes are destined to rust and collect dust in garages and basements. The 10,000 bike will be used and serviced a lot. And yeah, high margin. Why do you think American car makers don't even bother making cheap, compact cars here? Margin.

[oldpotatoe]

Originally Posted by Mr. Pink

Dude, 90% of those cheap bikes are destined to rust and collect dust in garages and basements. The 10,000 bike will be used and serviced a lot. And yeah, high margin. Why do you think American car makers don't even bother making cheap, compact cars here? Margin.

I agree but margin is margin...Whether it be a $500 or a $10,000 bike. The amount is higher but the percentage is the same...(divide cost by 'about .35-.4)..but gotta add labor yo build, sell and do that '1 free service'..that eats into the margin quickly.

Trucks are different..those are YUGE margins compared to a sedan plus BIG $, since they are in high demand. Try to find a good, used, lowish mileage midsize PU truck for less than about $15,000....

[Butch]

One thing to consider with this conversation is getting kids on bikes. Growing up, Schwinn dealers were what a bike shop was and it was about kid's bikes. No matter the style of riding, getting the youth of the community on bikes safely and effectively is where the bike community should start.

15 years ago my wife started a Safe Routes to School program here in the Boat that includes bike rodeos to teach kids the basics and includes the never ever kids that haven't had the chance to ride. The look on their faces as they ride for the first time is priceless. The local shops come out and help as well as the teachers and parents, this is an active community so that makes a big difference. For my taste the big guns should put their money there and to a good extent they have supported NICA and the growth there is very encouraging.

I believe the biggest loss the industry has with IB going down is this lack of community to supply and build the next generation. Sea Otter is inspiring as the number of kids there is awesome. Having more events where all the manufacturers take part and have a broad spectrum of people show up for some fun is essential. Living in a ski town we have all watched as the ski area battles to get people on the mountain to ski and they have banded together with combo passes that just might get more folks on the slopes.

In regard to the prices of bikes and how the shops and manufacturers make money, as has been pointed out, selling higher priced bikes is more profitable. For the manufacturer the fixed costs of importing a bike, paint, assembly, boxing, shipping, reassembly and selling is pretty much the same for a $500 bike as a $5000 or $10,000 bike. The big guys figured this out a few years ago and they focused and targeted those of us who were in the premium bike market. And it worked. It does not build the base however.