Internet claims another LBS

[benb]

Originally Posted by oldpotatoe

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.

The thing is whose fault is it that the LBS pays way more wholesale for parts than the European shops can sell for? Why aren't the US shops forming some kind of group and making a stink to Shimano, etc.. to get a better rate on parts? Why aren't the Trek/Specialized/Giant dealers screaming to Trek/Specialized/Giant to get some help? If 500 dealers all of a sudden signed a letter to Trek & Shimano saying they're not selling anything till the problem is fixed I bet the problem could get fixed. We've been hearing the LBSes are getting a bum deal for as long as I've been cycling and nothing has changed in all that time.

[velomonkey]

Costco sells paper towels at retail for about the same wholesale price the local corner store pays. Heck, I go to Costco and see people who are clearly running their own business buying their ingredients for their food business - hot dog vendors buying dogs and condiments, small artisanal bakers buying their flower and eggs, cart vendors buying ingredients for soups . . .

When I worked in shop from 92 to 96 while on college it was cheaper for us as employees to order a build kit from colorado cyclist than it was to get the wholesale price of a group set from quality. There is nothing new here with Ribble.

I will say, from 03 to 10 or thereabouts it was so much easier for a shop to sell a high end road bike to a client due to the Lance effect. When I worked in a shop we couldn't give away road bikes - $300 hybrids and $500 mtb bikes were the order of the day. Then in 03 shops were selling 3k treks like hotcakes. Those days are reduced but they are still way higher than it was in the 90s, or 80s or 70s.

[jmal]

Originally Posted by velomonkey

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.

That's a good start, but if it is a smallish community and everyone has a bike, and their families have bikes, the shop needs something else to survive. That's why I mentioned a mobile population. You need the customer base to constantly change so that you always have new customers. It's not the high end bikes that sustain the shop, but rather the low end bikes that you can sell at higher margins and higher volume.

I have no idea why the shop closed. Perhaps the market is perfectly sustainable there. If it is a loaded community, I would guess that real estate is at a premium and might have played a role. The Internet certainly hurts many shops, but most shops don't make their money selling component groups that a sliver of the population knows they can buy from the UK at a huge discount. If that is the only customer base a shop has, then they have narrowed themselves out of business.

[jmal]

Originally Posted by velomonkey

Costco sells paper towels at retail for about the same wholesale price the local corner store pays. Heck, I go to Costco and see people who are clearly running their own business buying their ingredients for their food business - hot dog vendors buying dogs and condiments, small artisanal bakers buying their flower and eggs, cart vendors buying ingredients for soups . . .

When I worked in shop from 92 to 96 while on college it was cheaper for us as employees to order a build kit from colorado cyclist than it was to get the wholesale price of a group set from quality. There is nothing new here with Ribble.

I will say, from 03 to 10 or thereabouts it was so much easier for a shop to sell a high end road bike to a client due to the Lance effect. When I worked in a shop we couldn't give away road bikes - $300 hybrids and $500 mtb bikes were the order of the day. Then in 03 shops were selling 3k treks like hotcakes. Those days are reduced but they are still way higher than it was in the 90s, or 80s or 70s.

The Lance effect definitely inflated the market. I almost wonder if some shops were led astray by the Lance bubble only to find that it wasn't sustainable.

[benb]

Originally Posted by velomonkey

When I worked in shop from 92 to 96 while on college it was cheaper for us as employees to order a build kit from colorado cyclist than it was to get the wholesale price of a group set from quality. There is nothing new here with Ribble.

So my experience is 16 years, you've brought that up to 24, there are lots of smart LBS owners, why hasn't this problem been fixed in all these years?

I actually suspect one of the more successful LBSes in my area is actually sourcing parts from alternative sources to be competitive and perhaps taking chances on warranty issues. Say they're buying Shimano components.. they could probably save enough buying overseas themselves to eat the warranty costs themselves.

[Gummee]

Originally Posted by benb

So my experience is 16 years, you've brought that up to 24, there are lots of smart LBS owners, why hasn't this problem been fixed in all these years?

I actually suspect one of the more successful LBSes in my area is actually sourcing parts from alternative sources to be competitive and perhaps taking chances on warranty issues. Say they're buying Shimano components.. they could probably save enough buying overseas themselves to eat the warranty costs themselves.

Shimano made a stink about online sellers, etc a few years ago when they chopped many distributors out of the loop. All that did was make things tougher


M

[BobbyJones]

Absolutely right. Greg should've looked into the whole coffee / bike shop combo from the get go!

Originally Posted by Tony T

Yes. 5 Depot Place Bethel.
(was) A great shop at an old RR Depot:


?robably will now be a Starbucks

[velomonkey]

Originally Posted by benb

So my experience is 16 years, you've brought that up to 24, there are lots of smart LBS owners, why hasn't this problem been fixed in all these years?

I think it's easier for some owners to point to the internet and lay blame. I haven't been to that shop, but I will say road biking has decreased and other bikes have increased - gravel, mtb and cross - even fat bikes. Are these bikes making up for the lost ground? Not sure, but they are rising for sure. Where I live we had huge group rides all during 03 to 10 - then they got smaller and smaller. They seemed to have leveled off, but people left are for sure riding gravel a lot more - no doubt there at least where I live.

Here is what I will say - any shop betting on Trek, Specialized and Giant better start to transition to other brands ASAP.

[Mikej]

LBS needs to offer more -we like all kinds of expensive things that they could supply us with but they overlook - Coaching, physio testing, PT, training plans, nutrition, bike destination trips in the winter or to big races like the MTB Whiskey 50, or sea otter, sunny warm temp training camps etc. Why sell us a derailleur when you can sell us the experience we want? You have to supply something we want and cant do or buy cheaper somewhere else.

[Tony T]

Originally Posted by Mikej

LBS needs to offer more -we like all kinds of expensive things that they could supply us with but they overlook - Coaching, physio testing, PT, training plans, nutrition, bike destination trips in the winter or to big races like the MTB Whiskey 50, or sea otter, sunny warm temp training camps etc. Why sell us a derailleur when you can sell us the experience we want? You have to supply something we want and cant do or buy cheaper somewhere else.

Something like this? http://www.bethelcycle.com/rides--tours--camp.html

[Mikej]

Originally Posted by Tony T

Something like this? http://www.bethelcycle.com/rides--tours--camp.html

oh well....not the first time!

[Dead Man]

I've talked about it recently, but my favorite shop, Western Bike Works, does most of their sales online. They've got a nice storefront in NW Portland, and then a huge warehouse full of parts across the river, where their online sales fly from. Nice thing is if the shop doesn't have something in stock, and they have to "order it," you can actually just go across town and pick it up right then. They do fitting and service and saddle loans and stuff at the shop, which may or may not even pay for itself... place is usually pretty empty

One of my favorite climbing shops is the same way.. OMC - Oregon Mountain Community... itty bitty little boutique shop on Sandy in NE Portland, with a huge warehouse shipping gear via e-OMC. Go in for a boot fitting or try on a harness or whatever... and then also get online price for it.... crazy best of both worlds.

This isn't Mom n Pop. Mom n Pop is dead. Society evolves. But it is in your neighborhood.

[oldpotatoe]

Originally Posted by benb

The thing is whose fault is it that the LBS pays way more wholesale for parts than the European shops can sell for? Why aren't the US shops forming some kind of group and making a stink to Shimano, etc.. to get a better rate on parts? Why aren't the Trek/Specialized/Giant dealers screaming to Trek/Specialized/Giant to get some help? If 500 dealers all of a sudden signed a letter to Trek & Shimano saying they're not selling anything till the problem is fixed I bet the problem could get fixed. We've been hearing the LBSes are getting a bum deal for as long as I've been cycling and nothing has changed in all that time.

Called collusion and illegal in the US.

[BobbyJones]

Originally Posted by oldpotatoe

Called collusion and illegal in the US.

Yet amazing how manufacturers and distributors have the other side of things soooooo locked up.

[beeatnik]

How the largest one man bike shop in America makes it work:

"Bikes go up to $22,000 right now," he said. It's ridiculous. I don't believe in wasting a person's money."

"Thirty percent of my sales come from bikes and the other 70 percent comes from accessories," Lubanski said. "I might sell 150 to 200 bikes in a year. But some shops will sell 800 bikes in a year. I'm an accessory shop, not a bike shop."

"I have 400 pairs of bike shorts in stock," he said. "There's no one else in the United States who has 400 pairs of shorts. You sell a person one or two bikes every five years. That's not a business model to me especially since I'm working a one-man shop. But you might sell them 20 pairs of shorts over their lifetime. It's not like the bikes are an after-thought ... they're the whipped cream on the cake."

Lubanski works seven days a week.

"I get seven days a year off," he said. "New Year's Day, Easter, my wedding anniversary, the Fourth of July, a day off for the bike show, Thanksgiving and Christmas."

Simple

http://www.pasadenastarnews.com/busi...op-in-pasadena