[undies]

Last year I decided to re-enter bicycling after a 10+ year absense. I was an enthusiast before so I already knew where to get a good bike. I went to a LBS and bought a Trek 3700 for $260. If you're reading this forum you're probably accustomed to bicycles that cost a lot more than that. Among enthusiasts a $260 bicycle is considered lowest of the low end.

When I got the bike home my wife almost flipped out that I would spend "so much" on a bicycle. I think her reaction is typical of the general public, who might enter a LBS, look at the prices, and walk right back out. "Why would I spend hundreds of dollars here when I can go to Wally World and get a perfectly good bike for $79?"

I know it's impossible for any LBS to seriously compete with Wal-Mart. Wal-Mart's retail price on Magnas and Pacifics is likely lower than the LBS could buy them wholesale. But would it be possible for LBS's to sell $100, or $150 bikes? What would it take? Can the general public be convinced that they'll benefit more from QR skewers and Shimano Tourney drivetrains than from overweight, dysfunctional fashion-statement full suspension? Could the LBS staff enthusiastically sell <$200 bicycles? Is it even worthwhile for LBS's to try to cater to the general public, or are they destined to always be enthusiast boutiques run by their owners more as hobbies than as businesses? Would mass-market appeal destroy the great character of most LBSs?

I'm just thinking out loud here... sorry if this has been rehashed many times. I just can't help but think that bicycling would be more popular if most people didn't buy such crappy, poorly set-up bikes.

 

[botto]

seems like the general publiuc have become accustomed to sweatshopped globalization goods.

they want it cheap, then whine about outsourcing

god bless capitalism

 

[den bakker]

next time she buys shoes ask her why the perfectly good $10 was not her choice.
Next time you go out, skip the italian place and get a perfectly good one dollar menu at mickey D.
Perhaps the phrase "perfectly good" would be rethought at some point.

Last year I decided to re-enter bicycling after a 10+ year absense. I was an enthusiast before so I already knew where to get a good bike. I went to a LBS and bought a Trek 3700 for $260. If you're reading this forum you're probably accustomed to bicycles that cost a lot more than that. Among enthusiasts a $260 bicycle is considered lowest of the low end.

When I got the bike home my wife almost flipped out that I would spend "so much" on a bicycle. I think her reaction is typical of the general public, who might enter a LBS, look at the prices, and walk right back out. "Why would I spend hundreds of dollars here when I can go to Wally World and get a perfectly good bike for $79?"

I know it's impossible for any LBS to seriously compete with Wal-Mart. Wal-Mart's retail price on Magnas and Pacifics is likely lower than the LBS could buy them wholesale. But would it be possible for LBS's to sell $100, or $150 bikes? What would it take? Can the general public be convinced that they'll benefit more from QR skewers and Shimano Tourney drivetrains than from overweight, dysfunctional fashion-statement full suspension? Could the LBS staff enthusiastically sell <$200 bicycles? Is it even worthwhile for LBS's to try to cater to the general public, or are they destined to always be enthusiast boutiques run by their owners more as hobbies than as businesses? Would mass-market appeal destroy the great character of most LBSs?

I'm just thinking out loud here... sorry if this has been rehashed many times. I just can't help but think that bicycling would be more popular if most people didn't buy such crappy, poorly set-up bikes.

 

[Mel Erickson]

Most of the Wally world bikes are bought for kids. If the adults ever had to ride them they would soon head for the LBS for a "real" bike. The general public doesn't ride bikes so why would a LBS stock something no one would buy? The LBS couldn't make enough money on a low end bike to justify stocking them. Your wife is not well informed about bikes, just like the rest of the general public. When the general public decides to ride a bike regularly they will soon learn why Wally World sells what they sell and why the LBS sells what it sells. It's like anything else where the casual user turns into a regular user (which is also different from an "enthusiast"). Fly fishing, tennis, golf, skiing, skateboarding, you name it.

 

[Ridgetop]

Around here most of the Wally World bikes are ridden by the poor folks, DUI specials, and meth heads. Just goes with the type of town I guess. I pass around 5 to 10 Wally World riders every time I commute. Usually full suspension Magnas. But, I guess you ride what you can afford and we have a lot of low income folks.

 

[danl1]

A proper bike shop would go broke selling $150 bikes if they got them for free.

There's a notion that if they sold for less they'd get more business and be able to make it up in volume, but it doesn't work that way in practice.

While we don't often think of it this way. bikes from the LBS are luxury goods, and economic theories get all bendy where luxury goods are involved. They can't make any money on crap, because their sales costs are too high. But they can't successfully sell near-crap either, because the crowd looking for value won't show up there, and the crowd looking for high-end stuff isn't interested. Meanwhile, the low-end stock paradoxically hurts sales of the high-end stuff, because it brings people out of the monopoly-money mindset critical to successful sales of luxury goods. The most common sale of such lines are when the luxury buyer gets one for the spouse or kids, in an attempt to get them involved in the hobby. That's a low-odds proposition, and it tends to reflect poorly on the shop down the road. Even though it's the buyer's error, there's a "why did you sell me this albatross" rationalization that happens.

So moderately priced goods have little reason to be stocked, and a few not to. You can tell a shop that has their game on by where the bikes sit. Popular, moderately expensive stuff is at the front where it's easily seen, fitted, and test-ridden. High-end stuff is at the back, deep in the "inner sanctum." You don't just wander back there, and you sure as hell don't just wander back out. The value goods hang out anonymously somewhere near the middle, or shoved behind a rack, or off on a side-aisle with the water bottles and patch kits, and so on - hidden in plain sight.

 

[elviento]

You can get 10 large cookies at a grocery store for $0.99 that have more than enough calories to stuff two people's stomachs. But if you go to a decent restaurant and are served by waiters, it's going to cost you, say $40. The latter is 39 times more expensive, but is it outrageous? Is it luxury? I don't think so.

People have different priorities. People will spend little or none on something they don't care about.

 

[Edgecrusher]

A proper bike shop would go broke selling $150 bikes if they got them for free.

There's a notion that if they sold for less they'd get more business and be able to make it up in volume, but it doesn't work that way in practice.

While we don't often think of it this way. bikes from the LBS are luxury goods, and economic theories get all bendy where luxury goods are involved. They can't make any money on crap, because their sales costs are too high. But they can't successfully sell near-crap either, because the crowd looking for value won't show up there, and the crowd looking for high-end stuff isn't interested. Meanwhile, the low-end stock paradoxically hurts sales of the high-end stuff, because it brings people out of the monopoly-money mindset critical to successful sales of luxury goods. The most common sale of such lines are when the luxury buyer gets one for the spouse or kids, in an attempt to get them involved in the hobby. That's a low-odds proposition, and it tends to reflect poorly on the shop down the road. Even though it's the buyer's error, there's a "why did you sell me this albatross" rationalization that happens.

So moderately priced goods have little reason to be stocked, and a few not to. You can tell a shop that has their game on by where the bikes sit. Popular, moderately expensive stuff is at the front where it's easily seen, fitted, and test-ridden. High-end stuff is at the back, deep in the "inner sanctum." You don't just wander back there, and you sure as hell don't just wander back out. The value goods hang out anonymously somewhere near the middle, or shoved behind a rack, or off on a side-aisle with the water bottles and patch kits, and so on - hidden in plain sight.

"There's a notion that if they sold for less they'd get more business and be able to make it up in volume, but it doesn't work that way in practice."

What? What? What? Hmm, so selling lower priced goods at higher volume
doesn't work. That is simply an amazing statement. Perhaps that archaic
notion had some sort of half-truth to it in the past, but in today's global economy
and today's free capital market system, it is completely off base for the majority
of businesses. Sears, Wal-Mart, K-Mart, Target, Sam's Club, Costco, BJ's
are a just a sample of businesses that sell low to moderately priced goods
at high volumes. This is fact, not speculation. The formula works, and has been working for some years now. LBS's unfortunately, only cater to a very segmented populas.

It is a real problem for beginners and people on strict budgets who want to participate
in cycling, but are thwarted and stunned by the ridiculously high price for a entry-level
bicycle. So, most then turn to the much cheaper bikes offered and sold at Wal-Mart,
K Mart, or other big box retailers. Then, some of these girls and guys are ridiculed
for riding these bikes! Which of course smacks of arrogance and contempt.
Sadly the elitist attitudes still seem to prevail in cycling. A good example is Tennis,
before the Williams sisters, Tennis was pretty much a foreign word in lower income
urban areas. it was a sport for the rich, and pompous. Tennis knew it had a problem
on its hands, and wanted to change that image. Which to its credit, has done so
and continues to work at it.

The bicycle industry should do the same thing. Weed out these pompous, snooty,
elitists who think they are something special and if you don't pay $1000 for your first
ride...they just look sideways at you.... Sickening. Nevermind if you
didn't pay $5000 for the carbon or titanium model...because it's just not
a real bicycle if you didn't cough up thousands and thousands of dollars,
and it doesn't have a big name brand company sticker on it...

Yes, there are a good number of people riding those 79, 150 dollar bikes
who have no real interest in cycling itself, but rather utilize them for modes
of transportation. But maybe just maybe some of those will be converts.
If the industry marketed to a more diversified segment of the population
it would no doubt sell more units. Which has the potential of creating
a customer who will buy another bike sometime years down the road,
and more than likely be upgrading. It's a missed opportunity.

Although with the asian manufacturers producing quality bikes, and internet
merchants selling thse bikes, the LBS has serious competion now. Which is
a great thing. Hopefully it will be a slap in the head wake up call that the big
name brands need, and will see a new market to tap. There are many young riders
who want to get into cycling but their parents cannot afford to spend 700, 800,
or 1000+ dollars, it is simply a matter of economics for these familes. There are many
young adults who have very low paying jobs, with high rents, children to support
who also cannot afford a decent road bike at outrageous prices. it is a problem.
It is not a problem to the perceived who have the money, or cannot relate to
these people. There is a huge lack of compasion and understanding for the
segment of the population that cannot afford the typical road bike. Which exudes
such repulsion, and that is really very sad.


People have different priorities. People will spend little or none on something they don't care about.

I bought my first bike online, for $575, I bought my second bike online as well.
I buy my compression shirts from Wal-Mart, I've bought water bottles from the dollars store, and all my accessories from ebay.I tried to avoid retail or new whenever possible.
I choose to maximize my dollars spent, because I DO have priorites.
Such as putting two kids through college, paying down debt, and paying a mortgage.
I love cycling, I care about it very much as well. Making a broad sweeping statement
as to the opposite is just plain contemptuous. Perpetuating the elitist attitude.
We have to better than that as cyclists, as a community, bicycling is not a special
club, it is not reserved just for few select. Attitudes need to change, and more affordable
options need to be marketed and sold. I think it is slowly starting to take place, but sadly
there are those who will always cling to that elitist mentality. We're not above anyone.
I try to spread the good word about bicycling to everyone I know, hopefully it may
make a difference or influence a decision about just starting off, or coming back
to a great sport, a great activity which so many can benefit from.

 

[danl1]

You can get 10 large cookies at a grocery store for $0.99 that have more than enough calories to stuff two people's stomachs. But if you go to a decent restaurant and are served by waiters, it's going to cost you, say $40. The latter is 39 times more expensive, but is it outrageous? Is it luxury? I don't think so.

People have different priorities. People will spend little or none on something they don't care about.

It may not be outrageous, but by definition it's luxury. That is, if it's not a need, it's a luxury, and we have no need to be served. For that matter, even the supermarket cookies are probably luxuries. The economics of choice operate differently than the economics of need.

The trick of marketing luxury goods is in creating the sense of need, where no need exists, in creating the plausible denial of luxury.

 

[physasst]

It may not be outrageous, but by definition it's luxury. That is, if it's not a need, it's a luxury, and we have no need to be served. For that matter, even the supermarket cookies are probably luxuries. The economics of choice operate differently than the economics of need.

The trick of marketing luxury goods is in creating the sense of need, where no need exists, in creating the plausible denial of luxury.

this is why I was so glad to see Wal Mart sell a road bike now, Yes I know, It's a POS, but if it gets some younger guys/gals into cycling with dreams of being Lance, and unable to afford a "real" bike, then the sport is better for it. They may go onto watch the TdF every year and eventually invest in better bikes and gear. It benefits us all. Same with Tennis, I played on a D1 Tennis squad and won many tournaments when I was younger, but I didn't start with a graphite Wilson or Donnay racquet. I started with a cheap aluminum McGregor racquet from K-Mart, and once I fell in love with the sport, my mom started to spring for more expensive gear........Same thing with cycling man, if we can get more people involved, all the better. At least IMHO.

 

[estone2]

Yeah, the Wal Mart bike gave me that same initial reaction, but I've got a fear about it; riding my road bike on the sidewalk scares the CRAP out of me.
A TON of my friends' parents freak out when they see me on the road in full bike kit, let alone their kid out on a leisurely ride around the block on the road.
Kids riding road bikes on the sidewalks is the result. Most kids will have the sense to be scared to death of it. But they wouldn't fathom getting on the road: the wrath of a parent is something to always be avoided.
What this is gonna mean is that the kids could be afraid to ride the road bike.

HOWEVER, that's worst case scenario. I think with time, most parents wisen up (as the kids get to an age where they're visible to cars and have the sense to not walk in front of one), and allow kids to get out on the roads.
But still the potential early negative effect scares me somewhat. It's for this reason that I'm somewhat skeptical of any impact that the Wal Mart bike will have - there are negative effects like the one I mentioned, but there's also the positive of more people getting hooked. Less+More=Same, at least in my vaguely logical and untrained mind.

 

[ultimobici]

A proper bike shop would go broke selling $150 bikes if they got them for free.

The problem is that the $150 bikes take twice as long to put together initially. When they go out the door they are far more likely to come back with faults. In addition, the customer doesn't enjoy cycling as much as they could due to an inferior product so are more likely to give up.

My boss bought some $200 bikes a few years ago to cater for the buget end of the market. After we'd unpacked the fourth one that was duff, the whole lot went back.

The margin on the bikes was actually as good as the $300 bikes, but the time involved in building them up was prohibitive.

 

[Dave_Stohler]

Has she ever bought a $50 skillet, or a $200 evening gown? How about a $150 pair of shoes? She could've gone to Wal-Mart and gotten any of the above for less than $20......

 

[danl1]

"There's a notion that if they sold for less they'd get more business and be able to make it up in volume, but it doesn't work that way in practice."

What? What? What? Hmm, so selling lower priced goods at higher volume
doesn't work. That is simply an amazing statement. Perhaps that archaic
notion had some sort of half-truth to it in the past, but in today's global economy
and today's free capital market system, it is completely off base for the majority
of businesses. Sears, Wal-Mart, K-Mart, Target, Sam's Club, Costco, BJ's
are a just a sample of businesses that sell low to moderately priced goods
at high volumes. This is fact, not speculation. The formula works, and has been working for some years now. LBS's unfortunately, only cater to a very segmented populas.

Archaic? It's your economic model that's out of touch with current markets if you believe that the LBS can compete in the volume/price arena, or that they don't because of some sense of 'elitism.'

Of course volume selling works for Wal-mart, but it can't work for the smaller shop that they've pushed out of that market segment. The companies you've mentioned and their peers are not anywhere near the majority of businesses, they are members of the relatively small club that can generate the necessary economics to make the volume proposition work. The LBS isn't being elitist by selling to the higher-end, they are fighting for survival in the only market space left to them. They can't afford to sell the low-end bikes at a profit, and having them conspicuously on the floor is damaging to the sales of their main profit goods.

30 years ago, the bike shop was the place to buy a bike, and they carried all price levels. Though Sears, etc did sell them, they were neither the lowest price nor the highest quality, and their market was those areas not well served by a bike shop. When the big boys decided to use their buying power to take the low end of the market, moving upmarket was the only choice the LBS's could make.

 

[freezin_is_the_reason]

An interesting thread. And one that parallels this one on MTBR in some respects.

http://forums.mtbr.com/showthread.php?t=172854

Bottom line is that cheap bikes don't work as well as quality bikes.

 

[Edgecrusher]

The bottom line is, a bike doesn't have to be cheaply made to be sold relatively cheap.
The prevailing thinking by short-sighted individuals and bike companies keep
themselves from capitalizing on a pending market. There absolutley no reason
a entry-level road bike could sell at $300 to $350. at least half of what they are
currently marketed and sold at. If internet companies can sell them at low prices
so could LBS's. The problem starts with the manufacturers, i.e. Specialized, Trek,
Cannondale, Giant, etc... They could easily produce a bike that nets a smaller profit,
but would sell more units to potential customers.

Bike shops HAVE to market and sell to the high end....what a ridiculous statement.
Well, hopefully, sooner than later, a good number of these elitist shops
will find themselves failing and faultering to the internet stores, who can sell
a bike for 1/3 to sometimes half the price of a local shop.

Yea, blah blah blah...about the cry's of service and supporting the community.
Todays economy is fierce, and very competitive, so either you compete
and be comparable or you don't and more than likely find yourself closing the doors.
The world will still keep turning and moving foward, and if businesses can't compete
someone else will take their place. I have to laugh when I hear and read such nonsense
about being 'forced' to sell bikes at high prices...oh, that's rich....hilarious in fact.

 

[ultimobici]

The bottom line is, a bike doesn't have to be cheaply made to be sold relatively cheap.
The prevailing thinking by short-sighted individuals and bike companies keep
themselves from capitalizing on a pending market. There absolutley no reason
a entry-level road bike could sell at $300 to $350. at least half of what they are
currently marketed and sold at. If internet companies can sell them at low prices
so could LBS's. The problem starts with the manufacturers, i.e. Specialized, Trek,
Cannondale, Giant, etc... They could easily produce a bike that nets a smaller profit,
but would sell more units to potential customers.

Bike shops HAVE to market and sell to the high end....what a ridiculous statement.
Well, hopefully, sooner than later, a good number of these elitist shops
will find themselves failing and faultering to the internet stores, who can sell
a bike for 1/3 to sometimes half the price of a local shop.

Yea, blah blah blah...about the cry's of service and supporting the community.
Todays economy is fierce, and very competitive, so either you compete
and be comparable or you don't and more than likely find yourself closing the doors.
The world will still keep turning and moving foward, and if businesses can't compete
someone else will take their place. I have to laugh when I hear and read such nonsense
about being 'forced' to sell bikes at high prices...oh, that's rich....hilarious in fact.

An LBS will never be able to sell at the same prices as internet and stay in business.

Rent is higher on retail premises compared to an industrial unit in the middle of nowhere. Staff costs are higher, as LBS staff have to both sell and watch out for shoplifters etc. The internet sales staff can concentrate on sales without that sort of distraction. Very often the internet place will send the bike out in the box as they received it from the manufacturer, so no mechanic to pay, plus they don't offer a first free tune-up or minor adjustments at all. Very often the internet business is a wholesaler too, like Ribble in the UK. They are the retail arm of Cyclesport North. They buy their stock at a price few LBS's can get so can undercut them by a chunk and make full margin. The only shops that can compete are smaller manufacturers like Thorn & Condor. But they are the exception not the rule.

All these things add up. If you expect LBS's to be as low on price as the internet, then kiss the extra bits they do for customers goodbye or get ready for no LBS at all. All you will have left are E-shops and big chain stores and no traditional shops that will go the extra mile.

To say that Internet based sellers and LBS's are comparable is not correct. If you were comparing a big Chain with a high street presence with the LBS, it's closer.

Internet sellers don't have to deal with tyre-kickers, or any of the jobs an LBS does that make no money. The guy who wants to know how to fix his own gears doesn't call the internet shop, he drops into his LBS. He may offer to pay, but they rarely do. Who do you turn to when the bottom bracket in the frame you bought on Ebay won't come out? I could go on.

If you cost up a $300 bike, you are using parts that retail for less than $10 on a frame retailing for $50 with forks retailing for $17.50. Take out the cost of the original build plus the mechanic's time to set the bike up and you're looking at a very small amount of money to play with.

 

[Lifelover]

Wow

The bottom line is, a bike doesn't have to be cheaply made to be sold relatively cheap.
The prevailing thinking by short-sighted individuals and bike companies keep
themselves from capitalizing on a pending market. There absolutley no reason
a entry-level road bike could sell at $300 to $350. at least half of what they are
currently marketed and sold at. If internet companies can sell them at low prices
so could LBS's. The problem starts with the manufacturers, i.e. Specialized, Trek,
Cannondale, Giant, etc... They could easily produce a bike that nets a smaller profit,
but would sell more units to potential customers.

Bike shops HAVE to market and sell to the high end....what a ridiculous statement.
Well, hopefully, sooner than later, a good number of these elitist shops
will find themselves failing and faultering to the internet stores, who can sell
a bike for 1/3 to sometimes half the price of a local shop.

Yea, blah blah blah...about the cry's of service and supporting the community.
Todays economy is fierce, and very competitive, so either you compete
and be comparable or you don't and more than likely find yourself closing the doors.
The world will still keep turning and moving foward, and if businesses can't compete
someone else will take their place. I have to laugh when I hear and read such nonsense
about being 'forced' to sell bikes at high prices...oh, that's rich....hilarious in fact.

Sounds like you really have a great business plan. You really should consider putting it into practice.

If you do please report back on how you are doing. Assuming you can still afford your internet connection.

 

[collectorvelo]

might work - some do

If I understand the issue here; there are stores that make money on volume instead of high margin

You do not HAVE TO make 50% to keep a retail store going; nor do you have to sell high ticket items

If you can keep the volume up; you can sell at lower margin, give the customer a better deal, and still make money -- that is done in many industries

Bike Shops will need to get more competitive on prices by lowering margins or improving buying - as customers realize that the bikes are for the most part just alike these days from every practical aspect [thus reducing brand premium in pricing]

 

[ultimobici]

If I understand the issue here; there are stores that make money on volume instead of high margin

You do not HAVE TO make 50% to keep a retail store going; nor do you have to sell high ticket items

If you can keep the volume up; you can sell at lower margin, give the customer a better deal, and still make money -- that is done in many industries

Bike Shops will need to get more competitive on prices by lowering margins or improving buying - as customers realize that the bikes are for the most part just alike these days from every practical aspect [thus reducing brand premium in pricing]

Name one. All I require is that it is within 1 mile of the centre of a decent sized town, is not part of a chain of 4 or more shops, nor a franchise and has a full workshop. It goes without saying it can't be a loss leader for some rich enthusiast, but a fully fledged selfsupporting business.