I was going to write a post today talking about the horrible weather conditions that canceled the Victorian State Road Championships / Tour of Geelong yesterday. As you’ve probably read in cyclingnews (or my constant Twitter updates – cyclingnews’ inevitable replacement) the race was abandoned due to extreme winds. In all my years of bike racing I’ve never been a part of a canceled race or DNS’d because of the weather. The worse it is outside, the more I enjoy racing in it! However, the wind was absolutely ridiculous. Riding around a tight circuit that resembled a criterium course in many sections with nearly 200 other riders of varying abilities would have been asking for serious trouble. I’ve seen it too many times and having nothing to prove. Yesterday would have been my first DNS but fortunately the decision by the organizers was to abandon the race.
When you see trees like this get blown over it’s probably a good time to put the ego aside and pull the pin. I wouldn’t even attempt kiteboarding in 45knott winds.
Support your LBS?
That’s all I have to say about the race yesterday. What the topic of today really should be about today is supporting your LBS (local bike shop). This stems from some of the comments placed on yesterday’s “Sponsor Thank You” post. I think this issue deserves its own attention.
As you may have noticed I’ve taken down the PBK and Wiggle advertisements. Many of you have been considerate by placing your online orders through them from this site knowing that I receive a 5% commission. This has helped fund this site (believe it or not there are costs involved) I thank you for that.
As I commented yesterday I believe that these online retailers harm the bicycle industry in Australia. They are good for consumers, but not so good for the LBS. I had to make a decision on whether I’d like to be involved with helping local businesses or hurting them. Of course there is a conflict with putting both internet ads and LBS ads up here. Now that the opportunities are becoming available I prefer to take the approach of establishing long term relationships with businesses who I can help by gaining them advertising exposure.
As one commenter pointed out “this is a very noble gesture”, however the high cost of this sport forces us to shop online for many items. Indeed many items such as tyres, tubes, groupsets, etc can be bought at nearly half the price as the LBS sells it for. Many shops will use the warranty and support argument to try to get you to buy locally, but the prices are just too high. If something fails that you bought online, you simply go and buy another one and it still comes out cheaper.
So who’s responsible? Well I’m not a LBS owner or even in the retail industry so I don’t get a view of the whole picture. However, I have seen the the distributor’s prices of some items and I can tell you that many items sold online are cheaper that they sell to the the LBS for. The distributors I’ve spoken to have stated that they cannot import their product as inexpensively as the online retailers sell it. Tyres are a good example. Most tyres or outrageously expensive in the LBS. They are a consumable item and can be bought for half the price online, so why would it make sense to buy them anywhere else? But then again the LBS needs to make money (they’re a business, not a charity), so they need to add margins on top so they can survive.
Unlike your LBS these online retailers have minimal overheads (Lighting, Rent, Staff, etc). They deal in a currency that is not AUD and exchange rates are paid by the consumer. They do not have the exorbitant taxes that the Australian Government charge for importing for on-sell. They negotiate rates on an international demand, meaning their turnover would be huge.
Another method that the online retailers use to drastically reduce their prices is by buying parts OEM. What this means is that there are two prices that the manufacturer charges for bike parts. There is a price for buying them separately, and there is a price for them being built up on a bike. The price charged for being put on a bike is significantly cheaper. Just like when you buy a PC and Windows comes installed, you don’t pay $250 for Window on top of the computer price. It is built into the price of the whole computer and the manufacturer gets it at a reduced cost. However, if you walk into a computer store and buy Windows off the shelf, you’ll be paying a few hundred dollars. Same thing goes with bike parts. The online retailers will source frames that are extremely cheap which enables them to get OEM prices for the components. They will then discard the $200 frame if they need to so they can sell the components inexpensively.
From what I understand, the online retailers will also get OEM prices on components by getting other bike companies’ excess supply. Sourcing factory seconds is another way they reduce the costs of components.
So why can’t the LBS play this game as well in order to compete? I wish I could answer this question. Perhaps some LBS’s are doing this but are still selling at the local market price…who knows.
From my discussions with various LBS’s, some have decided that they need to do business differently in order to compete. Many cycling components have become commoditized and aren’t they even worth trying to compete based on cost. They have to find a way to increase their value instead of reduce prices. This means offering better service, offering clinics, advice, etc.
This is a massive topic that I only have limited knowledge on, but I’d be very interested in hearing your opinions. Perhaps an LBS owner or distributor will jump on here and give us some more insight as well. What are your thoughts?
