Shhh Shimano

Is ‘Shimano’ a naughty word?

There are so many good things to say about the Shimano brand in the world of cycling (not to forget, they are big in fishing). Even if you you have a budget Shimano groupset, it will still be well designed and will continue to perform as long as you look after it. And Shimano has also lead the component market without the teething problems that have held back SRAM or the chains of nostalgia which hold back Campagnolo.

Customers are happy, but a lot of bike shops and even their own national Shimano suppliers are having second thoughts. So why the discontent, it is the legacy of Shimano distribution which allows the European online bike shops access to super cheap wholesale pricing.

The Bike Dealer Blog recently published a blog post, The “S”-Word: Dealers Speak Out and discussed the American perspective of the Shimano distribution strategies;

Shimano American management claimed it cannot do anything to control European distribution, a part of the world that doesn’t allow MAP or MAP enforcement.

An example is given of a California bike shop owner who complains that the Shimano 105 5800 groupset is available online from European retailers for $382.49 while his wholesale purchase price is $500.

This scenario is similar in other countries with not online the bike shops, but also the Shimano national offices facing stiff price competition from their own brand, and little power to act for fear of being cut-off.

The Bike Dealer Blog quotes a Texan bike shop owner (which I assume is unrelated to the ex-seven time Tour de France winner),

Here’s the problem. Which bike company wants to bankrupt itself to make a point? You can’t avoid using Shimano components on your bike. You can’t even work on phasing them out, except at the low end, and if you try to do that, Shimano will strike back by making their parts cheaper and thus your competitor’s bikes a better value.

For a bike dealer to shift to SRAM or Campagnolo also involves its own challenges. Aside from missing out on the strong “Shimano” brand and having to service this brand anyway, what is stopping SRAM and Campagnolo from also tapping into the lucrative European internet retailer market?

While the European online bike shops are branded with the blame for killing local bike industries, and while the distributers and bike shops call their customers ‘heartless’ for buying online, it is the brands themself who have ultimate control. These big brands however have been caught by surprise at the power and speed of the internet and the subsequent price discrepenies which make customers happy and bike shops unhappy are a legacy of deals and arrangements which can’t be changed overnight.

For young brands the lesson is to establish globally consistent pricing which ensures that bike shops and distributers can compete on price. And consistent pricing makes customers happy, they no longer pay a ‘massive local premium’ for the same item.

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