The market size of the big brands allows them the opportunity to do business on their own terms, for example many of the big brands such as Specialized and Trek no longer exhibit at bike shows such as Eurobike and instead run their own dealer events and customer demo days. And they have also controlled online sales, the popular online retailers Wiggle, CRC, PBK and Ribble don’t sell Trek online.
Trek and Specialized belong to the few brands that have prevented sales through the big online retailers and a quick search confirms. Wiggle provide a “not found” for the search term Specialized and Merida while for the search term Trek the big bike brand has some competition from a nutrition brand.
Screenshot from Wiggle:
Chain Reaction Cycles however take a different approach, while they don’t have Specialized or Trek in stock, they have plenty of positive results in searching for Trek, Specialized and Merida, however all promote their own inhouse brand called Vitus. They are ‘managing’ the search results to push their own gear.
It is common practice for brands to offload their old season products at good prices and the online retailers are good outlets as they have massive amounts of traffic and also operate on lower margins. This can be a Win – Win situation for the brand and retailer (and customer) as dealers are not able to offload the stock. It does however mean that the retailers may not stock new equipment. And some brands resist the online retailers regardless, and any stock that comes through are from rouge distributers.
Trek Connect Retail Marketing
This is the name of the new service going on trial for two years and open to 30 Trek dealers in the United States. The brand is supporting these dealers with an online sales platform which includes the dealer in the loop.
The big problem which dealers have with the internet is that they are cut out, the brands on the other hand don’t immediately lose-out with internet sales because they are still making sales. However in the long term it upsets the bike shops and the brand can lose retail support which is still crucial, particularly for higher priced items such as complete bikes which a majority of customers still prefer to buy instore.
With the new Trek online shop at trekbikes.com, the dealers will receive a ‘service commission’ and customers encouraged to pick up the bike instore. Any bike ordered goes to the dealer anyway who will assemble the bike and can delivery or hold it for the customer to pickup.
There are a number of angles to approach the move by Trek and predict the success. From a dealer perspective, the Trek brand is trying to support them and generate sales. And very importantly, providing a commission for sales.
From a brand perspective, they have to support their dealers and see the popularity of the internet and don’t want to miss the train.
From a customer perspective it can be viewed more critically, what is the actual benefit for the customer? Often customers are looking for the lowest price when buying online and have a number of ‘brand independent’ retailers who are competing for their dollar. A dedicated Trek Online store won’t compete with other online retailers or bike stores, the prices need to be regulated so that it isn’t creating a disadvantage.
For a customer, the online access however may provide some advantages such as:
• Faster and quicker overview and selection of the preferred bike and parts
• A larger range and more options than available instore (though Trek have the instore Project One concept)
• Convenience when a store visit is not possible
Buying online does assume that the customer can chose the right bike and right size so this may be an area for confusion, if a customer purchases online to discover instore that the bike is the wrong size. It is the fault of the customer, though the dealer will probably have to help resolve.
The biggest volumes of internet sales in the bike world is in parts and accessories, for customers there can be some convenience in saving a trip to the bike shop… but this is about bikes so the online purchase option for Trek bikes may be more ideologically important than for actually generating sales. The online shopping isn’t competing, rather is another doorway to Trek.
The new retail concept launches in September 2015 for the US and Bike-EU reports that this is a pilot program which will trial for two years.