Look out for End-Of-Season specials on Bikes and Gear

Many of the big brands have already announced their 2015 bikes or cycling gear and products. You will even find some bike shops stocking next years gear. The fact is, new is sexy and for some strange reason, next seasons gear or next years gear always looks better.

The other fact is, most of us are not performance cyclists and the one percent saving will make zero percent difference (just don’t tell the marketing departments). The real effect is that often last season’s bike or gear may be substantially reduced and you could save hundreds of Dollars, Pounds or Euros for a bike which is almost the same as next years model.

Some brands are trying to buck the trend by removing the ‘year’ and ignoring seasons as a bike model generally has a life span exceeding one year. Often after a few seasons (and a few paint jobs and accessory changes later), a top model bike may be relegated and replaced, but still remains in the program as it was a good bike.

Bike shops need to clear their floor stock and/or warehouse stock for the new gear so you need to keep your eye open from between October and February, more specific time-frames will depend upon your country’s sale trends as well as the individual brands time frames for supply. Don’t be afraid to ask “when do you expect the new bikes in?”

Online retailers however may have different cycles when it comes to new season gear. Local bike shops are often first inline and online retailers are second-in-line as they are the ‘clearing houses’. This means that online retailers may get new season stock much later however once again, it depends upon the brands and their relationship with the retailer.

The bottom line

If you chose last year’s bike or gear, the chances are that the savings you make over the new year and new season equipment are far great than the difference in performance benefit. Of course there may be differences and the new gear is new – so if you want New and can afford New, go for it.

Are you a scumbag if you buy online?

The worldwide cycling industry would like you to believe this. But the worldwide cycling industry also facilitates online shopping, the online bike shops have to get their bikes and gear from somewhere and you can’t believe that a brand doesn’t know who is selling their genuine bikes or parts and accessories.

You are a scumbag if you go into a bike shop to look at gear, to try it and to take time from the staff when you intend to buy the same thing online. This is known as Showrooming and is tackled in the online BBC article: The peril of ‘showrooming’.

Your not a scumbag if you go into a shop and browse, or if you are genuinely looking to purchase but don’t find what you want.

It is a fine line, but the nature of retail, even before the internet was that customers compared anyway and want the best deal. And good staff will look after you.

The hard to devour line is “traditional bike shops will disappear.” Cyclists will be left with nowhere to service their bikes (and are probably not patriots if they are buying from overseas shops). Why is it the consumers obligation to pay a premium for the benefit of somehow shifting supply and demand for an apparent indirect long term benefit?

It is supply and demand, and it demands brands, wholesalers and retailers to change. Don’t showroom – but likewise, if you find the most competive price for a bike or cycling gear online, do you homework, know the pro’s and con’s, but don’t be ‘guilt tripped’.

Inside Chain Reaction Cycles

Big online retailers usally don’t let customers peak behind the scenes. Only very recently have they ramped up personalised customer service so with some retailers it is possible to have a sole contact person manage your ‘issue’ from start to finish.

Gaining  a behind the scenes look into the giant online bike shops is still a rare opportunitity but recently online retailers recognise that customers want to identify with them. Knowing a shop and the exchange also creates a sense of belonging for customers.

Earlier this year, Dave Everett was welcomed on behalf of CyclingTips into the Chain Reaction Cycles in Ballyclare, Northern Ireland.  While it is a promotion excercise by world’s number 1 retailer, with focus on their inhouse brand, Vitus (with French origins) there are a few valuable snippets of information. Everett suggest that CRC have 60 staff looking after customer support.

Images and article on CyclingTips: A tour of the Chain Reaction Cycles headquarters

 

Wiggle UK Midlands

Wiggle UK moving to triple warehouse space

Public financial information show Wiggle trailing close behind Chain Reaction Cycles  in annual turnover and recent news on a pending move from Portsmouth to the British Midlands could signal a shift in the top position of online bicycle shops.

Wiggle has reportedly outgrown their 95,000 feet distribution centre in North Harbour, Portsmouth and earlier this year was reportedly looking for a warehouse facility around 300,000 feet.

The local news reports 200 Portsmouth jobs at risk as cycle firm Wiggle considers move to Midlands  and addresses the employment of locals and potential redundancies.

Wiggle is now reportedly moving to a huge Citadel Logistics Centre in Bilston, Wolverhampton which is in the British midlands and set to create hundreds of new jobs.

Express & Star regional newspaper published the following on October 1. 2014 in the article titled: Sport firm to create hundreds of jobs in Wolverhampton warehouse move

James Murray, spokesman for Bridgepoint, which bought the majority shareholding in Wiggle in 2011, said: “It didn’t make sense to have a distribution centre located at one end of the country. This new site is right in the middle.

“At this stage it is expected to create several hundred posts over the next two years.

“The total will depend on the number of people who transfer from Portsmouth. Consultation with the workforce there has yet to take place,” he added.

 

Online Shopping Love and Hate in the Cycling World

Where customers have access to choice and competive pricing, online shops are seen as a threat by many others in the industry.

“You are either with us, or against us” is the mentality driven by traditional business who easily turn their backs on any one or any entity aligned with online retailers.

In Australia, CyclingTips blog highlights a recent example of a charity organisation, the Amy Gillett Foundation, who have partnered with Wiggle as an event sponsor. A local distributer released an open letter criticising this however the Foundation were quick to point out that the distributer had never actually supported them anyway and that local business support has been insufficient. Read more: Local charities partner with online retailers but face industry fall-out

But there is an opportunity for dealers, brands and wholesalers. Rather than fight and oppose independent local entities such as charities and media – take over and dominate the advertising, sponsorship and support. Without a doubt, most would welcome the local support and pay it back. While it can’t rest on the shoulders of one business, a mutual understanding within the industry will share the load and share the gains.

How bike shops win customers in the modern age

The modern world is online. That doesn’t mean that ‘offline’ is out of the picture, rather to be viable online and offline, the internet needs to be part of the strategy.

But a lot of traditional businesses were caught out but the internet. Amazon has redefined book shops and with the kindle, digital tablet to read books, it is also redefining books.

In the cycling industry, magazines traditionally played a pivitol role along with the stock in your local bike shop. The internet not only provides a massive range but it is also where cyclists look for information. Readership and subscribers levels of magazines continues to fall. [2012 State of the Media Report].

It means that online advertising is the key and explains why many previously young and unknown brands who invested heavily in online buyers with aggressive online advertising have suceeded. Infact, the advertising spend of online retailers is in correlation with the size, and guess who the biggest spenders have been… Chain Reaction Cycles and Wiggle.

Strong retail brands and chain store who were slow to move still have the advantage of a strong offline customer base and have been able to rapidly modernise their digital communication and sales – so have a chance. Even traditional bike shops still have an opportunity to catch up however without the know-how and first-mover advantage, it may only be catch-up.

Who is the biggest online bike store?

Easy, Chain Reaction Cycles which is based in Northern Island (United Kingdom) is the world’s biggest bike store  and reported a 2012 turnover of £170 million and are a top 10 UK online retailer. They are followed by Wiggle who have a smaller but enviable 2012 recorded turnover of £140 million.

In 2011 Chain Reaction Cycles reports sales outside of the European Union at 39% which is £66 million. For more information, a case study by a supplier provided more historical and financial information: Export Technologies: Chain Reaction Cycles Case Study

The leading bike shop shares their formular for success:
Traffic x Conversion Rate x Average Order Value = SALES
*Turnover values vary from source to source, some values provided are much lower however Chain Reaction Cycles leads.

How do online bike shops sell the same products for less?

When the online sales boom started, one of the biggest effects was the online businesses could significantly reduce the traditional overheads; high street’ retail premises, skilled floor staff and many of the costs involved in running a bricks and mortar business. When bicycle parts and accessories have mark-ups up to 100% (of the wholesale purchase price), eliminating the expensive shop costs has a big impact on profit margins.

Selling online is cut-throat and in Feburary 2013 Wiggle posted a 2012 turnover of 140 million pounds. But after costs and overheads the retained profits were just under 9 million pounds. The constant  discounting by online shops means that they are reaping obscene fortunes.

But big online bike shops have a few tricks up their sleeves to remain competitive and consistently undercut smaller shops on price. The approach will vary from shop to shop, but here are a few in brief:

• Bulk Buying: large volume purchases give big online retailers  power to negotiate on prices.

• Old Season Stock: brands with old and hard-to-sell stock can offload to online shops who buy cheaply and can quickly sell.

• OEM Equiptment: accessories that are officially purchased for assembly on complete bike, but are never assembled (or even disassembled) and then sold seperately.

• Grey Market Sales: bikes, parts and accessories which are purchased via unofficial agents or routes. Also making wavailable to customers in countries that are otherwise served by official distribution partners and dealers.

• Tax Breaks: Online shops may locate to countries, regions or districts with low taxes and exemptions.

• Wheeling and Dealing: using loopholes, unsanctioned or even dubious channels to acquire cheap stock.

Some brands actively try to manage their distribution, and explains why they are hard to find with the big name shops, but many have traditional distribution agreements which fuel price discrepencies between distributers and online retailers.