Mario Cipollini

Culturally incompatible – Cycling gear that doesn’t sell

A blog came up on my radar, Jonathon Nunan is a consultant in the bike industy and publishes insider news on his brand new Better Bike Business blog. A February post caught my eye:

Selling cycle clothing in Australia? No hotpants or white Lycra for starters.

It covers a list of do’s and do nots for selling cycle wear in Australia, a good list and explanations such as including UV rated wear, Australian cyclists love full length zipper and women like 3/4 knicks. Surprising is that cycle wear needs to be offered in size 6XL, 8XL and 10XL plus… wow.

That’s a nice example of some of the cycle wear that does and does not sell in Australia, what about the rest of the world?

 

What are the Rules for Cycling Wear?

Do you remember the The Official Euro Cyclist Code of Conduct (by Dom Guiver and Mike Flavell)? It is a goldmine of goodness, here are some excerpts:

Rule 1. Image and style shall be the primary concerns of the Euro Cyclist. When suffering, one must focus first on maintaining a cool, even composure and second on performance. Winning races is an added talent, and only counts if said Euro Cyclist wins with appropriate style.

 

Rule 5. A prominent line where one’s kit ends and where one’s deep tan begins is essential to one’s image. Artificial tanning is BANNED. The tan shall reflect the level of training commitment.

 

Rule 6. The socks of the Euro Cyclist shall extend to within two (2) cm. of the main bulge of the calf muscle, and shall never extend further than one (1) cm. past said primary calf muscle bulge. All socks SHALL BE WHITE in colour with prominent logo placement.

 

Rule 12. Ridiculously stylish eyewear (see endorsed products list) is to be worn AT ALL TIMES without exception. Glasses are to be worn over helmet straps at all times.

There are 63 rules in total, and if you are serious about cycling, you really need to learn them by heart. The most current version is on the OREC (Official Rules of the Euro Cyclist) facebook page.

 

Cycling Brand Matters

Getting a bit more serious, it goes without saying that there are differences between continents and nations with regard to well known and lesser known brands. Popularity can depend on the brand origins, the marketing of the brand among other factors.

Seasons play a role, how cold is winter, how hot is summer. Is professional cycling (road, track, MTB, BMX) popular and what about access to these different styles of cycling.

Consider mountain biking, in one country or region it is considered a fringe sport, a sub culture. In other countries it is an active sport more open to a broader age range and sports cycle wear, even lycra is commonplace.

And even the media and television coverage of cycling events will play a role. If cycling fans see the professionals in the latest gear, the lastest gear is likely to be a big seller – and this includes styles such as long cycling socks.

 

Making or breaking it

While writing, I have been thinking hard, what cycling equipment or cycle wear is truely specific to one country. For every I can think of, I can’t say that it is really specific, such as Americans only wearing white cycling shoes or the British only wearing black helmets. I can say that in Europe, commuter cyclists are more fashionable, particularly where bike riding is a convenient or prefered transport mode. When cycling is less integrated into society, there is a natural focus on safety, so fluro and high visibility wear becomes more important.

So this is a great topic, and for the cycling industry, something most brands should know – so what unique trends have you spotted in cycling, unique to one country or region?

Title Photo: © David Hunter

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.

IBD Annoyed bike shops importers

How to annoy bike shops and importers

Some bike shops get annoyed the minute a customer walks through the door, but that’s a different story. Good bike shops welcome customers with open arms and but there is a sure-fire way to get the staff to quickly turn against you. 

Local bike shops, independent bike dealers and bicycle retail chains face stiff competition from online retailer. A few dabble, succeed or even embrace online retail (and concentrate on bike servicing which online retailers can’t provide), but many can also compete against online retailers. This is not usually on price, but by providing the service and local engagement which Wiggle, Chain Reaction Cycles and co. simply can’t provide.

The easiest way to annoy staff at the bike shop is to ask them to price match an online price. Price matching an (overseas) online retailer will often knock out the complete margins and in many cases the bike shop may be paying a higher wholesale price than the online price.

But there is another way to frustrate your bike shop beyond tears, if you have purchased something online that has broken, take it to your bike shop (rather than to where you purchased) and attempt to get them to resolve the warranty claim. You, as the ‘bad customer’, are the idiot in this case. But this still happens. People try their luck returning their online purchases to the bike shop.

This scenario is made worse when it takes time to determine that the faulty equiptment was not purchased locally. People mnay attempt to contact the importer directly and waste their time before the importer determines that your wheelset was purchased overseas. (There are some good news stories where the shop or the import still look after the customer regardless, they really need be be commended for this).

Of course it can be costly, time consuming and frustrating if you purchase online, the equipment fails and you have to convince the online retailer that it is a warranty replacement. In many cases, this is where your local bike shop simply win through better customer service.

Outside of the bike world, big brands such as Apple offer worldwide service, but as a brand they also have much strong control over their retail outlets. Giant Bicycles is in a similar position with their Giant Bicycle stores and limited online availability.

Consumer protection laws change between countries and even states, the rule of thumb is to return items under warranty to the place where you purchased. And if in doubt, you can enquire with the brand.

 

photo © Bruce Turner

Are Online Bike Shops Guilty of Exploitation?

The headlines from November 2011:

Chain Reaction & Wiggle guilty of “exploitation”, says US store

The US store in question is competitive cyclist and a shop blog post was posted by company founder Brendan Quirk. Mr Quirk (and co.) sold the online retailer to Backcountry.com in August 2011 and Quirk left employment with Competitive Cyclist in April 2014 to take a role with Backcountry.

In the blog posted titled Definitely Not Wikileaks, Quirk argues, “I kept thinking that Chain Reaction and Wiggle aren’t winning in the high-end US marketplace because of a strategy. They’re winning by exploiting a market anomaly. Exploitation is not a strategy.”

Are online retailers in countries outside of the US ‘exploiting’ or are they ‘competing’? Before we answer this, lets concentrate on the accusations. Discussing how the online retailers Wiggle and Chain Reaction Cycles have such a competitive advantage, Quirk turns to the difference in enconomic-geographic influence, “Because they’re based in Europe, Chain Reaction and Wiggle have the advantage of buying their goods directly from manufacturers.”

While it is true that distribution channels / processes between countries different, CRC and Wiggle don’t exclusively purchase directly from the manufacturers. But Quirk acknowledges the role of the manufacturer or brand, “Whenever we ask manufacturers why they don’t have global pricing parity, they plead the same case: They’d love nothing more, but they have no enforcement mechanisms.”

Analysing this, under the assumption that the brand / manufacturer sells a product at the same price, price differences creep in with mark-up from a distributer but it suggests that rather than a common 50% markup by a retailer, that Wiggle and CRC have much lower margins. The UK stores are not bound by the Manufacture Suggested Retail Price (MSRP) where-as the US stores are.

Considering that Wiggle and CRC are retailing within the law with this approach, are they guilty of ‘exploitation’ because overseas cyclists chose to purchase from them rather than paying a premium to buy locally? Hardly, though it doesn’t stop others from feeling threatened by online retail. Spanish bike shops joined efforts to protest against Chain Reaction Cyclists and in Australia, the cycle retail representative body is lobbying for regulated taxes on imports.

In the public sphere the brands are quiet, they are doing good business and reaching the customer. Customers who chose online are growing to understand the pros and cons, while the price saving are hard to resist. Online retailer have reduced overheads and are competing in a growing market. This leaves traditional retailers and wholesalers who are used to the classic supply chain but now feel threatened. Some chose to adapt (such as shifting brands to the those that maintain consistent pricing so that retailers are not undercut). Some chose to fight a losing battle.

While the end-consumer would prefer to pay the lowest price, they may still choose a local bike shop if they value the service. But it is difficult to consciously spend more money for the same product in situations where there is no added value, such as chosing between competive cycling (as a US resident) or chosing overseas. What ‘Value proposition’ do competitive cyclist offer in this situation?

Consumers may not want to hear this, but pricing can be managed, brands have the power create consistent pricing and allow for a level playing field. Why should a distributer and retailer stay with a brand that is actively undercutting them?

 

Photo: © Dauld

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.

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.