Hello Vital MTB Visitor,
We’re conducting a survey and would appreciate your input. Your answers will help Vital and the MTB industry better understand what riders like you want. Survey results will be used to recognize top brands. Make your voice heard!
Five lucky people will be selected at random to win a Vital MTB t-shirt.
Thanks in advance,
The Vital MTB Crew
Jeff addressed that in his next post "I found a few datapoints that suggest golf is a $70-80B/year industry when you count everything; softgoods, equipment, greens fees, memberships, golf tourism, pro golf, media rights etc."
Typed up a whole thing an lost it, so here is a link. Translate and read. Lots of good bits
https://www.mtb-news.de/news/pon-santa-cruz-cervelo-produktion-schliess…
PON Revenue 2.3 Billion Euros. DAMN
How about 2.6 million bicycles in 2023?
Pon owns Caloi, Cannondale, Cervélo, FOCUS, Gazelle, GT, Kalkhoff, Mongoose, Santa Cruz, Schwinn, Urban Arrow, Public, and Veloretti bicycle brands.
Anddddd the Mike’s Bikes Chain in the Bay Area. Watching the things that Mikes Bikes shops do is very interesting as it relates to the larger holding.
Yeah, I was just saying the bike brands. A significant portion of their revenue must also be their bike services companies, which do things like lease bikes, offer bikes and ebikes via subscription, and offer AAA-style bicycle roadside repair services.
Just surprising- almost 2x size of KTM, and none of those brands are 'big' in my opinion like a Trek, Spec, Giant.
Trek claim their revenue is circa $1b.
Crazy good deals if you want an ebike with a spare battery.
I wonder if they'll still make motors? Could cause Giant some problems if not.
Bikes are only part of what PON does.
https://pon.com/en/about-pon/companies/
Check out some of the brands on that list which PON partners with, including exclusive rights for distribution/sales a whole bunch of luxury vehicles.
Finally found time to listen to this and really enjoyed it; lots of good insight and the discussion was able to convey a lot of nuance that doesn't necessarily fit/carry over in forum post. Thanks @sspomer for making it happen and @jeff.brines for all your research and time!
Not to nit-pick but just want to point out that what Neko and Frameworks are doing isn't some unique "drop" model, its literally how every company using an OEM supplier works, they just inform you of quantities beforehand.
Unless you pay an OEM for a an entire production line, they will make/assemble whatever quantity you ask for in batches, and then re-tool that line to make someone else's product. So for instance, Transition get their frames welded by Genie (I believe), they will make lets say 1k frames, then that line will be re-tooled and make 1k frame for, lets say RAAW, and if Transition want a 2nd run they have an option for that etc etc.But they don't have permanent line where they make their frames 24/7, if that makes sense.
The only difference that Neko has done, is tell you beforehand how many they are making, then saying we will do a 2nd run if needed. Every bike company does this, they just estimate internally how much they need, and figure it out behind closed doors.
Your last sentence is the kicker. Most companies are estimating their demand and place an order with their supplier. But if you have your forecast wrong, you have working capital tied up in your excess inventory.
Conversely, with a drop model, you first obtain commitment from your customers up front, then send the order to the supplier for precisely the amount of frames you need to meet demand. It's a more predicitable way to manage your working capital.
Or you could make as many bikes as you want, force your dealer network to pre-buy bikes ahead of time with the promise of a small volume discount, and then they get stuck with your overstock sitting on their books and sales floors. Win win!
Kinda ironic that having bikes is one of the things that is most dangerous to a shop's financial well-being..
Regarding vehicles, they are the official importer of the complete VAG group in the netherlands, therefore Volkswagen, Audi, Škoda and Seat vehicles with the likes of Porsche, Lamborghini, Bentley, and apparently Rimac and Bugatti too, thrown in due to them being under the VAG umbrella. And MAN trucks fall into the same category.
I am missing Ducati though...
That would be true, if it wasn't the case Frameworks said they were making 80 DH bikes as that's what was ordered, and then they went on sale to the mailing list and online after that. They then said they would make more than 80 if there was enough demand, which is what everyone manufacturer does, as they release during production with contract caveats that they can extend the line usage if necessary.
You either invest in marketing a product that doesn't exist to people to pre-buy or you market it after you've estimated. What frameworks did specifically isn't some new business method
From what i see, the bullwhip effect is still in full swing and 25 will still be oberheated. 26 could be the first year of linear growth since 19 which would mean 27 could potentially be the forst "normal" year in market behaviour.
Lets hope the industry doesnt take the fist signs of a linear market behaviour as a sign of "market is fully healed, back to overstocking"
Don't under estimate the stupidity of the industry. I sat through 8 hours of presentations from a very large manufacturer (that rhymes with Drek) where they explained to us that the huge growth in sales (mid lockdown) was down to their hard work and foresight and how we should be grateful to them and not let them down by listening to medical advice.
Just listened to the Podcast with Jeff...
My couple of thoughts..
Clothing sucks from a shop standpoint. So much is seasonal. While companies have broken it down to two seasons which makes it a little easier, but the shops are still expected to commit a year or more out. Is that color or pattern still hot when it hits the stores? And usually they want quantities that almost guaranteed to result in a shop blowing out inventory. It's almost best for a shop to use the old Kmart Blue Light Special model..
As for bikes, the industry can't react quickly to changes in the economic climate. When demand soared, the industry needs at least 18 months to respond. Remember Trek's announcement regarding slimming down the models and how it wouldn't hit until 2025? They are banking on 2023 and 2024 bikes they already bought to carry them. 2025 will be lean and I think 2026 will be a lot of carry over.. Soon they will be looking at ordering for 2027..That will be interesting to see what happens..
If one had the money and simply loved bikes and has a decent business sense, I wonder what one could get the Nukeproof and Vitus lines for?
You may be correct, especially in Germany, but I've played a ton of golf in all three of those countries. France and Italy both have very strong golf cultures and some of the top courses in the world. I have spent a lot of my career working in Europe and met almost no one who would consider MTB a hobby (they think it is odd that I do for the most part) but I know literally (no exaggeration) at least 100 people that are avid golfers in those countries. So, as always, some perspective is needed in that we tend to see what we know. I'm always going to notice more MTB opportunities than someone that only plays golf and isn't an avid MTB rider. I'm also going to always see more golf opportunities than someone that rarely plays golf and rides all of the time.
One anecdote for you as well. I went to both XC races and also the golf tournament at the Paris Olympics this year. They were actually very close by each other. Orders of magnitude more people attended the golf. I mean, it wasn't even comparable by a long shot. I would guess there were several individual holes that had more people on them than the entire attendance of the XC races. It is hard to judge because on the ground you can't see everyone but if I were to just judge by the concessions alone, it took around 3 min to get a soda and a bottle of water at the XC race in the main concession area. It took almost 40 min to do the same at the golf tournament even though there were 5 times the number of stands in the main area.
That Yamaha motor contract with Giant is lowkey one of the largest contract in the industry, I would be very surprised if Yamaha were to drop Giant.
Their eMTBs were outdated and not competitive at all, smart decision to get rid of that division. Being forced to move their inventory at 60% off is all you need to know about these bikes.
Venue Events Capacity
Le Golf National Golf 35,000
Élancourt Hill MTB 25,000
Yeah, I didn't look it up but I can just tell you what it was like on the ground and also what it was like getting a ticket. If that's correct number wise (and I have no reason to doubt that it is) then Elancourt Hill was not even close to full. Kinda makes sense as the XC tickets were by far the least expensive tickets we bought. Table Tennis were second and they were almost three times as expensive. Unfortunately (but fortunately for me), most of my tickets were corporately provided so I can only compare XC, table tennis, golf, one basketball game, team fencing, gymnastics and 3X3 basketball in ticket prices. For Women's XC I paid $40 each and for the men's I paid $28 for one (my wife couldn't make it). Golf was around $200/ticket the days we went. Those were all secondary market tickets.
Nothing to do with this post-Table tennis and fencing were both way, way more intense than either 😂
That's cool... whatever you do for business, are they hiring?
Yup. And interesting how viable a store with no bikes but service and common replacement parts could be. It's definitely something to think about going forward with the internet era and 'digital sales' where shops basically end up as like drop shippers for lack of a better term.
An interesting case study being The Path in Orange County who I think took their original store and basically made it an outright warehouse (borderline distro building) to handle online sales pick up and inventory and stuff... And opened a new separate location that actually does their standard service and sales. Sounds like they adapted VERY well to the modern MTBing industry in SoCal.
There is something very special about a well stocked bike shop. Wall of handle bars, grips, seats. Nice pedal display. Bikes stacked to the ceiling. Just about Every bike tool or brake pad you could reasonably need. Loads of shoes, pads, helmets in various sizes and price ranges. But unless you are in a metro with a devoloped bike scene or in a wealthier area with an extremely devoloped bike scene you helped cultivate it’s a bad business decision. Having just enough stock a guy can walk around the shop after dropping off the bike for service and focusing on services you can offer in your community is the way to go.
A friend of mine did exactly this, he was making way more money out of service than he was from bikes. It also meant he could get away with much smaller premises, significantly reduced overheads and escape from customers who had the expectation that he should price match with larger retailers and the internet.
Look at the people who are doing well with mobile repair.. No bikes to stock, a limited usually carefully selected amount of parts on hand and some will carry a small amount of accessories like lights and helmets. Also, no expensive multi-year lease to deal with.
Anyone that has worked in a shop and has looked at the numbers can see that the best profit margins typically come out of the service department..
Post a reply to: The Bikeconomics (Mega)Thread