Trek To Start Selling Bicycles Online 19

I understand that those who work for LBS will feel threatened, but the fact is that the world is changing. Many of us have careers that have been dramatically altered by the realizations of worldwide competition, among other 21st century realities. Anyone who thinks that the Trek direct plan is anything but an irreversible trend doesn’t understand the marketplace. Price drives the market. Service is increasingly less of a priority. I may not be the norm but I have built up my own bikes and built my own wheels for the past ten years. When I shop at an LBS I invariably end up disappointed. It's just an added hassle. I look forward to the day when I can deal directly with manufacturers. I mean, it's nuts. I bought a Mavic Ultimate wheelset online a few years ago along with their repair and replacement warranty, and then when I needed to use the warranty had to go through an LBS. Why? It makes no sense. In a price driven market with more and more people wanting to build their own unique bikes and capable of figuring out how to do it themselves, why should they have to go through a middleman?

I'm looking forward to reading the forum posts about how Bike Company X's call center in Bangaloor India were useless, and you tried explaining the problem with your electronic damper, but he just kept quoting the instruction manual to you.

Read my experience below in dealing with Bdop Cyclings Taiwan support. Service was the best I've ever received.

Welcome to the year 2,000. I've never seen an industry more afraid of the internet in my life than the bike industry. Unreal. It's here, embrace, adapt, innovate. Newsflash, it's not going away, and it makes our lives better, easier, and more convenient. For the user, customer first, therefore it wins.

Do people go online and purchase new cars? No, you go to a car dealer.

And where have you been for the last 15 years? ;-)

Oz, working in the bike industry, amazed at the resistance to the internet

I 90% bought my Xtera though carmax online. Sure I made my final choice in person. But all the research, shopping, then payed the fee to get the truck transferred to a local dealer, financing and insurance online, and went down and signed the papers. Not all online, but close.

Actually, they do. In Colorado, there is a dealership chain that offers the ability to choose and purchase a new car online and will drive it to your door. They're doing it to appease the market segment of new car buyers who are research heavy but dread the traditional dealership experience. I am in that market segment.*

* Unfortunately, I cannot afford to buy cars new.

I really think bike shops are about to get squeezed out really hard by online retailers, particularly at the high end. I see two reasons for this:

1) Pricing: companies that offer consumer direct sales can offer more aggressive pricing, as they can cut out several layers of middlemen (distribution and shop).
2) Stocking: with the huge number of standards nowadays, it is very hard for shops to keep stock. With all the different hub standards, bb standards, headset standards, etc. shops are put in a bind. If they stock an item, there is a fair chance that they won't sell it and if so they pay for that cost. If they don't stock an item, their lead time should a Customer request it is quite long. Larger online retailers that move much higher volumes can adapt more easily to these standards as they are better able to predict year to year how much product they will move.

I purchased two items recently, one from a shop, one online.
-I purchased an air can for my shock at my LBS. It takes me 20 minutes to drive there. I had to visit the shop to order, and to pick it up. It took 30 days for it to arrive, and I called them twice to remind them and check on status.

-I ordered a dropper post online. It arrived at my house two days later.

I'm buying more and more online these days as it is way more convenient. If I order something through a shop, it is considerably more effort at this point.

***Edited to add this experience as well:

-I purchased a rear hub online from Bdop Cyling online this year, a Novatec. Price was great, it arrived ontime, etc. All was good, unfortunately about 2 weeks later the hub died. It absolutely exploded. I was really bummed. That was Tuesday. That night I sent Bdop Cyling an email, asking about warranty process.

Before I went to bed, I checked my email, they asked a few questions, requested some basic pictures. I sent those. The next morning I checked email again, they asked a few more questions to clarify a few things, and a couple of more pictures as some of the earlier ones weren't very clear. All in all super friendly to deal with.

Thursday morning I received my brand new replacement hub from Bdop Cycling. They priority overnighted it from Taiwan.

This dude is exactly right ^^

This is exactly it. I feel bad for shops, but 98% of the time they don't have what I want and say they can order it. Then they only put in orders once a week, and then it takes another week "at least" for it to come in. AND it costs more... Then there is the hours, you pretty much have to leave early from work or go on your lunch to visit the shop. OR waste time Saturday that you could be out riding. Heck, I end up having to go to REI when I need a tube, or brake pads after work to go ride because they shops are all closed already.

It sucks because I'd rather buy local and keep somebody who loves bikes in business. But when I can shop whenever I have the time, compare prices and products from different sellers, and have my parts in a day or two for less money it's pretty hard not to choose that.

I have purchased a new Trek fuel cx 7 from a local Trek store in Fort Myers Florida. I purchased the bike for proper fitment. The sad part is when I finally got the bike the shop had me sit on it and said looks good. No time was spent helping with fitment. That was my main reason for buying. Now they have lost 3 more sales and all my gear to online. So the question is the first sale might be online but the store will have to really need the WOW factor to keep them from going back online.

Sounds like a pretty crappy shop unfortunately... While I am a big supporter of the LBS, they also need to do their own part in offering better customer service, fitting services, and repair services. If they chince out on any or all of those three, then they are shooting their own selves in the foot.

So local bike shops have their already low margins squeezed and there is no price reduction or benefit to the consumer. Good for Trek.

People are willing to buy bikes direct online because they are great value for money. If you are going to pay dealer prices anyway, part of the cost/experience is being able to demo the bikes and speak to real people about your purchase, and develop a relationship with your local shop (that will probably save you money on servicing and parts in the long term).

Imagine if you are running a bike shop. Who is going to get your attention? The guy who buys his bike after coming to you for advice, ordering, and giving you a decent margin on the sale. Or the anonymous customer who buys the exact same bike online, collects it from your store, but you make very little money out of the sale, and you never see that customer again because he buys all his gear online anyway.

And what is to stop customers going into bike shops, getting the advice, trying the bikes, then going online on a Friday evening and ordering the bike they want for collection from the same store. Dealer does the work, Trek gets the margin.

The whole thing just doesn't seem fair to me.

I do like the idea of proper dealer training. Why not do that anyway and allow the dealers to improve their expertise and service to incentivise people to actually visit a bike shop.

Oz T on the other hand . Shops with lower overheads could mean the result of more bike shops . Trek has a big range of bikes and parts and there would be very few bike shops that could cary the entire range . In the last part of the article there was a reference to " The high profitability of service v sales " Would could see better pay and condition for bike mechanics and better training . But really the article only scratches the surface and Im sure allot has been quoted out of context . Until we see trek sight live its all second hand info . Like will trek drop the standard build ? will we be able to make the build we want on a bike ? . I just hope they come to the realisation that on high end bikes home branded parts as fillers just dosn`t cut it and thats were the consumer dosn`t see the value .

"their already low margins squeezed" = LOL. You mean keystone margins? Like the $10 part you are selling for $20? Most car dealers make lower margins off a $30k vehicle than a shop makes on a $6k bike, but they understand business and move inventory. It is pretty common knowledge in the car industry that anything on the lot over 30 days is basically losing money. But at bike shops its laughable, there are year-old models that are discounted $500. You should have moved that bike a year ago for $1,000 margin, now you're sitting on it because you tried to make the $2,000 margin. Time to adapt or die - ask Kodak about that. This is the internet age, there is no longer a benefit to having most non-time-sensitive parts on the floor at MSRP. The long tail is captured by Amazon, they've seen to that. Time to provide top-notch service at reasonable prices, move inventory at lower margins, and figure out what items are actually worth having in-stock and racking up inventory costs.

I think the margins are low for such a niche, high end product. Standard margins (ignoring any tier based pricing structure) are around 25%, and you will find that most online retailers will advertise bikes at 10% discount right away, even on the latest models. So most customers go into a local shop asking them to price match, meaning true margins are usually around 15%. It's not a fair comparison with the car industry because of the way that industry is propped up by finance. Car dealers sell finance agreements and optional extras and they don't like cash buyers. I stand by my comment that for the number of high value bikes that a typical bike shop sells, the margins are low.

There should be no need for a small shop to have to stock every size of every model of bike. A select few sizes and models should be all that's required to demonstrate size and spec differences to a customer. If the distributors keep good stock levels then bike shops should be able to order the stock they need when they need it, instead of the distributor holding onto stock for their own web store.

When distributors or manufacturers turn to direct sales, it's always the middle man who loses out. The work load will be the same, but with a lower margin.

The margins on bikes suck i know first hand at BEST we get a 35% margin we are lucky to get $1000 before expences. The average is around 27%. And its not like we just make up some random price we have to make money. Trek is tring to slowly push lbs out of the picture and create large regional stores so they make more money. They dont care about the lbs they just want more money.

Yeah, you don't know what you're talking about. Top-level dealers for the big 3 (Trek, Giant, Specialized) make 35% at BEST on bikes. Trek is taking 20% of this which leaves the bike shop 30% margin before taking into account all overhead. 35% profit is generally accepted to be the tipping point between profitable and not. A 30% STARTING point spells doom for the shops where you can go to check out new bikes and parts, where you go to test ride, where you have your bike serviced, and where you speak to your local expert. Just sayin'--online shopping doesn't offer any of that.