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Dirt Rag has it:
By Adam NewmanSpecialized is warning local bike shops that a new app from Amazon.com could seriously undercut their business. In a letter to dealers from Specialized’s founder and president Mike Sinyard warns that the app, which allows customers to scan a bar code and find an item for sale online and make the purchase from their phone – often cheaper than in the store – would effectively turn a local bike shop into a fitting room for online retailers.
The Amazon.com cycling storefront includes "featured brands" Mavic, Crank Bros., Yakima, Thule, Diamondback, and Schwinn. Shimano and Pearl Izumi are other major brands sold through Amazon.
In the letter, Sinyard tells dealers that by ordering, stocking, and servicing these brands, they are supporting Amazon.com’s sales while undercutting their own. Specialized even produced a video demonstrating exactly how the app is used.
As a sign of Amazon.com’s commitment to cycling sales, it recently hired Paul Calandrella away from Specialized and named him Senior Vendor Manager for Cycling.
I often buy online but I can’t imagine the gall of someone walking into an LBS to window shop, pulling out their phone, getting the prices and walking out. I just can’t imagine being that shitty of a person.
Last week, I needed the axle on my rear wheel tightened, so drove the 45 minutes to the shop. While there, I asked him for the prices on chainrings, chain and cassette. I had already looked the prices up online and the bike shop came in about $60 higher for all. I set an appt to have him install the parts. The way I figure it, Amazon will never come to my house to fix my bike and there’s a lot that I can’t do so it’s in my best interest to keep him open. I can’t always buy from him due to limited funds, but I will when I can.
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It’s crappy yes but what can be done about it? Smart phones are changing the landscape of retail business for sure. This is something we started to see in the tattoo shop years ago when phones first started to feature camera’s. Folks would come in, find a design they like, snap a pic then go price shopping all around town. We even busted scratchers stealing the art in this way! Things are changing quickly and retailers are falling behind the curve. With the economy the way it is people are just trying to find the best deals possible to keep doing what they wanna do. It’s a tough pill to swallow 😢
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I see your point, but I wouldn’t compare keeping current with the times and a mom and pop competing with a multibillion dollar industry.
A tough but to crack is becoming even tougher and unfortunately, there’s little the brick and mortar can do to stop something like this ‘convenience’ app.
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Your right, there can be no comparison of the two. The little guy is most always going to get the shaft. As a matter of fact, I just got a smartphone for Christmas and just yesterday I downloaded a UPC code scanner. Not to use in the way we are discussing but to finally be able to scan the new square codes I’ve been seeing everywhere, many of which I see in Dirt Rag and other industry zines.
Oh and I just gotta say I’m sorry it takes you 45 min to get to your bike shop! I could visit all 5 of our area shops in that time frame….not trying to rub it in or anything, just thinking it would suck to be….well, I’ll just leave it alone 😐
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I value my LBS and agree that nothing will replace the service and advice one can get in their LBS. And you know, its just plain fun to browse the shops and check out the bikes et all.
But, I think we can agree that the mark up on some products is rediculous. When you can order a bike tire (for example) online for one third or sometimes half the price of the LBS….nuff said I think.
Still, I enjoy the interactions with the folks at my LBS because they love biking and the service and assistance they provide is invaluable so I will keep buying most of my stuff from my LBS.
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"jayzilla" wrote
Oh and I just gotta say I’m sorry it takes you 45 min to get to your bike shop! I could visit all 5 of our area shops in that time frame….not trying to rub it in or anything, just thinking it would suck to be….well, I’ll just leave it alone 😐
Hehe, it’s all a trade off. I don’t mind the extended trips for the few things I need. It could always be worse. I could still be living in a city 😃
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Wow, that would be brutal for some of the LBS’s. On the other hand, I kind of see the other negative aspect… I guess Specialized isn’t selling their products on Amazon, so they’re badmouthing amazon and the companies that are sold there in an attempt to get their products featured at the lbs. All I hear Specialized saying in the above is "if you carry our products, you will make more money."
It’s all a big game of business…
Oh btw, while we’re talking about companies and business practices, I learned by watching Klunkerz the other day that Specialized produced the first Rockhopper by basically taking one of Tom Ritchey’s bike overseas and having the frame design ripped off and mass produced by the Chinese.
But business is business…. ?
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"mtbgreg1" wrote
Oh btw, while we’re talking about companies and business practices, I learned by watching Klunkerz the other day that Specialized produced the first Rockhopper by basically taking one of Tom Ritchey’s bike overseas and having the frame design ripped off and mass produced by the Chinese.
Yeah, that little nugget jumped out at me too.
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"maddslacker" wrote
[quote="mtbgreg1":3i54lc26]Oh btw, while we’re talking about companies and business practices, I learned by watching Klunkerz the other day that Specialized produced the first Rockhopper by basically taking one of Tom Ritchey’s bike overseas and having the frame design ripped off and mass produced by the Chinese.
Yeah, that little nugget jumped out at me too.[/quote:3i54lc26]
At first I thought it was hear say, then they showed the similarity in the frames, then the guy from Specialized basically admitted it. "Inspired by Ritchey…." yeah right, try a carbon-copy.
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I’ve heard the same thing from the guys at my LBS – that the store is basically just becoming a showroom for the online retailers – and it’s certainly bad for business in the short term. For example, it’s pretty common for folks to come in and try on a bunch of cycling shoes, walk out the door, then order them online. But then again, what’s to stop anyone from doing this or checking prices using their smartphone? I guess you could berate them when you catch them doing it but that’s not going to be good for repeat business. Like jayzilla says, it’s gonna happen so why not try to adapt the business?
Off the top of my head, here are some thoughts about how local bike shops can adapt:
1. Offer more items in stock or more quickly than online retailers can. Yes, inventory is expensive but what if my LBS could at least get me a part the next day instead of next week? Nearly all bike shops in the US get their parts from QBP so why not lean on them to offer next day shipping to the store? I remember looking for a part at my LBS last year and they said, "Sure, we can order that for you – and it’ll come in next week." Riiiight – I can do that too – it’s called the internet.
Ever notice those NAPA trucks zooming around town delivering parts to auto shops? Why couldn’t the same system work for bike shops, especially in big cities? Yes, I’m talking to you QBP…
2. Focus on services. People are buying stuff online but most folks still don’t want to install or assemble on their own. Perhaps this means partnering with an online retailer to bundle service sales with parts purchases, creating annual maintenance plans, or reducing service times. One LBS near me had incredible success selling their services on Groupon and Amazon local, so much so they had wait times of 2 weeks for tune ups over the summer (we’re talking thousands of sales).
3. Remind your best customers to review your shop on Yelp and sites like singletracks. This is a big part of marketing in the internet age.
4. Sell online yourself. As I understand it, the distribution agreements most local bike shops have don’t preclude them from selling online themselves. In fact, even the internet guys are required to have at least one physical storefront before they can sell online. Yes, there is a learning curve but the alternative is to be left behind. Higher volumes can help shops compete at lower margins.
5. Find a niche. Every single LBS around me sells way too much stuff – from kids’ bikes to road and mountain bikes to commuters and triathlon bikes (and all the ancillary equipment). No wonder they only have 2 different mountain bike tires in stock – they have to stock all those other tire types too! I suspect the bike companies (like Specialized) are partly to blame, requiring dealers to sell their full line, not just MTBs for example. Focusing also helps address #1 above by offering a greater depth of product selection instantly, something the online guys can’t do.
But what if an entire bike shop’s floor space (and inventory budget) went to just one type of bike gear? Sure, that would mean I’d have to go to two different shops for road and MTB gear but I already do that for house paint and car parts so what’s the big deal? The internet is fragmenting markets everywhere and businesses need to adapt.
6. Negotiate. If you suspect a customer is price checking, ask them what price they’re seeing online and work with them to get close to that price. It’s always better to get a lower margin than to get a $0 margin on an item. Plus, most customers are willing to pay SOME premium over the price they find online since you can give it to them instantly, without shipping costs, and they’ll feel good about buying locally.
7. Stop being so nice. No, I’m not saying employees should call out folks for showrooming or price checking but I do think some bike shops may be spending too much time creating and sponsoring events. Bike shop owners are experts on bikes, not planning and organizing events or building trails (remember Adam Smith?). Motivated groups and individuals will find a way for that stuff to get done, leaving bike shop owners more time to focus on sustaining their businesses.
Not all of these items will apply to all bike shops (particularly in one-shop towns) but at least it’s a start. And, the idea isn’t to change overnight, just to start moving in a new direction. I honestly hope to see bike local shops thrive – but you and I can’t subsidize their current business model forever.
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"trek7k" wrote
1. Offer more items in stock or more quickly than online retailers can. Yes, inventory is expensive but what if my LBS could at least get me a part the next day instead of next week? Nearly all bike shops in the US get their parts from QBP so why not lean on them to offer next day shipping to the store? I remember looking for a part at my LBS last year and they said, "Sure, we can order that for you – and it’ll come in next week." Riiiight – I can do that too – it’s called the internet.
As an Amazon Prime member, I can get stuff shipped 2-day for free, or overnight for $3.99, and over the last 18 months or so Amazon’s selection of what I buy most, computer parts and bike stuff, has increased exponentially.
One LBS chain here encourages online purchasing, and they revamped their service model to display a la cart pricing for installs. The manager told me that he’d rather employ techs than stock inventory, a fair percentage of which he ends up discounting or even selling for cost, not to mention the cost of the money to source and stock it. He said let Amazon run the big warehouse, it’s what they do best, and he’ll install and service stuff, which is what he does best.
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Oh, and what this shop does keep in stock is stuff that is best tried before buying: bikes, clothing, shoes, etc. And stuff that you might need in a hurry: tires, tubes, pedals, spokes, etc.
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I totally agree to support your LBS although Amazon undercuts everyone even on-line companies I was recently looking for a (cycling) tool box Amazon sold it for $75.00 and a bike website sold the exact same box for $99.00. Unfort. with the economy in the crapper (not to be turned into a political debate!!) people have to save where they can.
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You guys are making great points! I enjoyed reading your post, trek7k. Very insightful.
maddslacker, I think what your LBS is doing is wise. My local shop seems to have a similar attitude. They don’t stock a ton of merchandise, they mainly offer service. I heard my LBS owner say once that he loves it when people buy walmart bikes, because they’re going to need to be fixed up pretty quickly, and he’s the one they’re going to come to. Shops make way more money on service than they do on selling stuff.
Also, for me personally there are things that I will probably always buy in stores, such as shoes and boots. I want to know that the bike shoes I am buying fit my feet the way I want them to, so I’m willing to spend a little extra money to know I’m getting the perfect product.
Also, good points on the convenience aspects… I’m right there too…
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You can bet Specialized isn’t doing this out of the goodness of their hearts. They’re a business pure and simple. This the company that swooped in and monopolized the Horst link for years. They require shops that carry their brand to devote a large proportion of their floorspace to Speciailized products–the dealer must comply or forgo carrying the most popular brand. This goes for parts and supplies as well as bikes. They engage in a wide variety of business practices designed to squelch competition.
Now I’m not condemning their business practices–just pointing out that the only reason they’re showing concern is they know that if thier distributors suffer, they suffer.
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I don’t think anyone would be confused at Specialized motivations. In fact, I would consider them to be an incompetent company if they didn’t look out for their own best interests. My initial post was geared more toward shining the light on the uphill battle that the brick and mortars face as technology progresses.
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"schwim" wrote
I don’t think anyone would be confused at Specialized motivations. In fact, I would consider them to be an incompetent company if they didn’t look out for their own best interests. My initial post was geared more toward shining the light on the uphill battle that the brick and mortars face as technology progresses.
Your right schwim, it’s gonna be an up hill battle but I think trek7k hi lighted some great points on ways our LBS’s can stay competitive and current. I especially like the idea of not being combative with a price checker but asking them what their finding online then offering to meet them half-way on the price. Some profit is better than no profit and you catch more flies with honey 😀
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It’s common practice for them to lose money on stock for the ability to gain some labor(and a return customer). I don’t have a luddite’s outlook of the situation like the music industry; the World Wide Intardnet is here to stay with all it’s tubes and Myspaces. Business will have to adapt or go under.
If anything, it serves as a lesson to me; be on the side of the internet 😀
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The LBS I mentioned above actually dropped Specialized as a brand a couple of years ago, for the reasons you mention. They kept Trek and Cannondale and picked up Pivot and Tomac.
If Specialized is really serious about having that much control, they could just open their own stores like Giant is doing…
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"maddslacker" wrote
If Specialized is really serious about having that much control, they could just open their own stores like Giant is doing…
With all of the other irons they have in the fire, I could see them doing that.
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It seems to me that by Specialized not allowing their products to be sold online protects their dealers but also costs them a ton of business…quite admirable to me! That tells me a couple things. First, they care about their dealers and second they care about how their products are sold. They want their products to be sold with real service attached to it…added value. As a independent business owner, I make sure my products leave with added value, i.e. proper recommendations, friendly service, we carry the products out the door an load their cars, offer free delivery and additional services, etc.
I don’t agree with this:
"jamis29er" wroteBut, I think we can agree that the mark up on some products is rediculous. When you can order a bike tire (for example) online for one third or sometimes half the price of the LBS….nuff said I think.
I can assure you that any REPUTABLE shop, cycling related or not, isn’t using ridiculous mark-ups! It’s just that what’s online is discounted soooo deeply it looks that that way. You’d be surprised that a ton, not all, of what comes from Amazon gets shipped from someones garage with practically no overhead.
I do agree that businesses do have to adapt! Commerce is changing and businesses have to change with it. I also think that we have to look at how supporting a local shop benefits you and your community. I’d say my shop is usually 10-20% higher than online on average. To me, that’s worth paying! Why, well first, my shop has my paint on his walls, he supports me (I own paint stores) online shops don’t support my business. But besides that, local shops support growth in the community, they create jobs, they drive traffic, they pay local taxes and so does their employees, they often support local efforts and charitable organizations and their money earned goes back into the community from their support. Last year I put over $2000.00 to my local trail through my business, I don’t think the online shops are putting money into my trails. Now that’s not to say I don’t buy anything online. If I have credit card points to spend or a gift card or my shop can’t get it for me, I’ll shop online of course, but I make it a point to try to buy local MOST of the time.
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it’s survival of the fittest. a lot of industries are upsidedown from where they were 10 years ago, not just LBCs. some day you may be able to get stuff really cheap online but what are you gonna do when you go for a short ride friday afternoon and you need something saturday morning for long ride with all your buddies and the local guy can’t afford to keep any thing in stock. a lot of times amazon never touches the item, it is shipped directly from manufacturer’s warehouse. prices may seem high, but if you knew all the costs of running any small business you would not believe it.
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