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Trek has just announced that they are going to begin online bike sales, as reported by Bicycle Retailer. This is big news, as they’re the first brand of the big three to take the plunge into online sales At first, I thought that Trek was finally getting with the times, but as I read Bicycle Retailer’s report, I changed my mind. Instead, I think Trek’s new online sales are doomed to fail.

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Overview of Online Bike Sales Program

Let’s take a brief look at the online sales model that Trek is rolling out. In brief, a customer will be able to log on to the Trek website and order a bike from them. When checking out, they will have to choose which retailer the bike will be shipped to–bikes will not be shipped directly to the customer’s door step.

Next, the bike shop will build the customer’s bike for them. As a result, the shop will receive a commission–about “80 percent of their normal margin on these new sales.”

Now, there are two things that can happen: if the local dealer ops in, the dealer will drive to the customer’s house to personally drop the bike off on their doorstep. However, if the dealer has opted out of delivery, the customer must come to the shop to pick up their bicycle.

Why this Program Is Doomed to Fail

If you ask me, this new online sales program is doomed to fail.

1. Less revenue for the bike shop.

For starters, this program is going to mean less revenue for bike shops. Shops will already be facing a 20% loss of revenue on these bike sales and then, on top of that, Trek wants them to volunteer to hand-deliver these bikes to customers? If shops opt in for delivery, not only will revenue decrease, but their overhead will increase, thereby cutting into their profits even more. I don’t see many shops opting in for the delivery option.

2. Less convenience for the customer.

If the shop doesn’t offer delivery, that means that the customer must come into the store to pick up the bicycle. Now, I’m all for patronizing local bike shops, but it seems to me that having to go to the shop to pick up the bike totally defeats the purpose of online purchasing. If the customer buys online from Trek, not only do they still have to go to the shop (which might be located close by, or could instead be a significant drive from their home), but they now have to wait for the bike to be shipped.

I’m a fan of buying at my local bike shop for two big reasons. Personally, the two benefits of buying at my LBS are immediate gratification (I can take the gear or bike home with me immediately) and the hands-on testing (I know if the gear or bike fits and will do what I want it to). Trek’s new program essentially removes both of those benefits, and then doesn’t give the customer any of the at-home shopping convenience or price savings that we’ve grown accustomed to from modern online retailers.

If I’m going to have to drive to the shop anyway, why would I want to purchase a bike online that I’ve never tried, don’t know will fit, and won’t save me any money? Instead, it makes way more sense for me to show up at the shop, try the bike out in person, and then walk away with it immediately instead of waiting for it to ship and to be built up. It seems to me that if I’m going to take the risks of not getting hands-on with the bike before I buy, I should get a dollar savings as a result of that gamble and a convenience savings of having the bike show up on my door step.

Unanswered Questions

While there are some serious issues with the program that are already obvious, there are still several unanswered questions about how the program would operate. First and foremost, what happens if the customer is dissatisfied with the bike? When ordering online, it’s entirely possible that the customer could order the wrong size. They could also even decide that they don’t like the color, or the bike model altogether, as they hadn’t seen or ridden it to begin with.

At this point, what happens next? Based on our analysis of current return policies that Trek and Bontrager offer via their online stores, we think it very likely that the customer can get their money back if they’re not satisfied with the product, but we have yet to see a detailed return policy covering complete bike purchases. But if the customer does return or exchange the bike, does the shop suck up the loss of money, or does Trek?

Even in the best case scenario that the responsibility goes back to Trek and that Trek will either refund the customer their money in full or exchange it for a different size bike, that entire process will still be incredibly inconvenient. If, say, the bike is the wrong size, the customer will have to bring the bike back to the shop, have the shop re-box the bike and ship it back to Trek, have Trek ship back the correct size bike (hopefully it’s right this time), have the shop build the second bike, and the customer must come in for the third time, to pick up their new bike.

In this scenario, everyone loses. Trek loses value on their partially-used, returned mountain bike. Trek loses money on shipping multiple bikes back and forth. The shop loses money on additional labor for no extra revenue. And the customer loses the most precious commodity of all: time.

Conclusion

In no way am I against either online sales or buying from your local bike shop: I support both ways of buying when the situation makes sense. But if the scenario doesn’t make sense, then I just walk away.

I’ll leave you with a parting anecdote as an example. I was in a local outdoor store recently shopping for a pair of Hoka trail running shoes. Unfortunately, the store didn’t have any shoes in my size. I asked the sales associate if they could order some shoes in my size, as I had never tried Hokas before and wanted to try them on before I purchased them. He said yes, they would order the shoes, but that I had to commit to buying them.

Well, since I had never tried Hokas before, I was unsure whether I would need my normal size running shoes, or if I would have to size up or down a half size (I’ve heard that Hokas run large, and you often size down). I asked, “can I commit to buying the shoes if they do indeed fit me?” And he responded that I had to commit to buying the shoes regardless, as not many men wear my size and they wouldn’t be likely to sell them

I stood up, thanked the man for his (lack of) help, and left. If I was going to accept that level of purchasing risk, I’d rather log on to Amazon.com, purchase the shoes there, save $30 on the retail price, and have them shipped to my doorstep in less than 2 days for free (which would save me gas money driving back to the shop at least once more). As a result of my exchange with the sales associate, instead of the shop taking a chance that they could make some money on me, they instead ensured that they would make no money on this specific purchase, and most likely no money at all from me in the future.

The moral of the story? If your sales strategy doesn’t make sense in the current market, consumers won’t buy from you. I don’t think Trek’s new online bike sales strategy makes any sense at all, and as a result it’s doomed to fail.

Your Turn: Would you buy a bike online from Trek? Why or why not?

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# Comments

  • Michael Paul

    Greg, I agree with everything you said. Plus, patronizing a LBS (repeatedly) often gets you a discount. It does not sound like Trek would be willing to give you the same kind of deal. When spending loads of money on a bike, there is no better feeling than physically touching, and oogling, every little part in person.

    Another problem with online sales is that it has the potential to cheapen the brand. I think Niner is a great example of this. Once they had a cult following, and as they grew, they started selling their bikes via 3rd party sites like Jenson USA at discounts at or near cost. This not only hurt bike shops, it tarnished their base. They lost part of their cool factor. If you can only get a bike from the shop, and they are harder to get (and more expensive), then people tend to want them more. The same thing will happen to Yeti if they start letting online retailers sell at discounted prices (especially after this year’s rear triangle debacle, aka ReTriGate 🙂 Trek is really in a market against the big S and Giant. All three companies make great bikes, and all three have different strategies. I personally think Trek should lean more toward the customization idea (and get away from the lackluster graphics people have complained about for years) and strike a pricepoint b/w the more expensive Specialized and the (generally) cheaper priced Giant. Either that, or start handing out Emily Batty swimsuit calendars to Trek purchasers…anything but this online purchasing idea. Cuz it’s terrible.

  • k2rider

    Well, I didn’t like the idea at all either until MP said we’re getting an Emily Batty swimsuit calendar so I have changed my mind. It’s an excellent idea that should be hugely successful.

  • Eric Riggs

    I agree with you on all points.

    Mail order is a necessary evil in the world of LBS’s stocking less and less on the floor, and what they do have on the floor is likely old or didn’t sell. I am going through the same issue now trying to find an iXS helmet to try on locally. Dealer will bring one in based on what size I need, but I have to commit to buying it. Unfortunately they have lost my business because I am not willing to commit to buying something that may or may not fit.

    • Marc Allen

      Yet you expect the shop to commit to buying a helmet that might not fit you? In some cases the suppliers won’t accept returns, while others charge a restocking fee. And even if the supplier does accept returns with no charge then the shop is still worse off for sending it back because they don’t get a refund on the initial freight, or when they send it back. Or if they decide to keep it, they might sell it and make money, sure, but they might have it sit there for months and end up selling it for less than they paid. If one of your friends asked you to go to the shop to buy something but weren’t sure if it would fit and said that they would only pay you if it fit then you wouldn’t be that keen to go along with it.

  • Jared Fuchs

    Funny stuff, I work at a store selling Trek’s arch nemesis and Santa Cruz, etc.. and I find the story about your Hoka shoes funny Greg. Any shoe store person knows you can send back a shoe, who cares if you need 2 sizes they should order them both to try on. They can always discount the other if it doesn’t fit you and not loose money or your business which should be more important to them. The Trek idea will be interesting to watch unfold.

  • Marc Allen

    Greg, i think you are missing the whole point of trek doing this. They are simply trying to cater to those people who insist on buying stuff online, or who have trouble finding the time during the day to get to a bike shop. They are trying to cater for the 1%. Anyone who is sensible will still go into their LBS as they will get a better deal.

    As for whether it fails or succeeds, i think it’s hard to say that it will fail. It might simply not succeed, but it can’t really fail as its such a simple setup that even if it doesn’t do well trek won’t have really lost anything. It’s a minimal outlay, as the majority of the system is already in place. All they really need is the website.

    • Jeff Barber

      Marc, you would think this would require a minimal outlay but the article linked said this:

      (Trek president John Burke) said the plan had been in development for about two years, and called it the “largest investment Trek has ever made.”

      As far as the helmet example goes, I can understand the retailer’s perspective but at the end of the day, the customer doesn’t care. The customer expects to have free returns/exchanges like they do online. Not sure how the online guys deal with this–maybe they have special arrangements w/ the distributors or maybe they can just make this work because of the volumes they sell. Customers expectations have shifted and they’re not going to go back to the old way.

  • beerfriday

    What about the customer that decides they really want a Liquid or whatever Trek bike… then goes to the LBS to find they are not a Trek dealer and then that dealer sells them on Bike G or Bike S ? Trek’s lost the sale. Or what if the shop kid really thinks Bike N is cool and sells that to customer instead? Trek’s lost the sale.

    By allowing themselves the ability to fulfill the customer’s impulsiveness, they retain the customer.

  • barrygxnz

    Referring to your running shoe store experience, any decent store should be only too happy to bring in a shoe in a different size, if they stock and sell the model you are looking at. I don’t understand a retailer who, by the sound of it, has no concept of looking after the customer. If you don’t buy the shoe they bring in, for whatever reason, all they would do is return it to stock and sell it to the next bloke looking for that shoe in that size.
    It sounds to me as if Trek is starting to try to cut out their dealers to some extent, especially if they are just selling a standard bike that the dealer would carry, and not their line of (semi) custom painted bikes, which I think may only be road and tri bikes. I wonder how many dealers are going to balk at this and will opt out of Trek all together?
    Cheers
    Barry

  • DudeDowne

    Love the dialog that has ensued! Tesla and Apple have interesting retail strategies and have managed to maintain prestige and high margins on their brands while offering both online and brick and mortar presences. To me the difference with Trek is that they ultimately sell bike frames adorned with other manufacturer’s stuff. Not nearly as sexy or mysterious as a Tesla.

    In my estmation, once someone buys their second bike, they begin to be less reliant on shops for service vs. an iPhone or Tesla where virtually nothing is user serviceable.

    So what’s my point?
    In order for the LBS to survive they need to be a social hub for riders. Especially catering to newbies with families. Focus on Trail Stewardship and sell quality beer and post ride snacks.

    I would go to my LBS everyday day if there were some dirt jumps, a pump track, and a skills area. Even if they only sold Trek. 🙂

  • RobertD

    Now the shops are competing against one of their vendors. Game changer. When the running shoe companies did this the show-rooming got a lot worse. I know this first hand. We special order shoes for our customers but if it is a new customer they have to pay in advance. Here is why. If they don’t pay up front, they can leave, go online and leave the store hanging. It is too easy to do these days. People will scroll on their phones looking for the best deals while I am trying to fit them and watch them run to get them in the proper shoe. If I am in doubt about them and a good customer is there, then I move on to the person I know is buying from us. If you don’t sell your product, then you are gone. I don’t get paid to just show stuff and not sell it. My .02 It sometimes gets so bad that I don’t even bring the box out so the customer can look at the style and size on the box. It works both ways. I hate it for the bike shops and it is a bunch of BS. It will eventually hurt the vendor because it will put shops out of business.

    • beerfriday

      I’m confused…I thought Trek was giving the retail margin to their dealers, and driving the customers to interact with the dealer? How are they competing against their vendor?

    • RobertD

      It is only the first stepping stone to sending it direct to the customer.

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