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.
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.
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.
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?