Joe-El, WordPress expert, said that I need to blog more. “Add more content,” he said, “Drive the hits toward your site.” Well, if I keep blogging about one of my favorite topics: “Running a Local Bike Shop,” I may give away secrets and tell the competition what Standard Bike Repair is up to.
Richard Brautigan is my favorite poet. There are 11 plants in this bike shop, including a poinsettia surrounded by friends in front of the French window that catches the morning sun.
Let’s talk about pricing strategy, distributors, part manufacturers, consumers and bike shops. Online shopping changed the game in bike business. Back in the olden days, a bicycle part manufacturer could sell a part or 50 to the distributors and their channels would put the parts in as many as 5,000 bike shops around the United States. Depending how large the part manufacturer is, and how useful/cool/cheap it was, dictated how wide the parts were scattered. The part manufacturer did not have to use their limited resources to sell a few parts to each bike store; they could sell large quantities to a few distributors.
Logistically, it makes sense for everybody to focus on what they do best: make parts or distribute. Somewhere along the way, the issues of pricing came about. I owe myself and this blog post more research on the history of bike part distribution. Nowadays, bike part companies make contracts and agreements with distributors to sell the parts at a certain rate. If the parts can be had at different price points, it creates confusion in the market and if the lower price points are well known to consumers, they will buy from the cheapest source provided there are no hidden costs in obtaining the part. This drives the whole market for that part down.
When people started trusting online purchases, the game grew to humongous proportions. Nowadays, I have seen the spot part selling for cheaper online somewhere than one of our distributors. While this instance may be rare, often-times, I am surprised at how slight the mark-up is online. Who knows who/where these places are, but apparently they have the parts, may or may not be charging local sales tax and will send you the part if you enter your credit card.
Thankfully, many if not most people still prefer to see the part, talk to the sales floor person/bicycle expert. We sold one thing online: a Special Edition, 55lb, Western Flyer cruiser bike. And when the customer saw it, he returned the heavy monstrosity. The miscommunication: he thought it was an antique in great shape. The ebay ad neglected to mention it was a “Special Edition”. That was the last time that Standard Bike Repair attempted to sell something to a customer in a different locale.
Business is about people and relationships. Heck, most of life is about people and relationships. We choose not to deal with nameless faces, IP addresses and anonymous returns. We like to meet people. It makes us happy. Nevertheless, running a bike shop in today’s world means that there are rules that weren’t here 25 years ago. Local bike shops in the modern world deal with online competition do their best to obtain parts at a price point that makes sense. We, local bike shops, carry parts that are useful, work and will be purchased without extended shelf time.
Part manufacturers and distributors do their best to keep sanity in the marketplace kind of like the governing bodies of the money markets.
