Saturday, June 16, 2012

A new model for bike shops?

It's hardly a surprise to anyone in cycling to see that bike shops are closing, and that links are being drawn between the price difference between shopping online vs in store.  However unlike the Borders & Dymocks vs Amazon and Book Depository, the argument is about more than price.

Where most people who used to shop and Borders and now shop at Amazon had no relationship with the people in their Borders shop, the bike shop situation is different. Those who use the acronym LBS do so with passion, LBS stands for Local Bike Shop but means the relationship you have with the people who give you advice, and the loyalty you give them in return.  Cycling forums are full of warnings about buying online and going into a bike shop to ask for help with something that didn't quite go to plan.  This seems pretty obvious, so why is there a problem?

Firstly, this isn't as much a problem in the difference between retail and online, the problem is elsewhere.  Want evidence?  Compare the Cell Bikes, once of Australia's leading online stores, price for a Shimano Ultegra cassette $165 with the equivalent offering from Wiggle of $75.  Sure, Wiggle is much bigger than Cell so has the economies of scale, but that doesn't explain a price that is twice as expensive.  The answer to this is the distributors; I've been told by numerous people that Australian companies (shops and online sales alike) pay more to the wholesaler than the likes of Wiggle sell for.  In order words, Cell Bikes are probably paying $100 to start with for the above cassette - no wonder they can't compete.

Taking the above into consideration, is it any wonder that cycling enthusiasts abandon the LBS and purchase online, buying the tools they need to do their own maintenance at the same time?  So what does the future of the Australian bike shop look like?  Something needs to change, and I think it's the business model.

My suggestion is that bike shops augment their current revenue stream with a paid for subscription service.  As a subscriber, I would be entitled to chew the fat with the bike shop mechanic, ask for his/her opinion on something I was looking at online, and even bring my part into the shop to ask for advice.  If I wanted them to work on my bike, I'd still pay for the labour, as I do now - but without the stigma of asking them to work on something I didn't buy from them.  I'd picture a subscription range from $10, $25, and $50 per month, with a minimum commitment of 12 to 24 months.  The difference in value would be represented by whether this enabled you to talk to the person on the shop floor, or all the way back to the mechanic in the shop, and of course how much you spoke to them.  If I chose to, I could buy from one of the many online shops, or even from eBay, and have the part (or bike) delivered directly to my LBS.

Distributors of course would be horrified at the above, and so they should.  However as a consumer, I am already horrified at the way the market operates.

2 comments:

  1. Apparently I'm not the first person to think of this (who would have thought?): http://www.timmarsh.net/how-to-fix-bricks-and-mortar-retail/

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  2. Hey Dmitri, thanks for the linkback. I'm certainly not the first to think of it either.

    I just felt like writing about a solution and seeing if any bike shops would jump on it.

    The fulfilment side is very easy.

    I can even see a case where shops flat out refuse to provide assistance unless the person pays, or joins up to the "Shop club" or a mailing list for the shop.

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