Gray Market Bicycle Parts

[BroDeal]

Effectively they are. When there is a warranty issue with an item bought this way there is no obligation to honour the warranty through the local distribution network because it has been imported direct. Your warranty is with PBK/CRC/Ribble, and good luck sorting that out!

The guy mentioned in the OP is not a poor businessman , he is victim of somewhat excessively generous personal import allowances coupled with the ability to avoiding paying any sales tax.

As for the guy in this LBS, he has every right to charge a levy on parts bought from overseas. IMO he would be better served offering a discount to those buying from him.

But that is the way it has been for decades anyhow. If you come into the store and buy kit and want it installed, most shops will cut you a deal on fitting or on the whole package.

Problem is many people who buy online do their research at the LBS. But the one thing they often neglect to do is ask if the LBS is willing to do a deal. They just go home and click. That is one of the most galling things in bike retail. Seeing a guy rock up on a bike that is fitted with the stuff you spoke to him for ages about but he never even asked about a package price or installation at all. then to cap it all he wants his gears dialling on the spot!

The urge to tell him to Foxtrot Oscar is very very strong!

The problem with Travis--which is not the OP, it was just quoted by the OP--is that he has taken a confrontational attitude with his customers. Telling people that he will turn them into the government is a huge mistake. The customer cannot be blamed for buying at a low price from the web. His anger needs to be directed at the industry itself rather than his customers.

 

[richwagmn]

funny, i don't remember anything about that book except it being remarkably awful.

+100000000000.

 

[Reformed]

That too, but it is remarkably funny encountering anyone over the age of sixteen, maybe eighteen at most, who buys into it. It's like meeting an adult who tells you that Winnie the Pooh is his favorite movie.

Having my youngest over 18, I will am just wondering is this what you call a "troll" type remark? Forgive me please if it is not, but the remark seems completely adolescent, as if someone just completed their first year of Economics 101 in the 13th grade by a rather liberal professor, and is venturing into the deep end of the pool with their new water wings. Most I have met that don't understand the book have never owned a home(s) or business (es).

Lots of love,

Dan

 

[BroDeal]

Having my youngest over 18, I will am just wondering is this what you call a "troll" type remark? Forgive me please if it is not, but the remark seems completely adolescent, as if someone just completed their first year of Economics 101 in the 13th grade by a rather liberal professor, and is venturing into the deep end of the pool with their new water wings. Most I have met that don't understand the book have never owned a home(s) or business (es).

Yeah, most people are not too understanding of books filled with fantasies of economic ubermen who have no attachments to other human beings, think they are an island unto themselves, and throw fits of misanthropy when they are expected to uphold the responsibilities that come with being a member of society. It's fine if you are a teenager or someone whose mind never matures past that stage, but to other grown ups it is just sad.

 

[Boeing]

brodeal; i ask you, besides it being "unfair" and you not liking it, Ideologically, is this form of arbitrage (taking advantage of price differences in the market) any different than what a bank or brokerage firm does? One might argue that preventing gray market importation could create a barrier between markets and perhaps allow the trademark company to create monopolistic pricing.

 

[BroDeal]

brodeal; i ask you, besides it being "unfair" and you not liking it, Ideologically, is this form of arbitrage (taking advantage of price differences in the market) any different than what a bank or brokerage firm does? One might argue that preventing gray market importation could create a barrier between markets and perhaps allow the trademark company to create monopolistic pricing.

I did not say I did not like it. I have taken advantage of it a lot. I am just interested in the implications. I am sort of fascinated by the whole industry even though I only participate as a consumer. It seems so disfunctional. The behavior of the consumers is also interesting.

Usually when traders take advantage of arbitrage situations, others are free to also take advantage, so the price gaps will naturally close. In this situation the other players in the market are not free to take advantage. An American LBS cannot call Colnago and ask to buy gruppos at rock bottom prices from the excess that Colnago bought. U.S. LBSes are basically screwed.

 

[ultimobici]

I did not say I did not like it. I have taken advantage of it a lot. I am just interested in the implications. I am sort of fascinated by the whole industry even though I only participate as a consumer. It seems so disfunctional. The behavior of the consumers is also interesting.

Usually when traders take advantage of arbitrage situations, others are free to also take advantage, so the price gaps will naturally close. In this situation the other players in the market are not free to take advantage. An American LBS cannot call Colnago and ask to buy gruppos at rock bottom prices from the excess that Colnago bought. U.S. LBSes are basically screwed.

The implications are that, in the short term, many shops will not stock any Campagnolo at all. Then, as a consequence, the knowledge of how to fit, service & repair Campagnolo will die out in the US. I suspect that this is already quite advanced already. It's already happened to a degree in the UK due to heavy discounting on much of the high end Campagnolo, Shimano & SRAM. You only see it on the shelf in shops that are designated as bike manufacturers or sell sufficient volume to order direct. The likes of LBS, Evans & Cyclesurgery will either not stock it or have it forever until it goes on sale at a loss. The margin on Campagnolo is not the greatest if you're buying in small quantities so 10% off online makes it hard to compete. Ribble's 20% is impossible to come close to and break even.

Campagnolo will have to eventually insist on warranty going through the original shop. That way the attraction of PBK, Wiggle & Ribble will be weaker.

 

[biker77]

The implications are that, in the short term, many shops will not stock any Campagnolo at all. Then, as a consequence, the knowledge of how to fit, service & repair Campagnolo will die out in the US. I suspect that this is already quite advanced already. It's already happened to a degree in the UK due to heavy discounting on much of the high end Campagnolo, Shimano & SRAM. You only see it on the shelf in shops that are designated as bike manufacturers or sell sufficient volume to order direct. The likes of LBS, Evans & Cyclesurgery will either not stock it or have it forever until it goes on sale at a loss. The margin on Campagnolo is not the greatest if you're buying in small quantities so 10% off online makes it hard to compete. Ribble's 20% is impossible to come close to and break even.

Campagnolo will have to eventually insist on warranty going through the original shop. That way the attraction of PBK, Wiggle & Ribble will be weaker.

This is probably a nieve question - why not buy from Ribble and resell?

 

[Moose McKnuckles]

I think eventually bike shops will choose to create their own brands by sourcing inexpensive frames from China and thus obtaining access to the highly-discounted OEM market.

Campagnolo is just insanely priced in the States. $3100 or thereabouts for the SR11 with Ti crankset?

Di2 is cheaper than that from Europe. Savvy customers aren't going to go for that, no matter how much they want to support their LBS. It's an $1,100 upcharge from UK pricing. I'll pay extra for something from my LBS, but when the price difference hits above $300 or so, I start thinking twice. Once it hits 4 digits, it's really just a simple economic decision.

The current model is stacked against the bike shops. I don't blame them for the pricing at all.

 

[BroDeal]

Campagnolo will have to eventually insist on warranty going through the original shop. That way the attraction of PBK, Wiggle & Ribble will be weaker.

I don't think that would have much of an effect. The warranty is not used often. Consumers can just view the occasional bad part as a risk worth taking for the money saved. If the price gap were small then it would help, but for the U.S. the amount of money to be saved is too much. I don't know about the U.K.

 

[ultimobici]

This is probably a nieve question - why not buy from Ribble and resell?

As a shop in the UK one can buy from them through their wholesale arm Cyclesport North. But that leaves a nasty taste in the mouth as you run the risk of having to ditch it for virtually zero mark up, which is in real terms a loss.

As a US based shop you'd find several issues. Firstly you'd be liable for duty as a commercial venture, which would negate the advantage of buying from them in a single stroke. Then you'd still be paying what your customers pay, so you're still unable to compete.

 

[ultimobici]

I think eventually bike shops will choose to create their own brands by sourcing inexpensive frames from China and thus obtaining access to the highly-discounted OEM market.

Campagnolo is just insanely priced in the States. $3100 or thereabouts for the SR11 with Ti crankset?

Di2 is cheaper than that from Europe. Savvy customers aren't going to go for that, no matter how much they want to support their LBS. It's an $1,100 upcharge from UK pricing. I'll pay extra for something from my LBS, but when the price difference hits above $300 or so, I start thinking twice. Once it hits 4 digits, it's really just a simple economic decision.

The current model is stacked against the bike shops. I don't blame them for the pricing at all.

$3100 is about £2000, which is below the UK RRP by a fair chunk.

Relatively speaking it hasn't become that expensive at all. In 1997 Record was just out of reach on my salary. Having stayed in the business it hasn't gotten any harder to afford, if anything it's more affordable.

What has changes is due to the internet you in the US are able to find out and more importantly buy from the likes of Ribble, PBK & Totalcycling who shag the hell out of the price.

 

[BroDeal]

As a US based shop you'd find several issues. Firstly you'd be liable for duty as a commercial venture, which would negate the advantage of buying from them in a single stroke. Then you'd still be paying what your customers pay, so you're still unable to compete.

How much is duty? I have only been charged for it once and at the end of the affair when I mentioned that the parts were for a bicycle, the customs guy said, "Oh, I thought these were motorcycle parts." I am not sure I would have been charged anything if he had known they were bike parts from the beginning. I seem to recall that I was dinged for about 5%.

It seems to me that a U.S. LBS that builds a lot of bare frames using Campy SR could source from the UK. But perhaps if you are not charging a fee for building the bike when components are bought from the shop then the markup that you could get away with does not put you in any better position than charging people a couple of hundred for building with components that they bring in.

 

[JayKosta]

If the USA LBS buys/sells/installs grey market parts, what do they tell their customers - "oh BTW, those parts aren't covered by the mfg warranty"?

Or, the LBS takes the risk of doing their own 'self-funded' warranty program - which might be fine, or could turn into a beast.

Jay Kosta
Endwell NY USA

 

[The Gnome]

Funny. In my copy of Atlas shrugged, amongst the adolescent delusional views of economics and human behavior, I don't remember anything about suppliers obliterating their dealer networks by allowing their goods to be sold at below wholesale to a select few.

funny, in mine, there was nothing about overpriced delusional views about what "skilled" labour was worth either...

 

[avanti]

............... it's still cheaper to buy outside of the US market. ..............

Not always -- I know a LBS that has quite a few buyers from the UK who buy bikes and a few other components. They ride them around for a week or so and take them back to the UK (they also stock up on non-cycling clothing such as Levi Jeans - I given suitcases to visitors from the UK so they pack their buys).

 

[Boeing]

http://www.agmaglobal.org/

The Alliance for Gray Market and Counterfeit Abatement is a strategic initiative composed of leading high technology companies committed to addressing the global impact of the gray market and counterfeiting of goods on the technology industry.

 

[ultimobici]

funny, in mine, there was nothing about overpriced delusional views about what "skilled" labour was worth either...

What's with the "quotes"? You have every right to question the pricing structures shops apply. But to denigrate the skills possessed by many mechanics in many shops worldwide is disingenuous to say the least. It is a skilled job, not one that any home mechanic could do. I have trained, assessed & employed many mechanics over the last 18 years. In that time I have lost count of the number of enthusiasts who've tried out and have failed. Most last a day, two at most. Of the rest there has been the occasional one who's lasted the week. Hardly any manage to swim.

The reason? It's so, so much more than fixing bikes. It's planning & assessing jobs & workload. It's weeding out worthless jobs (both to the shop and the customer) and explaining the reason to the customer. There's advising customers on parts, pricing jobs so you ensure the customer's needs are attended to at a fair price to both parties. There's the knowledge that comes from experience that there is a cheap fix for a seemingly expensive crash or part failure, something a home wrench may not realise. There's the ability to work to the highest standard whether the bike in the stand is a C59 or a 50 year old Pashley that's seen better days.

We don't claim to be as skilled as a surgeon or rocket scientist, but we are skilled in our field. You may be a pretty good mechanic but I suspect that your skills are somewhat lacking when faced with something outside of what you ride.

 

[LugHugger]

Not always -- I know a LBS that has quite a few buyers from the UK who buy bikes and a few other components. They ride them around for a week or so and take them back to the UK (they also stock up on non-cycling clothing such as Levi Jeans - I given suitcases to visitors from the UK so they pack their buys).

Indeed. I've bought components from the USA and paid duty and tax and probably paid what I would have paid in the UK.

Except I did not have to wait 6-8 weeks for either the manufacturer to change their tooling for a new production run or the UK importer/distributor to decide that they had a large enough order to cover the shipping costs

 

[Reformed]

Having my youngest over 18, I will am just wondering is this what you call a "troll" type remark? Forgive me please if it is not, but the remark seems completely adolescent, as if someone just completed their first year of Economics 101 in the 13th grade by a rather liberal professor, and is venturing into the deep end of the pool with their new water wings. Most I have met that don't understand the book have never owned a home(s) or business (es).

Lots of love,

Dan

Upon a little reflection, I would like to apologize to BroDeal for the above post. I should have just let the comment go by and am sorry my remarks.

Have a wonderful night,

Dan

 

[Moose McKnuckles]

$3100 is about £2000, which is below the UK RRP by a fair chunk.

Relatively speaking it hasn't become that expensive at all. In 1997 Record was just out of reach on my salary. Having stayed in the business it hasn't gotten any harder to afford, if anything it's more affordable.

What has changes is due to the internet you in the US are able to find out and more importantly buy from the likes of Ribble, PBK & Totalcycling who shag the hell out of the price.

UK RRP is meaningless. Resale price maintenance is illegal in Europe under Article 81 and much easier to prove than in the States, where it falls under the "rule of reason" per the Leegin decision.

That said, you can get SR11 for 1336 pounds from the UK at Maestro.

Plus, if you are saying that 2000 pounds is BELOW UK RRP by a "fair chunk", I think that's crazy. No way UK RRP is MORE than the US. I'm guessing you mean $2,000, not 2000 pounds.

 

[ultimobici]

UK RRP is meaningless. Resale price maintenance is illegal in Europe under Article 81 and much easier to prove than in the States, where it falls under the "rule of reason" per the Leegin decision.

That said, you can get SR11 for 1336 pounds from the UK at Maestro.

Plus, if you are saying that 2000 pounds is BELOW UK RRP by a "fair chunk", I think that's crazy. No way UK RRP is MORE than the US. I'm guessing you mean $2,000, not 2000 pounds.

Nope. £2100 for SR11. Maestro has always sold at nutty prices, but then he's always been stuck in the middle of nowhere with rent that would make a regular shop owner cry. His £1336 is ex VAT. ALl prices in the UK are quoted including VAT as it is a uniform tax unlike your sales tax which I believe varies from state to state. His retail price is a shade under the wholesale price in the UK! But his business model has always been under the radar since the 80's when I remember buying an ALAN Competition from him in Doncaster. His current set up doesn't appear to be from the lock up shop in Nyetimber anymore so I suspect that he doesn't have that cost, nor that of business rates to contend with either.

$2000 wouldn't get me, as a shop, the full groupset.

 

[The Gnome]

What's with the "quotes"? You have every right to question the pricing structures shops apply. But to denigrate the skills possessed by many mechanics in many shops worldwide is disingenuous to say the least. It is a skilled job, not one that any home mechanic could do. I have trained, assessed & employed many mechanics over the last 18 years. In that time I have lost count of the number of enthusiasts who've tried out and have failed. Most last a day, two at most. Of the rest there has been the occasional one who's lasted the week. Hardly any manage to swim.

The reason? It's so, so much more than fixing bikes. It's planning & assessing jobs & workload. It's weeding out worthless jobs (both to the shop and the customer) and explaining the reason to the customer. There's advising customers on parts, pricing jobs so you ensure the customer's needs are attended to at a fair price to both parties. There's the knowledge that comes from experience that there is a cheap fix for a seemingly expensive crash or part failure, something a home wrench may not realise. There's the ability to work to the highest standard whether the bike in the stand is a C59 or a 50 year old Pashley that's seen better days.

We don't claim to be as skilled as a surgeon or rocket scientist, but we are skilled in our field. You may be a pretty good mechanic but I suspect that your skills are somewhat lacking when faced with something outside of what you ride.

Hey, take it easy...did not mean to offend...and yes, you are right...there is more to it like any job than fixing bikes at home... is it worth per hour what is being charged and guys go crazy and get their panties in a wad when you say it ain't worth lawyers fees is what I am responding to...is it a "skill"? sure it is...is it worth 100 to 200 dollars an hour? nope, I don't think so...30 bucks an hour seems fair to me given it's nature...but I am sure this will make some squeal...and yes, I know about overhead, rent, all that jazz...

 

[The Gnome]

The implications are that, in the short term, many shops will not stock any Campagnolo at all. Then, as a consequence, the knowledge of how to fit, service & repair Campagnolo will die out in the US. I suspect that this is already quite advanced already. It's already happened to a degree in the UK due to heavy discounting on much of the high end Campagnolo, Shimano & SRAM. You only see it on the shelf in shops that are designated as bike manufacturers or sell sufficient volume to order direct. The likes of LBS, Evans & Cyclesurgery will either not stock it or have it forever until it goes on sale at a loss. The margin on Campagnolo is not the greatest if you're buying in small quantities so 10% off online makes it hard to compete. Ribble's 20% is impossible to come close to and break even.

Campagnolo will have to eventually insist on warranty going through the original shop. That way the attraction of PBK, Wiggle & Ribble will be weaker.

You are right here Ulti...or at least from my experience...Shimano stuff is everywhere and even old stock...I am doing a Merckx MXLeader rebuild...it came with some worn campy parts...I ended up having to buy a xenon rear derailleur (grey market, no less, as no shops here could ever get anything like this for a 9 speed) and a token bb spindle sent from taiwan...searching for 9 speed campy products even grey market was ridiculous...someone wants 365 bucks for a record rear D. on ebay used...eventually, when something fails on the bike, I will just move it all over to shimano as I have no trouble finding anything here and tons of spare parts...wanted it abit original and took much more effort and money...

 

[Bustedknuckle]

You are right here Ulti...or at least from my experience...Shimano stuff is everywhere and even old stock...I am doing a Merckx MXLeader rebuild...it came with some worn campy parts...I ended up having to buy a xenon rear derailleur (grey market, no less, as no shops here could ever get anything like this for a 9 speed) and a token bb spindle sent from taiwan...searching for 9 speed campy products even grey market was ridiculous...someone wants 365 bucks for a record rear D. on ebay used...eventually, when something fails on the bike, I will just move it all over to shimano as I have no trouble finding anything here and tons of spare parts...wanted it abit original and took much more effort and money...

Thought you were a 'wrench'? Any Campagnolo 10s rear der works just fine with Campagnolo 9s (and 8s!!) shifters. Campagnolo still makes 9s cogsets, use any 9s chain. Use any front derailleur...blah, blah.