Gray Market Bicycle Parts

[barn yard]

chain reaction/pbk etc are not 'gray market' - they are authorized dealers

this guy is just unhappy that someone has better buying power than him and can undercut his prices

there are plenty of brick and mortar bike shops making a lot of money selling high end gear at retail prices

what we have here is someone who has not worked out how to do this so he is just blaming someone else for his own shortcomings as a business owner

 

[DirtyWorks]

Why should I pay twice the price for everything at the LBS?

Because it costs something to keep the doors open and the lights on! Groceries aren't free either. How will bikes remain relevant if there's no place to buy one? Or, the only three places selling them are 50 miles in away?

 

[DirtyWorks]

there are plenty of brick and mortar bike shops making a lot of money selling high end gear at retail prices

while I agree the guy hasn't changed his offerings to reflect new/different market demands, I want to see this mythical place successfully selling high end gear at full retail.

If you mean a shop that lives off of < USD$500 bikes and the occasional high-end break even then I might believe you. High end consumers are the first ones to blame a shop for being "expensive."

 

[Polyarmour]

Because it costs something to keep the doors open and the lights on!

Meanwhile the two major brands are hammering the independents out of business. This leads to less stuff, that costs more and no innovation. Which works out great for Trek and Specialized.

I don't see any evidence of innovation disappearing. In fact I see the opposite. I see more and more stuff and more innovation. Cycling is an expensive sport and I want the costs kept down so I can continue to enjoy it. I don't want to be paying for someone's real estate if I don't have to. I sympathise with the LBS's predicament but trying to get 'government protection' is not the way to go about this. The "innovation" required is in the LBS. They have to find a new way of doing business.

 

[barn yard]

while I agree the guy hasn't changed his offerings to reflect new/different market demands, I want to see this mythical place successfully selling high end gear at full retail.

If you mean a shop that lives off of < USD$500 bikes and the occasional high-end break even then I might believe you. High end consumers are the first ones to blame a shop for being "expensive."

the 1st one that comes to mind in the land of the free is 'pista palace' - piles of lightweights everywhere... and yes i have seen many other similar stores that i cannot recall the names of off the top of my head

there are two shops local to me that are absolutely booming at the moment only selling high end bikes and parts, one has just expanded and opened a third store in the main 'trendy' street in my city at great expense

there is a market for this stuff, it just takes work and research (and a financial gamble) to corner that market

the person who wrote the rant in the OP seems to just expect it will all come to him, and that everyone who doesnt just throw money at him is a piece of garbage

 

[BroDeal]

The "innovation" required is in the LBS. They have to find a new way of doing business.

How do you suggest they are going to do that when they cannot profitably sell goods at prices anywhere close to what a few UK dealers sell at? The LBS model in the U.S. seems hopelessly broken.

 

[Martin318is]

while I agree the guy hasn't changed his offerings to reflect new/different market demands, I want to see this mythical place successfully selling high end gear at full retail.

If you mean a shop that lives off of < USD$500 bikes and the occasional high-end break even then I might believe you. High end consumers are the first ones to blame a shop for being "expensive."

I know of several shops that do very well in australia selling within say 10% of full rec retail and making reasonable margin. Even with people buying direct from the UK etc (who generally ship free to aus if purchase is over $100)

The difference between those few shops and the 'average' shop though is the amount of customer service that comes with it. The shop owners I know do things like running demo MTB afternoons, Road riding days etc where the top shelf stuff is offered for use to anyone who turns up on the day. They ride with people and teach them skills etc and really let them understand the characteristics of the bike. One of them sometimes provides sandwiches and runs for coffee etc while waiting for mechanical service in the shop. They remember every single customer they see and treat them all like pro riders. You walk out almost feeling like the 10% discount you get means you are a sponsored rider.

Walk into a chain store and get ignored for ages before eventually being attended by a uniformed moron who only knows about BMX and you will soon see the positives of online shopping.

Contrary to a lot of people's complaints on this topic, not all LBS owners are good. Some that I have met seem to be uninterested in serving anyone they don't already know and treat you like an idiot if you ask for something they disagree with. (For example, try buying an 11-23 cassette in inner-East London, "Too hilly for that mate - I fitted a 12-25 instead") One of my personal rules in customer service is, your mates come second and should know that already. A new customer must always be given priority and coming second is the price of mates rates.

Personally if its a brand a good shop doesn't sell and I can get it online for the same (or sometimes MORE than the) price a bad LBS stocks it at, I have zero guilt about buying online. I do 99% of my own wrench work anyway.

 

[richwagmn]

I think the shop owner is making a mistake turning his customers away. Aren't labor costs for repair one of the things that helps keep shops open? Oh that and small parts if my experience is any guide.

While most/many of us wrench on our own bikes, I know many cyclists who don't own so much as a hex key set. It'd seem you want to keep those guys coming back. And if he wants to charge them more to install their gray market parts well, how would they know what the labor cost is to install say a set of brifters and cables?

It does seem that some mfgs manage to keep pricing pretty even between different retailers. Speedplay comes to mind. I don't think I've seen a blow out price on a set of zeros anywhere.

For instance, here's speedplay zero stainless from one of the largest bike shops in the twin cities:

http://penncycle.com/product/speedplay-zero-stainless-17726.htm

Here's performance:

http://www.performancebike.com/bikes/Product_10052_10551_1068178_-1___

Cheapest I could find from the UK:

http://www.jejamescycles.co.uk/cntry-us/speedplay-zero-stainless-item158900.html

So maybe as others have suggested Campag could do a better job of protecting their retailers.

 

[bc_hills]

I am a career mechanic and have worked in the industry for nearly 20 years. It is unbelievably frustrating that customers can buy stuff like wheels and componants cheaper than I can. A friend recently bought a new Ultegra group for 50 dollars less than I can. I can't support Travis' approach, but I identify with his frustration. Trying to find a way to make a bike business work around that is difficult to say the least.

This.

Don't kid yourselves; no bike shops no biking. Sure, the people on this forum would fair okay and stay current or retro, or whatever, but for the majority the LBS is crucial. Okay, maybe wal-mart would fill the gap with crappy bikes, but is that what we want to see? Mail order or wal-mart quality?

Maybe duder is wrong to threaten to call the feds on those who bring in "grey" market goods. But you're wrong when you chose to ignore your LBS (assuming it's a decent shop run by good people, etc.) for the sake of saving a few points. $50 on a $1200 group? Ya shoulda supported your local guy, especially if you're not going to install it yourself. Who's gonna look after young riders? You? Hell no, you'll be too busy patting yourself on the back and making smug faces at the %5 you saved on a purchase. Who's gonna organize trail building daze and buy beers and burgers for the volunteers? You? Ya right! Giving back doesn't pay the way scavenging the net for deals does.

 

[Polyarmour]

How do you suggest they are going to do that when they cannot profitably sell goods at prices anywhere close to what a few UK dealers sell at? The LBS model in the U.S. seems hopelessly broken.

Despite the online sales you still see a few LBS's going well. I know of several stores that have got involved with race event and team promotions, training and coaching for example. Others are focussed on products where customers are less inclined to buy over the internet, kids bikes, fashion bikes etc. I would think too that the big chain stores still have a lot of sway with the OEM's and there are a number of options they can pursue there. After the UK online experience things can't remain the same, the LBS has to offer something different.

 

[DirtyWorks]

the 1st one that comes to mind in the land of the free is 'pista palace' - piles of lightweights everywhere... and yes i have seen many other similar stores that i cannot recall the names of off the top of my head

That's a cannondale shop. Cannondale is pursuing the same vertical plan as Trek and Specialized.
[/QUOTE]

there is a market for this stuff, it just takes work and research (and a financial gamble) to corner that market

A middle class funded by the military industrial complex and lots of tech and big ed too. That's a pretty rare combination that keeps Pista Palace going. You've got parts of Oregon and Washington State similarly configured. Northern California has tons of tech to fund expensive bike hobbies. What you don't see is shops opening though.

 

[DirtyWorks]

Despite the online sales you still see a few LBS's going well. I know of several stores that have got involved with race event and team promotions, training and coaching for example.

They have to do all that stuff because the business model in the industry is awful. The dealers are doing what it takes to stay in the business. But the shop owner knows the guys showing up at the race are all buying mail order because his shop is viewed as "expensive."

Kids bikes are not a viable business for an independent. But, it's important to stock a few. It helps preserve the sense the shop caters to all. And again, a bike sale is a break-even endeavour for a shop.

The business model for the major bike brands is much better for going vertical. No one is getting rich in a shop. No one. But, being beholden to one brand provides enough margin to keep the doors open. Take that away, or do your best to stay fully independent and it's pretty easy to become like the guy complaining about gray market stuff.

Some of you guys just don't get it though. Shop closes and bike stuff not only becomes irrelevant, but more expensive with fewer choices. Have you ever tried using Bontrager accessories more than once?

 

[ultimobici]

Not what's happening. UK mailorder places are going direct to manufacturers, with CASH, and getting what they want at prices they want. Manufacturer makes $, reseller in UK does too. Manufacturer needs to decide whether or not to support these places(BIG $ BTW) or the US distributors. The UK places arebn't going away any time soon.

Add to that unrestricted OEM resale. Bike manufacturer A buys 15,000 ultegra groups at screaming low OE prices..the manufacturer then resells 1000 of them, at a profit, to the UK MO outfit, who pays cash.

Money talks these days of economic uncertainty. I am sure Campagnolo is happy to get a little less margin but sell many more groups/components.

Same for Continental, Vittoria, Verstein, Michelin, etc......

Not quite.

I know for a fact that Wiggle buy the same way the guy down the high street does. Ribble however are a different matter. They are also a wholesaler under the name Cyclesport North. They screw the price for LBSs everywhere. At present they have 20% off retail in the UK which makes it impossible to compete. Many of the customers they compete with as Ribble are CSN customers. Their nickname in the trade here is Cyclescum North.

 

[DirtyWorks]

Aren't labor costs for repair one of the things that helps keep shops open? Oh that and small parts if my experience is any guide.

Except 'factory service' is the latest profit center for bike brands. Between that and some equipment having no spare parts, what's left for a shop?

...how would they know what the labor cost is to install say a set of brifters and cables?

Oh, they know... To the penny and rarely appreciate it.

Some brands have tight control over pricing. Part of being a dealer for some brands is agreeing to manufacturer's approved pricing. Electronics industry uses it everywhere. I hate to break it to you, but speedplay is a very small business. It's pretty easy for them to manage their pricing and it works okay for a bike shop. Except for all that Shimano stuff everywhere...

I hate that the guy isn't making it, but it's kind of obvious he's not got a decent business model. I'm going to bow out of this discussion. I'm too biased for independents.

 

[Bustedknuckle]

Not quite.

I know for a fact that Wiggle buy the same way the guy down the high street does. Ribble however are a different matter. They are also a wholesaler under the name Cyclesport North. They screw the price for LBSs everywhere. At present they have 20% off retail in the UK which makes it impossible to compete. Many of the customers they compete with as Ribble are CSN customers. Their nickname in the trade here is Cyclescum North.

For a fact, ehh?

OK, 'maybe' one of the what 1/2 dozen in the UK that push stuff out the door at wholesale prices?

'The same as the guy down the street'? That's funny.

 

[Bustedknuckle]

I have to wonder if Campagnolo is seeing any incremental increase in sales. It appears the strategy is only cannibalizing off the US based market.

I know a lot of people who ride Campy and they all get their stuff from the UK. I can't image that is good for North America's business. If TK had hair he would be pulling it out

Tom and Campagnolo NA is an office of Campagnolo Italy. He has no power to do anything w/o Valentino's OK. Valentino is a very hands-on manager/owner.

 

[Bustedknuckle]

chain reaction/pbk etc are not 'gray market' - they are authorized dealers

this guy is just unhappy that someone has better buying power than him and can undercut his prices

there are plenty of brick and mortar bike shops making a lot of money selling high end gear at retail prices

what we have here is someone who has not worked out how to do this so he is just blaming someone else for his own shortcomings as a business owner

Buy something Campagnolo from Chainreaction or PBK(other the other 3 or 4), get it and have a Campagnolo ProShop check the little barcode number with Campagnolo NA and see if it has a warranty.

I'm sure the LBS guy could get a big loan, go to Vicenza and buy a bunch of stuff and ship it back. What the 'authorized dealers' in the UK do.

Pretty black and white when it comes to pricing. It is not any bike shop's 'shortcoming' when you look up a wholesale price with any US distributor and the same bit with these UK MO places.

SR Ti, 8 piece group-wholesale about $2000

$2009.77 from just one UK place.

 

[ultimobici]

For a fact, ehh?

OK, 'maybe' one of the what 1/2 dozen in the UK that push stuff out the door at wholesale prices?

'The same as the guy down the street'? That's funny.

Wiggle do buy some stuff direct, but from what I hear here in the uk they buy Campagnolo via the regular channels. That would explain the lack of heavy discounts across the board on Campagnolo.

Ribble are way different.

 

[elapid]

I am not a business owner and have no training or skills in business management, but from reading the OP's post it seems as though one big difference in the two business models is the middle man. Why don't bike shops get together and eliminate the middle man out of the equation? That would be one less markup they need to pass on to the consumer and one less markup that would eat into their bottomline. I know I'm probably missing something here, but ...

 

[ultimobici]

I am not a business owner and have no training or skills in business management, but from reading the OP's post it seems as though one big difference in the two business models is the middle man. Why don't bike shops get together and eliminate the middle man out of the equation? That would be one less markup they need to pass on to the consumer and one less markup that would eat into their bottomline. I know I'm probably missing something here, but ...

But then they would have the headache of warranty claims, customs, warehousing etc. that's what a distributor does to earn their crust.

To get the benefit they would have to buy in a lot of stock and it ain't on invoice terms of 30 or perhaps 60 days. It's paid for, up front and in full before it leaves the factory.

 

[Master50]

My first thought about North american distributors is they are fine for supplying the first line of their product but are really poor at parts and after purchase support. Ever try to buy a single cog for your $600 Super record cassette? If you are really lucky the distributor has the cog as they are available in OEM packaging but if your cog isn't in stock you are screwed because no matter what your LBS says the distributor won't have it drop shipped from italy. Often pushing us to buy the whole cassette.
Then there is price fixing. Ever see a pair of Oakley on sale? Maybe a discontinued line or a clear out of all stock because the dealer is dropping the line. The distributors are also charging downline at retail markups. Your SR cassette is closer to $450 before taxes in England than $600 in Canada. Now the US is supposed to be the birthplace and protector of capitalism but they have lots of protectionism so how does that fit?
I live in a really blessed place for bike shops where there is nearly 1 shop for every 12,000 people. We should have incredible selection but if you are looking for a new jersey you stop shopping after only 4 or 5 shops because they are all carrying the same lines. Want a pair of Assos Shorts? Vancouver has a couple of shops but Victoria can only order one in.
Outside of Europe we are stuck with distributors who dilute our choices and add a tier of cost without significantly improving aftermarket service or parts support. Ever try to get a warrantee on a broken part outside of the order season? I have waited over 6 months to get a pair of shorts replaced. The distributor was as supportive as he could and in the end he sent 2 pair of replacements. I am currently trying to get a Rotor stem part. The Canadian distributor won't even answer the email. The US distributor is helping but he has no stock and Spain isn't answering his letters. So much for warrantee within the system. My bad for not buying an easton stem?
I appreciate that LBS' frustration but I also intend to stretch every dollar I have to maximize my purchase. Last I looked when you get a package from Europe it has a customs declaration on the box. In Canada it is not uncommen to pay duty and taxes upon delivery so nothing I ever bought from the US or Europe has avoided tax or duty either. I do support my local shops as much as I can and have paid them more than i needed to for that support. Yes a good relationship with your shop is important but if he doesn't have it or cannot get it at a reasonable price i will go elsewhere.

 

[ultimobici]

My first thought about North american distributors is they are fine for supplying the first line of their product but are really poor at parts and after purchase support. Ever try to buy a single cog for your $600 Super record cassette? If you are really lucky the distributor has the cog as they are available in OEM packaging but if your cog isn't in stock you are screwed because no matter what your LBS says the distributor won't have it drop shipped from italy. Often pushing us to buy the whole cassette.
Then there is price fixing. Ever see a pair of Oakley on sale? Maybe a discontinued line or a clear out of all stock because the dealer is dropping the line. The distributors are also charging downline at retail markups. Your SR cassette is closer to $450 before taxes in England than $600 in Canada. Now the US is supposed to be the birthplace and protector of capitalism but they have lots of protectionism so how does that fit?
I live in a really blessed place for bike shops where there is nearly 1 shop for every 12,000 people. We should have incredible selection but if you are looking for a new jersey you stop shopping after only 4 or 5 shops because they are all carrying the same lines. Want a pair of Assos Shorts? Vancouver has a couple of shops but Victoria can only order one in.
Outside of Europe we are stuck with distributors who dilute our choices and add a tier of cost without significantly improving aftermarket service or parts support. Ever try to get a warrantee on a broken part outside of the order season? I have waited over 6 months to get a pair of shorts replaced. The distributor was as supportive as he could and in the end he sent 2 pair of replacements. I am currently trying to get a Rotor stem part. The Canadian distributor won't even answer the email. The US distributor is helping but he has no stock and Spain isn't answering his letters. So much for warrantee within the system. My bad for not buying an easton stem?
I appreciate that LBS' frustration but I also intend to stretch every dollar I have to maximize my purchase. Last I looked when you get a package from Europe it has a customs declaration on the box. In Canada it is not uncommen to pay duty and taxes upon delivery so nothing I ever bought from the US or Europe has avoided tax or duty either. I do support my local shops as much as I can and have paid them more than i needed to for that support. Yes a good relationship with your shop is important but if he doesn't have it or cannot get it at a reasonable price i will go elsewhere.

I work for a company that buys direct from Vicenza. I wanted the largest triplet of a SR cassette so asked my boss to price it up. Cost was about half that of a full cassette at manufacturer cost!

It is exactly the same with Shimano too. Dura Ace rear hub costs £229.99, the free hub alone costs £149.99!

 

[Bustedknuckle]

My first thought about North american distributors is they are fine for supplying the first line of their product but are really poor at parts and after purchase support. Ever try to buy a single cog for your $600 Super record cassette? If you are really lucky the distributor has the cog as they are available in OEM packaging but if your cog isn't in stock you are screwed because no matter what your LBS says the distributor won't have it drop shipped from italy. Often pushing us to buy the whole cassette.
Then there is price fixing. Ever see a pair of Oakley on sale? Maybe a discontinued line or a clear out of all stock because the dealer is dropping the line. The distributors are also charging downline at retail markups. Your SR cassette is closer to $450 before taxes in England than $600 in Canada. Now the US is supposed to be the birthplace and protector of capitalism but they have lots of protectionism so how does that fit?
I live in a really blessed place for bike shops where there is nearly 1 shop for every 12,000 people. We should have incredible selection but if you are looking for a new jersey you stop shopping after only 4 or 5 shops because they are all carrying the same lines. Want a pair of Assos Shorts? Vancouver has a couple of shops but Victoria can only order one in.
Outside of Europe we are stuck with distributors who dilute our choices and add a tier of cost without significantly improving aftermarket service or parts support. Ever try to get a warrantee on a broken part outside of the order season? I have waited over 6 months to get a pair of shorts replaced. The distributor was as supportive as he could and in the end he sent 2 pair of replacements. I am currently trying to get a Rotor stem part. The Canadian distributor won't even answer the email. The US distributor is helping but he has no stock and Spain isn't answering his letters. So much for warrantee within the system. My bad for not buying an easton stem?
I appreciate that LBS' frustration but I also intend to stretch every dollar I have to maximize my purchase. Last I looked when you get a package from Europe it has a customs declaration on the box. In Canada it is not uncommen to pay duty and taxes upon delivery so nothing I ever bought from the US or Europe has avoided tax or duty either. I do support my local shops as much as I can and have paid them more than i needed to for that support. Yes a good relationship with your shop is important but if he doesn't have it or cannot get it at a reasonable price i will go elsewhere.

I take exception to your last sentence. 'Reasonable'? What's reasonable?

You use UK MO, garage operations, heretodaygonetomorrow internet places as the basis of what is 'reasonable'. Their prices aren't based on anything 'reasonable', and as long as volume is up, they will survive. Low volume? Adios. Go to some of these UK places and walk into the showroom...can't? Cuz they don't have one, they are computer screens and a warehouse.

LBS' ask for a level playing field, that's all.

 

[Master50]

I take exception to your last sentence. 'Reasonable'? What's reasonable?

You use UK MO, garage operations, heretodaygonetomorrow internet places as the basis of what is 'reasonable'. Their prices aren't based on anything 'reasonable', and as long as volume is up, they will survive. Low volume? Adios. Go to some of these UK places and walk into the showroom...can't? Cuz they don't have one, they are computer screens and a warehouse.

LBS' ask for a level playing field, that's all.

Exception noted

Maybe my Rotor stem is a good example. 175 out of Europe and 200 from my lbs. Purchase to LBS. Shipping included but a risk of duty. Paid taxes on 200.

SR 11 speed upgrade. +$200 my LBS retailer over Ireland. This was duty and taxes in. In both cases I thought it was reasonable to support my LBS. Take reasonable to be a personal matter between me and the community.
In all cases I do my own work.

I negotiate hard sometimes and sometimes I just pay. It is related to what I can afford and sometimes my mood. Since I actually own 2 or 3 of every thing I don't need anything. Most of my spending is restrict to things that are wearing out. Maybe a 29er next year and I never have purchased anything MTB from Euroland. I guess you just have to accept it If I want it I will pay what I think is reasonable locally or overseas. The criteria will also be relative and personal.

 

[Race Radio]

I take exception to your last sentence. 'Reasonable'? What's reasonable?

You use UK MO, garage operations, heretodaygonetomorrow internet places as the basis of what is 'reasonable'. Their prices aren't based on anything 'reasonable', and as long as volume is up, they will survive. Low volume? Adios. Go to some of these UK places and walk into the showroom...can't? Cuz they don't have one, they are computer screens and a warehouse.

LBS' ask for a level playing field, that's all.

Here is a tour of Chain Reactions 150,000 square foot facility (They have another one down the road, 65,000 feet)

http://www.bikeradar.com/news/article/chain-reaction-cycles-behind-the-scenes-29496/

LBS are critical for the health of the sport. A 10% difference is one they can survive....but 50%?