Gray Market Bicycle Parts

[Llewellyn]

There's at least one shop I know of here that will happily fit parts that have been bought from overseas. I'm sure they make sure they don't lose anything in their labour charges when they do this. Maybe Travis in the original post should take the same approach rather than potentially alienate punters and lose even more business.

After all, service and repairs is probably where most bike shops can really make decent margins.

 

[Moose McKnuckles]

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%?

Looks like the same warehouse where Indiana Jones hid the Ark of the Covenant.

Still no coupon codes for that on Chain Reaction or PBK.

 

[ultimobici]

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.

Wiggle don't have a shop it is true. But they do not engage in wholesale price hacking by and large. 10% off many items, yes but not 20% across the range. Ribble actually do have a shop, but they are able to cut their prices due to their wholesale arm. They have been doing this for at least 20 years. Chain Reaction also have a shop front and are able to trade the way they do, I suspect, due to massive tax breaks/government incentives available in Northern Ireland. PBK, I'm not sure if they have a shop, but they have been incorporated since 1998 - hardly heretodaygonetomorrow.

I am in no way condoning PBK or RIbble's business model. It sucks being on the receiving end of it in the UK as I have seen over the years in the industry. But the big problem is that Campagnolo don't seem to have the will to close down the loopholes that allow it to flourish. By demanding proof of purchase and insisting warrantee claims go through the original supplier they'd reduce the attraction of transcontinental purchases. Similarly buyers need to realise that the JRABS guy has a point regarding duty. If you buy a SR groupset and neglect to declare it, you're committing an offence. It's simple tax evasion. The LBS guy who stocks Campag having bought it through the proper channels has paid the duty, that's part of the reason it cost more in the US. The fact that offshore purchases are free of VAT makes it cheaper still. Non-declaration is no different on SR11 to trying to bring in more than 1 Litre of alcohol to the US without paying the duty. In a word, theft.

 

[Master50]

Wiggle don't have a shop it is true. But they do not engage in wholesale price hacking by and large. 10% off many items, yes but not 20% across the range. Ribble actually do have a shop, but they are able to cut their prices due to their wholesale arm. They have been doing this for at least 20 years. Chain Reaction also have a shop front and are able to trade the way they do, I suspect, due to massive tax breaks/government incentives available in Northern Ireland. PBK, I'm not sure if they have a shop, but they have been incorporated since 1998 - hardly heretodaygonetomorrow.

I am in no way condoning PBK or RIbble's business model. It sucks being on the receiving end of it in the UK as I have seen over the years in the industry. But the big problem is that Campagnolo don't seem to have the will to close down the loopholes that allow it to flourish. By demanding proof of purchase and insisting warrantee claims go through the original supplier they'd reduce the attraction of transcontinental purchases. Similarly buyers need to realise that the JRABS guy has a point regarding duty. If you buy a SR groupset and neglect to declare it, you're committing an offence. It's simple tax evasion. The LBS guy who stocks Campag having bought it through the proper channels has paid the duty, that's part of the reason it cost more in the US. The fact that offshore purchases are free of VAT makes it cheaper still. Non-declaration is no different on SR11 to trying to bring in more than 1 Litre of alcohol to the US without paying the duty. In a word, theft.

What is this thing about smuggling? Since I don't understand US importation law maybe you can add some detail? When PBK sends a package to the US, don't they attach importation documents? Doesn't the Importaion require some form of customs evaluation? Duty is charged according to policy by the revenue agency? Every thing I ever purchased from overseas came with documents and many times I pay those taxes and duties but I am not evading taxes or stealing. I am being a good and honest capitalist. How is that different or illegal.

 

[LugHugger]

What is this thing about smuggling? Since I don't understand US importation law maybe you can add some detail? When PBK sends a package to the US, don't they attach importation documents? Doesn't the Importaion require some form of customs evaluation? Duty is charged according to policy by the revenue agency? Every thing I ever purchased from overseas came with documents and many times I pay those taxes and duties but I am not evading taxes or stealing. I am being a good and honest capitalist. How is that different or illegal.

It depends on how the package is manifested when declared by the courier company to customs. This information is taken from the packing slip completed by the shipper (read volume retailer in this instance).

If as is sometimes the case, the goods are declared as 'samples, no commercial value' then this is clearly a misrepresentation and is tax avoidance from the perspective of local Customs and Excise at destination.

Still with me? It's boring, I know

Sometimes, the value of goods can be under-declared since there is a threshold where it becomes more expensive to collect the duties and taxes than it does to just let the goods in for free. It's likely that if you bought, for example, a pair of tyres that you would be under the threshold and not pay d&t. On a gruppo, I would suspect that d&t would be payable in Canada and the US.

If you flip this around, bringing these parts in to the UK would incur 15% import duty on the manifested price and 20% VAT payable on the manifested price plus duty. The manifest threshold in the UK is about $115 iirc.

I think that this is the illegal behaviour being referred to.

 

[ultimobici]

What is this thing about smuggling? Since I don't understand US importation law maybe you can add some detail? When PBK sends a package to the US, don't they attach importation documents? Doesn't the Importaion require some form of customs evaluation? Duty is charged according to policy by the revenue agency? Every thing I ever purchased from overseas came with documents and many times I pay those taxes and duties but I am not evading taxes or stealing. I am being a good and honest capitalist. How is that different or illegal.

Under US customs law a private individual can import via overseas mail order, for their own personal use, up to $2000 worth of goods duty free. Hence my use of a SR11 group as an example. From what I can gather it is a little bit of a lottery as to whether one actually gets charged for it or not as the USPS tend to be a little relaxed about charging. Compare that to the situation in the UK where I have been charged religiously on any item bought from the US on ebay at 18% plus admin fee! So the US's own customs rules don't exactly help matters.

My reference to theft was those instances where an item or order is worth more than $2000 and either luckily gets through (onus is still on buyer to cough up) or is split into a couple of shipments to avoid tax (dishonest).

The funny thing is, despite buying outside the regular distribution channels, in my experience those same customers want to take advantage of their local dealer when they have an issue. Very often they cite the international nature of the warranty, something that really sticks in my craw.

So the guy who buys online from the UK, and isn't charged the correct duty, is fiddling his taxes and removing his tax dollars from his local community. As soon as he rocks up to the local Campagnolo dealer with a warranty claim he's attempting to get services he hasn't paid for.

The latter is the embodiment of the expression "he knows the price of everything and the value of nothing"

 

[ultimobici]

It depends on how the package is manifested when declared by the courier company to customs. This information is taken from the packing slip completed by the shipper (read volume retailer in this instance).

If as is sometimes the case, the goods are declared as 'samples, no commercial value' then this is clearly a misrepresentation and is tax avoidance from the perspective of local Customs and Excise at destination.

Still with me? It's boring, I know

Sometimes, the value of goods can be under-declared since there is a threshold where it becomes more expensive to collect the duties and taxes than it does to just let the goods in for free. It's likely that if you bought, for example, a pair of tyres that you would be under the threshold and not pay d&t. On a gruppo, I would suspect that d&t would be payable in Canada and the US.

If you flip this around, bringing these parts in to the UK would incur 15% import duty on the manifested price and 20% VAT payable on the manifested price plus duty. The manifest threshold in the UK is about $115 iirc.

I think that this is the illegal behaviour being referred to.

The really galling thing in the UK is they'll charge on anything new or old. So that bargain of a part from Campag that is 10 years old, used and was made in the EU is charged the same as a brand new Shimano or Sram item that was made outside the EU. That way HMRC still gets to skin you for an item that is exempt due to being manufactured in the EU!

 

[bc_hills]

My reference to theft was those instances where an item or order is worth more than $2000 and either luckily gets through (onus is still on buyer to cough up) or is split into a couple of shipments to avoid tax (dishonest).

Maybe it's the use of the word "theft" that's a little off putting. I often cross the border and I always declare any purchases. Sometimes I'm asked to pay taxes and duties, sometimes I'm waved on through. In that case I'm not stealing anything from anybody and I don't need to force the collection of duties in order to not be a thief. As long as the value of contents is accurately declared, how I am I a thief if the system decides to take a pass on collecting duties/taxes for my imported item?

As for splitting shipments a group set is a collection of parts isn't it?

Anyway, the mere availability of online parts doesn't destroy LBSs everywhere. I doubt that the majority of people go through the trouble of ordering and installing their own parts.

It would be interesting to hear from the bike professionals here whether or not the self-described cycling intelligentsia (the contributors to this forum for example) are a significant portion of the market. They can't be, because there wouldn't be an LBS left in existence.

 

[Bustedknuckle]

Maybe it's the use of the word "theft" that's a little off putting. I often cross the border and I always declare any purchases. Sometimes I'm asked to pay taxes and duties, sometimes I'm waved on through. In that case I'm not stealing anything from anybody and I don't need to force the collection of duties in order to not be a thief. As long as the value of contents is accurately declared, how I am I a thief if the system decides to take a pass on collecting duties/taxes for my imported item?

As for splitting shipments a group set is a collection of parts isn't it?

Anyway, the mere availability of online parts doesn't destroy LBSs everywhere. I doubt that the majority of people go through the trouble of ordering and installing their own parts.

It would be interesting to hear from the bike professionals here whether or not the self-described cycling intelligentsia (the contributors to this forum for example) are a significant portion of the market. They can't be, because there wouldn't be an LBS left in existence.

They aren't, most people I know have no clue about these UK/Irish MO places. PLUS, even if they do, they don't go to the trouble to order a cogset and chain, save $50, wait 1-2 weeks when the stuff is right there.

Occasionally groups. of the frames I have sold in 2011, maybe one or two I assembled with a UK group. They pay $225, to get it installed(takes about 1.5-2 hours).

 

[LugHugger]

The really galling thing in the UK is they'll charge on anything new or old. So that bargain of a part from Campag that is 10 years old, used and was made in the EU is charged the same as a brand new Shimano or Sram item that was made outside the EU. That way HMRC still gets to skin you for an item that is exempt due to being manufactured in the EU!

If you buy from the eu you should not pay any duty or vat. Of course, if you buy campag made in Vicenza from the USA, you will be billed duty and VAT. Got to love HMRC!

 

[biker77]

They aren't, most people I know have no clue about these UK/Irish MO places. PLUS, even if they do, they don't go to the trouble to order a cogset and chain, save $50, wait 1-2 weeks when the stuff is right there.

Occasionally groups. of the frames I have sold in 2011, maybe one or two I assembled with a UK group. They pay $225, to get it installed(takes about 1.5-2 hours).

Thats the LBSs' problem right there.

 

[LugHugger]

They aren't, most people I know have no clue about these UK/Irish MO places. PLUS, even if they do, they don't go to the trouble to order a cogset and chain, save $50, wait 1-2 weeks when the stuff is right there.

Occasionally groups. of the frames I have sold in 2011, maybe one or two I assembled with a UK group. They pay $225, to get it installed(takes about 1.5-2 hours).

Wow! $225 to install a gruppo? What would you charge if it was bought from you?

A full build with own sourced components cost c.$175 in the UK! 2-3 hours work.

Are you the only shop in the state?

 

[chasbo]

I charge 175-200 U.S. for a full build in my shop. I take from 2-3.5 hours and offer a free tune up within the first 30 days to touch things like the cables and spokes up.

 

[Bustedknuckle]

Thats the LBSs' problem right there.

Why is that my/LBS' problem?

 

[Bustedknuckle]

Wow! $225 to install a gruppo? What would you charge if it was bought from you?

A full build with own sourced components cost c.$175 in the UK! 2-3 hours work.

Are you the only shop in the state?

No charge if the bicycle was bought from us.

Probuild in other shops are $250-$300.

 

[biker77]

Why is that my/LBS' problem?

This is said with respect as I enjoy reading your posts. $225 to install a group is very expensive imo, and is why I do my own work. I have said before, a bike is a simple machine and I don`t believe an $80/hour labour rate is good value. This may be the reality of a bike shop and what you need to charge to barely make a profit, but from a consumer standpoint it doesn'`t make sense to me to pay that much.

 

[The Gnome]

This is said with respect as I enjoy reading your posts. $225 to install a group is very expensive imo, and is why I do my own work. I have said before, a bike is a simple machine and I don`t believe an $80/hour labour rate is good value. This may be the reality of a bike shop and what you need to charge to barely make a profit, but from a consumer standpoint it doesn'`t make sense to me to pay that much.

all true...it's a bike...and yeah, i do my own wrenching for the most part...the guy who works on my car works for 40 bucks an hour...best mechanic I have ever had and works fairly cheap for here in america...and everything he does do I can't do tho I can fix alot on my van...or it would take me a long time to figure it out...for instance, he installed a new fuel pump last week in an hour and a half...80 dollars an hour to fix bikes is outrageous but common...and why LBS's are dying...actually, those geeks down at the LBS charging so much for labor and whining about grey market parts are what will drive lots of folks over to the wallmart to buy a bike...so it goes...let em die if they think they are so special and that greedy...

 

[BroDeal]

This is said with respect as I enjoy reading your posts. $225 to install a group is very expensive imo, and is why I do my own work. I have said before, a bike is a simple machine and I don`t believe an $80/hour labour rate is good value. This may be the reality of a bike shop and what you need to charge to barely make a profit, but from a consumer standpoint it doesn'`t make sense to me to pay that much.

If you cannot do your own work then it's good value. With $1500 worth of components and a $3000 frame, a couple hundred seems pretty reasonable and typical. What do you expect them to charge? It's not like shops have a queue of people waiting to have their internet bought components assembled into a bike. Down time has to be accounted for with higher labor rates.

 

[The Gnome]

If you cannot do your own work then it's good value. With $1500 worth of components and a $3000 frame, a couple hundred seems pretty reasonable and typical. What do you expect them to charge? It's not like shops have a queue of people waiting to have their internet bought components assembled into a bike. Down time has to be accounted for with higher labor rates.

Bro...in all due respect...what other business expects that you pay employees for "down time" ? maybe drug dealers...but not too many others...

 

[The Gnome]

I charge 175-200 U.S. for a full build in my shop. I take from 2-3.5 hours and offer a free tune up within the first 30 days to touch things like the cables and spokes up.

really, that is so overpriced via the skill it takes...no offence...and your 30 day 5 minute touch up is kinda silly via prices...there is no way that is worth what you charge...

 

[BroDeal]

Bro...in all due respect...what other business expects that you pay employees for "down time" ? maybe drug dealers...but not too many others...

All sorts of consultant jobs do. Labor rates have to take into account whether you can fill your schedule. Using your auto repair analogy, if a Honda repair shop has a packed schedule then they can afford to charge a cheaper rate than the Ferrari repair shop that sees very few customers. It's basic biz. You need to charge enough to keep the lights on. When consulting, you need to charge enough to cover the time between jobs.

 

[RDV4ROUBAIX]

really, that is so overpriced via the skill it takes...no offence...and your 30 day 5 minute touch up is kinda silly via prices...there is no way that is worth what you charge...

$100/hour is very fair for any kind of mechanic bike or auto. Most people aren't mechanically inclined and don't have a clue how to work on bikes whatsoever, or anything else really. I'll agree with the 30 day thing though, that's not nearly enough time to put a wheel out of true, or break cables in. Standard is one calender year from the build, anything less is Bush League.

 

[The Gnome]

All sorts of consultant jobs do. Labor rates have to take into account whether you can fill your schedule. Using your auto repair analogy, if a Honda repair shop has a packed schedule then they can afford to charge a cheaper rate than the Ferrari repair shop that sees very few customers. It's basic biz. You need to charge enough to keep the lights on. When consulting, you need to charge enough to cover the time between jobs.

again...with respect...this is fixing simple mechanic things...your idea applies to having your car done at a dealership...we all know what BS that is...give me a good solid car mechanic who has more work than he can handle...the job I spoke about in previous post would have cost 5 times more via a dealership and been done worse...THAT is basic biz...bikes are not ferrari's...maybe that is the problem...and the idea that we pay for their space or that bike shops promote anything other than their own self interest is BS as well...you must have fun driving a "ferrari" bike but you still don't need to pay those prices for mere labor...it's a scam actually...and no, we are not paying for the privilege of having a LBS...not moreso than any other trade in today's world...me, I drive a plymouth...the idea that a bike mechanic makes 80 bucks an hour is just a joke...unless he is doing some real special things...like reacharounds...

 

[The Gnome]

$100/hour is very fair for any kind of mechanic bike or auto. Most people aren't mechanically inclined and don't have a clue how to work on bikes whatsoever, or anything else really. I'll agree with the 30 day thing though, that's not nearly enough time to put a wheel out of true, or break cables in. Standard is one calender year from the build, anything less is Bush League.

RD...a 100 dollars an hour is fair for both bikes and cars...? when a good lawyer charges 150 an hour, this is just off...I can see a good auto mechanic and even then 60 an hour is high...but not for bikes...no idea of the economy of where you live...but my plumber, electrician, furnace specialist do not charge 100 an hour...neither do roofers, builders ect...100 dollars an hour for a bike guy is a joke...unless he is maybe rebuilding a broken frame...something highly specialized...not your average mechanic...I mean I know folks here who work on helicopters and jets and have spent a fortune on their education who make 80 bucks an hour doing that sort of work including welding and very intricate FAA approved and judged work...but a guy wrenching in your local LBS charging 100 dollars an hour is "very fair"?

 

[RDV4ROUBAIX]

...the idea that a bike mechanic makes 80 bucks an hour is just a joke...unless he is doing some real special things...like reacharounds...

Maybe it a perception problem, a joke to someone who DIY's their own bike gear and you may find it easy, isn't the same for the rest. You said your auto mechanic charges you $40/hour, that's half the National average for automotive work, in Colorado it's more like $150/hour, and that doesn't even include a massage with a happy ending.