Why dont LBS even try and compete with Wiggle/Evans?
Discussion
So looking at either an Trek 1.2 or Felt F/Z95 and they are currently discounted by the usual suspect (Wiggle, Eavans, Triton etc).
I have called 3 LBS to see of they could get anywhere near the price as I'd like to support local business and buy local and my other bikes get taken there for services and its useful to be able to buy bits locally.
All 3 have not tried to either
1) Discount to match
2) Discount to get close
3) Discount a bit and try and talk me round eg "free service, better service" etc
I suspect they get no where near the bulk discount of the big players but surely it would make sense for them to try ?
Two were even quite arsey and said - "well you better buy from them then" - which one said and put the phone down. I can understand they get annoyed by competing with the chains but I would try and get the custom even if I didnt get the sale in the end.
Eg - "I'll tell you what, we can do the bike for £50 more than Wiggle but we will throw in a service" - which you could do by buying it from Wiggle (the LBS that is if their unit cost is so bad) - adding £50 and then when service comes round - I'll no doubt spend another £50 in the shop on stuff I dont need ("new shorts sir?") so they are quids in.
I'm not that fussed but I don't think some of these guys are running a business -its a hobby or lifestyle.
Views? This isnt a rant or a moan. I'm intrigued by the economics and thinking.
Cheers
Mike
I have called 3 LBS to see of they could get anywhere near the price as I'd like to support local business and buy local and my other bikes get taken there for services and its useful to be able to buy bits locally.
All 3 have not tried to either
1) Discount to match
2) Discount to get close
3) Discount a bit and try and talk me round eg "free service, better service" etc
I suspect they get no where near the bulk discount of the big players but surely it would make sense for them to try ?
Two were even quite arsey and said - "well you better buy from them then" - which one said and put the phone down. I can understand they get annoyed by competing with the chains but I would try and get the custom even if I didnt get the sale in the end.
Eg - "I'll tell you what, we can do the bike for £50 more than Wiggle but we will throw in a service" - which you could do by buying it from Wiggle (the LBS that is if their unit cost is so bad) - adding £50 and then when service comes round - I'll no doubt spend another £50 in the shop on stuff I dont need ("new shorts sir?") so they are quids in.
I'm not that fussed but I don't think some of these guys are running a business -its a hobby or lifestyle.
Views? This isnt a rant or a moan. I'm intrigued by the economics and thinking.
Cheers
Mike
I've wondered about this too. A while back I went to my LBS to look at some MTBs for the missus and a road bike for me. They are all at full retail. Look online and they are least £100 cheaper each (so £200 saving).
Asked LBS if he would do a discount if I buy 2 bikes (about £1500 in total). Flat "no". He couldn't have been less interested in making the sale.
Asked LBS if he would do a discount if I buy 2 bikes (about £1500 in total). Flat "no". He couldn't have been less interested in making the sale.
There's no money in it, the discounts / costs they're up against with the big box shifters are Goliath like and they get burnt a lot by people who are out to bend their ear for half an hour to get all the info / feedback that they won't get online and then when it comes to actually making the decision to buy can't bring themselves to pay a few hundred quid "over the odds" and buy it online anyway.
Thankfully my LBS decided years ago they couldn't complete and changed their model so 80% of their bike sales are now online, which means they've got a huge well stocked shop floor which really couldn't be justified or even profitable without all the web sales.
Thankfully my LBS decided years ago they couldn't complete and changed their model so 80% of their bike sales are now online, which means they've got a huge well stocked shop floor which really couldn't be justified or even profitable without all the web sales.
My LBS reduced a bike cheaper than most shops online, they have a small shop, but huge warehouse (Mitchell's in Swindon) . There were a few shops online selling it cheaper, but sometime you have to pay for the advice, demo facility and convenience the shop offers
I can see it from both sides:
TBH it is frustrating for the shop with everyone coming in and saying "oi mate I saw this cheaper online" and must get grating !!
Then again the shops have to evolve or die and offer great customer service or risk going out of business! My local shop gets my custom as the service is top notch, even if on some lines they are more than Wiggle.
IMO lots of bike shops are started by keen bikers, who aren't really salesmen or customer facing people and often get disillusioned after a few years and wish they never started a shop!! Especially as it means they no longer have the time to actually ride any more
I can see it from both sides:
TBH it is frustrating for the shop with everyone coming in and saying "oi mate I saw this cheaper online" and must get grating !!
Then again the shops have to evolve or die and offer great customer service or risk going out of business! My local shop gets my custom as the service is top notch, even if on some lines they are more than Wiggle.
IMO lots of bike shops are started by keen bikers, who aren't really salesmen or customer facing people and often get disillusioned after a few years and wish they never started a shop!! Especially as it means they no longer have the time to actually ride any more
You would be surprised just how little margin there in in selling bikes. Esspecially for local shops with little buying power. They wont be buying in a large stock of each model like a national chain or large online retailer will and so they will get either zero discount from the supplier or very very little.
Local shops wont rely on the sale of bikes to keep them afloat. Having some nice bikes in the window and in the shop is to entice people in. I expect they make the most profit on and rely on the sale of accessories and servicing to keep them in the black. The odd bike sale is a nice bonus but not going to be something they sell, every day, day in, day out.
They wont give you a discount as they can't and it isn't worth their while. Offering a free service or something is a good idea but would you really buy from an local shop because they offered a free service when you could get the bike £100 cheaper online? Doubtful.
Local shops wont rely on the sale of bikes to keep them afloat. Having some nice bikes in the window and in the shop is to entice people in. I expect they make the most profit on and rely on the sale of accessories and servicing to keep them in the black. The odd bike sale is a nice bonus but not going to be something they sell, every day, day in, day out.
They wont give you a discount as they can't and it isn't worth their while. Offering a free service or something is a good idea but would you really buy from an local shop because they offered a free service when you could get the bike £100 cheaper online? Doubtful.
It's probably not worth the shop selling it for the discounted price.
When I bought my last bike from my LBS we were chatting about this and they were explaining to me about a customer who'd came in looking at a £7k S-Works bike. Basically there was a group of guys who rode together and when one got a new bike, the others would tend to follow and buy the same thing.
The customer had been given a really good price form another shop and wanted the LBS to price match, even after speaking to Specialized and getting a discount from them it still wasn't worthwhile for them to sell the bike to the customer as they'd be making next to nothing once the free first service and bits like that were taken into account.
As it turned out this model of bikes had issues with brakes which were covered under warranty by Specialized and the guy had to return them 3 or 4 times to get sorted. If the LBS had sold at the discounted price, they would have ended up out of pocket on the sale!
When I bought my last bike from my LBS we were chatting about this and they were explaining to me about a customer who'd came in looking at a £7k S-Works bike. Basically there was a group of guys who rode together and when one got a new bike, the others would tend to follow and buy the same thing.
The customer had been given a really good price form another shop and wanted the LBS to price match, even after speaking to Specialized and getting a discount from them it still wasn't worthwhile for them to sell the bike to the customer as they'd be making next to nothing once the free first service and bits like that were taken into account.
As it turned out this model of bikes had issues with brakes which were covered under warranty by Specialized and the guy had to return them 3 or 4 times to get sorted. If the LBS had sold at the discounted price, they would have ended up out of pocket on the sale!
So - I get all of that and fully agree with most.
However................
If the margins are so tight - I would buy the bike from the discounters and charge more (say £50) and trouser the difference. Now I suspect that this doesn't work due to manufacturers getting the hump about "grey market" stuff but.
I'm sort of doubtful how a LBS survives at all without an on-line business.
If the margins are so slim they cannot be discounted then they will by and large no support the business model.
Cheers
Mike
However................
If the margins are so tight - I would buy the bike from the discounters and charge more (say £50) and trouser the difference. Now I suspect that this doesn't work due to manufacturers getting the hump about "grey market" stuff but.
I'm sort of doubtful how a LBS survives at all without an on-line business.
If the margins are so slim they cannot be discounted then they will by and large no support the business model.
Cheers
Mike
mikees said:
So - I get all of that and fully agree with most.
However................
If the margins are so tight - I would buy the bike from the discounters and charge more (say £50) and trouser the difference. Now I suspect that this doesn't work due to manufacturers getting the hump about "grey market" stuff but.
I'm sort of doubtful how a LBS survives at all without an on-line business.
If the margins are so slim they cannot be discounted then they will by and large no support the business model.
Cheers
Mike
The problem with that is when you need to make a warranty claim for something. The customer returns the bike to the LBS who then have to return it to the discounter who then have to deal with the importer. I imagine it would be a nightmare!However................
If the margins are so tight - I would buy the bike from the discounters and charge more (say £50) and trouser the difference. Now I suspect that this doesn't work due to manufacturers getting the hump about "grey market" stuff but.
I'm sort of doubtful how a LBS survives at all without an on-line business.
If the margins are so slim they cannot be discounted then they will by and large no support the business model.
Cheers
Mike
mikees said:
So - I get all of that and fully agree with most.
However................
If the margins are so tight - I would buy the bike from the discounters and charge more (say £50) and trouser the difference. Now I suspect that this doesn't work due to manufacturers getting the hump about "grey market" stuff but.
I'm sort of doubtful how a LBS survives at all without an on-line business.
If the margins are so slim they cannot be discounted then they will by and large no support the business model.
Cheers
Mike
Not everyone buys everything online.However................
If the margins are so tight - I would buy the bike from the discounters and charge more (say £50) and trouser the difference. Now I suspect that this doesn't work due to manufacturers getting the hump about "grey market" stuff but.
I'm sort of doubtful how a LBS survives at all without an on-line business.
If the margins are so slim they cannot be discounted then they will by and large no support the business model.
Cheers
Mike
You might walk in, ask for a discount and walk out disappointed, but the person in the queue behind you might happily pay the asking price and buy a load of accessories with it too.
If you want the service of your local bike shop, then use them and pay what they ask. When you become a regular, reliable customer, they might consider giving you a discount on the odd thing here and there to reward your loyalty. Otherwise, just buy it online and when you need somewhere to fix your bike and find the LBS has shut down, you'll only have yourself to blame
So you would like them to compete with Wiggle etc on margin but offer a better service with higher overheads?
They need to charge more because they don't get the discounts and their business model doesn't support low margins on bikes. They are besieged by time wasters ringing round trying to beat them down on price because things are cheaper online. The fact that you rang round three shops and have also been shopping around online suggests to me that you are far more interested in price than service. If that's the case, buy online.
I don't know many LBS owners who are millionaires. You are right that their business model is outdated, but there is still a market for it and many are willing to pay slightly over the odds for it.
If you were a regular customer I suspect you would only have spoken to one LBS, and you would have done so in the shop. They would know you personally and they would be happy to talk to you about what sort of discounts they can give. My LBS give me some very healthy discounts and credit on everything I buy, because I spend a small fortune with them and they know I will keep using them. I wouldn't expect them to offer discounts to someone they don't know who just rings up asking for a cheap price with an internet price as a comparison. They would be mad to conduct their business that way.
They need to charge more because they don't get the discounts and their business model doesn't support low margins on bikes. They are besieged by time wasters ringing round trying to beat them down on price because things are cheaper online. The fact that you rang round three shops and have also been shopping around online suggests to me that you are far more interested in price than service. If that's the case, buy online.
I don't know many LBS owners who are millionaires. You are right that their business model is outdated, but there is still a market for it and many are willing to pay slightly over the odds for it.
If you were a regular customer I suspect you would only have spoken to one LBS, and you would have done so in the shop. They would know you personally and they would be happy to talk to you about what sort of discounts they can give. My LBS give me some very healthy discounts and credit on everything I buy, because I spend a small fortune with them and they know I will keep using them. I wouldn't expect them to offer discounts to someone they don't know who just rings up asking for a cheap price with an internet price as a comparison. They would be mad to conduct their business that way.
MysteryLemon said:
You would be surprised just how little margin there in in selling bikes.
Only one of my good friends manages my LBS and I've seen what they pay for most stuff, most of it is around 60% of retail price, yes I know overheads have to be paid but there's still a decent margin in there.Matt_N said:
Only one of my good friends manages my LBS and I've seen what they pay for most stuff, most of it is around 60% of retail price, yes I know overheads have to be paid but there's still a decent margin in there.
Accessories and small items do have a big markup. Stuff like inner tubes etc. They may sell for £5 in the shop but the shop will probably pay £1 or less.Stuff like complete bikes will have a much smaller markup.
Matt_N said:
Only one of my good friends manages my LBS and I've seen what they pay for most stuff, most of it is around 60% of retail price, yes I know overheads have to be paid but there's still a decent margin in there.
So maybe a £300 margin on a Trek 1.2? Sounds about right to me. Call it £200 by the time the haggling is over. How many bikes like that do you think an LBS manages to sell most weeks? That's before we get to the end of the season, where they start having to discount stock to shift it. They need to do a lot of servicing and sell a lot of accessories to keep their business running, they can't just do it on bike sales.MysteryLemon said:
Accessories and small items do have a big markup. Stuff like inner tubes etc. They may sell for £5 in the shop but the shop will probably pay £1 or less.
Stuff like complete bikes will have a much smaller markup.
They are a authorised Specialized dealer and test centre so maybe they get a decent rate, but most Specialized bikes are 60-70% of retail to them.Stuff like complete bikes will have a much smaller markup.
I believe mark up on bikes is normally somewhere between 30% and 40%, clothing and kit anything up to 60% whilst components like shifters and mechs barely over 10%. Sure LBS have overheads and cant buy in bulk like Wiggle and CRC but they do have some room for manoeuvre on negotiating a sale... From what I have seen, very few LBS' are prepared to move on rrp unless they really have to but on the flip side, they will do some substantial discounts for local clubs they are affiliated to/sponsor and I wouldnt expect them to do the same discount for people who arent regulars or arent prepared to wear kit with their name on.
The forward thinking LBS' are now promoting coaching services, retul fitting, guided rides and performance/VO2 tests, they will be the shops that survive because Wiggle et al simply cant offer those services. Sales of bikes and kit may even become secondary income streams for them?!
Many LBS' still use CRC and wiggle, one shop in Bristol didnt have a Sram BB in stock but could get it for me in 24 hours....
The forward thinking LBS' are now promoting coaching services, retul fitting, guided rides and performance/VO2 tests, they will be the shops that survive because Wiggle et al simply cant offer those services. Sales of bikes and kit may even become secondary income streams for them?!
Many LBS' still use CRC and wiggle, one shop in Bristol didnt have a Sram BB in stock but could get it for me in 24 hours....
MysteryLemon said:
Not everyone buys everything online.
You might walk in, ask for a discount and walk out disappointed, but the person in the queue behind you might happily pay the asking price and buy a load of accessories with it too.
If you want the service of your local bike shop, then use them and pay what they ask. When you become a regular, reliable customer, they might consider giving you a discount on the odd thing here and there to reward your loyalty. Otherwise, just buy it online and when you need somewhere to fix your bike and find the LBS has shut down, you'll only have yourself to blame
This, absolutly this... When your spoke snaps after you hit a pothole you didn't see on your new bike you got for £100 cheaper. Try sending it to Wiggle for a new spoke. Good luck.You might walk in, ask for a discount and walk out disappointed, but the person in the queue behind you might happily pay the asking price and buy a load of accessories with it too.
If you want the service of your local bike shop, then use them and pay what they ask. When you become a regular, reliable customer, they might consider giving you a discount on the odd thing here and there to reward your loyalty. Otherwise, just buy it online and when you need somewhere to fix your bike and find the LBS has shut down, you'll only have yourself to blame
LBS everytime.
McFsC said:
This, absolutly this... When your spoke snaps after you hit a pothole you didn't see on your new bike you got for £100 cheaper. Try sending it to Wiggle for a new spoke. Good luck.
LBS everytime.
You can still walk into a LBS and say 'Hi mate, snapped a spoke. Reckon you could replace it and retrue the wheel for me please?'LBS everytime.
What do you think the owner will respond with:
'Of course geez, that will be £15, collect it Thursday?'
or
'f
k OFF YOU , BUY STUFF ONLINE DEAL WITH THEM DON'T EVER EVER DARKEN MY DOOR AGAIN!'I think it is more likely the former.
Eddh said:
You can still walk into a LBS and say 'Hi mate, snapped a spoke. Reckon you could replace it and retrue the wheel for me please?'
What do you think the owner will respond with:
'Of course geez, that will be £15, collect it Thursday?'
or
'F*** OFF YOU C***, BUY STUFF ONLINE DEAL WITH THEM DON'T EVER EVER DARKEN MY DOOR AGAIN!'
I think it is more likely the former.
Sure, but if you'd bought it from them in the first place they'd probably do it for free and have it ready by the end of the day.What do you think the owner will respond with:
'Of course geez, that will be £15, collect it Thursday?'
or
'F*** OFF YOU C***, BUY STUFF ONLINE DEAL WITH THEM DON'T EVER EVER DARKEN MY DOOR AGAIN!'
I think it is more likely the former.
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