How do Bike Shops compete with Ebay?

Triathlon Forum
21

As a liberal economist (the one that I play on the internet), I agree whole-heartedly with what Aardvark says.

Know that it won’t end with bike shops or Wal-Marts. This is a topic I was contemplating just the other day. Wait untill auto manufacturers (the actual manufacturer) open stores with exactly 2 of every model they sell. One top-of-the-line model, and one basic model. They will sell neither. A customer will compare both, sit down and choose the exact features they want based on these two examples, and set a delivery date of a week or less. The car will be $500-1000 less than we pay now with the reduction of inventory and elimination of the antiquated dealership system. Of course, that figure will be discounted back to today’s dollars, as this will take 25 years at least. The Hyundai’s of the world could implement sooner, however.

22

“Wait untill auto manufacturers (the actual manufacturer) open stores with exactly 2 of every model they sell. One top-of-the-line model, and one basic model. They will sell neither. A customer will compare both, sit down and choose the exact features they want based on these two examples, and set a delivery date of a week or less. The car will be $500-1000 less than we pay now with the reduction of inventory and elimination of the antiquated dealership system.”

It’s already being done, only even more efficiently. Basically, you go to a traditional car dealer, look around, and find what you want. Then you go on the internet and order the same car for hundreds or thousands less. Anyone buying a new car at a traditional dealership today is a schmuck. I buy only used cars, 1-3 years old, with low mileage by going to a used car dealer, telling him what I want, then he finds one at an auction. I pay his cost, plus transportation, clean-up, and a reasonable profit.

23

The folks who lost their jobs fortunately live in the US, where it’s easy to find new ones that pay just as much.<<

What the hell kind of crack are you smoking? Try telling that to a lot of people who have been out of work for many, many months. That’s a pretty broad statement that just isn’t true.

24

Hey boothrand, excellent thread. How do WE compete against E-bay? We don’t. It’s a different retail experience. WE do use E-bay extensively here, both overtly and covertly.

Part of the bicycle industry is adverse to using E-bay. Some (most) bike companies and component manufacturers force us to sign dealer agreements that prohibit us from selling goods on E-bay. That’s OK, and we respect it almost completely with very few exceptions.

When a person buys a bike on E-bay there are substantial additional costs they will need to incur before it is road ready. If it is a used bike it requires maintenance, assembly, fitting, etc. It is not uncommon for that to be close to $1000. So, with E-bay as a popular trend as well as a viable tool we see a lot of bikes coming through the door that have been bought off E-bay but do not have the correct stem, handlebars, cranks, gearing, saddle and seatpost for the customer. By the time we install that, fit them, re-cable the bike and get it up and running they have spent some serious cash. We make more that way than then if we had sold them a new bike, so we like E-bay customers.

In selling on E-bay, we like that too. We can “broom” obsolete inventory and things we would have otherwise never sold. We can sell our used (personal) bikes at the end of the season and turn a good profit above what we paid for them at the begining of the year- and we got a season’s use out of them. So, for us, the more new bikes we own- the more net profit we make. It is an enormous incentive for my employees to buy and try new bikes. It is like saying “I will pay you $500 to ride this bike for a year, maintina it, learn about it and then sell it on E-bay.” It is common to get $500-$800 above what we paid for one of our own personal bikes.

If people think they are getting a bargain on a bike on E-bay, they are often times wrong. There are tons of hidden costs. And at the end of the day, they wind up with a used bike they paid full price for.

E-bay is configured for the seller: The buyer almost always loses. We buy almost nothing on E-bay, but sell as much as $15,000 per week.

E-bay is also a trend right now. It is “cool” and “savy” to say, “Hey, I picked this up on E-bay- look- only $1500!” But then you see the guy needs another $500-$1000 worth of parts and labor to get the thing on the road fitting and running correctly- and they still have a used bike. For $1000-$2000 they could have bought a brand new, precisely fitted bike from a LBS and probably got a year’s free labor. Clearly, that is the better deal for a smart person.

But not everyone is smart. That is why E-bay works now, and will work forever.

25

">>The folks who lost their jobs fortunately live in the US, where it’s easy to find new ones that pay just as much.<<

What the hell kind of crack are you smoking? Try telling that to a lot of people who have been out of work for many, many months. That’s a pretty broad statement that just isn’t true."

Cathy, I stand by my statement. The folks in my hometown who lost their retail jobs to Wal-Mart today have other jobs, generally higher paying. And they save thousands per year because Wal-Mart lowered the price of most of what they buy by 30%+. Their welfare is today unequivocably higher. Survey the town on its thoughts on Wal-Mart, and you’ll find opinions to be 90%+ positive. The folks who lost work may not find new jobs instantaneously, but they find them, and general welfare increases.

Do you know what types of companies employs those that lose their jobs? Ranking high on the list are Wal-Mart and eBay (assuming they work for themselves). But there are countless others in a small town of 5,000: farms, county government, higher education, construction, mining, high tech. The local economy adjusted, absorbed the unemployed, and grew nicely.

In terms of making a broad generalization, my comment reflects creative destruction at work. The US economy is the world’s largest and most prosperous because, unlike most others, it allows companies like Wal-Mart and eBay to innovate and replace less efficient business models. Our unemployment rate is much lower than that in European countries, and much of our unemployment is seasonal rather than structural (meaning people are out of work for shorter time periods). These are facts, not crack. By most economic measures, it IS easier to find a new job that pays equivalently in America than in any other country.

For your next response, if there is one, try keeping emotions in check.

26

"Wal-Mart "

I won’t disagree with most of what you said, but the only thing I’ve noticed is that when Wal-Mart moves into an area it quite often “destroys” the downtown area in small cities/towns. In some areas this can be compensted to changing over to a vibrant tourist orientated type downtown area but in others they simply become ghost towns.

As for myself, I’m finishing my X-mas shopping tomorrow and refuse to shop at Wal-Mart. I’ll be supporting the local downtown instead.

27

your “rant” against traditional car dealerships is SOOOOO 1999. Dude, your theory flew out the window with all of Ford Motor’s billions (delaying new car r&d which led to decrease in market share which lead to stock prices in the toilet…great move by them) trying to “internet” or otherwise circumvent the “traditional” new car system. If every new car purchaser is a “schmuck” then there about 16.5 million of them this year (4th best year ever) and a projected 18 million next year. Hardly trending away from the new car purchase. Internet sales are routed thru a traditional dealer anyway. As for your reference to buying used…that’s a personal preference. The next time you are in the market, I’d be happy to let you come to the auction with me, pick out your car/truck. You can even drive it home. I’d charge you next to nothing.

Don’t get me wrong, I would love Ford to streamline their order/delivery system. Instead of 6 weeks, make it 1…then I might have a shot at deducing my $6,000,000 inventory. But high inventory levels will always be needed for the “today” purchaser. Most people want their new car right now…not in a week. So there are only incremental gains to be made on that front.

Doug Campbell President of Campbell Ford Lincoln Mercury Niles, MI www.carsbycampbell.com

28

Tom, thanks. Also, I didn’t mean to get angry up there in my second reply, probably uncalled for. FYI, I’m hanging out on Ebay getting into this because of people who talk about it here on this forum.

In all seriousness, Tom, can you walk through, for some of us idiots, who want to compile a bike from ebay, what most bike shops would do here. Let’s say, we’ve ebayed the whole bike, and we stop right at letting the bike shop put the bike together with Campy Record. Assume, and this may be incorrect, but let’s assume the buyer has gotten everything correct for the bike from the stem, handlebars, saddles, to every thing, and he or she has chosen a correct wheel set, frame and other components to jive with Campy Record. Throw this in. He or she goes to that bike shop regularly for service and has bought or has talked with that shop about buying a new bike from that shop.

Assume the ebayed bike frame, etc, you are not a dealer on, if that makes any difference. Let’s just make this one up. Let’s say, somone has ebayed a nice Bianchi frame, and everything puchased after that, matches that frame.

Here I come. I give you a call, and tell you what I’ve done. I’m bringing all of this to your shop. What will most bikes shops do, here. I want to buy the Campy Record through you. What kind of attitude and information am I looking at here.

thanks.

I’m fixing to do this.

29

IronCLM:

Perhaps a broad sense is exactly why this statement works (minus the “pay just as much” part). We will always have unemployment because the inefficiency of the labor “market”. “Natural” unemployment in the US is about 6%. This would be the people actually wanting a job, but not finding one.

Many out-of-work people are out of work because of choice. The US allows (encourages) goods (think resources… NO! think Human Resources), information, etc to travel at will. My uncle couldn’t find a job in NW Indiana where he had a kid in school, and a custom home built. He found one in Florida though. A tough call had to be made, but he’s now employed. How about those types of individuals who were $150K/year MBA’s in San Fran, before 2000? Some of those people are “too good” to take the job of an Accounts Receivable Supervisor making $45K/year, but they certainly are qualified. How about those blue-collar jobs? In addition to the above two scenarios, think about the people with tradesman work and the factory up-and-left to China. They have learned one trade, why don’t they learn another (subject to what’s local) or go pick up a bachelors? Instead of fighting against the loss of “tangible” work, learn to work with the job-types of the information age (I dislike that phrase too).

It seems three things must be breached by those people who “can’t find work”. 1.Open mind about moving 2.Open mind about what they can/should/would/could do 3.Open mind about getting a job in another field (technical, non-technical, professional, whatever)

Unfortunately, open minds are difficult to come by.

How about Nursing these days! Damn nice starting salaries and a huge shortage. AND according to the news coming from Penn and NJ lately, no one will ever check your references.

“Great topic. Love the show”

Burns

30

The average unemployed American is out of work for about 6.6 weeks in normal economic conditions and 8.2 weeks during a recession. Extension of unemployment benefits lengthens this time. In Belgium, unemployment is over 11%, in most of Europe it is over 9%. In the U.S., it is 5.9% and dropping every month.

31

Can’t we all just get along?..

When it comes to the LBS vs. e-Bay, I have to go with the LBS. I ordered a used bike once on e-Bay and, even though it looked good in the pic, it was crap. The seller sure wasn’t gonna take his bike back, so now I was stuck with a two-wheeled mechanical asshole that I couldn’t even *give *away. Now maybe I’m biased because I work part-time at our local shop in No. Virginia. However, this is the same one that sponsors our team, has prices well below MSRP, has great service/turn-around time, can order anything needed (oh, my fault: e-Bay has “EVERYTHING”), and is very friendly with the local population. And we do our best to take care of EVERYTHING that has a warranty, and we’ll fight tooth and nail for the customer. What does e-Bay have? Your credit card number. You can’t just run down to e-Bay and pick up tubes or bottles. And e-Bay won’t call you up to ask you how your new bike is running or remind you about basic maintenance. Now maybe that doesn’t apply to athletes who “know everything” (and even as a triathlete and coach, I’ll be the first to say that, for the most part, triathletes don’t take care of their equipment. I see it every time I’m in the shop and a triathlete “was just out on a training ride…”), however it really appeals to those who really know nothing about bikes and just want to ride on a Saturday afternoon with the family. Good customer service builds good rapport. So say all you want about warranty issues and service. It may not be a big thing…until something happens to you and you need your local shop. And to be honest, there’s no frustration here with e-Bay. However, boothrand, it just sounds like you’re a little salty and bitter at your local shop. Sounds like you have some issues of your own…

32

For your next response, if there is one, try keeping emotions in check. <<

Damn! You are obviously new.

33

I’ve done what you’re talking about three times now (though I prefer buying closeouts from big online mail-order places to ebay but same difference). All three times at different shops, each time it cost me $80-100 for labor (not including building up wheels). Tom’s point about spending $500 at your lbs to get your e-bay bike up and running is (I think) a gross exaggeration but there is some truth to it. One time I got the wrong front derailleur, one time the wrong bb, one time the wrong stem but those are each $30 parts (I bought those from the lbs; didn’t have the heart to say “ok, wait while I mail order the right one”)

Each time I expected the lbs guys to hate me and/or try to nickel and dime me for things like cables, bar tape etc. but it never happened. Well, ok maybe they hated me but they were always nice enough and they built the bikes up right.

Maybe they were smart capitalists who had priced their labor properly so that they would make a profit rather than using the shop as a loss-leader or maybe they were just nice guys.

34

The statement I’m contesting is this one:

">>The folks who lost their jobs fortunately live in the US, where it’s easy to find new ones that pay just as much.<<

Sure, maybe in BF nowhere, where you work at the local WalMart, but in certain geographic areas and industries, no way.

How about those blue-collar jobs? In addition to the above two scenarios, think about the people with tradesman work and the factory up-and-left to China. They have learned one trade, why don’t they learn another (subject to what’s local) or go pick up a bachelors?<<

You make it sound like it’s as easy as running down to the grocery store to pick up dinner.

35

I just bought a Polar 720 on e-bay for $220 with S&H, new. Had I gone into Tom Demerly’s shop he would have charged me $300+ and then tax. The person I bought it from is an authorized Polar dealer so the warranty is still valid and even if it isn;t is not like the watch cannot get repaired if it broke.

Last year I bought a Trek 5200, “used” but it had 0 miles on it. If I had put that in the floor of a shop you would not have noticed the difference. I paid $2000 with helmet included and then I had to buy a $60 stem. Even if I had taken it to Tom’s shop to do a bike fitting it wouldn’t have been as expensive as if I had bought it there.

Don’t even get me started on the number of new parts I have gotten for much less on e-bay. So when Tom says it comes out to be the same I really don’t see how. Unless of course the shop is hitting me extra hard because I decided to save some money and bought it on e-bay.

36

Some customers prefer the E-Bay experience. They are fine customers. We value our E-bay customers and their opinions greatly. Every dollar has 100 cents.

As I mentioned, we occasionally do as much as $15K per week selling on E-bay, and I see that only getting larger.

Thank you for shopping on E-bay!

37

Ebay is all about knowing exactly what you want and how much it’s really worth. Six weeks ago I purchased a 2003 P2k for only $50 above the reserve price (paid $1350). It was one of several Cervelos auctioned by a Tri-store in Richmond Va and was advertised as having less than 25 miles on it. I contacted the seller by phone and found out it was the store’s demo P2K and the 25 miles was legit. I bid and won the auction with 15 seconds left. Add $50 for professional packing, shipping, and insurance, unboxed it and the tires weren’t even dirty. The only Cervelo dealer even close to me is in Madison (WI) had none in stock, charged $2000, and no demos to try out. You do a Serotta fitting and then they order the bike. I will get a fitting done there (feels pretty close stock) which will probably piss them off but they will have my $145 and probably recommend a different stem. The 2004’s are $2200 so I feel pretty good about it. I also just purchased a TCR carbon seat post (brand new swap out) for $34 ($120 retail)for my road bike. I will support the LBS’s when I can but it’s very hard to pass up some of the deals on Ebay. Thanks to Tom D. for the P2K review at his site, it’s what sold me on this bike.

38

I have purchased a pair of training wheels on EBay. These were usually in good shape at a cheap price and I didn’t feel bad about the beating the took or when they break. And you can’t beat the deals for tires on there either usually at about 50% less than LBS.

40

Here is another way the LBS benefits from E-Bay and other on-line bike shops.

I own 6 bikes and counting. I have,

  1. Merlin road bike - Retail ~ $4,500. bought as pieces on Ebay 2) Ritchey Cross bike used for commuting - Retail ~ $3,000. bought as complete bike on Ebay 3) Ritchey Mt Bike - Retail ~ $2,000. Bought as pieces on Ebay 4) Meridian Tri Bike - Retail ~ $3,000. Bought as pieces on Ebay 5) Bilenky Tandem - Retail ~ $6k-$7k. Bought as complete bike on Ebay 6) Santana triplet (bicycle built for three) - Retail ~ $6,000. Bought as complete bike thru on line classified page.

There is no way I could have afforded that many bikes if I had to buy each at a LBS. I use each of them and have gotten my moneys worth out of all of them. I do have to keep them in spare tires, tubes, chains etc and that is no small expense when you consider the triplet uses 7 chains all by itself.

I am more into cycling now then ever and it is because I have all these bikes that need to be ridden. I also can’t walk by any bike shop without walking in to see whats new and it is a rare dy when I come out empty handed. I also buy my bike clothing at the LBS. And since I don’t do major repairs I count on a couple bike shops to do those. Plus I had to be fitted on two of them. Hell, I just bought my 6 year old a $300 Free Agent Mini BMX bike, from a LBS, because I wouldn’t dream of letting her ride something from Walmart or Target. After all, all my buddies would see what she rides and give me hell if it wasn’t decent. Well I did factor in her two younger sisters who it will get passed down to.

Due to Ebay, and other on-line bike sources, we are all riding either a cheaper bike or a better bike then we could have afforded if we had to buy retail.

Willy in Pacifica

41

I think recognizing a distinction between on-line/internet retailers and an LBS is very short sighted. The LBS of tomorrow will be an on-line retailer also. They will have to be. It is a matter of survival.

Currently, the chronic lack of sophistication within the industry has vendors making us sign dealer agreements that forbid us to sell their products on line. That is absurd. It is not much different than forbiding us to us e-mail to interact with our customers. I wonder if vendors in the 1930’s made bicycle stores sign dealer agreements that said “You will not conduct business over the telephone regarding our products.”

The bicycle industry will have to wake up one day and see what Victoria’s Secret, Bluefly.com, E-Bay, Amazon, Backcountry.com, Altrec.com and other on-line powerhouses have learned. Every year the amount of retail that is conducted on line increases by billions of dollars. That is money the bicycle has left on the table.

Integrating an effective on-line sales strategy into bicycle retail is critical to the bike industry. A very few companies do a fine job, Colorado Cyclist is quite good, but most of the others are archaic.

We use our website as a service to our customers and to our vendors. AS several posters have pointed out, they bought bikes elsewhere that were reviewed on our site becasue of our review. Our site has sold thousands (that’s right) of pairs of Speedplay pedals for other retailers around the world because of a review on our site. I have no problem with that since we generally only print reviews of products we believe in firmly and have tested thoroughly. We do review the occasional “dog” because I don’t want people to waste their money and I think they deserve a diverse cross-section of opinions.

Our site does draw people to our store and helps establish credibility. It is not an e-commerce site since we don;t currently have that capability and I wouldn’t do it unless it could be done correctly, and that isn’t easy. One of our respected vendors told me “The only thing standing between you and e-commerce is your unwillingness to do things half-assed.” I took that as a compliment.

In the mean time we can use E-bay. It works great for us and we operate within the requirements of our dealer agreements with our key vendors.

The day will come, not too far off, when the dealer agreements the bike companies make us sign will REQUIRE us to have a website instead of discouraging us from selling on line.

It may be a matter of historical interest that Dan Empfield (Slowman of Slowtwitch) was THE first pioneer and advocate of the LBS having a website. I remember years ago when Dan told me I should have a website, I was like, “Ahh, I don;t know Dan, I don;t thik that will be such a big factor…” Possibly one of the stupidest things I’ve ever said.

As usual, Dan was more right than he may have ever imagined.