Death of a Bicycle Salesman
When I saw the news that Giant Bicycles was going to sell bikes online, I knew that it was over. Most people think of Giant as a second tier brand in the U.S., but their size and stature in the bicycle industry is unmatched. Basically, Giant makes bikes for everyone else. They probably made that Trek or Specialized you see riding down the street, or the high-end carbon racing bike hanging in your garage. That’s just how the bike industry works. And when the literal Giant of the industry says they don’t need bike dealers anymore, well then you just know the local bike shop’s days are numbered.
Please don’t take this the wrong way. I positively love bike shops. You can ask my wife! I spend entirely too much time, and too much money at my LBS (local bike shops). We are fortunate to have a handful of great shops in Palo Alto. That’s because there’s so much disposable income and lots of MAMILs who must own the latest and greatest race bike, so they have an excuse to go for coffee on Sunday mornings. I’m just as guilty as the next guy, with a garage full of bikes (21 at last count!). This isn’t some erudite post about why bike shops are failing. These are just my thoughts as an avid cyclist and customer.
Customer service is a double-edged sword
I love walking into bike shops anytime I visit a new city or even a new country! The local shops know me, so this doesn’t work at stores I visit frequently. I usually see how long it takes before someone offers to help. Then I wait to see how they interact, and what assumptions they make about me as a customer. I can only wonder how women are treated when they visit a bike shop, considering most shop owners and employees are male. Most of the time they assume that I’m a newbie, and the surprise (relief?) is visible when we start talking. I can out-geek most bike geeks.
But customer service is tough if you don’t know what the customer wants, or even they don’t know themselves what kind of bike they need. And it is doubly difficult for an entry-level salesperson (bike sales seem to be a popular job for high school kids) to assess and assist the variety of buyers that walk into a shop on any given Sunday. Lots of customers we’ve talked to actually dread going into a bike shop because of the two extremes. Either they are new to cycling and feel intimidated, or they’ve been riding for a long time and the shop doesn’t meet their needs, or talks down to them.
Customers pay for the value you give them
With most bicycle parts purchases having shifted to online sales, the bike shop’s only defensible product is the bicycle itself. But the markup on bikes are both large and diminishing. Shops usually get 30–40% margins on bicycle sales, but many still feel this isn’t enough to cover rent, labor and leave them a reasonable profit. Even the very best bike shops in the country are lucky to end up with single-digit profit margins at the end of the year. It’s not an easy business, and it is hard to convince customers that the markup is justified. Unboxing a bike and getting it ready for a customer doesn’t take that long. But having a bike sit for a year unsold is very costly.
With online bicycle sales, the shops will be reduced to service centers for bike repairs and tune-ups. Even bicycle accessories (helmets, locks, etc.) will be sold online more often, as customers become better educated about the products and bicycles are bought online, pre-equipped. Shops have to work even harder to earn the cyclist’s spending dollars in the store. They have to convince riders that their services are not just necessary, but valuable too.
Customers are shifting to online for everything
If you consider that a bicycle box is probably the biggest shippable item, then it makes sense that it’s the last thing to be sold online. These days some big-screen TV’s come in bigger boxes, and they’re a lot more fragile! The hardest part about shipping a bike is that there is still some “assembly required” by the customer. This can be an intimidating proposition if you’re not mechanically inclined, or haven’t even ridden a bike in years or decades. We’ve thought about this a lot and hope we’ve come up with some novel ways to address the customer’s hesitation. One thing we’ve done is in the design of our Koben and Koben S models. We’ve removed one of the most difficult and perplexing parts of a bicycle: the rear derailleur. We also use disc brakes for their simplified setup and maintenance, not just for the superior stopping power. We try to make it easy. We even try to make it fun!
The age of online shopping isn’t just coming to the bike industry, it is already here. The companies that don’t adjust to this new paradigm will simply fade away. Customers are smarter than the bike industry thinks and bicycles aren’t these complicated machines they would have you believe. Once customers get used to buying bicycles online, the landscape for bike shops and bike manufacturers gets a lot more bleak and barren. Trek and Giant are only taking half-steps, shipping bikes to your local store and charging you the same price. The true revolution of online sales is passing along the savings to customers and giving you better bikes at better prices.
I know it seems self-serving for a direct-to-customer company like Karmic Bikes to bemoan the death of the Independent Bicycle Dealer (IBD). But even The League of American Bicyclists puts it bluntly in this article:
Bike shops as we know them are dying. From 2000 to 2013, the number of bicycle retailers in the United States decreased from 6,195 to 4,055.
We sell direct because it allows us to offer a really great bike at a much more affordable price. We are also adamant that our customers are treated very well, and that’s not something we can guarantee once there is a middleman. It takes years for a new bicycle brand to sell into the IBDs and convince shop owners to carry expensive inventory, and give up precious “showroom” for an unknown company. The big bike brands don’t like having any other competition on the floor, so the bike shop owner is stuck selling the same one or two brands. Tesla had to establish their own branded showrooms since dealers wouldn’t sell electric cars over regular cars. We can’t expect that a bike shop would sell a Karmic electric bike over a regular bike. It takes more work, it takes educating the customer (and the shop employees too!) and it is just easier to push the same old product that they’ve been pushing.
There are so many theories on why the U.S. ebike market hasn’t grown as quickly as Europe and Asia has over the last 2–5 years. No one wants to blame the bicycle retailer for their part in this. New technology can be intimidating, but it will come in every industry, whether you want it or not. The fact that any industry can still be debating selling on the “Internet” in 2016 is crazy! Unfortunately a lot of IBDs will be surprised to find the knife in their back, as the bike industry kills itself. Innovate or die indeed.
Just don’t cry bloody murder. The death of the bike salesman was by suicide.
