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Online versus traditional brick and mortar IBD… again/ still/ some more…

The cycling industry, like nearly every other industry known to man, struggles to come to terms with the growth of online retail and how to adapt to it/ with it. The cycling industry- especially at the retail level- has been fighting to survive the battle against online retailers ever since the earlier catalog mail order days. The vast majority of retail IBDs have been unable or unwilling to compete with the buying power and discount pricing of many online retailers. For several years nows, the manufacturers in the industry have also struggled to come to terms with the growth of online retail. Many brands have tried to cultivate twin distribution channels, attempting to remain strong in both IBD and online worlds. For some brands and product categories, it has worked with relatively few issues. The main category, but certainly not the only one, to receive the greatest amount if scrutiny and angst has been bikes- complete or framesets.

There are many arguments why a brand would want to partner with online retailers, the biggest and most obvious being the sheer number of consumers doing their research about brands/ products online, and then hunting for that ever popular and hated “buy now” button. For traditional IBDs, there are plenty of reasons to fear online retailers- many online retailers offer prices that can be cheaper than what an IBD can buy a similar product for, thanks to their massive buying power and lower overhead. Online retailers, often referred to as  evildoers attempting to undermine the health of the industry and put shops out of business, are far from The Evil Empire®. Is it fair to paint all online retailers as being ruthless bloodsuckers for simply being often more efficient and existing in the space where so many consumers spend vast amounts of time?

For brands, especially for smaller bike brands fighting for dollars in an increasingly competitive market with dominant incumbents increasing their control over retailers in the traditional IBD world, choosing to ignore online distribution- either through consumer-direct sales or with an online retailer- could spell death. With retailers often seeking to streamline their businesses, to keep things easier in a tough market or because of pressure from their major brands, smaller/ newer brands are left with very few options if they want to survive. Ignoring online distribution means saying “no” to consumers interested in their products. In my previous role as Brand Manager at Masi Bicycles, I had to frequently tell a consumer that I couldn’t directly sell them a bike, and that there were no online retailers who could sell them a bike… I had to say “no” to a sale. And I did it a lot. Masi had very large geographic areas without any retailers, and consumers in those areas who wanted to buy bikes… but we had to say no to selling direct and there were no retailers who could help them out. And things haven’t changed much in the industry in the few years since I was at Masi. It’s not entirely about small/ new brands either, because there are plenty of consumers who can’t get easy access to established brands too- or they simply choose not to deal with the local IBDs available to them. What are brands to do? Continue to say “no” and allow the brands who say “yes” to steal their sales?

For the IBD, there are numerous issues at play. If they attempt to compete on price, they may end up selling products- just to capture the sale- for less than they paid for the product, or at such a small profit that it becomes hardly worth stocking the product. Many retailers have had the experience of being “shopped” by consumers who use the retailer and their expertise to determine the proper product/ size/ fit that they need, only to have the consumer go home and buy online (or even within the store on their smart phones). Sometimes, it isn’t enough to explain the added value of personal service, good relationships, and proper product knowledge that the consumer misses by shopping online. Many consumers are addicted to the thrill of getting the ultimate “deal”, even if the shipping and/ or labor to install/ set up the new widget brings the IBD and online source to pricing parity. There is an increasing number of consumers who just flat-out prefer to shop online, for everything they purchase. This coming Christmas season is expected to be another record-breaking year for online sales. In fact, just this past week, UPS shares went up significantly in value based on reports by the company of the anticipated increase in business due to online sales. Even if an IBD is able to entice consumers into their shop, there is always the chance that they will not have the item in stock and need to order it themselves, increasing the desire of the consumer to go home and order it… and possibly get free freight, unlike the IBD!

Online retailers, have struggled for years to develop a better buying experience than walking into the local trusted retailer. Sometimes it’s easy, and other times it’s not. Online retailers without knowledgable staff, or with high turnaround, can struggle to survive as well. It takes a lot of volume of low margin closeouts to keep the lights on and the computer server humming. Having the right mix of product and inventory is an equal challenge for online as well. There has to be a balance of closeout inventory pulling in the low-price consumer, as well as new and currently hot products (at full margin) to keep “the geeks” coming back. Logistics is its own nightmare too, especially for larger companies doing their own private label products.

With brands, the answer will likely settle into a hybrid model of traditional IBD retailers and some sort of online presence. Either consumer-direct sales or some version of a “buy now/ buy local” option on brand websites, even if it directs the consumer to a nearby retailer- similar to Shopatron. For the retailer, the answer is likely going to require developing both an online presence, and learning how to offer a buying experience that trumps the convenience of buying online and potentially saving tons of money. And online retailers are increasingly attempting to develop IBD footprints, as well as learning how to increase profitability without just selling an increased volume of closeout products at low margins.

Overall, the answer is going to be uncomfortable at times, and is going to require a lot of dialog between all parties. There are many more pieces to the puzzle, and nobody seems to have the lid to the box so we can all look at the picture and figure it out. Consumers are online. A lot. They’re comfortable buying everything from watches to clothing to food to cars… and bikes. Brands need to reach more consumers- the industry has not had enough growth beyond its regular customers in over 10 years. Retailers have to make money and reach consumers- whether online or off the sidewalk. With the market’s hyper-competitive environment, the answer is likely going to get muddier before it gets much clearer.

 

Tim Jackson

Chief Kool-Aid Dispenser

What if a bike manufacturer made a model-year 2013 catalog that had 100 images of earlier models.  All photography by happy owners.  Bottle cages, after-market tape, non-OE tires, computer mounts, dirt…

Bikes leaned against garage doors.  Pedal-propped at the coffee shop.  Cafe, even!

Even if it was a small run and only distributed at Interbike while the copywriters and designers took their time with the real book.

Would that not be a clear message to its intended audience?

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A Twitter exchange

An interesting exchange between me and one of the folks I follow on Twitter.

Twitterpeep: “Assembling a new bike for Mr6 – I better make sure everything gets screwed on tight!”

Me: “You have to assemble a kids bike? Isn’t that the job of the retailer?”

Twitterpeep: “From a bike shop sure but this was purchased from Toys-R-Us and I trust myself more than I do their staff.”

Question? If consumers don’t trust big box staff, why do they trust their products?

So what holds folks back from purchasing from an IBD? Is it only price? Is it convenience? Is it just shopping habit? Or is it us?

It can’t be convenience, because there are more IBD’s than big box retailers, we are usually around the block somewhere. Price? How much is a consumers time worth? Is this a calculation? We deliver the bike to consumers assembled to standard and with a higher quality which saves them both time and sometimes frustrating effort. It can’t be habit, consumers show very little brand or retailer loyalty these days….maybe they don’t trust us either.

The Tour de France is good for cycling

Velo News has done a rough analysis of the very positive numbers coming out of this years Tour de France – fortunately not the positives we usually think about – it was all crowd numbers, television audiences and print media, all of which appear to have experienced solid increases, and in the case of bike sales there is anecdotal evidence that, doping or not, the Tour is good for anything connected to cycling.

I was also very interested in web viewing numbers, knowing that my own blog stats showed some big increases – something I’m sure all cycling blogs experienced.

If the numbers are to be believed, the Tour’s worldwide audience on the Web rivals that of television. Versus.com is reported that its unique visitors for of its Tour coverage are up 15 percent to 1.4 million, and total page visits grew 8 percent to 3.9 million.

At VeloNews.com, unique visitors to the site were up 15 percent to some 4.4 million, with page views up 11 percent to 32 million. Online video views on VeloNews TV grew from 1.1 million views a year ago to 1.3 million views this year.

I compared my blog (Spinopsys) stats over the duration of the Tour to a similar period last month (my biggest month ever) and saw raw visits increase 42%, absolute uniques up 47%, page views to 60%, time on site up 11% to over 6 minutes and pages viewed per visit increased 12%. There is more like this when I drill down further.

A simple explanation for the increase in interest could be the quality of the live television coverage of the event combined with the broadcast skills of Phil Liggett and Paul Sherwan.

Cycling is a difficult sport to explain to the ordinary sports fan, and though Phil and Paul may sometimes drive many hard core cycling fans nuts with their commentary, they manage to explain and describe the action in a way that even the most cursory sports fan can understand – they make cycling’s complexities accessible and easily digestible.

Cycling is also a difficult sport to broadcast technically and ASO has invested heavily in getting that just right. The closeup of the final sprint down the Champs d’Elysées was an awesome display of this and it brought a whole new dimension to the viewing experience. National networks have obliged and taken this quality coverage to the living rooms of general sports fans who now have a greater understanding of cycling.

Looking broadly at this expanded media attention not only is the Tour de France good for blogs, networks and newspapers it’s great for cycling and impacts on anything related to it, ultimately it looks like more is more.

A call to advocacy

If you haven’t watched it yet, here’s Trek president, John Burk, giving a presentation calling for advocacy in the bike industry. It’s the best 23 minutes you’ll spend today.

That’s the most inspiring thing I’ve seen in a long time and I feel it’s the beginning of something grand.

It’s hard to tell if my perspective is just skewed due to the fact that I watch the bike industry so much anyway, but it seems like we are on a verge of a renaissance here in the US. The overall “green” feeling growing across the country. Higher gas prices forcing people to look towards other means of transportation. And now, one of the biggest movers in the industry calling for an move towards bicycle advocacy.

For me, the part in the video that stood out the most is when John Burke confessed to not being interested in advocacy ten years ago and consistently turned away people asking for help. That kind of honesty is refreshing.

From there, the points about growing the number of people on bikes just a few percentage points will make the industry boom struck me as something I never had considered… but should have!

So here’s my questions… What can I do? And what can you do?

We can give money to advocacy groups… but what else?

How do we start getting involved in my community? Where do we start? Should we be burning up the phones calling our local politicians? Or is there something else?

I’d love to start compiling a list of resources for people that want to get involved in their community to get more people on bikes. If you have some information, links, tips, ideas, etc etc. Leave them in the comments to get us going.

What do women really want?

Graham at Go Clipless asks us to play brand manager dressups for a day in an effort to answer the unanswerable. Exactly what do women really want?

If the clothes are conservatively designed, there are women that will want them to be sexier. If the colors are too dark, they may be seen as too masculine. If the choices are the same as for men, they will not be seen as special. A conundrum to be sure.

So what would you do? Play cycling product manager for a day. What’s your strategy to approach this market, whether you are male or female?

This is good timing because I had an interesting and wide ranging conversation yesterday with a wonderful 50’s + woman about this exact topic, and about what influences her bicycle buying choices.

I think I know what women want……………..!?!?

She and other women I talk to on a regular basis about this do not want pinks and baby blues, however most of them are roadies and that’s where I’ll focus this conversation.

The specific conversation was about a Sarah Ulmer Brand full carbon Ultegra WSD machine that was accented with pink, white and silver, the bike was an out of the box fit, but there was no way she could get around the pink. I suggested we blacken it up (seat, tape, post stem) in an effort to de-emphasize the pink even though there wasn’t a lot of it. No way.

The feedback I’m getting is that the reference points of this kind of female cyclist are the men they ride with in the bunch, they are absolutely influenced by them simply because they are almost always in the minority and as such want what the guys are having. They don’t want to stand out as girly, they just want to fit in and be one of the boys.

This is not an isolated conversation, and as a result, my conclusion is that this particular market want the same bikes, the same clothing and the same accessories in the same colours as the men, just cut and designed for women.

So, as brand manager for a day, I’d like to design every womens high end product to look just like what the men are using.

((I’ll take my brand manager salary in a dirty brown paper bag of $100’s – just hang around the phone booth at the corner of Main and Central and wait for the phone to ring.))

Update: Smithers has a nice thread going on this, with comments from actual women (gasp!) like Mrs Smithers.