Giant No Longer a Value Brand? A Tale of Two Similar E-bikes, Two Years & $900 apart

[jabberwocky]

I mean, I'd still disagree that Giant is or ever has been a value brand. Bikesdirect/Motobecane is a value brand. The generic QPB brands like Surly and Salsa can be considered value brands. Giant just tends to be (but isn't universally) a bit less expensive than Specialized and Trek. I've never heard of Giant referred to as a generic value brand, and my first MTB was a Giant Rainier hardtail I bought in 2003. There are definitely segments where they offer a great pricepoint (the Revolt Advanced 3 is my LBSs bread and butter bike; full carbon and GRX for a little over 2k is a super competitive bike and I live in a gravel riding mecca).

Ok, they retired the Quick-E and replaced it with the Fastroad and the price went up. Clearly it still sold well enough, because its still in the lineup. If its too expensive for you, keep your Quick-E? Or buy another brand? However we think of these brands, they are all businesses and price at what the market will pay. My observation is that early ebike pricing was all over the place as companies tried to figure out what would sell in a nascent market. Maybe Giant priced the QuickE low, it sold great, and when they decided to replace it with a new model they looked at what other people charged for comparable bikes and bumped a few specs and pulled the price up? Or they figured they had to price the QuickE low as their leading bike to establish themselves in the ebike market, and once established they raised pricing? The good news is that Giant is far from the only game in town, so if people don't like their pricing there are plenty of other options to look at.

 

[Asher]

I mean, I'd still disagree that Giant is or ever has been a value brand. Bikesdirect/Motobecane is a value brand. The generic QPB brands like Surly and Salsa can be considered value brands. Giant just tends to be (but isn't universally) a bit less expensive than Specialized and Trek. I've never heard of Giant referred to as a generic value brand, and my first MTB was a Giant Rainier hardtail I bought in 2003. There are definitely segments where they offer a great pricepoint (the Revolt Advanced 3 is my LBSs bread and butter bike; full carbon and GRX for a little over 2k is a super competitive bike and I live in a gravel riding mecca).

Ok, they retired the Quick-E and replaced it with the Fastroad and the price went up. Clearly it still sold well enough, because its still in the lineup. If its too expensive for you, keep your Quick-E? Or buy another brand? However we think of these brands, they are all businesses and price at what the market will pay. My observation is that early ebike pricing was all over the place as companies tried to figure out what would sell in a nascent market. Maybe Giant priced the QuickE low, it sold great, and when they decided to replace it with a new model they looked at what other people charged for comparable bikes and bumped a few specs and pulled the price up? Or they figured they had to price the QuickE low as their leading bike to establish themselves in the ebike market, and once established they raised pricing? The good news is that Giant is far from the only game in town, so if people don't like their pricing there are plenty of other options to look at.

I don't get why you and others are defensive about someone observing that a company's product pricing changed. "Someone is critically evaluating a company, capitalism is under siege!"

Being a value brand isn't about sheer price, but what you get for it. You can charge more than BikesDirect and still be a value brand, because you offer better frames, LBS support, etc.

There really isn't anything below ~$4k for a high quality class 3, mid weight commuter from an LBS, except the Cannondale temporarily on sale at REI. There was for $3k for two years ago. That is notable.

As for Giant figuring out pricing, they already know their parts costs and they don't go random on setting their profit margin every time they sell a new model. They probably realized a low price wasn't really worth the loss in margin, alongside a general move upmarket. Which sucks for people with a lower budget who can't get quite this quality of bike at the same price any more (unless you can furnish a counter example, mid drive class 3 commuter from an LBS).

 

[PedalUma]

One man's greed is another man's strategy. Condemning it is not going to change anyone's mind anyway.

As a business, there are different ways you can market yourself. You can try and keep prices low to ward off competition and attract customers, or you can have higher prices supported by marketing to persuade people to pay more - prestige, status etc. I'm saying that it seems like Giant is switching from the former to the latter.

There are bike brands that aren't platinum brands but give you a good value for bikes, especially if you weren't after the latest frame innovation (the components are still the same). Best examples are probably REI and Decathlon, plus Canyon and BikesDirect if you buy online. It's just a bit jarring if a company switches. It's like if your cheap neighborhood diner suddenly renovated and raised prices (but the actual food was pretty similar lol).

People are emotional and not perfect economists. Status is a social and emotional factor in price. I have a $55 watch. It turns out that is the same one Bill Gates has been sporting. Who does he need to impress? A $20,000 watch does not tell time any better. Some people LIKE to pay MORE! This is one factor in the mix that is often overlooked. In Manhattan some women will not be seen on the street with a handbag that cost them less than $50,000. Status is not an attribute of engineering or physics that can be read in specifications.

Blue Crocodile Hermès Birkin Bag - $113,525​

 

[jabberwocky]

I'm not being defensive; I genuinely don't care about Giant, and own bikes from several mfgs (wife and my collection currently has two Ibises, a Soma, two YTs, two Giants, a Liv, a Motobecane and two Raleighs. I've owned bikes from Lemond, Turner, Lotus, Evil and a few others as well. Many were bought used as complete bikes or frames and built up. I bought my Revolt because competition was slim in the e-gravel space and I like my local LBS who is a Giant dealer. I like it fine. If I had to replace it I might go with the Niner RLT (I know people at a shop who deals Niner and have fitted their bikes well in the past though I've never owned one).

Even pre-pandemic, demand was high and component prices were climbing. The pandemic just supercharged it. In 2010 you could get a nice FS MTB for 2-3k; now they are at least 1k over that. I paid 2100 for my Mojo HD frame in 2010; a current model HD5 frame is 3k. Pricing has been on a steady climb since I started riding in 2003. Even low cost brands like Rad have pushed pricing up over the past few years. Some of it is material costs (which have increased massively), some is component costs (which have increased) and some is just "we are selling as many as we can make, we should probably increase the price".

I'm not trying to be argumentative, I guess I'm just a little confused about the point of this thread. Yeah, pricing has gone up. IME It always does.

 

[PedalUma]

I convert peoples bikes. The increases have left a gap for me to fill.

 

[Asher]

I'm not being defensive; I genuinely don't care about Giant, and own bikes from several mfgs (wife and my collection currently has two Ibises, a Soma, two YTs, two Giants, a Liv, a Motobecane and two Raleighs. I've owned bikes from Lemond, Turner, Lotus, Evil and a few others as well. Many were bought used as complete bikes or frames and built up. I bought my Revolt because competition was slim in the e-gravel space and I like my local LBS who is a Giant dealer. I like it fine. If I had to replace it I might go with the Niner RLT (I know people at a shop who deals Niner and have fitted their bikes well in the past though I've never owned one).

Even pre-pandemic, demand was high and component prices were climbing. The pandemic just supercharged it. In 2010 you could get a nice FS MTB for 2-3k; now they are at least 1k over that. I paid 2100 for my Mojo HD frame in 2010; a current model HD5 frame is 3k. Pricing has been on a steady climb since I started riding in 2003. Even low cost brands like Rad have pushed pricing up over the past few years. Some of it is material costs (which have increased massively), some is component costs (which have increased) and some is just "we are selling as many as we can make, we should probably increase the price".

I'm not trying to be argumentative, I guess I'm just a little confused about the point of this thread. Yeah, pricing has gone up. IME It always does.

Fair points all. Do you think those MTBs are noticeably better in quality? I'm wondering why component costs are going up. I guess it's increasing wages and material consumption in developing countries at a very macro level, especially Taiwan and China. Plus aging workforces in those countries.

I used to work as a cost analyst, albeit in a very different industry.

My point for the thread was exploring why Giant massively increased prices.

 

[jabberwocky]

Fair points all. Do you think those MTBs are noticeably better in quality? I'm wondering why component costs are going up. I guess it's increasing wages and material consumption in developing countries at a very macro level, especially Taiwan and China. Plus aging workforces in those countries.

I used to work as a cost analyst, albeit in a very different industry.

My point for the thread was exploring why Giant massively increased prices.

TBH I don't really think theres that big a quality difference between most brands. Bikes over like $750 are basically luxury items; companies charge what the market will pay, which is often decided more by marketing than anything else. My wild-ass guess is that Giant felt the old bike was underpriced (maybe deliberately to gain some market share), and when they replaced it with a new model they took the opportunity to upgrade a few parts and pull the price more in line with what Trek and Spec were charging (causing a spike in price), but thats a total guess. Companies employ people to figure out what the market wants and they sometimes screw it up. Who knows. When I started shopping was when Giant was phasing out the Toughroad E and replacing it with the Revolt and the price went from 3800 to 4200. Upgrade in some ways (more expensive drivetrain, class 3) and downgrade in others (smaller battery).

Component pricing has been making that steady march as well. You could get a dura-ace groupset for 1400ish in 2010. Now its 2k. The tech has trickled down though, and todays Tiagra is probably nicer than 2010s ultegra.

I do think Giant is lagging a bit in making varying levels available to hit different price points. Trek and Spec seem to have a few versions of each model (with the same frame and motor but different component spec). In ebikes, Giant seems to just have a single model. Like, they could probably offer a Revolt with Tiagra and cheaper wheels and price it a few hundred lower. Or a Fastroad with alivio shifty bits and mechanical discs to pull the price down. I'm guessing the sales numbers don't quite rise to the level to make the varying stock headache worth it. And at the moment everyone is selling stuff like crazy so value engineering the model line just isn't on their mind. Maybe post pandemic when things settle down.

 

[Alvin1957]

Three years. Not one. For the Quick-E at $3k.

Giant was popularly considered a value brand, often. Now it isn't. Value brand = below market or below big brand pricing. Kirkland is a value brand, for example.

I have a really stupid question. We have loss leaders in our product lines in my industry. We sell one part of a set of products at a loss that is really attractive to the customer and make our money on the 'accessories' that go into that set or with that particular item.
How does that work in the ebike industry? You buy the ebike but then where would the company make its money? Sorry if this is obvious.

 

[McCorby]

I'm not trying to be argumentative, I guess I'm just a little confused about the point of this thread. Yeah, pricing has gone up. IME It always does.

Me too! I find myself feeling this way with many of Asher’s posts/threads!

 

[FlatSix911]

People are emotional and not perfect economists. Status is a social and emotional factor in price. I have a $55 watch. It turns out that is the same one Bill Gates has been sporting. Who does he need to impress? A $20,000 watch does not tell time any better. Some people LIKE to pay MORE! This is one factor in the mix that is often overlooked. In Manhattan some women will not be seen on the street with a handbag that cost them less than $50,000. Status is not an attribute of engineering or physics that can be read in specifications.

Blue Crocodile Hermès Birkin Bag - $113,525​

As my father taught me and I taught my kids... A fool and his money are soon parted.

 

[Asher]

I have a really stupid question. We have loss leaders in our product lines in my industry. We sell one part of a set of products at a loss that is really attractive to the customer and make our money on the 'accessories' that go into that set or with that particular item.
How does that work in the ebike industry? You buy the ebike but then where would the company make its money? Sorry if this is obvious.

A loss leader is used to bring customers in, it's a marketing device where the store is spending money on losses instead of say ads. You wouldn't use a bike as a loss leader because that's the core product, and also a high cost, high profit (in absolute terms). You don't use loss leaders where many consumers would simply buy that product and have little need for you after, especially if the product has a high relative acquisition cost.

In the bike industry, you might say sell a couple accessories at a loss, or offer a small free repair service. Loss leaders also seem less common for online retail, because the deal will end up on deal sites where people buy just that product and then never come back, eroding any benefit of the marketing. Costco famously uses it's rotisserie chickens as a loss leader, because no one comes to Costco and just buys the chicken (though partly because it takes so long just to drive/walk in and out).

I don't see the bike industry doing loss leaders with much regularity. The razors and blades strategy doesn't quite work here because the razor (the bike) is expensive and the blades (the post purchase service) is fairly cheap. There is a related concept of halo vehicles, where some vehicle is so appealing it brings people to your brand, but is too expensive or impractical for many people to actually buy, and they end up leaving with something else. The Dodge Viper was said to be a halo vehicle.

That said, being a loss leader doesn't have any relation to being a value brand.

 

[PedalUma]

As my father taught me and I taught my kids... A fool and his money are soon parted.

I saw a $15,499 bike today. What is cool is that it had gold stickers.

 

[Alvin1957]

A loss leader is used to bring customers in, it's a marketing device where the store is spending money on losses instead of say ads. You wouldn't use a bike as a loss leader because that's the core product, and also a high cost, high profit (in absolute terms). You don't use loss leaders where many consumers would simply buy that product and have little need for you after, especially if the product has a high relative acquisition cost.

In the bike industry, you might say sell a couple accessories at a loss, or offer a small free repair service. Loss leaders also seem less common for online retail, because the deal will end up on deal sites where people buy just that product and then never come back, eroding any benefit of the marketing. Costco famously uses it's rotisserie chickens as a loss leader, because no one comes to Costco and just buys the chicken (though partly because it takes so long just to drive/walk in and out).

I don't see the bike industry doing loss leaders with much regularity. The razors and blades strategy doesn't quite work here because the razor (the bike) is expensive and the blades (the post purchase service) is fairly cheap. There is a related concept of halo vehicles, where some vehicle is so appealing it brings people to your brand, but is too expensive or impractical for many people to actually buy, and they end up leaving with something else. The Dodge Viper was said to be a halo vehicle.

That said, being a loss leader doesn't have any relation to being a value brand.

Thanks! what you have described is more in keeping with how we use loss leaders. I just couldn't see it with an e-bike. The halo vehicle is a term new to me but I have encountered the reality when a dealership parked a Porsche 911 in the showroom next to the VW Rabbit I wanted. I thought briefly about it until the sales guy told me the tune-up costs. Thanks again.

 

[reed scott]

TBH I don't really think theres that big a quality difference between most brands. Bikes over like $750 are basically luxury items; companies charge what the market will pay, which is often decided more by marketing than anything else. My wild-ass guess is that Giant felt the old bike was underpriced (maybe deliberately to gain some market share), and when they replaced it with a new model they took the opportunity to upgrade a few parts and pull the price more in line with what Trek and Spec were charging (causing a spike in price), but thats a total guess. Companies employ people to figure out what the market wants and they sometimes screw it up. Who knows. When I started shopping was when Giant was phasing out the Toughroad E and replacing it with the Revolt and the price went from 3800 to 4200. Upgrade in some ways (more expensive drivetrain, class 3) and downgrade in others (smaller battery).

Component pricing has been making that steady march as well. You could get a dura-ace groupset for 1400ish in 2010. Now its 2k. The tech has trickled down though, and todays Tiagra is probably nicer than 2010s ultegra.

I do think Giant is lagging a bit in making varying levels available to hit different price points. Trek and Spec seem to have a few versions of each model (with the same frame and motor but different component spec). In ebikes, Giant seems to just have a single model. Like, they could probably offer a Revolt with Tiagra and cheaper wheels and price it a few hundred lower. Or a Fastroad with alivio shifty bits and mechanical discs to pull the price down. I'm guessing the sales numbers don't quite rise to the level to make the varying stock headache worth it. And at the moment everyone is selling stuff like crazy so value engineering the model line just isn't on their mind. Maybe post pandemic when things settle down.

Heh heh, 'Value engineering'. We started using this cover phrase in the construction industry with clients when what we really meant was 'cutting corners'. We learned it from engineers. I think they learned if from the bean counters.

 

[jabberwocky]

I getcha (architect) but its pretty common in the bike industry. Have the super pricey halo model that pros and rich people ride (think S-Works), and then various similar models with less expensive specs to hit various price points. If Giant felt they needed a RevoltE to slot in at a lower price point than the current one, there is plenty of room to put less expensive parts on it and drop the price (and, vice versa, plenty of room for more expensive parts for a higher end model if they think it will sell). Like, in normal bikes Giant has the Revolt Advanced Pro, Revolt Advanced and the base Revolt, with prices across the range starting at 1200 and going up to 6k, depending on what sort of spec you want, carbon vs aluminum frame, wheels, etc.

 

[Asher]

Heh heh, 'Value engineering'. We started using this cover phrase in the construction industry with clients when what we really meant was 'cutting corners'. We learned it from engineers. I think they learned if from the bean counters.

Value engineering has a double bonus in the bike world. Crappy parts induce some buyers to upgrade through... the other customer, the store selling the bike! The brand can sell a little more volume through hitting a lower price point, and the dealer can sell more parts/labor to fix the 'value' created by value engineering.

Notably, direct sales brand Canyon seems to use quality parts across the board, adjusted for the price point. Direct sales provides a nice check on this behavior, insofar as customers actually care and reward Canyon for avoiding it.

 

[Alvin1957]

thanks! I hear the 'value engineering' phrase in the building products industry all the time. Usually, it's from sales and marketing staff. We (chemists) keeps telling them that 'value engineering' is a synonym for 'failure in the field' and 'lawsuit.' This is all interesting when thinking in terms of the bike industry.

 

[reed scott]

Yes but. Not much chance for successful lawsuits of Chinese bike makers. I guess we can't bring the bike manufacture industry back to the western world in any volume sense but there are lots of other countries hungry for a chance. I think Wattwagons is looking at India but it's not an imminent proposition.

 

[Asher]

thanks! I hear the 'value engineering' phrase in the building products industry all the time. Usually, it's from sales and marketing staff. We (chemists) keeps telling them that 'value engineering' is a synonym for 'failure in the field' and 'lawsuit.' This is all interesting when thinking in terms of the bike industry.

Haha yeah I don't it mean it like that. The parts are still perfectly functional and safe, it's just that it's subpar relative to the rest of the bike, on the assumption that customers won't notice or care enough to be dissuaded. Like if you were making a quality commuter ebike but left out integrated lights.

 

[Alvin1957]

Haha yeah I don't it mean it like that. The parts are still perfectly functional and safe, it's just that it's subpar relative to the rest of the bike, on the assumption that customers won't notice or care enough to be dissuaded. Like if you were making a quality commuter ebike but left out integrated lights.

Miscommunication on my part. I followed what you described. I was just commenting on the comedy of value engineering in my field and should have probably just left it out. Even I like a functional equivalent if less expensive and it still works well. When my kids were young, I had a 3-speed from K-mart (extreme value engineering out of China) and it worked perfectly well puttering about the neighborhood following a 6 year old on their first ride.