Art Deco
Well-Known Member
- Region
- USA
- City
- Selinsgrove Pennsylvania
Local delivery means showrooms with a fitting room and a shop can satisfy most bikers. Beats waiting months for delivery.
Trying Specialized Delivery
- Thread starter Stefan Mikes
- Start date
BEC111
Well-Known Member
The theme of these points gets to the crux of the matter. Shipping to a dealer for assembly and either delivery or pickup save the dealer the significant costs of obtaining and managing inventory. In addition an inventory of more than one instance of all the sizes and colors of any one model, some of which may never sell is a very expensive investment of money and space.
Maintaining a small inventory of many models for test rides and a larger one for the most popular products is a more sensible approach, especially in a market where so many bikes have to be special ordered anyway. In many cases not having to worry about having everything in stock can easily compensate for any loss of margin on a specific sale.
I‘m thinking this is another perspective on Just-in-Time inventory management. Ultimately, it can be a better deal for many LBSes.
So you're saying dealers pay a wholesale price that's half of the retail price?
I figured dealers had a decent margin, but I didn't expect it to be that much.
Art Deco
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- USA
- City
- Selinsgrove Pennsylvania
That's not what I said at all. I said Specialized controls the price both at the wholesale and retail level.
Are you saying you didn't write "25 per cent loss of commission should be similar value to a 25% interest rate financing" in post #19?
I expressed surprise at the retail price being twice the wholesale price, I didn't expect there to be that much margin. (for 25% loss of margin/commission to equal 25% interest rate on the wholesale price paid by the shop, retail price must be double wholesale price)
Art Deco
Well-Known Member
- Region
- USA
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- Selinsgrove Pennsylvania
I have no idea what Specialized sets their wholesale to retail markup at. The 25% was a percentage of that unknown full markup quoted for a delivery commission only, as compared to high interest floorplan costs.
The whole thing can be a plus or a minus. On one hand, the LBS doesn't have any real carrying cost for items they order on behalf of a customer. On the other hand the LBS might end up sitting on outdated stock such as a 2020 Vado 4.0 and a 2021 Vado SL 5.0 I see in stock at a couple different shops in my area.
Another aspect of the hybrid model (shop orders stock on spec vs customer orders for pickup) is perhaps shops can carry fewer sizes in stock and as part of the sales process get the customer to order the specific size/color for pickup. Lower revenue on the bike, but also lower stock carrying costs.
Though without any specific numbers of actual margin or a typical LBS average cost of capital to maintain stock it's all speculation on our part.
The reality though is the market landscape has been changing and continues to change. Retailers must adapt to the changes if they are to survive.
GuruUno
Well-Known Member
This article may give a view of the landscape:
www.singletracks.com
The Bike Boom is Over, but Shops are Learning to Ride a New Wave
The once-hot market for budget bikes has evaporated, and bike shops are now facing tough inventory purchasing decisions.
www.singletracks.com
Art Deco
Well-Known Member
- Region
- USA
- City
- Selinsgrove Pennsylvania
I'm just glad I own a bike, and not a bike shop.This article may give a view of the landscape:
The Bike Boom is Over, but Shops are Learning to Ride a New Wave
The once-hot market for budget bikes has evaporated, and bike shops are now facing tough inventory purchasing decisions.
When I was ordering my Vado SL 4.0 EQ a couple years ago, the salesman invited me behind the counter to look at their ordering screen so I could see the difference in available colors. At the time, it showed what I assume to be the dealer cost. From what I remember it was about 2/3rds of the list price. So now for a $5000.00 bike the dealer commission would be about $1700. Which they only get half for bikes ordered thru the website for pickup. They still have to pay their service staff to fully assemble/adjust the bike and the store itself needs to make something. The sales people (who actually don't have to do anything for store pickup) are probably cut out completely or at best given a severely reduced token amount and are understandably quite bitter about the store pickup model.
Later this year I may try home delivery for a cheap non e-bike to use on vacation. Won't have to worry about it being damaged/stolen and if it survives I"ll donate it to the local co-op at summer's end.
steve mercier
Well-Known Member
Some of you Spec Heads may find this interesting: https://www.pinkbike.com/news/whats...the-specialized-d2c-move-its-complicated.html
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