Bike Shop Failure - Sydney City Bike Depot

SideFX

Likes Bikes and Dirt
Pretty sure we could all name a few brands that self distribute, both in cycling and other markets. I am pretty sure that their prices are very similar to those brands following the traditional model. Did Shimano or Specialized lower their prices when they cut ties with their ye olde business partners? Nope.
No , but theres still in business and able make a profit . Which is the hole point of being in business
 

Knuckles

Lives under a bridge
Totally . but were seeing concept stores now with there branded product . Basically manufactures selling direct and only to there franchises . Were CBD was in the city there are 5 " BIG " bike shops and 4 are branded , all in the space of three block . This is business .
And this is what cutting distro out of the chain will do. Brands will find it simpler and more economical to set up shop themselves. It still spells the death of the LBS.
 

scblack

Leucocholic
Wish you were wrong. Giant make it patently obvious that there doesn't need to be a price difference between aus and the USA.
The factor at play there is that Giant have a HUGE number of bikes imported into Australia. Thus they can run their own operation at a decent cost effectiveness. Do you think Intense, Banshee, Santa Cruz, (and many others) all niche bikes compared to Giant have the volumes to manage their own warranty and service operations locally?

Seriously?
 

Knuckles

Lives under a bridge
The factor at play there is that Giant have a HUGE number of bikes imported into Australia. Thus they can run their own operation at a decent cost effectiveness. Do you think Intense, Banshee, Santa Cruz, (and many others) all niche bikes compared to Giant have the volumes to manage their own warranty and service operations locally?

Seriously?
Exactly, giant is an outlier, in a mathematical equation they'd be ignored.
 

pink poodle

気が狂っている男
The factor at play there is that Giant have a HUGE number of bikes imported into Australia. Thus they can run their own operation at a decent cost effectiveness. Do you think Intense, Banshee, Santa Cruz, (and many others) all niche bikes compared to Giant have the volumes to manage their own warranty and service operations locally?

Seriously?
It could be done, but would require a pretty dynamic business model and switched on team. Use a bit of ye olde just in time for stock, a small warehouse, small team of over worked and under paid peeps...effectively set it up like some of the importers in that market already operate (one of the brands you note are notorious for being a shit house one man operation delivering terrible service) and ship to order with a few display items ferried around for demo days.

We would all recall that job add by specialized from not so far back...it isn't an industry notorious for good pay.
 

scblack

Leucocholic
It could be done, but would require a pretty dynamic business model and switched on team. Use a bit of ye olde just in time for stock, a small warehouse, small team of over worked and under paid peeps...effectively set it up like some of the importers in that market already operate (one of the brands you note are notorious for being a shit house one man operation delivering terrible service) and ship to order with a few display items ferried around for demo days.

We would all recall that job add by specialized from not so far back...it isn't an industry notorious for good pay.
Not a go at you - but HOW would any person expect comparative pricing to USA product, seeing the size of their market compared to ours - and then expect HUGE salaries for the gimp running the skeleton operation?

There are many other costs in running any business - insurance, tax, phones, internet/website, compliance such as accounting. No matter how lean a business may be, these costs cannot be shrunk to near zero.

Only having big numbers of product can reduce this cost per item to small amounts.
 

SideFX

Likes Bikes and Dirt
And this is what cutting distro out of the chain will do. Brands will find it simpler and more economical to set up shop themselves. It still spells the death of the LBS.
No , brands them self are cutting out distributors . The "LBS " aka local bike trader is now the branded distributor that can sell u a bike , fix your bike and supply parts . Its not the death of anything , the worlds just changing .
 

scblack

Leucocholic
No , brands them self are cutting out distributors . The "LBS " aka local bike trader is now the branded distributor that can sell u a bike , fix your bike and supply parts . Its not the death of anything , the worlds just changing .
LBS is NOT the distributor.

As I am saying this is only manageable by the few brands that have HUGE numbers, such as Giant, Specialized.

Otherwise we would be seeing Intense Bike Shop down the road. Not gunna happen.

Giant and Specialized LBS do NOT import their bikes direct from China/USA, they have a corporate entity set up here in Australia to do that. Then they would set up the connected bike shops, or maybe franchise them out.
 

pink poodle

気が狂っている男
Not a go at you - but HOW would any person expect comparative pricing to USA product, seeing the size of their market compared to ours - and then expect HUGE salaries for the gimp running the skeleton operation?

There are many other costs in running any business - insurance, tax, phones, internet/website, compliance such as accounting. No matter how lean a business may be, these costs cannot be shrunk to near zero.

Only having big numbers of product can reduce this cost per item to small amounts.
Seems to be some misunderstanding of my post...

- huge salaries? Doubt it.
- I didn't mention anything about pricing, just that those boutique bike brands would be able to go direct in a fashion not too different to some of the current operators in that market.
- of course there are additional costs outside of buying stock and paying wages. Some would he absorbed at the head office, some added on domestically. They would need to add up the pros and cons themselves and see if they Qmax it or not. OR if diminished returns are worth their efforts.

Like that thread cross reference?
 

Knuckles

Lives under a bridge
No , brands them self are cutting out distributors . The "LBS " aka local bike trader is now the branded distributor that can sell u a bike , fix your bike and supply parts . Its not the death of anything , the worlds just changing .
And a franchise outlet is not an lbs.
 

pink poodle

気が狂っている男
And a franchise outlet is not an lbs.
Neither is a chain. And neither will it be when specialized decide it is easier for them to run their own shop in location x and distribute to themselves etc. Choice for the consumer is dying off, hopefully prices do too.
 

tomacropod

Likes Dirt
Add trek to the list of manufacturers doing their own distribution. Works well and streamlines warranty stuff a lot, good for consumers. Most of the concept stores are still independently owned despite the badging. Shame about cbd, all the best to Hugh, it's hard to let go of such a large part of your life, and the decision to pull the plug is never an easy one.

As for the vulture comments, most attending the sale were on his list so already customers, and what's the alternative? Have nobody buy your stuff out of respect and leave you with debts, stock and no shop to sell it in?

There are plenty of traditional bike shops doing fine, we hear about the tall poppies going down but there are shop owners and managers who know their market and customers well and provide the right stuff at the right price.

The rotor burn community of high end mountain bikers is a small part of the market in Australia.

Joel
 

johnny

I'll tells ya!
Staff member
As for the vulture comments, most attending the sale were on his list so already customers, and what's the alternative? Have nobody buy your stuff out of respect and leave you with debts, stock and no shop to sell it in?
I also found those comments a bit silly and simple.
 

pharmaboy

Eats Squid
The factor at play there is that Giant have a HUGE number of bikes imported into Australia. Thus they can run their own operation at a decent cost effectiveness. Do you think Intense, Banshee, Santa Cruz, (and many others) all niche bikes compared to Giant have the volumes to manage their own warranty and service operations locally?

Seriously?
Filling in my comments by your own set of circumstances does not an argument make.

Just noticed that continental have a direct Aussie based website for their product - under $50 for a made in Germany tyre. There's an example of what can be done. For whole bikes, if the distro can't manage without a 1/3rd price hike, the manufacturer could use direct distribution with a decent freight arrangement.

Freighting is easier than local if the volume is low- these days most warranty work is done by shipping a new frame - the cost of production is so low, repair simply isn't worth it.

I know a bike shop that just buys a container load of small brand bikes from SE Asia - going direct for him seems to be working out ok.
 
Retailers fall over all the time, for lots of different reasons - crappy products / service, rent too high, margins too low, financing woes, inability to run a business etc etc

In this instance the reasons are unknown to us.

The LBS will endure, what % of bike riders do you think buy from OS and install themselves or buy bikes and frames directly imported from OS ?

I would wager a very small % of the total bike buying population.
 

rider124

Likes Bikes and Dirt
All this talk of service is nonsense. I was a partner in a bike shop for 5 years. We won numerous awards for our service (more than any other bike shop in town), as voted by customers. We barely made enough to pay the rent, let alone pay ourselves. Customers SAY they will reward good service. They even THINK they will reward good service. But what ACTUALLY happens is they buy on price and convenience every time.

That's why Coles and Woolworths are alive and well. They don't provide any level of service. They just have everything you need, in one spot, close to your house. That convenience sucks you in everytime, even if the checkout chick barely makes eye contact and packs your eggs under your juice bottles.

Bike retailing died back when modems made those funny screechy sounds on boot-up.
All so true - we have now been trained that online is awesome and convenient - but we only originally went there because Aussie retail had one of the highest margins in the world - it's come down, but the damage has been done.

Woollies and Coles do not have that outdated model however and are doing fine.

One thing can be learned from Coles and woollies though, is that joe public use certain items as cost comparators and if they meet their judgement of fair value then they trust in the rest of the prices. Eg a chain and cassette and tyres would be the classic comparators for me, and maybe xt brakes ;). Sell those at the right price and then sell more clothing, pumps etc
Woolies and Coles are feeling the pain from Aldi. Businesses must continuously evolve and adapt or risk going the way of the dodo.
SummitFever has got it here. Yeah woolies and coles were once competing with each other, but now Aldi and Costco have walked onto the scene, they are getting destroyed. the customer service in aldi is shocking, you cant ask anyone where anything is, you have to pack your own bags and the workers that actually are there dont seem to give a fuck. But because the pricing is cheaper for similar or the same product, people are going there?
(why do you think coles/woolworths have started to do insurance? It allows them to keep the same high levels of profit)

No, until the LBS is able to buy direct from manufacturers rather than buy at inflated prices from local distributors.
Not all are shocking no, But quite a lot are! Working in a shop i see my fair share of good and bad distributors. But even when companies (take shimano/Shimano Australia for example) set up their own importer in Australia, their mark up is still ridiculous!! It is sad when in more than 50% of cases its cheaper for a bike shop to buy off the internet than from the importer!!!
 

DJR

Likes Dirt
Went there 7 years ago. Told them my budget for a 6" travel duallie. Got pressured that I should spend 1k more than my budget and that the bike I was going to buy elsewhere wasn't going to pedal great. Walked out, bought bike at the other place (TBSM) and never went back.
 

floody

Wheel size expert
Coles and Woolies are still growing, sorry folks if you think your local area anecdotes about Aldi/Costco represents the broader reality. Range, price, expectation...they all fit their own niches.


@John - Times have changed though. Back then online sales were nothing like they are now, there was Jensons and FTR and maybe a few others. Now there are big orgs like CRC, Wiggle and smaller yet still significant cats like Pushy's, Torp7, etc. and bikes shops also had to live with a few years of a very powerful AUD.
The afternoon I called up Unreal Cycles in Seattle and ordered my first E-13 chainguide, I could see there was a storm brewing for the highly conservative Australian market. At that time I paid less, shipping included, than the local distributor's ex-GST, ex-postage wholesale price by $10, even including the international phone call. In fact it also arrived faster that it would have from the distro (who marked up express post at almost double), and truly the main reason I even went international was because they had the item in stock, unlike the distro who had practically nothing.

You know what the problem with that is? After about ten years, IT'S BASICALLY THE SAME! The biggest force of change in the industry has been attrition.



I worked in a bike shop that failed where, at the end, the recurrent customers couldn't believe it could happen to such helpful, friendly guys. Problem is, they represented some sort of loosely defined 'core' to some of the staff who somehow perceived them to be of particular value and fell over themselves to help them; when in reality all the customers should have been the core, because customers are obviously the core of a retail business. This explains the polarised comments about service I think, because it's pretty common in shops that go under.

Bike guys are rarely good retail guys, although there are some retail guys who are into bikes.



Also, calling Giant an outlier... Yeah, they are because they have a good business model! Any brand could be another Giant. Giant were NOWHERE 20 years ago. Even 10 years ago their product was still seen as entry level and viewed with some derision by many. If you don't stick your neck out and take the risk instead of placing it on the customer, well you'll be doomed to be I dunno, Dirt Works.
 
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