The Value Component: Service
It's easy to sell wetsuits, apparel and other triathlon bike parts and soft goods online. But selling bikes has a whole other degree of complexity. When a consumer buys a bike from a local shop, they buy not only the bike but also the support, generally in the form of favorable discounts on accessories and friendly service at reasonable prices.
But without the shop, a bike bought online brings just a bike. No place to bring it for derailleur adjustments, no warranty service. Nothing. But make no mistake, gears are turning to be sure the direct consumer is looked after.
As you may have noticed, mobile service is a white-glove cottage industry, catering to triathletes who, really, don't want to get their hands dirty or simply don't have time to take their bike to the shop. Enter Velofix.
The Canadian-based company is everything your local shop is; a qualified mechanic spinning wrenches, a few key pieces from pedals to tires available for sale, and the inviting aroma of a freshly-brewed Nespresso wafting in the air. The only difference? The Velofix mechanic is on four wheels; a beautifully built-out Mercedes Sprinter van, complete with Park Tools, space for storage and a full-service work bench. Schedule an appointment and the mechanic collects your bike at home and returns it shortly after. No shop to visit.
Where the local shop that you've frequented for years may frown upon your arrival with a Canyon or a web-bought Trek, Velofix fills the niche. Yes, mostly for the consumer who simply doesn't have time to take their bike to the shop, but also as a de facto mobile service center for a potential web buy. When your bike arrives to you, Velofix is there to swoop in, collect your bike-in-a-box, build and tune it, making it ready to ride.
With companies like Canyon showing up without built-in service, Velofix may become the perfect roving service provider. The company, with its 38 vehicles across the US and Canada, says they're up to the task, doing anything from the one-bike rear derailleur adjustments booked from your iPhone to a full tunings on all campus bikes for Microsoft.
"Someone said we're like the Uber of the bike business. Online is gaining massive traction," says Velofix founder Chris Guillemet. "The direct-to-consumer model for bikes is a huge part for us."
Guillemet saw the opportunity to go mobile as soon as he saw a stagnation in standard model bike margins. Something had to change, and online was it. "The last three and a half years, online sales have been way more prevalent for us," he says. "It's a hard place to be in storefronts. Insurance and rent are going up, but margins on bikes aren't."
Guillemet says he welcomes Canyon's pending presence. "I think there's plenty of room to work with retailers, because consumers will still be bringing their Canyons to brick-and-mortars for service. But Canyon really is a brand we'd love to partner with, and provide basic lessons—how to lube a chain or change a tire—to their consumers."
Defending Brick and Mortar Shops
Your local bike shop is suffering.
Maintaining a storefront, paying staff, organizing shop rides, and selling bikes on razor-thin margins is not a glamorous life. Truth is, the shop isn't paying its mortgage with the $7,000 bike it sold to you; it's only getting a small part (usually a few hundred dollars) of that sale. Rather, it's the aftersale—the bottle cages, shoes, maybe a pair of shorts, or a handful of gels—that makes up the difference once you are (hopefully) a devoted customer. Add service (tune-ups, a new tire swap) provided the shop gets you as a repeat customer, and it's a barely sustainable model. Barely. And when that new year model bike becomes dead year-end stock, selling at or below retail is often at a loss. It gets tougher when parts, from stems and derailleurs to tires and aero hydration systems are available online. It's an overplayed industry joke, but always plays the same: Want to know how to make $1 million in the bike industry? Start with $2 million.
Which is why there's a general thought that most mom-and-pop bike shops bristle at the thought of a customer walking through the door, trying out a new bike to be sure it fits, taking it on a test ride, and then walking out said door and ordering that same bike for hundreds less online. To add insult to injury, said customer often ends up bringing aforementioned online-bought bike into the store to have it built. The shop will do it, but not with a smile, and certainly not with a discount or sense of urgency.
For consumers plunking down big bucks on carbon tri bikes, their shops match their acumen: educated, forward thinking, and tech savvy. Most tri shops know the online wave is coming and are preparing to make it work for them.
"We look at a customer's buying patterns, not just from a retailer perspective or manufacturer's perspective," says Skip McDowell, CEO of Nytro Multisport. One of the most well-known and longstanding retailers nationwide, Nytro has a bustling storefront in Encinitas, California, with BMC, Cannondale and Quintana Roo bikes throughout the cramped quarters as historic Lotus frames hang from rafters above.
But even as a renowned retail location, Nytro maintains a thriving online presence. In fact, 80 percent of triathlon bikes sold out of Nytro come from the web. And it's a rare online presence at that. As a high-volume retailer with most of its suppliers, Nytro is afforded special license from a few brands (Quintana Roo and Cannondale among them) to sell bikes online (many as part of a first-time triathlete package that includes a bike, wetsuit, helmet, shoes and race kit) provided Nytro respects their retail pricing limiters. It's that forward-thinking retailing that has kept Nytro one of the most successful triathlon storefronts in America.
Still, it's not without challenge. "People are buying online, but the industry is having a hard time, both in online and brick-and-mortar," McDowell says. "With Amazon ruling the SEO market for soft goods—helmets, shoes, apparel—those sales have shifted from direct or retail to Amazon."
That aside, bikes are still the realm of retailers. And by McDowell's thinking, it still can be. It's just that retailers need to get on the online train. As do the bike brands.
"First, bike manufacturers have to get into the business," McDowell says. "If they put their head in the sand and say, 'We're never gonna have an online strategy and support the IBD,' in five or six years you may not have a business. It's coming; you have to embrace it and be part of it. And do it correctly, where it's efficient and doesn't harm brick-and-mortar."
He commends Trek for their gumption in being the first to take the direct sales chance in America. "Some [retailers] liked it, there was some negative press. But at least they had a strategy—they put their toe in the market and can adjust as they need to."
But McDowell says retailers need to be proactive about their business. "They have to look at how people are buying today. The smarter brick-and-mortar guys know it's more than, 'Here's the bike and here's the cost.' You gotta develop a relationship with the customer."
As a retailer, McDowell thinks there ought to be incentive from the direct sales manufacturers to send those customers to his store for build. He has a million different ways he could slice it and make the direct model tenable—even profitable—for retail storefronts. They may not get the bike sale, but they get the customer in the end.
"Maybe there's a way to structure things so that it's a win-win for the customer and the dealer," McDowell says. "Maybe offer a two-year maintenance-free program for the customer; free parts, fit and service. Or a $100 certificate toward any of their branded accessories to go with that bike. Or online gets a different kind of warranty: subsidized parts; an authorized bike build that adds a year to the warranty, whereas online-only with no retail component gets a different kind of warranty. I think if things like this happen, retailers will embrace it, knowing that 'Hey, these guys are driving customers to us.'"
Specialized: Defending Retail, Looking Forward
Defending the local shop are companies like Specialized. In fact, while Specialized does sell many pieces of its wide accessory range—including helmets, shoes and apparel—direct to customers from its website, it doesn't sell bikes online. You want a Shiv? Hit up your local dealer.
That said, they—like all other traditional channel bike manufacturers—are watching. And while they stand firmly behind defending the status quo, they're not averse to change.
"It's a huge topic that we think and talk about a lot," says Sean Estes, road product manager at Specialized. "Stu MacLennan, who spearheads our USA sales efforts, comes from Apple, and what we learned from him was that with online, they sold more product—period. Whether buying online or from a retail storefront, bringing online into the equation meant more sales across the board. If we do it, we want to figure out how to best do it."
What does that mean? "First and foremost, we're going to support our retailer, as our business was built by them, so we only want to do something that supports them," Estes says. "But we want to bring them into the digital age with us."
Interestingly, Estes says that Specialized nearly launched a program similar to Trek's, "But we pumped the brakes. We felt it was good, but we were still working on making sure we were doing right by our retailers."
While Specialized may take a "sit back and watch" approach as Trek makes the initial dive into direct sales and support, "It's interesting to look into, but not guiding our decisions right now," says Estes. "Our overarching goal is to move into the digital age with our retailers, but we don't have any direct or immediate plans."
What does this all mean to triathletes as we get ready to drop $3,000, $7,000 or $12,000 on a new bike? We're likely to be among the first adapters to any online programs. "I think triathletes are interesting," Bjorling says. "They're well educated about the product they use and do a lot of up-front research."
Is this a death knell for retail? It may be more akin to a Chicken Little fable for those crying foul about online—a fear of the unknown for retailers that have operated in the same manner for decades. To that point, Canyon doesn't aim to be the big bad guy upending the apple cart. Nor would Trek, or potentially Specialized or Cervélo or any other brand. It's just that the apple cart is now a clickable online cart. Canyon contends there is a place for all methods to coexist.
"It's bewildering to me that there are some brands that are so vocal about being anti-online, where it's so clearly the only way to survive," Heitmann says. To see Trek embracing it, it shows forward thinking. For us, it's simply the best business model."
Heitmann continues: "I used to have a bike shop, and any way we could get a customer—whether through sales or service—was great. We hope to provide new customers for them. We don't want to put anyone out of business; we want to coexist. We can't service every Canyon bike owner in the US when we're there, so we hope to have a reliable network of shops."
One thing is certain: the wave is coming. Get your board—or bike.
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