Thursday, April 7, 2016
Shimano. The giant, angry, blue smurf that's dismantling the cycling industry....part 1
In case you have been living with your head in the clouds, Shimano is making headline after headline these days, and it has nothing at all to do with the fact they still make a front derailleur. I will first begin by saying I feel that Shimano does make some, if not the very best, in cycling components. I used to be a full SRAM guy. As I progressed in my career, I made the move to Shimano. You can blame Juicy's, and every front derailleur, and every Hydro recall.
Not that it is anything new, but many throngs of retailers are bemoaning Shimano's pricing structure as it pertains to IBD's vs. internet sales. It has become common knowledge that Shimano components are priced at or below dealer cost online. Consumers know it, and retailers are demanding change. Shimano has no plans to change, and is pretty honest about it when facing dealer complaints.
Shimano dropped its pricing structure earlier this year. Not, as you would think, to help support IBD's in their competition against online shoppers. It came without a notice or heads up to many IBD's. Again, the IBD was left a little angry and pained, blue balls if you will. It just takes a quick glance at Bicycle Retailer's comment section to see this ager is widespread, with many dealer's throwing the rep out under the bus in the process.
low cost smurf's head down to the comments to get a Tapas of dealer frustration. Pay attention to article publishing date.
Now, I work for an IBD. I have friends, many of them actually, who own, run, and buy for IBD's. Many of my colleagues have called for a ban on buying Shimano product. That will get them to listen they say. Sadly, I feel these friends have no worldly idea of what they are talking about. In fact, many of them are running an antiquated business model that has been around for decades. Decades without change. Decades without forward thinking. Decades without a single ounce of prediction, only head in the sand reactionary bellowing from the same internets people are using to shop online. Meet your competition, it is the world, and you are staring at it right now. Perhaps you didn't notice the grimy handshake. Meet the internet, here since 1990ish. Crazily enough the whole selling online thing started decades earlier, and the first item sold was something anyone could grow themselves, weed. So this is Shimano's fault right?
Shimano is not around to subsidize the local IBD. They are a business. A fairly healthy and well run business that is multifaceted. You know they don't only sell cycling right? I mean they are healthy in that they have a diverse business profile that branches out to gain other sources of income. But most IBD's only sell cycling. As if every IBD is immune to winter. I mean, it's spring now, and sales are healthy. You do remember January and February right? That was about the time you were wise enough to save a few dollars and lay off your second technician. ( Oh don't fret dear reader, there is another piece coming on that bullshit.) How's that working out for you now?
Shimano. Well, Shimano not only cut it's price structure. It also announced it was up 14% . Is your business up? Notice the date stamped on that article. Yup same day as the price cut. How many times do you as a dealer, cut prices without losing margin, while you are up? Not many. Instead you wait for the big brothers to allow you to cut margin, mostly your margin by the way. SPRING SALES ON 2016 product??????????? Uh, that seems super healthy. What are you looking forward to when your terms are due and you still have floored 2016 product that was already on sale before spring?
Maybe this is your fault. Yup. Read that again. It is your fault IBD. I have been working in very healthy retail stores that have shelves of black and blue boxes on hand. The same boxes that are cheaper online. A lot cheaper. I have sold XT brakes all day long as replacements for Elixirs and Juicy's. Why? Not because they are cheaper, but because I have them on hand and have technicians who can install externally routed brakes properly in under an hour, on top of their regular work load. I work in healthy IBD's who can make that sale happen. What about your shop?
" I can order it for you"
" It'll be four days before we can get those installed"
" I have so many excuses for not making this sale happen its stupid. BUY LOCAL"
" There was a delay in shipping, not sure when they will arrive "
I'm pretty sure the customer has heard all that, and THAT is why they buy online. It's not them, its YOU. It's not Shimano. It's YOU. YOU the IBD. Your outdated, antiquated, surly business model is turning away clients. How may of you are welcoming of clients who bring their online purchases for you to install and don't complain about the cost of labor ? Very, very, very, few. That is pure profit. You didn't waste time ordering. You didn't shelf the product and have no carrying costs. Shops tend to charge $20-$40 per line to install disc brakes. If you maybe didn't lay off one of your technicians and get caught out when the season snuck up on you, you'd be glad to bank that $40-$80. If you are not happy to bank that, then you WILL go out of business. If you give that client the stink eye, you WILL go out of business.
Quite frankly, you should.