Originally Posted by
mlau
- too many models
Unless they constantly sell all the models at equal amounts, I would recommend cutting some of them.
- pricing too low
IMHO, there's a strange position in the middle where you're not Walmart cheap or Nordstrom. You're in the middle like Macy's or Sears.
This is a horrible place to be.
I don't agree that their pricing is too low. Perhaps on a couple of models such as their OSATA.
But, start with the base price, add a few options, and it is easy to get to > $2000. And, I think they'd hurt with much higher.
They do seem to be selling bikes. According to their stock offering (linked above) a couple of years ago, they had annual gross sales of $2 to $3 Million. At say $1000 to $3000 per bike, that equates to somewhere around 1000 to 2000 bikes, I think. Or, a few bikes a day. I think their materials cost was about 40%. General Adminstration, Sales, Customer Service, & Marketing was a big chunk (an additional 40%). The basic manufacturing was a bit less than 20% of the gross.
Your dental practice likely has a benefit of getting customers in year-around. Perhaps a few busy times at the beginning and end of the year.
But, the cycling business likely gets hit with too much business spring/summer, and too little business fall/winter.
The question should be what the real cost of different models/sizes/colors/etc.
There is a lot of similarity between say the Pocket Rocket, and a few other models, although 406/451 tire sizes and brakes make some difference.
Anyway, if a greater variety would increase sales, I'd go for the variety.
I think someone above mentioned a long turnover rate. So, this time of year, they may be waiting for the orders to come in, but in the summer, they can't ship the bikes out fast enough.
So, some work on pushing bikes out the door quicker (which should have a lot of overall benefits including customer satisfaction).
I would target order to shipping of a full custom bike in 7 days.
Day 1: Pull parts, welding of any missing subunits.
Day 2: Powder coating.
Day 3: Assembly & Decals.
Day 4: Shipping
Day 5: Extra Day
Day 6/7: The sabbath.
To hit that, they'll need a stock of common parts ready for assembly. And, of course, having adequate facilities to do their powder-coating.
And, of course, "Just in Time" with outsourced components, and perhaps a secondary or tertiary source for those that just don't quite make it in time.
Pre-manufacture of parts is complex, but they should have an idea of sales from prior years to get prepared for the next year.
Assuming the $1 Million in cost of goods is say 1/3 steel, 2/3 components, then they should be able to stockpile 1/2 year's worth of steel in various finishing states relatively easily.
I think their bikes are relatively simple.
Main Frame (perhaps 3 sizes).
Seatpost Mast (couple of sizes)
Fork 16", 406, 451 sizes/styles. Otherwise one size fits all.
Rear triangle, same as fork.
Some shared between models, some not.
Anyway, 50 sub-assemblies may well cover just about every bicycle they make.
Yes, quite a few, but say one made them in batches of say 50 of each at a time, then efficiency should still cover a lot of models.
If prices will support it, I'd bring back a couple of their former models. Especially if they can get whole different classes of buyers (a recumbent buyer might not compete with a pocket rocket buyer). Likewise one might get one buyer buying both the pocket rocket and haul-a-day, but the two aren't directly competing with one another.