softreset

Allow me to clarify them. As others have stated, there are two scenarios in play here. You're absolutely right, I presented two scenarios and didn't transition the thoughts with an appropriate transition.

It's middle to late June (common end of year transition for bike shops.

Scenario #1 : You've got a dozen bikes from brand X on the floor, various sizes, colors and models. In the case of our shop we've had those bikes either in inventory are committed to brand X since the fall of the year before. Brand X announced earlier this morning a new model colorway and that model Y now comes with Ultegra shifters instead of 105 shifters but for the same price. A customer walks in wants the new bike that was just announced. But (because this usually happens) that new bike isn't available for 2 months. So we work to sell them the bike that's on the floor, built, ready to roll. Any concession that occurs below MSRP comes out of the shop's margin. There's no kickback or compensation from the manufacturer because they've come out with a new bike.

Scenario #2 : Customer wants model Z from brand Y in a 52cm. We don't have that bike in stock. So we have to special order it. It turns out that the bike is on closeout from the manufacturer (but that this closeout hasn't been done at the MSRP level yet) as the manufacturer is looking to purge the back channel ahead of time and entice shops to order. In this case, the shop could stand to make a better margin on a bike.

Scenario #3 : Customer comes in and wants a carbon Ultegra bike with carbon wheels but doesn't want to spend more than $3500. We know that it's impossible to get that price point from brand X. However, because of the wholesale closeout that's occurring from brand Y (mentioned in scenario #2 ), we then position a different manufacturer would allow him to meet his shopping requirements and price point. So we special order the bike for them, close a sale and still meet shop margin goals.

Scenario #3 a: The customer decides after getting the special order bike that they don't like it and the sale is not finalized, the special order bike goes back into inventory, the bike goes on a blowout sale from the manufacturer before we can resell the bike. Hopefully the margin goal is still met.

So yes, I'll maintain that the shop takes it 100% on the chin on in-stock, pre-paid (usually net-60/90) bikes. Where the shop can offset that or even come out ahead is restocking or special orders during closeout/transition time periods.

Apologies that I didn't better clarify that. Hopefully this follow up clarifies that for you.