njkayaker

Pon owns Cervelo.

How focused on selling Specialized would Mike’s end-up being?

Might Specialized be served better with an outlet without that conflict of interest?

OldTryGuy

PON might very well have had an ISSUE from the onset of purchasing talks in which case the owners of Mike's could have simply figured "oh well, that's the way the cookie crumbles" and realized that customer's sales would be lost or hopefully redirected to another of their line.

We would order 300+ bikes at a time back in the 1970's boom and our Manufacturing supplier did not get a cent until after delivery. They did not know or care about our customer so IMO the onus is all on Mike's regarding customer's $$$.

himespau 

Mike's new owners probably look at it as a chance to try to convert some of those sales to their bikes. Specialized probably look at it as a chance to move 400 other people/shops further up in the line and build goodwill with those customers since, if the Mike's buyers were loyal to the lbs, they wouldn't be necessarily retained as Specialized customers anyway. I bet things would have turned out differently (potentially including 400 people not having already paid in deposits for bikes on order to jerk around) had we not been in a global bike shortage at the moment.

himespau 

In 2014 (or some other year) when there was a surplus of bikes, they may have done that. In a year of shortages when there aren't enough to go around, why give profit/commissions to someone who is now your competitor. You can keep some of those 400 and shove bikes that would have been aliquoted to the others to your factory stores so they have more product to display/sell and you get to keep that proft for yourself.

tyrion

Just a guess, but if Specialized sold their bikes through the new company (PON-Mikes), they'd obligated to provide service through the new company, and providing service via a direct competitor would be problematic.

Atlas Shrugged

One further point is the integrity of Specialized dealer network. There is a symbiotic relationship between the dealer and the manufacturer and if I was a dealer and Mikes/Pons were able to blow out 400 bikes while no longer meeting the obligations of being such that would be considered a breach of our agreement at least in principle. Funny how Mikes is getting a pass as they were the ones which screwed their customers as well as undermining the LBS model of selling bikes. I for one do not like the factory store model from any manufacturer but especially the ones who do not openly say this is a company owned store.

79pmooney

I believe there can be a difference between the legal obligation and simply being a good company. Yes, Specialized wasn't required to anything more than simply cancel all with Mike's. But those bikes were probably sold by salesman who were not in on the corporate talks to customers who likewise didn't know. Those sales quite likely were made in good faith.

What Specialized could have done is simply honored those sales simply to seen as good citizens (maybe contacting PONS and saying that, yes, it might get awkward but they felt bound to honor previous commitments as they expect PONS to do if the situation was reversed). The old business practice of not slamming the door behind you, of not burning that bridge. (And not feeding the internet, lest things go viral.)

Mojo31

Specialized may not have even known that Mike’s Bikes had orders with deposits. When a retail seller places an order, it doesn’t tell the supplier where the product is going when it hits the retail seller’s floor. From the suppliers perspective, it’s just selling inventory.

znomit

This is pretty scary given the instabilities in the industry.

What happens when next year customers get this: "Hey trusting customer, that Ultegra bike you paid for? We have Tiagra. Or you can wait another year."

greysquirrel

Why would Specialize honor the 400 bike sales since Mike's Bikes wouldn't be able to sell any more? Specialized would want to direct customers to stores where repeat/multiple/accessories sales are possible.
BTW, as of now, some Specialized models/sizes are listed as available for sale/pickup.

Sy Reene

More likely is 'that ultegra bike you ordered is now only available in 12speed, which you didn't pay for, but the 105 level bike is now the same price you paid.'

himespau 

The Specialized store near me has a fair few bikes, but none are road or gravel.

chaadster

This is exceptionally high level naïveté.

znomit

There's a future shock right there.

PeteHski

Because they are done deals? 400 bikes sold. I guess the reality is that Specialized are well behind on supply and can easily re-sell those 400 (probably not even produced yet) bikes directly or through other Specialized dealers. It does leave 400 pissed customers who have probably already been waiting ages for the bike they ordered and paid for. You could blame Mike's for selling their shop and losing their dealer contract, or you could blame Specialized for pulling the plug on these previous orders. Mike's seem to indicate that they would have been willing to complete those outstanding orders so......

eduskator

Exactly! Power changes people / things. I thought building customer's loyalty was the most important thing in the bike industry given that you don't buy a bike every year and that a happy client will be a returning client at some point, but this doesn't seem to be as important as before since summer 2020.

400 potential furious customers doesn't make much difference when there are thousands of others around on waiting lists that would be even willing to pay more than the MSRP just to get one quicker.

Now, is it Mike's that got rid of Specialized at the speed of light or is it Specialized that ended their business with Mike's as soon as they heard that it had been sold to Pon? It may be our answer.

chaadster

They are not done deals. Deals aren’t done until everything is paid and delivered. In this case, the manufacturer wasn’t paid and the shop didn’t get the bikes, making these deals very far from done. Assuming Mike’s are not idiot amateurs, they would have told their customersthat payment was not a guarantee the bike would be delivered.

You can believe that or you can trust their deeds, and what they did for sure was throw Specialized under the bus.

PeteHski

Well they are definitely not now are they?

eduskator

Full payment for something that isn't physically at the store (or even produced) yet? Wow!

Around here, if / when they ask for deposit, it's because they have it in stock or there's confirmation that bikes are in the country & on their way to the LBS.

PeteHski

I think people are genuinely worried that everything being produced in the next 12 months will be snapped up. Probably true for desirable high demand bikes. The shops are no doubt encouraging people to pay in advance too as it's about their only source of sales income at the moment. So I'm not really surprised this kind of thing is happening.

chaadster

Not done, of course not, but not lost either, and they didn’t have to put their entire business model at risk by selling to non-dealers.

All those pre-purchase people are free to get their money from Mike’s and take it to a Specialized dealer and re-order. Who knows, but maybe Spesh even has special instructions to dealers in Mike’s Bikes areas on how to deal with such customers.

But since we’re fond of the unlikely and outrageous here on BF, lemme jump on the band wagon and suggest that, with pandemic shortfalls and slowdowns, Specialized figure that the percentage of folks who decide to get a Cervelo from Mike’s rather than reorder a Spesh is the same percentage as those who would cancel their pre-purchase ahead of delivery anyway.

Whatever the actual case, Specialized is backed by the second largest bicycle manufacturer in the world, so it’s unlikely that anyone is going to beat them in bringing stock to the dealers.

Sy Reene

I can perhaps understand the shops needing some money coming in, even when they're not able to deliver product. But realize that if they were selling real delivered bikes, the shop doesn't keep the total amount, just the markup (or at least they only have the full amount for about 30 days). Then again, maybe the shop felt they had to do this -- is it possible that Specialized was not allowing any order cancellations on factory orders placed from the dealers' side?

We have no idea what the terms of the presales were. I wonder how formal/legalesed the written documentation is behind these prepayments. I don't even know how you sell a bike for future delivery if it might not even be known how the future bikes (model year) will be priced or configured by the manufacturer.

himespau 

What sucks for the customers is, not matter whether they decide to get another brand or go to another Specialized dealer is that they may have been near the front of the line (or not) depending on when they put down their deposit, but now they're probably at the back of the line with respect to getting their order filled. That would piss me off.

robbyville

Ah the joys of assumption that we all love!

on the topic of deposits… it’s absurd to not require a deposit program for hard goods, although paying in full is a choice I would never make unless it was a special order item that I was asking a store to make on my behalf. Well before the shortages deposits have been the norm to secure a product that was in order. It shows a commitment on both the consumer and dealer’s end. Rent a car, credit hold on reservation to hold the car for you, even some golf courses have started asking for “holds” on tee times to avoid no shows. It’s a thing and the store will be required to give back those deposits.

As the article mentions, this sale was not instantaneous, all parties would have had these discussions during the sale negotiations. I highly doubt (but won’t assume) that specialized’s decision came as any form of surprise, assuming (again), that these deposits on bikes were part of the retailer’s regular booking program.

one interesting thing in all of this is that since PON seems to be a holding group and not seemingly a direct manufacturer is whether or not as part of the sale they had any ability to dictate the products that Mike’s would sell moving forward, but to think that any of these decisions/moves/spin were surprises I just don’t believe it. Heck I see what’s involved in conversations selling a restaurant with revenues of one million a year, I can only imagine the detail work of what seems to be a wildly successful multi unit LBS.

if the long term operating partners of Mike’s are smart, they’ve probably already reached out to those 400 people and worked out a way to move them into a comparable product, without losing their place in line, with a great service package. Assuming (again) that Spec has no personal data on any of those same sales they would be relegated to a generic push in the geographic area to “any specialized customers affected by Mike’s change in ownership”

my .02

chaadster

There is no way to know that, and worst case, it’s on a store-by-store basis, so while maybe Mike’s Walnut Creek had your Creo SL Expert order along with three others, maybe Encina Bicycle Center Walnut Creek has only one on order or the their Concord store has none preordered. Maybe you could order it online before any of those stores get their allocation.

In any case, as I understand it, Spesh ain’t making bikes to order, so where you are in any kind of queue is a store-specific issue, and then dependent on what that shop gets offered and allocated to purchase by Spesh. The best one could do, I think, is to shop your dealer and ask them if they have any existing orders for the bike you want, pick the one with the least, pay your money and take your chances.