unterhausen

I think there are going to be marginally more people on bikes that are too large for them. OTOH, the owner of my lbs thinks that cheap bike shop hybrids are going away because of shipping costs, so a lot of the lower end customers are going to end up buying at walmart.

nel e nel

Isn't that where lower end customers are typically buying anyways?

cyclezen

Yeah, so going through the elements of this...
It's actually not a bad deal for the dealership...
some knowledge of general small retailer business has to be understood, especially in businesses which have 'seasonal' cycles (which are for many small retailers).
Retailers place 'orders' well ahead. As with all orders placed many months ahead, there is great risk in what and how you buy... Then when you receive, you generally get Net 30 terms, time enough to get the needed money in hand and pay the invoice - often through some form of shortterm loan. Then you sit on the inventory as long as it takes to sell, at the ridiculously low margins of bike hardware. You ALSO pay the Freight for the shipment of product to the shop - shipping is always FOB.
So... not being cut out, the retailer, is assured of a sale, beforehand, prolly takes a deposit, or if consumer pays Spec direct, has no up front cost. Pays NO freight (paid by Spec or consumer ??? (don;t know which since I haven't bought a bike Online from Spec...) . May get customers dealer would not have gotten otherwise...
Retailer still has option to buy normal pre-season and 'stock' for potential future sales of 'in-stock' OTS.
Point 4 is the only place where some 'cutting out' of dealer is done. The question is, how many consumers will opt for this option, if the price is the same ??? (price is the same ???)
Most, I would figure, would opt for the 'personal and professional touch' of the retailer.

I'm not clear what the industry would expect in the face of DTC surge in the bike business...
Spec has to compete... Not sure what pricing competition there is... Bike companies still must do their pre-ordering and sales plans WELL AHEAD of the 'season' year. Bike Production is not yet
Just In Time' - so quite some risk and speculation - unless they get more vertical again.
Retailers - not sure of other areas...
Bike retailers in my area do absolutely NO marketing ! Nothing. They expect every other type of specialty retailer has some requirement to do some level of marketing, for consumer awareness and to get some traffic to them. Retailers piss and moan a lot, in spite of the current huge demand - now it's a 'supply problem' which brings up the moan...
I get it, 'retail' truly sucks and is a great way to make a small fortune - from a big one. It's a serious risky thing with very high attrition.
Online/DTC is just the latest assault on them.
Spec seems to want to keep a local/dealer type business in some aspect of their current model - in spite of the assault of DTC.
Canyon, on the other hand, offers no such alternative option - they are the head of the spear of the DTC attack on retailers...
You buy Canyon, you know what you're doing!
I had many decades in the Sports Equip and Apparel biz... I will never buy a Canyon DTC... I spent too many years trying to walk the slack line of selling to retailers, keeping them happy and in business, building our business to stability, all wrapped by a love for the experience/lifestyle the chosen sports provided.
Spec has been successful in the face of many challenges. I do remember when they and Trek were 'startups', and my understanding is based and clouded by many decades of watching them (and many other sports companies...)
Ride On
Yuri
EDIT: And, remember, that a HUGE portion of the DTC is the foreign assault, DTC from asia...
and dealing with a multi-national company, like Spec and others, is a very complicated thing...
We all here, on BF, are seriously clueless on all needed to even understand this business level/model.
have a good day...

livedarklions

This!

That is rather the point, isn't it? Spesh is faced with a situation where if they have to be reliant on locally-owned dealerships for all of their sales, they're not going to be able to compete in a whole lot of market areas.

Trek put the squeeze on its independent dealers, then bought a bunch of them out. I don't think Spesh has the resources to do that, and I'm not sure it's really a better alternative for the remaining Spesh dealers than what Spesh is doing.

himespau 

As a parent, that's a shame because used cheap bike shop hybrids are the best kind of kids' bikes to buy. They're (usually) cheaper than an X-mart bike, much easier to work on, and, when your kid outgrows, if they haven't trashed it too much, you can usually get a good chunk of what you put into it back when you sell it to the next parent, unlike the x-mart bikes you bought new and work much less well.

prj71

1.) Because maybe said person doesn't have a bike shop nearby

2.) A bike shipped to the bike shop will require more assembly. A bike shipped D2C will pretty much all assembled for the person so you are paying Specialized to assemble the bike for you.

I think D2C is a great move on their part.

Kapusta

Having actually looked at the article, this is an interesting model, assuming that the price is the same among the different buying options.

Frankly, the pure D2C option does not sound like a threat to a local Spec dealer as long as the price is the same.

livedarklions

I agree with that.

My question was really rhetorical--1 being the most important reason this is needed. By not giving people that are doing their own final assembly a price break, Spesh did what it could to minimize the lost sales through dealers because people without dealers in their area weren't going to buy through a dealer anyway, and people who have the choice will probably have the bike shipped to the store.

cyclezen

I'd say there's going to be an equally sized population of buyers on bikes too small for them... The 'too large' thing is just so '70s... LOL!
Ride On
Yuri

livedarklions

I'll go you one further--I suspect that this arrangement is a hell of a lot better for dealers than any of the other practical alternatives Spesh had.

himespau 

I'd bet on people going with bigger frames because they overestimate their height (while underestimating their weight - it's human nature to want to think you're "better"), but even the folks that get the correct size will think it's too big because they can't touch the ground from the saddle if no one at a shop is there to reassure them that they're not supposed to be able to. Then, you're going to see a whole bunch of people riding around with slammed saddles.

Kedosto

What’s the plan for first time buyers? Canyon always seems to come up in these threads and I have to wonder how many Canyon customers are first time bicycle buyers. Without a D2C price benefit, where’s my incentive to seek out a sight unseen Specialized bicycle? I can’t claim to be any kind of retail expert here, but I don’t see any type of competitive advantage in this for Specialized.

In my local market, Specialized just lost a major dealer (Mike’s Bikes) to Pon. Do they really think going D2C will make up for the loss? And this is at a time when Trek is going all in on their “Trek Stores” where consumers are generously provided with the touch and feel (and test ride) experience in big, beautiful, branded stores.

It wasn’t too long ago when Specialized had their “Specialized Concept Store” idea and I don’t understand why they wouldn’t go further in that direction. Perhaps they’ve run the numbers and believe it’s more profitable to be an esoteric boutique brand than a brand for the masses?

In the long run I think this move will prove to be a mistake.

Rolla

70sSanO

I think little will change in more populated areas where Specialized has a presence.

The question cmes down to how far someone will drive to a Specialized shop. This also applies to other mfg’s.

I don’t frequent bike shops much these days so I don’t know how much upselling of accessories is going on. Many years ago, if you bought a bike that was it. There might be mention of additional stuff, but it was so low key, I don’t even remember it happening.

For new riders, especially entry level, I could see resistance to buy a $1000 bike and then feel pressured to spend another $250-$300 before even riding it around the block. For those customers, cutting out the LBS is a plus.

John

Rolla

I don't consider it "pressure" to suggest a lock, helmet, light, pump, tube, and tools, especially to new riders. Not all "upselling" is predatory.

livedarklions

You understand how much debt Spesh would likely have to go into to build up its proprietary dealership network?
Remember Performance Bicycle? That's the kind of thing that can happen if you have a strategy of ding everything at once.

Giant isn't going into brick and mortar retail, either. It's possible that Trek is doing this wrong and we're just not seeing it yet.

gpburdell

Out of curiosity I mocked up an order at Specialized.com

Total price appears to be identical for all three options, whether Ship to Home, Specialized Delivery, or Pick Up In-Store. With the latter it allows you to choose which Specialized dealer you wish to pick the bike up from.

A clever LBS sales person, if they have someone in store wanting a model they don't have in their size, might check the website for inventory and encourage the buyer to place a Pick Up In-Store order right then.

livedarklions

I don't think it's the upselling that might kill brick and mortar shopping, it's the investment and risk required of the store owner to keep selection in stock for customers to try. Does the in-store stock ever actually recover in the coming months? I'm not so sure.

gpburdell

Pricing appears to be the same for all three options; shipping cost appears as a Destination Fee ($50) in the mocked up order I played around with. Shows as $8.99 shipping initially but changes to $50 as you get closer to payment.

So strictly speaking, ordering/buying through the bike shop would be less expensive than ordering from Specialized.com even if ordering for pickup.

70sSanO

If there is the perception that there is an incentive in selling your higher price/margin accessories to me, I may not want to deal with it. I’d rather just buy the stuff I need off of Amazon as I go along.

It would be interesting if a shop ever sent someone, who was just starting out, to Walmart to get that stuff. I understand there is an under-current of supporting your local LBS, or you will be sorry when we are gone, but that bike might be sitting gathering dust after a few months and I’m stuck with a lock I never used.

John

Rolla

At my shop, we offer a 10% discount on any accessories purchased with a bike, so any "higher margin incentive" is mitigated. Moreover, Amazon and Walmart won't install your water bottle cage or show you how to use your tire levers, but we will.

But the point remains that people don't always know what accessories they might need for their new bike, and those kinds of recommendations are part of the full service that you receive when you buy from a shop. Calling it "pressure" implies a predatory aspect that I haven't found to be the norm in the industry; most of us are just trying to make cycling more enjoyable for the customer, so their bike doesn't end up "gathering dust."

indyfabz

Or properly size and adjust your helmet for you, which is something that a good number of people I see need.

unterhausen

I think Spesh has been trying to buy up dealers, but maybe trek dealers are more fed up with their life right now? Or Trek is offering better terms?

Certainly Spesh dealers were up in arms last year when the company sent them a letter saying they were going to make things hard on their dealers (that seems to be how dealers read the letter) so they should sell out to Spesh.

I think it's going to be bad for both companies, tbh. If they want to be Canyon, that seems like a good way to tank their business.

prj71

Nah. That won't happen. People spending the money on these bikes will pretty much know what size they need. Plus Specialized makes a size guide chart available.

prj71

The incentive would be to get the bike you want delivered to your house. And if you have a problem with the bike that requires warranty work you can bring it in to any Specialized dealer.

I have a D2C bike...If I have warranty issues, I need to box it up and send it to Colorado.

Other than Canyon, Fezzari and YT...most of the D2C bike manufactures are pretty close in price to big brands. The price gap is lot closer now. The smaller bike companies have to charge more due to small volume. The big brands can negotiate with the component makers and get volume discounts to bring the price of their bike down.

Specialized selling D2C is not a bad thing and will not be a nail in the coffin for them. They aren't going anywhere.