Clyde1820

This sort of thing has been a long time coming. Ever since the inception of the world wide web.

Amazon showed resellers the way. They basically became a big distributor, with an easy-to-use front-end and easy payment and logistics wrapped up in a bow (for the customer). Anyone wanting a commodity product was bound to move to something like that site, eventually.

Retailers who didn't get on the bandwagon sooner rather than later? Tougher, not having it all ironed out.

Of course, for many products where fitment's key, a good percentage of buyers will still heavily lean toward "brick and mortar" shops with inventory. But the tech is effectively penalizing those with higher inventories.

Challenging times.

On the question of Specialized, I just picked up a couple of helmets from them. Excellent fit, quite good pricing, and I couldn't find any retailers anywhere who had the model in stock for purchase. So, bought from Specialized directly.

PeteHski

It means that the masses (Joe Shmo) who would generally be clueless about basic bike maintenance don't tend to have 2 grand group sets on their bikes. But anyway there is still a viable business model servicing high end bikes and then there will always be custom builds, bike fitting etc. As I mentioned earlier, some of the better local shops have moved away from selling off-the-shelf retail bikes in favour of a more bespoke service model - like having competent mechanics who can actually do the job properly!

livedarklions

I don't know whether decreasing prices is actually the measure when there's inflation of costs at the transport and supply level. It may be more of a question of curbing the upward price spiral that we've been in for a while now. The success of Canyon suggests that there will be increased competition to cut distribution costs in this manner, so who knows?

Setting aside completely bespoke bike sellers, the future of LBS pretty much has to be service-centered. By essentially shrinking the supply to about zero, the COVID impact has already killed a bunch of shops and/or caused them to be bought out if they were too dependent on the sale of new bikes to maintain their bottom line.

livedarklions

When supply actually recovers and there's some competition out there, we'll see what happens to Specialized's prices.

smashndash

I imagine they'll figure out a way to maintain the same msrp but sweeten the deal a bit.

smashndash

i wouldn't be too sure about this. Look at the auto industry. Being an independent mechanic seems to be getting tougher due to the prevalence of dealerships (corporate service centers) and cars that are increasingly complex.

LBSs rn enjoy freedom from corporate service centers... but what happens when Specialized suddenly has first party shops all over the place? Trek and Pon are doing the same. These companies are not planning to become mail order only.

livedarklions

We can imagine lots of things. If inflation continues, maintaining the same MSRP is actually a price cut.

I really don't have any confidence in people's ability to predict what's going to happen to prices when the shortages end. The distribution infrastructure is just not the same as it was pre-2020, and I don't know if anyone can foresee all of the impacts of those changes.

Rolla

I think people overestimate how much profit bike shops make on bike sales. It's not chicken feed, but the real money is in parts, accessories, and repairs. I wonder if the mobile bike shop model is impacting the LBS more than manufacturers' D2C bike sales.

tcs

Canyon? BikesDirect!

To paraphrase the great Yakov Smirnoff, in Russia you go to bike shop. In America, bike shop come to you.



What a country!

prj71

So anyway...

Not every area of the country has a Specialized dealer nearby and sometimes not bike shop nearby at all...So its nice that a person can order direct if they want a Specialized bike. In this day and age of the internet and online sales it would be stupid not to sell online direct to consumer.

The reason consumer direct doesn't result in lower prices is because they aren't going to sell a bike less than it would be sold at the dealer. There are those of us that know what we are doing and can look at a bike, the components and geometry and order online and have it delivered to the door. Then there are those of us that kind of know those things but would be more comfortable taking a bike model for a test ride at the bike shop before buying it.. Then there are those that are clueless that need all the help from the bike shop they can get purchasing a bike. So because of that, bike prices remain the same no matter which method you choose to purchase a bike from Specialized. If the bikes sold less online, then the clueless folks would just stop at the bike shop, pump them for info and then go home and order online because it's cheaper. That plan isn't going to work out.

Companies like Canyon never had a dealer network and all bikes are consumer direct...so the prices reflect that. No dealers...no middleman.

msu2001la

30%-40% is a typical margin for new bike sales. It's more like 50%-60% on accessories, clothing, etc. This isn't "profit", as the shop has overhead expenses like rent, utilities, salaries, equipment, marketing, etc that they have to cover with those margins.

A well run shop is likely returning around 3%-5% profit on a new bike sale.

Rolla

Call it what you like, the point remains that bike sales aren't the principal profit/margin generators of most shops.

PeteHski

Well the indy bike shops (not selling big brand retail bikes) around here seem to be thriving off the wealthy middle-aged hobby cyclists. It appears to be a growing trend. These customers want proper mechanical service, pro level bike fits, custom builds etc. So even if you buy a bike from the likes of Canyon, it's not a problem getting it serviced if you don't want to get your hands dirty. I was in one of these shops recently looking at custom frames and there were 2 Canyons in the workshop for service, alongside a few Specialized, Treks etc. There's another shop I know that only retails a few niche brands, but will service ANY bike to the highest standards.

In comparison, the bigger shops retailing big brand bikes like Specialized, Trek, Giant etc invariably offer crap service. I long since came to the conclusion that it's not worth buying a bike from them if you can find it cheaper online. The one potential advantage they could leverage (i.e. personal customer service) is sadly lacking. These days they don't even tend to have demo bikes you can borrow. I'm not even sure what the point of these shops is!

mstateglfr 

They may not be throwing dealers under the bus, but they are definitely not pulling dealers out of the way of the bus.

mstateglfr 

The GM of my office rides maybe 1000mi a year'9often less) at a group bar hopping pace. He has Ultegra Di2 and specifically bought that instead of Ultegra mechanical.
He is absolutely a 'joeshmo public' cyclist. Many who ride that infrequently dont have Di2, but the below has stuck around for decades for a reason...

PeteHski

"Joe Schmo public" doesn't ride 1000 miles per year. I know there are plenty of wealthy guys who buy expensive bikes and don't ride very much. But they do tend to be at least "into" cycling if they bother to spend the cash on it. These people are not the masses. The vast majority of bikes sold in retail shops are way below Ultegra Di2 level. We're talking $5k+ bikes here in general. Very much the tip of the bicycle iceberg. Besides if they are not being ridden much then they don't need servicing anyway. They can just buy a new bike online every 3 or 4 years and not worry about it.

mstateglfr 

I took your comment to mean 'joe schmo cycling public' vs really the entire random public in a country/world.
Yes if it is the literal public we are talking about, then I agree 'joe schmo public' doesnt ride 1000mi a year or own a Di2 bike. But if thats the group we are talking about, the odds are that 'joe schmo public' doesnt even ride a bike to begin with. Its sorta worthless data when all public is considered.

Rolla

Falling-sky hysteria aside, I still haven't seen any projections that show how significantly their dealers are going to be hurt as a result of this. Seems to me that shops will be able to charge to assemble a certain percentage of the bikes they used to build for free, and to correct the errors of the home mechanics who screw up their D2C bikes. Moreover, I'd wager that the vast majority of consumers still prefer to see, ride, and fit a bike in person before they buy it.

Unusual as it may be on BF, I'm withholding condemnation until we see what actually happens.

Rolla

A crap shop will offer crap service no matter what brand they sell.

mprince

Perhaps in some ways this is positive for the shops (coming from someone who admittedly is not up-to-date with how today's LBS operates from a business perspective) - 1) Shops will not have to tie up a lot of money in new bike inventory 2) making a big assumption here, but if Specialized can keep the dealers supplied with spare parts and branded accessories, this ties up less capital and the shop can focus on the higher margin areas of the business (service/clothing/gear) 3) Stops traffic coming in, taking up a lot of shop time around a new bike the customer likely won't buy, or complaints that the shop can't keep their dream model in stock in their size/preferred color.

mstateglfr 

My prior comment was intended to mean that while they may have not thrown dealers under the bus, this announcement certainly doesn't further support the dealer network system of business.

As for not seeing projections for how significant this change is to dealers- its tough to quantify something that isn't known by anyone outside of the decision makers.
Something to consider- if this were projected as a benefit to dealers and good data supported that projection, Specialized would have announced that up front. It is simply good business to do so, and Specialized clearly didn't make this change without a lot of planning so they would have tailored their message to account for the projected benefit.


A shop 'being allowed' to fix problems that home builders make during assembly doesn't seem like much of a benefit, based on details I have read and heard from industry reports and commentary.
As for a shop 'being allowed' to build bikes for a fee when it used to be done for free, what is the total $ the shop 'earns' for building vs what they would otherwise earn for the sale of that same bike? <--- is a credit the same as revenue too?


I am not saying there is no benefit to consumers and possibly shops with this change, the latter seems a bit unknown though at this time. And I agree that most will want to go into a shop when buying.

Rolla

This summarizes and concurs with my points, so let's agree to agree.

PeteHski

Well the correlation between crap service and retailing big name mainstream bike brands is pretty high over here. The shops that offer decent service tend not to sell mainstream bikes at all. Of course there are a few exceptions, but that is the general trend I see here.

PeteHski

Nobody is going to be "home building" their bikes when they order online. They are going to be installing a seatpost and fitting a front wheel.

mstateglfr 

Tell that to the poster who initially discussed bringing home builds in to be built properly.