PeteHski

This is where Tesla really surprised me. When I asked about a trade-in I fully expected to be low-balled and was planning to sell it privately for a better price. But they offered me £8k more than what the private sale price books were estimating. I was shocked to be honest, but wasn't going to argue. It certainly made it easy to stay with them and it's not as if I was trading it in for a more expensive model. The new car actually cost £500 less than the trade-in price I was offered. Obviously there must be a big demand for a 4 year old Model X right now.

Mojo31

The cost for servicing any electric car should be -0- over 50k miles. Warranty would take care of any problems that crop up, and there are literally no service costs. The projected "service" costs of my Taycan is -0- over $100k miles with the exception of tires.

That is the reason that industry folks are saying that if and when the electric car becomes the standard or sole option, the dealer network will go away since dealer service departments are the big profit centers.

Our local MB and Audi dealers charge more for service (ICE cars) than my Porsche dealer. I've never had an issue with any of those, recognizing that service costs would be more expensive than Toyota, Honda, Kia, Mazda and other non-luxury brands.

PeteHski

The point is that I pay the same as everyone else. There is no smoke and mirrors going on with pricing like there is with a "normal" dealership model. Whether or not this represents good value is entirely a personal judgement. I've just taken delivery of our 3rd Tesla, so that should give you a clue where I stand on that front.

PeteHski

That's interesting, because over here in the UK Porsche dealerships are charging Taycan owners £4,500 for 3 services over 60k miles. Money for nothing. You are right about their service departments bricking themselves.

Koyote

Don't forget wiper blades. Those costs will kill ya.

TiHabanero

Man this thread has been all over the place! Been good fun to keep an eye on it.

"Not sure I follow? They offer Ship-to-Home yes, but also offer Specialized-Delivery and Pickup-In-Store options. All are the same price to the consumer, and all appear to be more expensive than just buying the bike from the Specialized dealer LBS due to the $50 destination fee."

As in years past, this is the beginning. 3 years from now the dealers will be cut off completely. It is in SBC's M.O. I am absolutely certain of it. As soon as big red figures out how to remove the dealers completely (with the unwitting dealer network helping them do it) they will cut the dealers out of the puzzle. The time is right for it. Runaway inflation, a looming recession, etc. will usher it in rather quickly.

As I no longer work in the industry it will not affect me at all. I build my own frames and hang the parts on them as well so I truly am self sufficient when it comes to a complete bike.

Mojo31

Sounds like the recommended cabin filter change. DIY for $100.

Maybe buyers in the UK should educate themselves. That's ICE service costs for 60k miles.

Mojo31

I haven't needed to change wipers in over 30 years.

Mojo31

I'm not sure how Sec's dealers will be too hurt by the change. Mom, pop and the kids will buy whatever is in the store. The only business that might be lost is the brand loyal enthusiast business.

Koyote

Wow. Are you in Southern CA?

Mojo31

Tejas.

PeteHski

UK owners realise they are getting ripped off (check out the uk Taycan forum - apparently charging the battery is a line item in the service schedule, lol) but then they have to consider future resale value and their warranty terms and conditions. Not having dealers to feed is a fundamental advantage of a direct sales model. Tesla were smart and figured out that the traditional franchised retail model wasn't going to work very well with EVs.

mschwett 

honestly i don't understand it either. the dealer/LBS model is so flawed - bikes are distributed based on who knows what priority to shops all over the country, and if the particular combination you want is at the wrong shop (far away etc) they generally are not willing to move stock around except as some sort of complex trade. so people end up getting bikes based on luck, not quite the bike they want, etc.

the click-n-collect model (which i've used twice) gives the dealer 50% of the commission for having done literally NOTHING to advertise, store, test-ride, etc the bike. they put it together, you pick it up. they take no risk on inventory, and you get the exact bike you want from a dealer who can service it later on. if you don't even feel like being bothered to go to the shop, they deliver it to you and then they get 75% of the commission.... for driving a bike to a customer. i have no idea how much commissions are on bikes but that extra chunk must be a lot more than it costs to drive a bike somewhere.

and, if what you really want is to just browse around, see what exists, the bike shops will still have bikes. it's just very unlikely to be the exact one that a demanding rider wants, but that's ALWAYS been the case. now you actually have a chance to get it, LBS still gets paid and still gets to get paid for service and warranty work.

the last two specialized bikes i bought, i actually asked the lead sales guy if it mattered to him at all if i waited for them to get me the bike i wanted (this summer) or ordered it myself on the website, and he was absolutely 100% totally cool with me ordering it and getting it in our hands sooner. a lot of people on this thread seem to think they know better than the actual stores selling these bikes.

PeteHski

Yeah I wonder if this is all being driven by the ever increasing number of models and spec options on modern bikes. For example Canyon list 16 build variants of their Endurace model alone! No shop is going to stock all those builds in a range of sizes. In reality they would only stock a handful of builds and sizes giving the customer much less choice. When I last bought a Specialized bike from my LBS (back in 2014) they had to order it in anyway. The only shop models they had were in both the wrong spec and size.

TiHabanero

Just how long does one believe a bike shop can function on bike sales revenue that is 50 or 25% less than normal? If mark up on a bike is 30% that means it is now 15% or less. It also means that the bike company, SBC, is receiving the revenue the bike shop forfeited. That is considered win-win? It might work for a one or two man show that work out of a small square footage shop, but for a shop with multiple locations or one large building, another story will be written.
Even if the revenue is slashed by 25% some part-time employees will not be brought in for seasonal sales as there will be no income to support them. In a year round sales environment employee cutbacks will have to be implemented.

PeteHski

A bike shop can function on a service based model offering quality maintenance, fitting services, upgrade and accessory sales. The very best local bike shops I know don't even sell mainstream brand bikes any more, but they do service them to the highest standard. The bigger shops over here (the likes of Evans, Leisure Lakes etc) focusing more on mainstream new bike sales invariably have crappy service departments, along with dubious sales advice and so they can disappear as far as I'm concerned. I don't think they would be missed by many people. Casual buyers are usually happy to order stuff online and the more serious enthusiast will know what they want and are likely to be using one of the more competent smaller shops for servicing and fitting anyway.

The direct sales model is already very popular in Europe. Canyon, YT, Rose, Factor, Orbea, Ribble, etc all offering direct to customer sales channels. Local shops able to offer genuine quality service have also flourished in recent years. Direct sales is not the end of bike shops. It's just the end of bike shops selling whatever new bike stock they happen to have to clueless customers wandering in off the street.

livedarklions

No question, if you compare this to some imaginary status quo, the dealers are facing declining revenue. But that writing is on the wall already because Spesh has competition and will die if it stays stuck in dealer-based only sales. LBS are disappearing all over the place or are being bought out, if LBS are going to survive, they need a business plan that works in an increasingly on-line sales market.

gpburdell

That's impressive. How often do you change cars though?

Here in the southeast I find I need to change wipers every couple of years. Easy to DIY, picking them up from an auto parts store.

gpburdell

Out of curiosity, since you mentioned you were in the business, how much of the shop's monthly overhead went to inventory carrying costs as well as the cost of the space to store all the inventory not on the sales floor? What does that figure look like on a per-bike basis?

Seems rather speculative. I'd be surprised if it went the way you predict; one of Specialized's competitive advantages over Canyon or other D2C dealers is that they have a dealer network. Not everyone wants to buy a bike from a website without seeing/trying it in person. So it seems improbable they would abandon that competitive advantage for so long as it exists.

That said, a company succeeds by identifying what consumers want and providing it to them. As the world changes, sales models often also change. The wise shop owner will maintain as sense of his/her own local market and provide what customers in that area are looking for - if the demand for in person bike sales dwindles substantially the shop owner will need to find different ways to serve his/her customers.

"Adapt or die" applies as much to local shops as it does to manufacturers.

himespau 

I agree with you in concept. It's not quite that bad because they don't have to pay interest on dead/unsold inventory, but it is definitely a big cut.

Mojo31

Depends. Some last a year, some last much longer. In fairness, none of our cars are driven more than about 10k per year, and some much less than that.

gpburdell

Yeah, they do last longer when not used much, particularly if parked under cover.

My wife and I each tend to keep vehicles a long time. Presently our "youngest" vehicle we've had for five years.

livedarklions

I think the real problem is that competitive pressures have reduced the margin on the bikes that sell to too low to cover the risk on the unsold inventory. LBS may not be able to make it as ventures that keep a wide selection in stock for consumers to try out and purchase on demand. Different stores are going to have to come up with different strategies as the independent big showroom may quickly become a thing of the past. Obviously, one of the strategies is to sell the operation to the major bike manufacturer, and we're seeing quite a bit of that.

prj71

I like bikes and I like walking around a shop and looking at them. But as a customer...LBS have almost nothing to offer me. When I'm buying a bike, I know what I want. The shop adds no value...and sometimes they subtract value. The last bike I bought from a shop for my GF (Kona Woo - March of 2021)...After a few months and miles I decided I should check over the bike for her. I discovered that the headset was loose and the sliding dropouts were misaligned...which explained the clunking and why it pedaled so hard when I took it for a spin. I had assumed that the bike shop had competently assembled the bike. This is after waiting around the shop for 2 hours to leave with the bike after purchase. They were having trouble setting up the tires tubeless.

cyclezen

Quote:
Originally Posted by TiHabanero View Post
Just how long does one believe a bike shop can function on bike sales revenue that is 50 or 25% less than normal? If mark up on a bike is 30% that means it is now 15% or less. It also means that the bike company, SBC, is receiving the revenue the bike shop forfeited.
Quote:
Originally Posted by TiHabanero View Post
As in years past, this is the beginning. 3 years from now the dealers will be cut off completely. It is in SBC's M.O. I am absolutely certain of it. As soon as big red figures out how to remove the dealers completely (with the unwitting dealer network helping them do it) they will cut the dealers out of the puzzle. The time is right for it. Runaway inflation, a looming recession, etc. will usher it in rather quickly.

Yes, clearly, the Bike retail situation for Brick &Mortar needs to find new ways to exist and do business. There's not really ONE way.
Taking ways other industries have adapted (and are prolly in play already in the bike business, to what-ever extent...)
'Coop' groups, initially organized for 'buying'/ordering for both pre-season discounts/margins and even 'house-branding' product. This has been a strong model for many, many prior decades, in businesses in which I was involved. Certainly something which MUST exist in the bike biz.
This model seems to be extended into the online sales side of retail.
It does seem that quite a few forward looking retailers also have a presence in the 'online webstore' business. They price accordingly to the 'web marketplace' pricing - different from what they must charge in their brick&mortar. Internet sales not being a panacea, because the variety of inventory needed is huge compared to a brick&mortar shop.
I'm interested in learning what the other bike brands are doing to hold & build their business in this changing environment of DTC... Like TREK, SCOTT, CANNONDALE, etc...?
The 'Specialized' model seems, at least, to be an attempt to hold a strong retailer base together. Buying up retailer operations is another way to assure some exposure to consumers - at a considerable risk.
And the bike business, as with many, is always changing... The latest wave - ebikes - holds a huge prospective customer base - only starting to show... and has significantly higher prospect for higher realized margins (for now...) .
Realizing it's not just the 'Canyon' model, but greatly the 'Ali-Express' model from asia, Online-only domestic & interrnational sellers.
... do you buy shoes online? or do you need to try shoes on, to decide? - decisions we all make... Specialized is in a strong position to keep their toes in many different market positions...
...not sure what the others are planning or doing...
Ride On
Yuri