Wednesday, August 05, 2015

Trek To Sell Bikes On-Line: Sign Of The Times

Soon to be available on-line
The "Trek World" dealer only show is happening now in Madison, Wisconsin. It is where Trek shows off its latest and greatest stuff, including Bontrager components and apparel. One might expect Trek to roll out a cool new entry to their line up at the show, which might cause a stir, or get some attention in the media. Well, they got a ton of attention, but it wasn't for any bicycle in particular. Trek announced it would sell its bikes and components on-line soon.

This has caused quite a tizzy amongst the cycling nerdom out there. First off, it must be said that this isn't what it appears at first glance. Trek isn't going all "Bikes Direct" on you. No, you still have to have a dealer involved in the process, but make no mistake. This is a monumental shift in the landscape of bicycle business in the USA.

 NOTE: Large doses of "my opinion" will be handed out in gloppy dollops today. You've been forewarned.....

So, what does this look like for consumers then? Basically, not a whole lot different in terms of pricing. In fact, it may not be as good as haggling with a dealer. You will pay the set price, pick which dealer in your area that will have to assemble it, and depending upon whether said dealer has opted in with Trek on the program fully or not, you may get it delivered to your door, or you may have to go pick it up at the shop. Basically, it is "special order" 24-7. Of course, this raises another set of questions......

The "Whys": You know, like "Why would anyone buy a bike this way? No test ride, no fitting, no real pricing advantages.  
  • No test ride- No big deal. This goes for fitting as well. Think about it for a minute- How do companies like Bikes Direct and Canyon Bikes stay in business if this test ride and fitting thing kills online sales? Obviously, it doesn't kill the online sales model. In fact- it doesn't matter. Not like many bike nerds think it does. Folks buy bikes for reasons that go beyond fit and test rides don't even enter into the equation. Some online companies have a return mechanism in place in case something doesn't fit right, or feel good. Trek probably has this covered as well. The point is, this isn't the stumbling block that many make it out to be. 
  • Pricing- Well, it may not be an advantage to Trek customers now. But don't be at all surprised if that's how things end up going. Trek sees fewer bike shops every month in the USA. (As do all brands) This means less opportunities to sell Trek product, and that trend of the shrinking local bike shop base isn't showing signs of abatement any time soon. Online sales open up "new territories" that are not covered, or serviced well by dealers. Those folks won't mind paying retail now, since many maybe cannot even get to a Trek dealer now. Plus, the "online store" is open 24-7. Once more big players come into doing online sales, and they will, then the pricing wars will heat up. 

Local bike shops are destined to become "service centers"
So, where will this leave local bike shops? I think something else Trek announced is very telling in this regard. Trek is going to open a service tech certification center where shop mechanics can go and become "certified technicians". Trek will designate certain bike shops as "Authorized Service Centers". Essentially what this is telling me is that Trek wants dealers to become "dealerships" in much the same way that car dealerships operate. Local bike shops will morph into "service centers" with a small "showroom" and will not have independent owners, but will become "authorized dealerships". Maybe franchised, or outright owned by Trek itself. Other big brands will likely follow suit. These service centers will not depend upon bike sales. That will be the realm of the online presence for each brand. Customers will get their bicycles sent directly to them, or built for a fee and delivered by a "service center". All tune ups and repairs will be done by the "authorized technicians" for each brand, or your warranty will be void. Oh.......and be prepared to pay a lot more for service and repair. Trust me, you've been getting a sweetheart deal on service over the past, oh......several decades. Think what you pay to have anything else with wheels serviced and compare it to a bike shop repair. The gulf in pricing is very wide. That will not be the case in the future.

Of course, this won't happen overnight, and many of us won't notice diddly squat difference in the coming months, or maybe years. But I believe a sea change is coming. Look- the way things are now in the bicycle industry is not a sustainable business model. It has to change, or it won't last. I may have it totally wrong, or not. Whatever happens, it won't be the same as it is today anymore.

Also, I believe when one thing moves, there will be a separate reaction to it that counters that move. Will the big brands consolidate their dealers into "service centers" and make way for smaller brands to come in and make a new "independent bike shop" model that we cannot even imagine now? Possibly. Who knows, but I wouldn't be surprised if something of that nature happened. Time will tell. Trek has cast a stone into the calm waters, and the ripples that come out from this will be changing the way bicycle business is done in the future. That I am pretty sure of.

5 comments:

Ἀντισθένης said...

As a customer, I have slightly mixed feelings, but most of all think the implementation's going to be crap for the consumer. I am not going to get it direct from the manufacturer, and even if I did, they'll want to keep that profit to themselves. Also, I don't want anything Trek's got.

Whether cars, bikes or what have you, the old model isn't efficient for anyone but the middleman's employment, which is grossly underpaid anyway. I am afraid that though there are good shops out there... most are crap. This is as true in Toronto, where I live, as it is in Tokyo where I have lived, and I expect as true anywhere else. I taught myself how to wrench because I was fed up with the expense of getting work done poorly. It takes me far longer than a guy paid minimum in a shop, but I care about my bike enough more to get it right... eventually.

The Internet's a funny thing for retailers: you can sell to a wider customer base, but they can comparison shop far more easily. In my case, living in Canada with consumer goods 150% the cost of the US ('Free Trade', WTF?), and Shimano/Sugino/Nitto etc. goods half the price in Japan where I travel to annually, it makes it impossible to accept shop prices except for what can't wait. I feel for the shops in Toronto, but living in Toronto's expensive enough.

Of course, I am not the typical customer for bikes: an enthusiast and tinkerer. There's going to remain a place for the very good shop, whether for city-bikes or dentist-bikes, and most people are still going to buy 'bike shaped objects' online or elsewhere. If I were trying to stay in business if sales go the way of Trek and Tesla, be a showroom for several brands and do fittings and repairs.

In an ideal world, each bike/car manufacturer would let you build=up the vehicle to your own specs and with your own components, with the help of someone in the showroom.

STW said...

I feel like we already see this "car dealership" model in Trek stores over here in San Diego. Maybe that's a tad different though. I just hope there's always a spot for weird, unique independent bike shops. Of course they'll have to figure out ways to be sustainable if they're not party to the dealership model. And many smaller shops tend to have trouble with this. I guess the local car mechanic is a good analogue to what smaller IBDs are to become?

youcancallmeAl said...

News like this reinforces my preference for friction shifting, threaded bottom brackets and quill stems. I can continue to refurbish quality steel frames and maintain them myself and ignore the so-called modern improvements!! Bicycle design reached its apex sometime in the 1980s and everything since then has been governed by the law of diminishing returns.

Souleur Jo said...

Interesting no doubt. This entire concept of the market, is an american concept, and that is to grab as much of the market share as possible and open up the opportunities that exist...well, is corporate. I'm not anti-corporation, yet I will say, this really misses many things. It misses first and foremost one of the reasons we/grouppeto ride, and that we seek a quality product...to the mm, and fraction of a degree, and we know quality. Just getting a product out, and in the hands of many isn't quality. Doesn't even seek quality nor can it, in that, if they really did ever produce a quality product in todays market, is there really anyone who would pay 12k up front for that bike site unseen and unfit? Secondly, IMHO, there is a direct inverse proportion of 2 entities that the corporate mindset seems not to understand, in that, the greater number of consumers tend to decrease your overall value, conversely, the lesser number of consumers tend to increase the product value...ie campagnolo componentry. Its a real risk Trek is taking on here, not to mention pissing off a bunch of LBS who may not be 'on board' with their 'thinking' on this

but then again, will see

Glenn said...

I bought my last road bike "sight unseen", ordered from the manufacturer via my LBS. Did not get a test ride. I would prefer NOT to do that again. I need that test ride, on the particular size/model bike, in order to justify laying out the cash for a new bike. I thought I knew how to read a geometry chart, but I didn't understand the relationship between chainstay length and stability.

So, in the future, I need to ride the bike prior to purchase.