Re: Bad Bike Shop Manners??
>> $200 margin isn't $200 profit. Keep in mind bicycles require substantial
>> time in assembly; not many other items you'd buy require all that work
>> before they can go out the door. Car dealers tell me they can prep a car
>> in 20 minutes, which is 2 hours, 40 minutes less time than it takes for
>> many bikes.
>
> But what's the incremental cost of selling that bicycle versus not selling
> it. It would seem like you'd want to keep these customers from going
> elsewhere even at the cost of an occasional extra shipping charge. They're
> likely to be buying all the high-margin accessories and clothing from the
> shop that they buy the bike from, as well as returning there for service
> after the warranty. Sure you can't afford to be special ordering every
> single bike, but once in a while it would seem to be a worthwhile expense,
> if it's a high end model.
On an inexpensive bike, it's not incremental profit, it's incremental loss.
That holds true up to about the $400-$500 area for the better shops; there
are some that can probably make a profit on a $300 bike, because they put so
little time into them.
On a higher-end bike yes, we will special-order one in-between larger
shipments if need be, because it's less-expensive to do that than to carry
so many in stock that there's no possibility of running out in-between major
shipments.
>> situational pricing (you charge customers differently depending upon your
>> mood, or that they won't buy something without bargaining, or the
>> business is in a cash flow crisis), but that's generally not a long-term
>> road to success. Everyone involved in the shop, from owner to salesperson
>> to mechanic, loses any real sense of value, in terms of what they're
>> delivering to the customer, because it's different to each one.
>
> Welcome to the world of retail. It's pretty rare to find a store of any
> kind that charges the same price to every customer, with all the sales,
> rebates, discount clubs, % off coupons, cash discounts, etc., not to
> mention plain haggling. I'm not sure that this is necessarily bad, as it
> enables the business to sell both to price-sensitive and non-price
> sensitive customers, increasing volume.
It may be rare, but that's us. We have no club discounts, no team-in
training discounts, no %-off coupons, no cash discounts. The product is the
same price to everyone, no exceptions. If we cannot establish that we're
worth "x" price, the customer will go elsewhere. That's fine; not everybody
wants to do business the same way. But it encourages us to be competitive
and deliver the best-possible service we can, because we're establishing
that *we* believe the product has a certain value, so we have to support
that.
We do however want to support various events, so besides direct
contributions we also offer 5% of a customer's prior-year purchases in the
form of a check to whatever charitable ride they're doing. We also do a 10%
discount on parts purchased with the bike.
> My favorite discount was one that the Bicycle Outfitter once had, where
> they had 15 or 20% off everything in the store, during the hours that the
> Super Bowl was on. It was the one time to buy stuff that rarely goes on
> sale, such as Rivendell bicycles.
You're probably aware that they changed hands; one of the problems they had
was that they trained customers to wait until they had their sales. They had
prices that were pretty high the rest of the time, but fewer buyers. That
can lead to the need for even more sale events to generate cash, which
further discourages people from shopping otherwise... a vicious circle that
makes it difficult to stay in business.
There are many successful business models out there; I'm not suggesting that
what we choose is better than someone else's. It just happens to work for
us, probably mostly because we're absolutely consistent. It also works great
because the customer who comes in saying his friend bought a bike from us
and got X$ off on it and he wants the same deal... well, we know that isn't
the case. We end up not wasting nearly as much time chasing customers who
are more interested in bargaining than in actually riding a bike. Yes, there
are people for whom the thrill of the negotiation is more important than
anything else. Me? I lose several years off my life everytime I have to buy
a car.
--Mike Jacoubowsky
Chain Reaction Bicycles
www.ChainReaction.com
Redwood City & Los Altos, CA USA
