Big Ha, Maybe Be Smarter Than They First Appear

BikeE was a high volume, low profit on each bike operation. It failed. Big Ha looks to be a low
volume, high profit on each bike operation. BikeE probably had to commit for thousands of bikes
produced in a Taiwan factory before they actually had payment from their dealers. Ordering thousands
of bikes months in advance for a market infamous for its' wide swings in demand. What a nightmare.

Big Ha will probably stock a limited number of completed bikes on hand. They will build more here in
the US, as needed, when they have accutal orders. By selling direct, they will also reap the dealer
mark up. They will sell just a fraction of BikeE's volume, but they only need to sell a relatively
small number of the higher profit bikes to survive.

With smaller volume, quality control could be closely monitored. Warranty issues could be minimal.
Big Ha could arrange to for any warranty repairs to be made by the owner's trusted LBS. Big Ha is
probably looking for a limited number of well-heeled riders who like comfy bikes with lots of high
tech bells and whistles. I wish them luck. But from what I have seen of the bicycle industry, a much
safer and saner business plan might be to liquidate all the assets of the company, fly to Vegas and
put it all on black.

 

> luck. But from what I have seen of the bicycle industry, a much safer and saner business plan
> might be to liquidate all the assets of the company, fly to Vegas and put it all on black.
>

That's NUTS !!!!!!!!!!!!!!!!!!!



(put it on RED!)

 

Never run a manufacturing facility, but I've seen one web-sales-only based producer of a fine
two-wheeled machine run into trouble. This is my understanding of their difficulty:

Selling directly to consumer over web, especially with a new product, can make it really
hard to plan.

So, you can stock lots of parts (which you gotta pay for some time) and wait for orders to come in.
They don't come in, you've spent dough that could have been invested, or you pay interest on the
loan you took to get parts...

Solution? Buy fewer parts? Then a sudden spike in demand leaves you short parts. You run a back log.
Impatient consumers look for something else. Or, even when things work out, you're buying small lots
(of specific things) and therefore, quite possibly, unable to take advantage of the economies of
scale kinda thing that could cut production costs.

Better planning on supply and demand? Maybe, but then, if one of your parts suppliers has trouble,
you can still end up in position B up there, for loss of a single whoozit.

I watched this one outfit lose a lot of sales when they got locked into position three.

I'm glad I don't have to run such an outfit. Don't think I'd have the brain to make it pay.

sj