Say it aint so Shimano ... PART 2

[B. Sanders]

"Kenny Lee" <[email protected]> wrote in message news:[email protected]...
> bfd wrote:
> > "Donald Gillies" <[email protected]> wrote in message news:[email protected]...
> >
> >>Looks to me Japan-style price deflation is taking down prices of engineered bicycle components
> >>everywhere. Shimano isn't the only component-maker trying to prop up prices to stay alive. See
> >>the recent notice from Chris King, listed below, for another desperate attempt to maintain
> >>prices in the market channel. Perhaps new Chinese components will be hitting the USA mainland
> >>soon ??
> >>
> >
> > Interesting, but are Chinese made components going to be able to compete with the likes of Chris
> > King? Does anyone make headsets comparable to
Chris
> > King? At any price? I think not! At around $100 or less, CK headsets are arguably the best. What
> > do you have?

> I live and ride in Taiwan. I've been told that Campy, Look, SRAM, TREK and a whole bunch of others
> are doing a whole lot of business here in Taiwan.

I have no doubt that this is the case.

> I can bear witness that the people here and in China have the resources and the ability to
> manufacture bike parts to NASA specs, be it metal or
> CF. I've seen them, bought them and am using them right now. The prices are unbelivable. Sorry to
> say this but, if I were CK or PW I'd seriouly consider moving my production to Taiwan.

The only people who care about the "Made in America" cachet are Americans. Correct me if I'm wrong
here. I think just about everybody else has moved on, especially when they see the difference in
retail margins between USA-made and Taiwan-made frames, wheels and components.

For instance, many lightweight racing wheelsets - often with European or US brand names - are made
in Taiwan and mainland China. How can US-made goods compete?

Have a look at the A-Class website and see if these wheelsets look familiar:

http://aclass-wheels.com/

> The following link points to a company that makes world class quality CF parts, CHEAP. For prices
> contact them directly.
>
> http://www.pazzaz.com/

I would bet a round of Guinness that Pazzazz makes some of the "Weyless" components (cranks, stems,
seatpost, etc) sold by SuperGo, and probably other house-branded parts from other mail-order
outfits. Looks like great stuff to me. I've used Pazzazz carbon components in the past, and they
were excellent quality.

-Barry

 

[Fred Marx]

Better yet, all shops hit by this should get together and
> file a class action suit.
>
> --Bill Davidson

yea let's all get together and support our friendly local ambulance chaser...... yea right, just
what needs to happen more lawsuits. Why not just get the merchants together and BOYCOTT King? Hit em
where it hurts.. If they're product doesn't get sold that'll hurt more than a stinking lawsuit. Oh
wait that's what Branford is doing isn't it.

 

[S. Anderson]

"Mark Wolfe" <[email protected]> wrote in message news:[email protected]...
> It's price fixing. Why not let the market decide the what it will fetch. I gave 100 for mine and
> didn't have an issue with it because of the reputation and the quality of the headset. They don't
> need to go to
these
> tatics to set a price. As a shop, you've got your cost on the part, if
CK
> wants to bring the price up for all bike shops, they need to increase what they charge for the
> part and let the bike shops decide on what sort of profit they make. Not make the shops sign an
> agreement to maintain a certain price.
>
> Mark
>

I tend to agree. And it's not only Shimano and CK. Certain bicycle manufacturers insisted on
maintaining prices throughout the dealer network. This was true for complete bikes as well as parts.
If you bought 2000 13" bikes in one model, you were forbidden from discounting them when you relized
that there weren't that many people under 5' in your neighbourhood. To me, that's price fixing. The
only people that lose are the consumers. And possibly CK in the long run as people turn to cheaper
alternatives. And headsets of all things! The most overrated piece of equipment on a bike.

My $0.02CDN,

Scott..

 

[Basjan]

Amen Scott - blah blah about King, while a WTB has lasted me years and is still going very strong,
and at low maintanance. Let them "price-it-up", I'll get my stuff elsewhere, may not be as cool, but
hey, if you need a headset to feel better about yourself...

. "S. Anderson" <[email protected]> wrote in message
news:[email protected]...
> "Mark Wolfe" <[email protected]> wrote in message
> news:[email protected]...
> > It's price fixing. Why not let the market decide the what it will
fetch.
> > I gave 100 for mine and didn't have an issue with it because of the reputation and the quality
> > of the headset. They don't need to go to
> these
> > tatics to set a price. As a shop, you've got your cost on the part, if
> CK
> > wants to bring the price up for all bike shops, they need to increase
what
> > they charge for the part and let the bike shops decide on what sort of profit they make. Not
> > make the shops sign an agreement to maintain a certain price.
> >
> > Mark
> >
>
> I tend to agree. And it's not only Shimano and CK. Certain bicycle manufacturers insisted on
> maintaining prices throughout the dealer
network.
> This was true for complete bikes as well as parts. If you bought 2000 13" bikes in one model, you
> were forbidden from discounting them when you relized that there weren't that many people under
> 5' in your
neighbourhood.
> To me, that's price fixing. The only people that lose are the consumers. And possibly CK in the
> long run as people turn to cheaper alternatives.
And
> headsets of all things! The most overrated piece of equipment on a bike.
>
> My $0.02CDN,
>
> Scott..

 

[Werehatrack]

On Tue, 19 Aug 2003 04:31:15 GMT, "Richard Ney" <[email protected]> may have said:

>Chris King probably flies well under the radar screen of the US DOJ.

Perhaps not for long. I doubt that they have the clout or connections to survive even the first
phone call.

--
My email address is antispammed; pull WEEDS if replying via e-mail. Yes, I have a killfile. If I
don't respond to something, it's also possible that I'm busy.

 

[Werehatrack]

On 18 Aug 2003 19:23:04 -0700, [email protected] (Donald Gillies) may have said:

>Chris King recently changed their pricing policy. They now require all dealers to consent in
>writing that Chris King products will be advertised at a price that Chris King believes riders
>should pay. The new, fixed retail price would be the same for all Chris King dealers...

I suggest that those who object to this, and are directly impacted by it, might want to visit
this website:

https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01

--
My email address is antispammed; pull WEEDS if replying via e-mail. Yes, I have a killfile. If I
don't respond to something, it's also possible that I'm busy.

 

[Rick Onanian]

On Tue, 19 Aug 2003 13:03:03 -0700, Mike S. <mikeshaw2@coxDOTnet> wrote:
> That's called Labor. Where do you think shops make their money? It certainly ain't on parts!

If they didn't make any money on parts, they wouldn't sell parts except when they will install
them; then it would be wise to price the parts with labor included. That's actually a good idea for
a LBS. Hmm...

Anyway, like I was saying, if they didn't make anything on parts, and didn't sell them except for
their own installation, that would suck,
IMO. I like to be able to go and get a part as soon as I need it, even at a higher price.

My shop makes a sufficient margin on parts. I am willing to buy there, because he always takes such
good care of me -- any problem, he takes care of
IN. Whatever I buy, he tells me how to install it. And so on.

I had suspected that he makes almost no margin on parts, because his prices are not terrible, but
when I had a problem and jokingly mentioned that thought after he solved a problem I had with parts,
he said he makes enough to be worth
IO. Good for him!

> Mike
--
Rick Onanian

 

[Dan Daniel]

On Tue, 19 Aug 2003 11:19:16 -0400, Alex Rodriguez <[email protected]> wrote:

>In article <[email protected]>, [email protected] says...
>

>
>>CK isn't trying to tell people what to charge,
>
>Yes they are.
>

As I read the original post, CK is referring to the ADVETISED price. I see nothing saying that you
can't actually sell it for whatever you want.

Is the new CK policy about the actual selling price, or about advertising a price?

 

[Mark Hickey]

Alex Rodriguez <[email protected]> wrote:

>In article <[email protected]>, [email protected] says...
>>CK makes nice headsets, but it's really not necessary to spend $100 or more to get a light, high
>>quality headset that will last for many tens of thousands of miles.
>
>Who else makes as nice a HS as CK? I have a Shimano Ultegra HS on my bike. It works well, but it is
>no where near as smooth as a CK.

Hmmmm - any decent, well-adjusted headset should be smooth enough that you can't tell one from the
other. Well, those with roller bearings will have a bit more drag, but that's not really a
"problem". I suspect there's something wrong with your Ultegra HS if it's noticeably rougher than a
CK (or any other HS).

>>It WILL cost you that much to get one with the manufacturer's name written garishly around it
>>though... ;-)
>
>I agree. In the past when I could not afford one I always wanted to get one. Then when I could
>afford it, they started putting thier name in huge letters on it, and now I would not spend my
>money on it.

Heh. That's kind of my feeling about it too - but a lot of people really WANT others to know they
dropped a C-note on their headset. ;-)

Mark Hickey Habanero Cycles http://www.habcycles.com Home of the $695 ti frame

 

[Paul Kopit]

On 20 Aug 2003 12:40:54 GMT, [email protected] (Qui si parla Campagnolo) wrote:

>The cost of the HS has stayed the same. CK wishes to not have the HS sold at a discount., at a
>lower margin.

You are likely 100% correct. Things change when they begin to lose volume.

 

[Fred Marx]

> Brick and morter bike shops applaud this and other measures that prevents discounting..

as well they probably should since their margins are slim enough already and the need to keep
clientel from using the old "well so and so has it for this much..." as they try to beat you out of
what you need to survive. I feel that MSRP is a good thing. If on an individual basis my LBS wants
to hook me (or anyone else..) up that's cool too. I would have a difficult time walking into a shop
and trying to beat them out of a fair price.

 

[Marten Hoffmann]

[email protected] schreef ...
> "bfd" <[email protected]> wrote:
>
> >Interesting, but are Chinese made components going to be able to compete with the likes of Chris
> >King? Does anyone make headsets comparable to Chris King? At any price? I think not! At around
> >$100 or less, CK headsets are arguably the best. What do you have?
>
> CK makes nice headsets, but it's really not necessary to spend $100 or more to get a light, high
> quality headset that will last for many tens of thousands of miles.

After going through three so-called "high quality" headsets in five years' time (on an off-road
tandem) the CK is a big relief because it's working flawlessly for 7 years now.

--
Regards, Marten

 

[Fred Marx]

> Good for you but it happens all the time...not by you but by many others(will you match this price
> or that? I want to give you the business)...little do they know they ARE giving us the business.

I suppose that I should add that I also do my homework and will buy at the best price I can find,
from a shop. I'm not incrediably loyal to one establishment. I have watched well heeled clientel in
the local shop try to weasel a deal for themselves and it annoys me to no end, which may influence
my purchasing habits. I like brick and mortar since they're gonna be there when I have a problem...
which leads to the next isssue. How many times (as a shop owner/mech) have you heard...... well I
got it from X Discount but I can't figure it out/it's broken. Dude can you get it
fixed/replaced/warrenteed? The local wrenches enjoy my reactions as I watch these exchanges from the
background.... ]

 

[Chuck Liu]

"Jim Edgar" <[email protected]> wrote in message news:BB67CDA0.4E057%[email protected]...
> If the "well managed" shop you speak of has better service, customer relations, reputation, store
> quality, etc., - and they manage to
articulate
> that difference in word and action - then they will get more customers -
far
> more than they would get by cutting their margin on a headset.

If a well managed shop can provide all of the quality services you mentioned above AND provide
quality parts for lower prices, don't you think they will get EVEN MORE customers? The possibilities
are endless... It's a capitalistic economy. Why should a manufacturer interfere with this process by
ordering a shop to sell at a certain price or else you can't sell....

 

[Ryan Cousineau]

In article <[email protected]>, [email protected] (Qui si parla
Campagnolo) wrote:

> Fred-<< I would have a difficult time walking into a shop and trying to beat them out of a fair
> price. >><BR><BR>
>
> Good for you but it happens all the time...not by you but by many others(will you match this price
> or that? I want to give you the business)...little do they know they ARE giving us the business.

Somehow, this reminds me of something I read in a Northwest Airlines house magazine a few months
ago. The CEO, by way of trying to explain why Northwest was losing money while certain
non-traditional airlines prospered (I can't remember if Southwest was explicitly cited or only the
implicit target) was because Northwest was a hub-and-spoke airline, and that covering small routes
was really expensive.

As a purchaser of flights, I couldn't tell why that was supposed to matter to me, and I also
couldn't tell why this answer was supposed to make Northwest's shareholders feel better, either.

I like good LBSes. The total goods I have bought mail-order is dwarfed by the gear I have bought
locally. So far, it's just a pair of Pedro's 3-corner spoke wrenches that I bought online because I
couldn't find them at any of the several shops I tried, and a pair of rims that I threw into the
order because they were too cheap to pass up (US$10 ea for Syncros Lil' Snappers).

That said, I wander into most shops and get such improbable stories just about every time I ask for
advice that I can't believe it. Tales about frame materials, stories about what bike frame will fit
me, notions about how PC-48 chains are too fragile, and other fancy stuff.

It has gotten to the point that my favourite shop is the one nearby where they specialize on used
and closeout gear, because most of the staff are decently ignorant about bikes and I can shop for my
odd cheap scraps in peace.

Instead, I find that a year or so of close study online, a copy of Zinn, and a judicious selection
of tools slowly accumulated, has left me as the only mechanic I really trust with my bikes.

Meanwhile, I hang around with anarchist types who do things like shift Gipiemme derailleurs with
Campy 9v brifteurs, and adapt freehub bodies onto ancient hubs because it seems like a neat thing,
and contemplate three ways of upgrading an ancient lugged 120mm frame's drivetrain without spreading
the rear triangle. I haven't yet met a bike shop interested in this sort of project, for the
perfectly decent reason that this combination of scavenging, experimentation, cheapness, and
cleverness doesn't amount to much money.

I sympathize with bike shops that get treated as the local free-advice joint by people who should
know better (or possibly just use the internet), and I understand that running any small business is
hard work, frequently punctuated by annoyances, and often terminated by failure. It's not easy being
an entrepreneur, and boutique retail may be the hardest niche of all.

But I didn't ask my LBS to go into business. I don't think it is either a library-like public
service or a charitable institution. I wish my LBS gave better advice, had more group rides (some of
the shops in Vancouver do, but none in my area advertise one), and had lower prices. I feel really
sad that they can't compete with MEC's price on cassettes, but I can do work I trust as much as the
repair shop, I can get better advice from other sources, and I can find pricing cheaper elsewhere.

Maybe Vecchio's is a superior enough shop that it really does deserve to live, some combo of
creating a social bike community, a great retail and service experience, and useful advice that
makes for customer loyalty. The bike shop equivalent of pleasant flight attendants and better food.

I can't say from here. It sounds like a great place to go for parts, but it's a long way from
Vancouver. What I can say is that I am one sample of a customer who is only marginally interested in
the woes of LBSes, and will fairly happily shop on price for most of my stuff.

Maybe I'm the kind of customer most shops would be glad to get rid of. Maybe LBS proprietors mad
about mail-order are not fairly compared to a hub-and-spoke airline CEO complaining about the
unfairness of competing with point-to-point carriers. But my impression is that at least around
where I live, there are an awful lot of bike shops that have earned their competition, and precious
few that set benchmarks for service.

--
Ryan Cousineau, [email protected] http://www.sfu.ca/~rcousine President, Fabrizio Mazzoleni Fan Club

 

[Doug Taylor]

Ryan Cousineau <[email protected]> wrote:

>Maybe I'm the kind of customer most shops would be glad to get rid of. Maybe LBS proprietors mad
>about mail-order are not fairly compared to a hub-and-spoke airline CEO complaining about the
>unfairness of competing with point-to-point carriers. But my impression is that at least around
>where I live, there are an awful lot of bike shops that have earned their competition, and precious
>few that set benchmarks for service.

I think your situation is fairly typical. Once a cyclist starts putting in serious mileage on or
off-road, they inevitably tend to wrench their own bikes with greater frequency. The alternative is
too much down time waiting for the LBS to get around to it. It's a question of degree. If I lack a
tool (headset installation, for example) or run into a problem I can't handle, I'm back to the LBS
for help. The one I usually go to has never turned me away just because I put the bike together
myself and didn't buy so much as a tube from their shop. Nor is their service any less reliable for
my lack of support. They have more than enough business from others to take up the slack from the
do-it-yourself crowd. Meanwhile, the latter still buy 95% of our parts on-line and do 95% of our own
wrenching. --dt

 

[Jim Edgar]

Chuck Liu at [email protected] wrote on 8/21/03 8:50 PM:
> "Jim Edgar" <[email protected]> wrote in message
> news:BB67CDA0.4E057%[email protected]...
>> If the "well managed" shop you speak of has better service, customer relations, reputation, store
>> quality, etc., - and they manage to articulate that difference in word and action - then they
>> will get more customers - far more than they would get by cutting their margin on a headset.
>
> If a well managed shop can provide all of the quality services you mentioned above AND provide
> quality parts for lower prices, don't you think they will get EVEN MORE customers?

Yep, that's true. If they didn't have to pay their workers or if the owner didn't want to take a
salary, that'd all work.

But, overhead in retail is a fact of operation - A shop with 2 or three skilled wrenches and a
couple knowledgeable sales people with actual riding experience has more of it than one person
operating out of a trailer and container complex in Nevada, for example. Or maybe if it's a big
discount operation, they have a few part time high school kids (or the economic equivilent) who pull
and pack the orders.

Retail is an equation - let's say you do $500K in biz and decide to cut your retail prices by 10%.
If your gross margin was 35%, it drops to roughly 28%. Until word gets around that you have HOT
PRICES, that means you're going to take in $50K less. Since the gross profit on that $50K was
$17,500, at your new low gross margin, you need to actually increase sales by $62,500 to keep the
same cash flow. And you probably need that cash flow because you haven't cut your operating expenses
of rent, utilities, advertising and salaries - all of which come out of that gross profit. This is
why most small shops who jump into discounting go out of business, they don't work (or don't know
how to work) the numbers.

-- Jim

 

[Ryan Cousineau]

In article <[email protected]>, [email protected] (Qui si parla
Campagnolo) wrote:

> Ryan-some snipped-<< Maybe I'm the kind of customer most shops would be glad to get rid of. Maybe
> LBS proprietors mad about mail-order are not fairly compared to a hub-and-spoke airline CEO
> complaining about the unfairness of competing with point-to-point carriers. >><BR><BR>
>
> Wrong about this. We fault no customer or MO place for buying or selling anything. I fault
> manufacturers and distributors who cannot control their distribution. If MO can get a shimano
> widget for less-sell it..if a customer can get a Spegatonni frameset for less, buy it...but I
> won't fault any bike shop for not liking the fact Spegatonni's are going out the back door at the
> factory in Milano and ending up on E-bay

Fair enough; I like that policy .

The last route you suggested: in your experience, is the back door of the factory a routine
distribution means for some companies?

When I look at mail-order firms, their deals (not always a deal, but to the extent that they are)
seem to fall into three classes:

1) volume discounts or margin reductions: the mail-order company leans on the
manufacturer/distributor to get a better price on a large order, or reduces the profit margin to
themselves

2) close-outs: they buy surplus stock, bankruptcy sales, component surpluses from frame makers,
etc. The key is they get the product through a non-traditional distribution route from a
motivated seller.

3) special arrangement: one friend recently bought an aluminum "Fram

--
Ryan Cousineau, [email protected] http://www.sfu.ca/~rcousine President, Fabrizio Mazzoleni Fan Club

 

[Super Slinky]

Ryan Cousineau said...

> Maybe I'm the kind of customer most shops would be glad to get rid of. Maybe LBS proprietors mad
> about mail-order are not fairly compared to a hub-and-spoke airline CEO complaining about the
> unfairness of competing with point-to-point carriers. But my impression is that at least around
> where I live, there are an awful lot of bike shops that have earned their competition, and
> precious few that set benchmarks for service.

Very well said, Ryan. I hate to say it, but the LBS has little to offer the sophisticated cyclist,
particularly if you don't live in an area where there is a significant bicycle culture and
consequently very good bike shops. Selection, availability of high-end merchandise, and a staff that
is more worldly and customer service oriented also plays a big role.

As for price, that goes back to the original point of these threads. It is the manufacturer's own
convoluted pricing strategies that enable the grey market. If a manufacturer charges very different
prices to different customers for the same product through volume discounts, OEM deals or whatever,
then somebody is getting the green weenie and subsidizing the one who is getting it for less. This
fact can't be kept secret from the market at large, and marketers and consumers are going to do what
they can to get the lower price. So instead of facing the fact that they cling to a broken business
model, Shimano, Chris King et al want to police their distribution to maintain the status quo. Even
if their strategy works, it won't fix the underlying weakness of their system. If it does work, then
higher prices can be the only result. Ultimately, this may not be such a wise move, because it
assumes that the cycling public has unlimited money to spend on bicycles and this is not the case.
Higher prices will mean a smaller market and it is hard to imagine why a manufacturer would want
this. They need to make their own pricing strategies more equitable for everyone with smaller volume
discounts, lower prices to wholesale distributors, higher OEM prices or some combination of all
these things. But I guess it is just easier to bully and threaten their customers than to clean
their own house.

 

[Basjan]

"Marten Hoffmann" <[email protected]> wrote in message

> After going through three so-called "high quality" headsets in five years' time (on an off-road
> tandem) the CK is a big relief because it's working flawlessly for 7 years now.
>
> --
> Regards, Marten

What do you have to do to a headset to go through 3 in 5 years? Improperly installed?