From: kim39@husc8.harvard.edu (John Kim)
Newsgroups: rec.bicycles
Subject: Re: Buyers Coop
Date: 17 Apr 92 16:37:54 GMT
Article-I.D.: husc3.1992Apr17.123758.11217
Organization: Harvard University Science Center

In article <92105.153334CBC107@psuvm.psu.edu> CBC107@psuvm.psu.edu writes:
Maybe bike shops start out withthis same
>dedication to the enthusiasts, but then become preoccupied with how much
>they can "keystone" the products they sell.  
	****  Forgive my ignorance, but what does "keystone" mean, other
than being a brand of beer?  *****

>If profits were uniform and
>predictable, wouldn't have this dilema, but then we wouldn't be in
>America either.  It is this line between profit and customer that is the
>crux of the issue.  I agree that shops provide a service that can't be
>dismissed.  I am not able to straighten chainstays or forks or replace
>dropouts.  For those, and other hard-core problems I go to the shops.
>But,in the same breath, I don't want to be gouged when I buy a bottom
>bracket either.  I had one shop charge me $30.00 for a bottom bracket.  When
>I got home I checked the price and found it in Nashbar for $16.00.  I took
>it back and they adjusted the price.  But a few days later I returned and
>saw the same BB for the original price.  

******  Well, I don't think the shop owed you a price cut, nor are they
truly "gouging" you.  If this were a mail-order place like Nashbar, with
similar overhead and lack of local personalized service, then I woudl consider
it a major price discrepancy.  However, the local shop cannot order in 
the quantities that Nashbar can; they usually do not suffer from the 
yearly shortages Nashbar has; they let you fondle the stuff in person
without having to wait 2 days and then pay return shipping if you don't like
it;  they let you hang out and see brands of bikes Nashbar doesn't sell;
and they pay personnel and overhead costs that Nashbar has never heard
of (except at factory outlet stores).  An interesting sidenote is that
people who live geographically close to Nashbar's warehouse in Ohio
are subsidizing shipping charges to those who live elsewhere in the conti
U.S.  This is a common pricing practice to prevent people far away from
a distributor from turning to other more local sources.
	I am not saying you should buy everything locally.  If I need
something next week, or something uncommon, or if I want to order a bunch
of stuff like tubes, tools, last year's gloves and the ilk, then
I go mail order.  If I want something today, or want personal advice
on a rack, tool, or set of gloves; or if I want a small item NOW which
would cost me an addition $3.50 in shipping to get from Nashbar
in 3 days, then I buy at the local shop.  Same thing with test rides.
One example of soemthing the mail-order places can't provide is spare
parts for components.  I'm still trying to repair my old Look pedals, and
none of the mail-order places had the parts or was able to even give me
Look's US address (though Colorado Cyclist did try to find it for me,
when I was placing an order).  I called located Look through a magazine
and called them.  The rep was helpful, but he would not sell me anything
nor would he give me dealers' prices.  He was happy to name several bike shops in my
area which could order the parts I needed, and he personally recommendeed
his friend's bike shop (about 20 miles from me).  He did give a MSRP of
$15 for the part.
 

>normal throughout the industry.  I'm advocating a mail order coop that ships
>directly to the consumer after minor repackaging.  The catalog will be a
>list of what's available, with some basic necessary info.  No photographs or
>graphics will be needed.  Since the consumers are enthusiasts they will
>already know the products from the bicycling media, compu networks and even
>bicycle shops (I know what you're thinking.) We will circumvent the backlash
>from bike shops by keeping the name "coop" out of the title ot the business.
>It's just a business - for enthusiasts.

	**** I suggest that places like NASHBAR and Excel might have gotten
into bikes this way.  Sell just a few things at great prices by ordering
in bulk and keeping the overhead down.  Then you do well, get popular,
expand, and start to offer services, conveniences and guarantees
which you perceive as necessary to compete.  Your selection grows, the
catalogs get glossier, and the prices eventually start to rise.  I havne't
been riding a bike long enough to say what NASHBAR and Perormance
have been doing as far as prices, but it looks like the Excel and CC catalogs
get bigger and better and more colorful as time goes on.  
	I look at The American Cyclist and I was pretty psyched at their
prices.  I ordered one pair of shorts and to try them out and I was very
happy with the shorts, except that the waistband was a little smaller
than my other shorts.  They beat everyone I know except the CC plain
shorts ($2-3 cheaper, not counting shipping).  But lo and behold, they now
offer tights and knee-lenght shorts too!  They may stay this way, but
success is tempting.  They were highly rated in some recent mag, and as
their sales jump, they will doubtless be tempted to offer American Cyclist
gloves, plain jerseys, helmets, shoes, and socks.  Next will be rain shells
("any color you want as long as it's red/neon yellow/pink").  If they
do really well, they might become another Excel without the bicycles
and framesets.
	Your idea of a no-frills operation with pictureless catalogs on recycled
paper is laudable, and, I suggest, profitable, within certain limits.  How
will you advertise?  Perhpas you won't need to, but the more business you do
for any particular item the larger your wholesale discounts and the more
money members will save.  What will you carry?  How will you determine what
items are so popular that all members will want them?  Sure, you can start
with shorts, basic tools, helmets, water bottles, and the 8 most popluar
tire models (say 4 ATB, 2 clincher, 2 tubular--ahhh, but will you carry
the 27" tires?  Will you have just one Avocet FASGRIP witdth, or 
all four widths?  Avocet alone has 4 widths and 3 models, makeing 12
tires you have to keep in inventory.  Continental Supersport Ultras
come in at least 3 widths).  But what about components?  You mentioned
bottom brackets:  how many brands and sizes will you carry?  If you
carry only the top road models, then poor cyclists and MTB riders
will not patronize the Co-op.  If you carry all the models (not even
NAHSBAR carries all the Shimano or all the Suntour models), your overhead
goes up, your inventory goes out of date more quickly, and your quantity
discounts are lessened.
	As for catalogs, I suspect that they are a very small part of
the overhead.  90% of each catalog is copied out of hte last catalog
and the postage rates for them are still low.  Along with catalogs
you have to consider customer service, convenience and return policies.
I think one reason NASHBAR and Performance cost more than CC or Excel
is that they staff their lines for more hours, offer more
generous return policies and hire enough extra staff to ensure
fast and efficient shipping.  When I order things from NASHBAR, they
(so far) have always shipped the same business day (before 6pm, unless
they were out of stock, which happens) and I get it three days later.
When I ordered from American Cyclist, they weremuch cheaper than
NASHBAR for high  -quality 8-panel shorts, but they could not promise
a shipping day and it took 10 days for me to get my shorts, which did not
come with the computer-printed pre-stamped return forms or return mailing
labels that NASHBAR likes to send.  

>
>I am sick of being treated like a whore every time I walk into a shop.  I
>love bicycling and therefore invest a lot of time and money into it.  Shops
>see me and see a way to make money - and I get screwed.
>
>With low overhead, little profit is required.
>

	**** I think this is a good reason to advocate a co-op.  The
other places, whatever their efficiency or buyign power, must make
a profit and pay taxes, while a co-op may not have to do either.  I am
not saying a co-op is a bad idea, but there are limits to what it can
carry and how much it can save people.  It would be easy for a co-op to
beat the locla stores in prices for items like cranks, BB's, and
chainring bolts, but there are some requiremnts I forsee:

1) Must carry items which do not go out of date easily (black shorts,
	water bottles, Avocet computers, Jobst's book, Conti tires, etc),
	or which turn over quickly enough that you can continuously
	order in large quantities and not have dating problems
2) Must be restricted to popular it\ems which appeal to large
	numbers of cyclists, such as Mavic rims, Ultegra grupos,
	black shorts, Park tools, and Selle Italia Flite saddles.
	Things like hydrulic brakes, Time magnesium pedals, 26"
	road tires and Suspenders front forks will not sell well
	enough.
3) Must find people willing to donate considerable amounts of time
	to keeping inventory, taking orders, chasing down bad checks,
	ordering new stuff, receving shipments and returns, packing
	boxes, adn so forth.  This can be done by a small group
	(i.e. family business), but that tends to preclude 
	such conveniences as guaranteed nex-day shipping, 24-hour
	phone lines, carrying 30 different spoke types and so forth.

other than that, I like the idea of a co-op.
-Case
 
Newsgroups: rec.bicycles