Anti Chain Reaction – the rise of online bike shops

Wednesday, 2 February 2011

In a story I picked up from BikeBiz.com, it seems Spanish bike retailers are trying to unite against the Northern Irish online bike shop ChainReactionCycles.com (CRC). The retailer is almost unbeatable on price.

Reactionary opposition

Antichainreaction.com has been launched as a protest site, an amusing touch that in order to complain about a website, you create a counter-website. The anti-website’s main request is that companies should not supply their goods to CRC, instead they should sustain the traditional supply chain via a distributor to a local bike shop. The plea says “The customer can freely buy wherever he/she wants“… so long as suppliers boycott CRC.

Whilst this is a classic cry of a vested interest wanting the rules changed to suit them, I have some sympathy. We’ve seen book stores and music retailers hammered by the arrival of Amazon and other online retailers. It can’t be fun to run a bike shop and know your customers are ordering online.

Without going into too much detail it’s not easy running a local shop. Decide not to stock, say, Campagnolo or Continental for the sake of simplicity or space and you lose some customers automatically who want particular products. Yet carry too many ranges of duplicate products and you risk sinking cash into holding stock that’s hard to shift. By contrast massive choice in a warehouse is a different game.

Indeed the “anti” website smells like a desperate effort. It might even backfire, think about it and this is the kind of publicity that CRC just cannot buy. Spanish retailers are screaming “you guys are too cheap“. You’d almost think it was a viral marketing stunt given the protest isn’t against the concept of online retail, rather it’s directed at one retailer alone. But BikeBiz.com says this is genuine, it’s apparently led by a Valencia bike shop owner.

How to fightback

  • Rather than fighting with websites, try not to compete on price. Offer customers a shop where they can hang out, charge them for coffee. Make the place a hub for local riders rather than a dusty shop handicapped by a high rent.
  • Get income from offering services that can’t be done online, like bike fits and artisan wheel building and above all repairs that can be done quickly, as opposed to a week or longer. If someone wants to buy a carbon seatpost, make sure they know you will fit it for them with the precise torque settings rather than groan because they “went elsewhere”.
  • Have a good stock of the things people need every day, like tyres or small spares.
  • If these things are a big change, be sure to offer the simple things like a smile and service. Good advice helps people.
  • And a poster on the wall reminding people that you don’t charge postage costs and offer easy refunds is another way to remind customers that shopping isn’t determined by price. You can also point out that customers aren’t at the mercy of a postal or courier service that’s going to deliver the goods whilst they’re out at work.

But at the end of the day, most bike parts are basic commodities, there is no reason to for a network of small shops to supply the market when a few low cost giants can do this more efficiently.

Owen February 2, 2011 at 7:13 pm

Well said, you have to worry for real shops, but…
Anyway Shiny Bikes are cheaper than CRC, at least for Campag.

SQUADRA February 2, 2011 at 7:52 pm

Bicycle Shops have to concentrate on service and quality. "stack em high, sell it cheap" outlets always come & go – cyclists chase the deal, but if they show up at your shop (with parts bought elsewhere) asking for a mechanic to fit the parts, then charge them appropriately.

Then they may realise that cheap equipment is one thing, quality and service, is another.

Alex Murray February 2, 2011 at 8:08 pm

The coffee and service thing is exemplified by Look Mum Now Hands! in London while Cyclefit are among those bang on the custom/fitted experience, along with Mosquito Cycles.

Where there is a gap to be exploited is in taking the online retailers on at their own game. Perhaps offer a service where you'll help customers find parts at best price and then fit them. A sort of semi-custom service perhaps?

Anonymous February 2, 2011 at 8:31 pm

A very good post. I believe in competition and the need to add value in any market. Lots of bike shops going from strength-to-strength in UK buy offering excellent service and community. I fear the shops complaining are often the local stores who offer poor service and are surprised when people choose to take their business elsewhere.

I don't like the way manufacturers are trying to put the squeeze on certain web retailers (eg. Lightweight stopping using Wiggle as UK distributor, Cervelo changing their whole supply model), which just means customers loose the choice of who to buy from. The customer should be allowed to choose to go with any player from the cheap but terrible service web retailer all the way through to the top quality service but higher price local shop. Let them choose the trade off that is best for them and if the webretailers can find efficiencies that drive down the prices then that is good for consumers not bad, just as if local store can find additional value to add that is also good for the consumer.

The other problem often is the bike market is quite small and there aren't that many producers for any individual product. Plus you can end up with a few competitors being distributed by the same company and lose a good deal of competition right away, international webstores at least limit these distributors market power.

Troy Squires February 2, 2011 at 9:30 pm

I do feel bad for proper bike shops, but the same can be said for any business that's been affected by the introduction of online shopping.

Shop owners need to get smarter. Along with your 'fightback' options, why don't more shops organise informal weekend rides, Bike Basics 101 courses, pro-rider appearances/talks (brands supplying the store could help), show the big races on TV, etc.

Moaning because 'they're cheaper than me' gets little sympathy. I clearly remember starting out as a roadie, going into bike shops and being made to feel like a complete tit because I didn't know my stem from my crank. Maybe shop owners will be more tolerant of these people going forward and help/guide versus snigger.

Evans Cycles commit the above crime, but they've also upped their game offering regular weekend rides for both MTB and Road riders, the chance to trial bikes on these rides and more recently, they've starting offering beginner mechanic courses.

I'd love to support my local store but sadly they don't deserve it.

TheInnerRing February 2, 2011 at 9:31 pm

Owen: yes, other places can be cheaper. It's more the way this one shop has attracted criticism.

Squadra: exactly.

Alex: yes but I feel this might be a metropolitan thing for Londoners and others in places like New York or Melbourne. Harder to fix in a provincial town in Spain… but different settings for different places.

Anonymous: thanks. All good points, and I've covered Cervélo's new distribution on here before:
http://theinnerring.blogspot.com/2010/10/cervelos-new-concept.html

Anonymous February 2, 2011 at 11:57 pm

I used to own a bike shop in the 80's and had to fight with mail order companies for business like Performance and Nashbar. I always hated customers that would try stuff on in our shop and then buy it from the mail order people. Since then I have felt that the bike shop should morph into a "service shop" and just perform repairs. Other than small parts, which are generally compatible between brands, and tires and tubes there is very little overhead. Let the online retailers deal with bike manufacturers quotas and headaches and the local shop can reap the profits by fixing all the stuff the online folks can't work on.

Anonymous February 3, 2011 at 3:05 am

Ask any bike shop, and they do not make money off of service. Between salaries, time etc…, you cannot charge enough for it to make financial sense. You still need to sell product.

Anonymous February 3, 2011 at 3:28 am

It's not about making money as much as building loyalty though. I bought my most recent bike from my local bike shop as whenever I have gone in they have been very helpful to me, when you can't compete on price you need to excell in customer service and in some shops I have definately got the feel of snobbishness if you aren't super techy.

Tom February 3, 2011 at 7:35 am

I find it hard to have sympathy when I get better service & cheaper prices while shopping online.

LBS: 1 x Conti GP4000 = AUS$90
Online: 1 x Conti GP4000 = AUS$40

Jon M February 3, 2011 at 8:30 am

"I'd love to support my local store but sadly they don't deserve it."

I'd have to agree with this statement made above in one of the comments.

Living in the NE in Hull, most local bike shops really don't get it. There is one which really does a good job, is welcoming and helpful, but doesn't have the kind of gear I'm interested in.

There is one very (in)famous one where the guy who owns it is almost actively miserable and unfriendly. How he stays in business I have no idea.

It is a breath of fresh air when I'm in London and go to Cyclefit, the Rapha Cycle Club (when open) and Condor. All are super-friendly and thus get my business.

Creating a nice environment, smiling and being helpful is not rocket science, but for some, it seems to be.

TheInnerRing February 3, 2011 at 8:38 am

All interesting points, plus some harsh comments for the bike shops. But as Tom points out, the arithmetic is inescapable.

Where I live there are some small shops but they just can't compete on price, availability and choice. It's bad for the local shops but they are under competition from international shops. It's here things aren't on a level playing field, for example French shops have to pay high taxes to employ staff, something that is less of an issue for a British shop. So it's not just the scale of the internet, some shops are pitting national tax and labour laws against another.

Anonymous February 3, 2011 at 9:42 am

I mix & match between OLBS and various LBS. I have a favourite but sometimes even they let me down. Its not about price, sometimes I pay full price online, its just an easier way to shop without hassles and people trying to talk me out of what I want and into what they've got in stock – in the worst examples. I've even had a sales guy tell me to find what I want online, get him the code and then he will consider getting it in. When I (crazily) did this, he asked me to ring back every few days to see what the progress was – with the inquiry, not even the order. At this point, I walked. Seriously, what value was being added?

I have bought 3 new bikes in the last year and all were from a shop at pretty much full price. I don't regret these. I also bought1 x second hand via Ebay which was 1/3 the price of a new one. With clothes and shoes though, the online option is vastly superior in general.

Shop dudes, you need to stay sharp.

Anonymous February 3, 2011 at 11:50 am

And I'll be shopping straight back at CRC

Get with the times people.

Anonymous February 4, 2011 at 6:55 pm

Ah I love when chainreaction cycles is a 'local' shop. From my place in Belfast it is just 15 minutes up the road in Doagh. In fact, I'm off there now to pick up some spares for the weekend.

(They aren't always the cheapest but they're usually pretty close)

Gillis February 4, 2011 at 11:52 pm

Suppliers Sound Off on Chain Reaction
http://www.bicycleretailer.com/news/newsDetail/5072.html

Alex February 6, 2011 at 1:54 pm

I think this article also highlights these issues and especially the comments suggesting ways the LBS can still be relevant.
http://redkiteprayer.com/?p=4152

Ian February 12, 2011 at 5:14 am

A lot of shots being fired here – but they seem to be at the wrong target.

– some contributors are doing customer satisfaction assessments on local bike shops. Too bad you had a bad experience. But if those businesses perform like that they will end up with no customers regardless of competition with online suppliers like CRC.
– a number of comments suggesting bike shops need to respond to the changing market. I would be very surprised if there are many bike shops that do not have some online presence.
– others are confused. There is more to “service” than a quick delivery after a visit to shopping site.

When you spend offshore/online, none of the value of the transaction is actually spent at home. Nothing on manufacturing. Nothing on wages. Nothing on distribution. Not event GST. Nothing. “Canny” online shoppers are looking at the smaller dollar total on the shopping cart. So who is looking at the the long term consequence of this spending behavior?

I think you will find our Spanish friends are NOT complaining about CRC or any other online seller because of their distribution model. They are asking for a more level playing field. There is something rotten in the system when you can buy product online at the same or less than cost price for your local retailer. The stink is not the small margin the LBS is making. Why cant our local distributors purchase at the same price available to the online giants?

Harry Rowland February 12, 2011 at 3:50 pm

I have been in the cycle trade for over 30 years and discounting is nothing new
how many LBS owners use the likes of Tesco ? we are all customers looking for the best price.
Like it or not discounting on line is here to stay,change the way you do business or find another job
or end up bitter and twisted.

The Inner Ring February 12, 2011 at 4:45 pm

Ian – “Why cant our local distributors purchase at the same price available to the online giants?”, that’s an interesting question and one that can be partly resolved with both US and European rules, any evidence of price fixing can land companies in a lot of trouble.

Harry: thanks. Taking the example of a supermarket, they can have advantages and lobbying power than mean the playing field is tilted in their favour. I don’t see the online bike retailers having as much influence but wonder if it happens a bit. But as you say, discounting is here to stay and the smaller shops need to work out ways to compete.

Harry Rowland February 12, 2011 at 9:14 pm

Tesco was not the best example sorry,I will put it in another way
I don’t like on line discounting when it affects my business but I will use it when it suits me
so I don’t blame my customers , I keep an eye on CRC/Wiggle prices and if they sell
at a price I cant or won’t match I will tell the customer and hope I can get the job of fitting /building
I do have a moan but I do it with a smile.

chuggington March 2, 2011 at 9:51 am

I run a rather large cycle related operation. Recently I sold a lovely bike to a good friend and mentioned if he needed anything else to please contact me as i could get some top quality accessories for him. As he did not want to bother me he went to his “local” IBD and bought a stem and some “bum” shorts (as he called them). When I met up with him last week he explained how terrible the service was from his local IBD . Lack of customer service, lack of choice, inflated prices and rude staff! I was really shocked as I honestly thought the IBD in question was top notch! I suggested he went to the other high profile IBD in Bristol. I contacted him yesterday to see how he got on and again he complained at the lack of enthusiasm and rudeness of staff. He asked for a black pair of shoes to try on and the staff member approached him with “we only have this white pair in stock” with no alternative. Now I am not saying this is a general rule but how can IBD’s complain if this is actually the reality of the consumer? Online stores such as CRC will always be the no.1 choice of consumers if IBD’s cannot offer something different.

patrick ryan November 15, 2012 at 5:50 pm

I do think that in order for these retailers to survive against these giants, they have to fight back with genuine competition. And to add insult after injury there’s another new online giant currently been constructed in Ireland and UK as competition to CRC. Saveburys is the name that has been floated about and these guys are going to be big into international selling.The only consulation with them apartently is that they have a service where they will sell for retailers at a percentage and handle all freight and documntation etc internationaly. retailers just make available there stock on a daily basis for collection by their logistics company subject to sales. Aparently they have massive logistics and selling power. Maybe this is a way to fight back, supply these guys with your stock and get into a bigger market.

Carl Allen May 13, 2013 at 4:03 pm

Why anybody would ask others to boycott an online supplier is beyond me. Just because they are offering products at a much cheaper rate than bike shops. As much as I can sympathise with these shops, in this day and age it is hardly a surprise that online retailing is taking over. Personally with clothing I like the old try before you buy method. There is a huge mark up on cycling clothing, obviously if the online retailers can sell it at a much lower price and still make money. A friend of mine services my bike for half the price of my local bike shop. Should I boycott them too. I dont think so. Shop around !!!

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