LBS or Online Retailers? I say both.
Where does the Local Bike Shop stand in today's brave new world?
You've got the online retailers cutting prices lower then any brick and mortar can reach. And if people can get products for half the cost on the internet, then it's obvious that they're gonna do it.
It's inevitable. Online retailers that can buy in bulk at lower prices and resell to a worldwide marketplace are going to consistently beat out the pricing on the LBS. And the number of people buying online is only going to grow.
The way I see it, the local shops have two choices. They can moan, fight and advocate against this and slowly go into extinction or they can play on the strengths that they already have.
I've talked to way too many people that have had bad experiences with the local shops to think it's isolated incidents. They get attitude when they do come in to spend money because at some point in the past they went for the online deal. Or they are pushed to higher price items and end up leaving with nothing. Or they feel out of place when they walk in a shop full of 'pros'.
I think the LBS has two major strengths that many of them are overlooking.
Maintenance and Customer Service... two areas that no online retailer should ever be able to match.
First of all, shop maintenance is the highest level of income per sale. You sell a derailleur, you make a low margin of profit. You sell maintenance... 100% of that cash is going into the shop. Instead of advertising deals and cutting prices on products that are still going to be cheaper online, why not advertise and push all forms of maintenance? Your product with the highest level of profit and applicable to all products whether you sold them or not.
And the Customer Service is where shops can really shine. Don't push a $1000 bike if a customer only has $300 to spend. Just explain the pros and cons and remind them about your maintenance package. You want that customer to feel nothing but welcomed and encouraged to come back.
Sure, in a perfect world there would be no online retailers, and the Local Bike Shops (that carry a lot of the heart and soul of the sport) would have very little competition, but that's not how it works any more. And you can either fight against it and lose or compete with your strengths.
I've discussed the topic with employees and owners of both the online retailers and the brick and mortar shops, yet I consistently come to the same conclusion.
So am I wrong? What're your thoughts?
Posted by Tim Grahl at 12:47 PM