Tuesday, December 13, 2005

LBS vs Online- Part Deux (or d'uh?)

Yesterday's post by Tim Grahl (aka- The Other Tim) was another good post for stirring up great conversations. The debate about the small (or even large) retailer and the online retailer is one that can not be answered or completed here. This is one of those topics that is hard fought on both sides of the issue and for good reasons. I can't pretend to know the answer and I have a tough time with the issue from the perspective of a manufacturer who is responsible for growing sales for my brand, to keep the bosses happy and keep my job, but I have to balance that against protecting the brand's image and then supporting those who are responsible for selling and servicing the bikes. It is by no means an easy issue to address.

The comments below were emailed directly to me and I have witheld the author's name, since he/ she did not post them directly here and may wish to remain "unknown". I felt that the comments were very valid to the discussion here though;

Hello Mr. Jackson.

I completely enjoy reading
your blog(s) especialy the new Kool-aid blog with your excellent team of
industry members.

This mornings blog has me
thinking.

More and more, I see companies that manufacture products
who sell their stuff wholesale to the local bike shop, but they also have their
own on-line website with ecommerce store selling pretty much the same selection
and possibly more than what the LBS is willing or capable of
carrying.

I am not picking on any of the following companies.
They are just companies I have found are successful in the industry and have
on-line stores.
Sock Guy (oh, so comfortable - my favorite sock) has an
on-line shop with what seems to be just about every sock design they make.Primal
Wear has an extensive on-line shop with an area to sign up for their mailing
list for "sale updates".
Pedros has an on-line shop too. I wonder
if Karl W. would share his thoughts on where they stand and if this
has ever been an issue with their dealers.

I know that many shops
are small and budgets are tight, so they cant afford or have the room in
their shop to carry every product, color, design that a company (like the few I
mentioned). It almost seems like a no brainer for the customer to shop
direct to the manufacture site where they have even more to choose from and the
potential of getting a better deal.

How can a bike shop
compete with that kind of selection?

Do local bike shops care that
manufactures are also selling direct?

Is the LBS is now
competing with the brands they carry?

Would buyers from local shops
looking for products to put in their stores consider if the manufacture has its
own outlet for sales and possibly decide to not carry their product knowing that
they have to then compete for sales with them?

If manufactures have
specials on their website: does that seem okay? Wouldnt that stear
customers away from the LBS?

Does this ultimately undermine the
relationship with the LBS?

These are a few thoughts that I had and
wanted to share with you.If you feel this is a worthy topic for the
bicyclemarketingwatch.blogspot.com then I will look forward to reading your
comments and others thoughts on this.

Thanks for your
time.


These are great comments and certainly worthy of discussion, so I will leave them "as is" for all to ponder and comment at will.

Now, some may be asking "what the heck does this have to do with Marketing?" Those folks have a valid question and I want to draw the discussion back that way.

To me, this is an issue of how the retailers market themselves to their customers. As Bernie from Panther City Bicycles commented in the earlier post, his strategy has been to point out the value of his relationship and service with his customers. Sure, some folks will go for the cheapest price and then bring it to him for installation/ service, but he is at least seeing that customer at some point in the store. Tim Grahl made a great point yesterday about this- service and customer service really do make the difference. I'm gonna pick on Bernie again because I like the guy a lot and think he's doing some great things [I have to point out that Bernie does sell Masi and Haro bikes at his shop, to be fair and honest.] Bernie maintains a blog for the shop that I believe is one of the ways that a shop can have a presence on the web that consumers can relate to and interact with. He's been effective, in my opinion, in building a good relationship with his customers and in promoting the brands he works with. I find this to be a great tool for him and his shop and believe that many retailers could duplicate his success very easily. Blogging is a great and often free way to stay in front of the customers who are already online looking for products.

Now I'll clear the floor for others to speak.

Tim
(PS- I'll address some of the other comments and issues in another post in the future.)





Posted by Tim Jackson at 10:50 AM

5 Comments

  1. Blogger Bernie posted at 12:37 PM  
    I just want to comment from the small retailer's perspective on the concern raised in the letter.

    No, I really don't mind that a manufacturer like Pedro's keeps an online store. Manufacturers in the industry who do have online stores all seem good about keeping the prices at standard brick-and-mortar retail level. Factor in shipping and it's more likely my customer's gonna buy a bottle of Ice Wax from me next time he swings by the shop.

    The only time I couldn't compete would be if a clothing company was closing out "last season's" styles. But clothing companies are at an online disadvantage because of the can't-try-it-on factor.

    Finally, as selection goes... a wide selection looks great, but doesn't necessarily make much money for the shop. For example, I might not carry every single mountain bike tire Brand A makes, but I do carry the 2 or 3 that work best on our local trails, based on customer feedback. The best answer for a shop on a tight budget (and I definitely have experience there) is to stock the few items in each category that are your favorites; the ones you've tested and that you know work. Products are easy to sell when you're enthusiastic about them.
  2. Blogger Karl Wiedemann posted at 2:47 PM  
    In 1997 when we put Pedros.com online we ran into a huge problem - we were big in the East and not so big in the West. Through the magic of the internet, everyone in the USA could see all the full Pedro’s product line. This increased demand and the number of consumers calling our customer service department asking where to find our stuff. Since we sell to distributors we don’t have an exact dealer list. So if someone called looking for 16oz. Ice Wax we would give them a list of three of four dealers that might have it. This was very time consuming for our customer service and very troublesome for the consumer.

    We decided to sell on Pedros.com to help our customers get the products they want. Not every dealer in the USA carries the complete Pedro's line (though that is our goal). We never sell our core products below MSRP and we have pretty hefty shipping charges. So it is a last resort place for people to find the obscure Pedro's product they want (like our Lip Schit).

    Retailers are our number one priority and most understand why we have structured our business this way. Hope this helps.
  3. Blogger Jeff Kerkove posted at 4:55 AM  
    Q: How can a bike shop
    compete with that kind of selection?
    A: No not really, unless they are a big munoey shop with high turn over on product. I know the shop I work at can't stock every SKU.


    Q: Do local bike shops care that
    manufactures are also selling direct?
    A: Oh hell yes! We talk about it daily!

    Q: Is the LBS is now
    competing with the brands they carry?
    A: Yes we have to compete. We try to work something out so we the shop and the consumer get what we want. It all comes down to the consumer making the right and moral choice.

    Q: Would buyers from local shops
    looking for products to put in their stores consider if the manufacture has its own outlet for sales and possibly decide to not carry their product knowing that they have to then compete for sales with them?
    A: For our shop...NO. We stock what sells in this market. Our biggest online competitior is online shops who sell clothing and parts...i.e. shimano components.

    Q: If manufactures have
    specials on their website: does that seem okay? Wouldnt that stear
    customers away from the LBS?
    A: Online retialers do, and it DOES hurt the LBS. Bike shops have to work on selling service.

    Q: Does this ultimately undermine the relationship with the LBS?
    A: It's about 50/50 with our shop. We get a lot of people that buy stuff online then have us install it. Mor times than not, it's the wrong size or not compatible. That's where the local knowledgable BS comes in.

    An I do work at a shop. I have for 5+ years.

    www.europacycle.com
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