Bike dealers torn by impact of Specialized direct offer
It’s been just over a month since Specialized broke the internet (at least a small corner of it) by announcing a move that many no doubt saw as coming from one of the top cycling brands and with the dust settling reaction remains mixed.
Unsurprisingly, the consensus in the retail network leans negative, with criticism ranging from gripes about the brand’s foundation being tied to the bike shop, to complaints that Specialized dictates repair prices for bikes. dealers who choose to manage their bikes. However, in a video titled Specialized go direct to consumer? Is this the end of the local bike shop?, a balanced view is given by the UK dealer and the two-branch bike shop J’s Cycle Shack.
Owner Chris Day is optimistic, admitting the natural order of global commerce is currently consumer-centric, but that doesn’t necessarily mean the end of the road for the retail partner who has valuable expertise that can’t be easily obtained. by direct means.
“From our point of view, at first when you look at it you think ‘Oh my god, they’re going to cut us, we’ve got all these bikes, it’s going to be a disaster. It’s not like that at all.
“I think what Specialized did here looked at an issue and reacted to the situation in front of them, which is that more and more people are buying bikes online. This creates a service problem. The internet can’t fix your bike and it’s long been the bane of the local bike shop that sees online bought bikes brought to the store and these go to the back of the queue. What Specialized has done is update their business by offering this bike online, making it more accessible to that customer if we don’t have one in stock, making it available to pick up in store, and establishing a service and warranty framework by certain retailers. I think it’s a great idea and other brands will follow. What this creates is ultimately the best thing for the ned consumer.
The news didn’t just elicit a strong reaction from retailers. Giant USA is among those big brands that have strongly pushed back against moving away from retailer-only delivery, although other more nimble brands are also using the turbulence to lure stores with the promise of retail-only delivery. .
In the background, internal CyclingIndustry.News research showed a steady trend of adjusting sales space and market composition, with many dealers wary of eroding margins on bicycle sales in the face of intensifying supply chain pressures at every link in the market. chain. This trend has been greatly exacerbated by the ripple effects of the pandemic on supply and prices, from raw materials to delivery to the end user.
Our new 2022 report (available to purchase here) now illustrates a deeper shift from full retail to full workshop or mobile, with 32% of respondents now prioritizing service over sales . 37% expressed great concern about the advance of the direct-to-consumer model and the potential phasing out of retail partners.
Understandably, not all resellers are convinced that this decision won’t have a big impact on revenue.
Boosting e-bikes wrote an open letter to Specialized UK promptly on the back of the ad, which can be read in full below:
I am writing to both of you to express our concerns regarding Specialized’s decision to begin selling direct-to-rider products.
We value the relationship we strive to build when our customers visit us for the first time. We spend time with them to understand, by asking them appropriate questions, their needs and to identify the products that meet their needs and expectations.
Once a suitable product has been chosen, we then take the customer on a thoughtful test drive to reinforce their decision-making. All of this helps to establish a strong level of trust in ourselves and in the brands we sell.
Maintaining a consistent and high level of footfall is key to the survival of the high street store. The introduction of direct to rider will significantly reduce our footfall and undermine the work and effort we have put into growing our business.
By talking directly to the rider, Specialized takes away the customer experience and decouples the customer from their local bike shop.
Many of our sales throughout the year come from repeat business and customer referrals. Selling directly to the passenger will have a significant negative impact on our business because it does not allow us to establish a relationship with the passenger.
In addition, the absence of commission for the LBS which would be the convenience store for end users does not follow what the other brands that support us offer. Many other brands offer us a fair commission when products are purchased from their website for direct-to-consumer delivery. This helps support and grow the LBS, without which Specialized would have no dealers to help undertake warranty repairs for products that were sold directly to the rider. This would be a negative result for the Specialized brand.
For example, we were a Brompton dealer before Brompton had its own retail stores. On several occasions we spent a lot of time discussing and demonstrating the product to potential customers only to find that by not having the color option they wanted, the sale migrated to the Bromptons online store . This not only cost us the sale, but also the time we invested in the client. Brompton, like you, did not offer a commission on the sale. This experience led us to remove the Brompton brand from our range.
It’s certainly no coincidence that the Direct to Rider is launched at the same time as the revised warranty charter. Specialized needs its dealer base to support warranties on bikes sent direct! Again, without the dealer base, how will Specialized cope?
It looks like Specialized wants all the accolades for selling the product without having to deal with angry customers when things go wrong. Instead, stress and frustration are passed on to a store that hasn’t had initial contact or developed a relationship with the customer.
One last point. We understand that you set up a click and collect with the reseller offering the reseller 50% of your standard storage margin. As a brand, Specialized typically supplies 10 points less markup than other brands we stock and is certainly the lowest markup of any brand we carry. It is completely unacceptable to have further erosion of what is already a weak base. Overall, this scheme is inconsiderate, one-sided, and would make us wonder if we continue to stock the brand.
I doubt we are the only retailer raising our concerns and would like to know what are Specialized’s plans to support its dealer network with appropriate commissions on direct passenger sales and click & collect?
Retailers have previously discussed the subject of direct-to-consumer sales on CI.N’s Facebook group, which you can apply to join here.