Trek going direct with new program

[goodboyr]

Lol. It's probably the same one near me. The one that can't set up an FD properly?

[fromtrektocolnago]

If the U.S. auto industry tried something similar the dealer networks would go livid. Trek is naive to think a bicycle retailer would react differently.

[tranzformer]

I'm not saying that it is but it could be a good situation for the LBS protecting their margin and keeping everything at a controlled MSRP. Even at the same price point time crunched people like to shop from their computer since it saves them time. When someone has issues with their purchase they will go back to that LBS for parts and accessories provided the LBS gave the purchaser a good experience. Helped them with fit or accessory or made future purchase recommendations with the purchase.

Manufacturer Suggested Retail Price. I sure hope sometime soon there is a class action lawsuit against the bike industry and the monopoly, force, cohesion that is used to price fix. Price fixing is always illegal.


https://www.ftc.gov/tips-advice/competi ... ice-fixing

[53x12]

+1 tranzformer. Price fixing has been a downfall of our hobby imo. Still ways around that as there are many a shop desperate of sales that you can negotiate with. If they don't want the sale, just walk. But the overhanded approach that companies like Specialized, Trek and others take re: pricing is overhanded and definitely illegal.

[Ozrider]

My one LBS is a Trek Concept Store, the one owner is currently at Trek World. He has posted on Facebook about the concept and seems to think it's a great idea.
Bikes are shipped without pedals, cages, bottles, lights, saddle bags, spare tubes, tyre levers, helmets, etc.
Bike is delivered to Trek dealer - buyer comes in and needs above items, and it is an ideal opportunity for the LBS to sell the client these items.
A good LBS will also ensure the bike fits properly and is set up correctly with correct length of stem etc.
If the staff are professional and friendly the have hopefully had a positive interaction with the client, who will return to them for servicing and parts.

[Stolichnaya]

Re: Manufacturer Suggested Retail Price (MSRP)

Prosecuting Attorney: "This amounts to price fixing!"
Defense Attorney: "Suggested..."

This would be fun to watch battled out though.

[mattr]

"Suggested".

I know of at least 4 LBSs who have lost their contracts with major US brands due to discounting from MSRP. All of them have it in writing. None of them will pursue it through the courts. (They win, big deal. Nothing changes. They can't get contracts with anyone anymore)

[tranzformer]

There was a recent case of price fixing in South Africa within the bicycle industry. An anonymous source leaked the minutes of the meeting where the companies had agreed to stop discounting and asked wholesalers to advertise higher MSRP. Very interesting story. Just wish similar would happen in the USA that prides itself on 'free market.'


http://www.bdlive.co.za/business/retail ... cle-cartel

[53x12]

With regards to this new Trek program, I am failing to see what it exactly improves upon for the end customer. As a potential Trek customer, it doesn't save me any money. It doesn't get the bike to me any faster, still have to wait for correct inventory and 5-7 days for the bike to get to the shop. Still have to wait for the LBS to have time to put it together depending on how busy they are. So where is the improvement in efficiency, both time wise and monetary? If I have decided I want one of Trek's offerings, why wouldn't I call around to local dealers and find the one with the size I need that day and take it home. Rather than have to order online, wait those 5-7 days to get shipped (if Trek has inventory available) and then wait another 1-2 days for the shop to build it up?

[spud]

^ agreed.

One of the reasons you might be willing to pay retail is to have the opportunity to either test ride the bike or pick the bike you want out of inventory. This program is probably good in some respects for the dealer in that they can likely reduce inventory of high end models, but for the consumer it's not much of a benefit.

[MRM]

With regards to this new Trek program, I am failing to see what it exactly improves upon for the end customer. As a potential Trek customer, it doesn't save me any money. It doesn't get the bike to me any faster, still have to wait for correct inventory and 5-7 days for the bike to get to the shop. Still have to wait for the LBS to have time to put it together depending on how busy they are. So where is the improvement in efficiency, both time wise and monetary? If I have decided I want one of Trek's offerings, why wouldn't I call around to local dealers and find the one with the size I need that day and take it home. Rather than have to order online, wait those 5-7 days to get shipped (if Trek has inventory available) and then wait another 1-2 days for the shop to build it up?

Maybe it is an advantage for those interested in Project One?! No idea personally...

[bearsdidit]

I wonder if the cut for the LBS is well though out, it might be workable. I suppose it would help cut down inventory - although that just means it sits on Trek's books as opposed to the LBS?

I would think the LBS cut would be reflected in that (less than now) as Trek would be taking more of a risk with inventory. Since LBS only has to receive bike and build it, their cut should be less. If size is wrong, customer would have to deal with trek.com I assume since that was the point of sale and not the shop who did so.

Too bad none of these cost savings are passed to the customer. Price just keeps going up and now the shop just has to deal with building a bike for a customer who put the order in and yet still get their 30-40% cut.

Dealers will typically get 10% less than what they normal would get if they sold the bike direct. A Trek "gold" level dealer was quoted that they should see a check for approximately 22% which is absolute shit.

A few things to consider:
- Trek did not lower the the dollar amount of each dealer's preseason.
- If someone wants to return a $10,000 Trek Madone in a size 61CM because it's too big, well the dealer is stuck with it.

I'm not really excited about the upcoming changes in the cycling industry. However, it's necessary to adapt or be forced out.

[bearsdidit]

"Suggested".

I know of at least 4 LBSs who have lost their contracts with major US brands due to discounting from MSRP. All of them have it in writing. None of them will pursue it through the courts. (They win, big deal. Nothing changes. They can't get contracts with anyone anymore)

That's absolute bull shit. A dealer won't lose his account for discounting but rather advertising lower than MAP. I can sell a Pinarello Dogma for whatever I want but I can not advertise it for less than MAP or MSRP.

[kbbpll]

My first thought was that Trek wants to eliminate the middleman without eliminating the middleman. It seems like poorly thought out nonsense. If I want a new bike and from prior fittings etc know exactly what size I want, can easily slap wheels on and attach bars etc, have it shipped directly to me, what the heck do I need the shop for? If I don't fall into that category and go to the shop to test ride, fit, etc, I'm supposed to go home and order it online instead of just buying it at the LBS and waiting? It kind of smacks of having the customer do all the research so the shop isn't bothered with knowledge, expertise, sales skills, then giving the shop a cut anyway. And what happens when I'm in one shop's territory, but I can't stand them from previous bad experiences, but I really love the shop in the next town over, yet I order something online shipped direct. The shop I hate gets the cut?

Also, to me, the whole "customer loyalty" thing is overrated/misunderstood. It's kind of like being a "regular" at a restaurant but every time you go in there's a different waiter. Same with my Trek LBS. Every time I go in there, it's a different person. I've been going there off and on for close to 30 years. Nobody would even recognize me. 25 years ago I fit the 20-something demographic for "customer loyalty", because I knew everybody who worked there, partied with them, rode with them, etc. Now I'm in the demographic that actually has money (ha ha) but has no connections with the social habits of bike shop employees. I don't see how this new Trek model changes that whole loyalty thing. I'm not spending $75 on a tire I can get for <$45 with free shipping someplace else.

[53x12]

Trek to begin online bike sales — Dealers will assemble bikes and get a service commission

MADISON, Wis. (BRAIN) — In a first for a major U.S. bike brand, Trek Bicycle will begin sales of complete bikes to consumers via its website in late September. Bikes will be shipped to the brand's retailers — not direct to consumers — for assembly, and retailers will receive a service commission on each sale.

Trek also will begin online sales of parts & accessories from its own brands, including Bontrager and Electra, as well as other bike brands including Park Tool, Garmin, Finish Line and Burley. Trek will deliver these products direct to consumers, but local retailers will also receive a service fee.

Trek president John Burke revealed the plan Monday evening to several thousand Trek retailers at the company’s annual Trek World dealer meeting here. He said the plan had been in development for about two years and called it the “largest investment Trek has ever made.”

“It’s been a massive investment,” Burke said, then referred to his father, Dick Burke, the co-founder of Trek. “One of my father’s business maxims was, ‘we play offense.’ So, we sat around and watched the online thing and that’s been OK — it’s been a great learning experience. Now it’s time for us to play.”

Burke cast the online sales program, called Trek Connect, as part of a larger investment in increasing the profitability of the brand's U.S. dealer base on several fronts. Trek will offer tools to help dealers increase sales to women, which Burke said will amount to half of all bike shop sales within five years. Trek is expanding its business management education programs, and will offer new marketing tools including comprehensive seasonal promotions with store displays tied to quarterly print catalog mailings.

And — in an announcement that drew applause from the dealers — Trek is launching a service department education and certification program. Burke said service currently accounts for only 7 percent of revenue for most shops, but produces nearly a quarter of gross profits for those shops. So increasing the volume of service business is a clear path to increased profitability — and survivability, Burke said.

"I've seen stores that sold a lot of products go out of business. I've never seen a store that did a lot of service go out of business," he said.

Trek is building a 5,000 square foot service education center at its Wisconsin factory and will begin classes in January. It expects to train about 1,000 service personnel next year.

In addition to mechanic and service manager training, Trek will offer dealers help with service department displays, fixtures, tools and systems that will lead to some stores being designated as Trek Certified Service locations.

’Not huge at first’

Burke and other Trek executives said they are not planning for a huge volume of online bike sales immediately. But they said it’s clear that consumers want to shop 24/7 for bicycles, just as they do for other products. Burke began his presentation by showing slides of e-commerce sites including Chain Reaction, Wiggle, Performance and Canyon Bicycle.

As part of the check-out process, consumers will be asked to choose the local Trek retailer who they want to service their order. Consumers will not be able to choose “none of the above.”

The chosen retailer will receive a service commission equal to their normal margin (which varies depending on the size of the store’s business with Trek) minus an estimation of the costs that Trek shoulders (and the retailer avoids) in making the online sale. That includes the cost of carrying the inventory, shipping, and sales. The bottom line? Retailers will receive roughly 80 percent of their normal margin on these new sales.

Burke said the bikes would all be shipped from Trek's warehouse to fulfill each order, and would not be taken from a dealer's existing inventory. Trek will ship them at the same level of assembly as other bikes shipped to dealers.

The redeveloped website will combine Trek’s and Bontrager’s sites, which are currently separate. It will offer live chat consultations on bike fit and selection. In addition to the online purchase program, the site will add a new feature that allows consumers to see if nearby shops have specific products available for in-store purchase.

All Trek dealers will participate in the online sales program, but they can opt out of the delivery service if they choose, or they can specify to what distance they are able to deliver.

David Sanborn of David's World Cycle in Orlando, Fla., said he loved the idea of delivering bikes that were bought online.

“Some people are just too busy to come pick up a bike. But we can go out there in our van and bring along some accessories … That’s where the relationship will begin," he said.

Sanborn, who operates 12 stores, was one of a handful of dealers that consulted with Trek starting last year on developing the program. He said if the program takes off, the look of his stores might change.

“In a few years they might be smaller stores (with fewer bikes on display),” he said. “It might be something to think about when it comes time to negotiate new leases. Maybe in five years I’ll have 12 people driving around delivering bikes,” he said.

Chris Kegel, CEO of Milwaukee’s Wheel & Sprocket retail chain, said Trek's service commission plan appeared “fair and realistic.”

“Customers want to be able to buy online so I think overall it’s a positive move,” Kegel said.

Kegel was more excited about Trek’s service certification plans, a concept he has worked on developing through CABDA and the NBDA. “It’s long overdue,” he said.

Doug Coulter, owner of Scott’s Bikes in Cleveland, Tenn., applauded Trek’s decision to take action in the face of a rapidly changing marketplace.

“I think our industry is changing and we need to take the bull by the horns,” said Coulter, whose father started the family business in 1964 in Connecticut. “If we are going to carry on, we have to look outside the box,” he said.

Trek is also launching a bookkeeping service, called Ascend Bookkeeping, which it has been test-marketing for about a year. Burke said the aim was to give retailers that same kind of book keeping services and analytics that Trek has, tailored specifically for bike retailing.

Burke also told retailers that selling e-bikes was a clear path to remaining viable and growing in the coming years. He said Trek is currently selling on 2 percent of the e-bikes in the U.S., while the company has a marketshare of over 30 percent in bicycle sales overall, and about 40 percent marketshare for pavement bikes. Trek is launching three new e-bikes at Trek World this week.

http://www.bicycleretailer.com/north-am ... ike-sales-—-dealers-will-assemble-bikes-and-get-service#.VcVXMoH3arU