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 Post subject: Re: Reynolds Wheels
PostPosted: Thu Feb 28, 2008 11:59 pm 
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53x12 wrote:
Interesting. I wonder where PF gets the wheels from? If PF still makes a profit off these it shows how big the mark up really is.


This is boring, but I will write it anyway.

Normally as a product finds its way to the retailer there is a chain. First the manufacturer sells the product to the distributor. A distributor gets a good price, but it is above the cost of the materials to make the product, this extra finances the R&D, warranty, advertising, sponsorship and all the staffing costs and overheards for the manufacturer. The distributor adds their markup to pay for their distribution, their added value marketing (such as events that they attend, and regional marketing), their sales reps and the risk that they have taken on with every product (that it wont sell, that a problem might show up) as well as their costs. Their price from the manufacturer is based upon the idea that they then sell to retailers, who in turn have a whole new set of costs to cover (including the staff member who chats to you about this that and the other every time you are in their shop) and for example local and amateur sponsorship. To do this, they mark it up to a suggested price. They are actually free to sell it at the price they want though.

Now, if you purchase as a distributor, and then sell directly chopping out a link in the chain, you abuse this system. Likewise if you buy at OEM prices (intended for manufacturers to build complete bikes, and usually agreed because of a. The quantity of product bought, and b. The way the two brands may compliment each other and work as a positive association) and then do not sell the product as part of a complete bike you can sell it very cheaply to the consumer.

Manufacturers do not like this because it devalues the brand. It removes the motivation for the retailers to stock and service the product (because they cannot compete), it upsets the distributors who have invested in the brand paying for advertising, sponsorship etc while someone else coins it in at their expense and it upsets the guy who has a warranty claim, but can't get any joy from his local shop and the discounter has long since made his money and shut up shop.

Most people in the bike industry are their because they love bikes. If you bypass all of the distribution and retail channels, then the number of people working in the industry will fall. So will the amount of innovation, sponsorship, and development of the sport as a result. In the short term, as the consumer you may only see the great price. But in the long term, the price is a large one to pay.

Just because it is possible to get products very cheaply, it doesn't mean you should be able to. Nor does it make it right.

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 Post subject:
PostPosted: Fri Feb 29, 2008 12:32 am 
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Or in other words, it prevents some distributor in the middle making their nice fat markup for actually doing very little. I'd certainly be surprised if cutting out some of them would make any difference at all to the amount of innovation and development in the sport. Not saying this is the case for Reynolds wheels (it probably isn't), but there's certainly one other brand on their discount wheel list where that very much is the case in the UK...

I have a feeling that the sort of policy Reynolds describe about forcing dealers to sell at MSRP is probably illegal in the good old United States of Europe.

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Posted: Fri Feb 29, 2008 12:32 am 


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 Post subject:
PostPosted: Fri Feb 29, 2008 12:40 am 
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I understand the whole economics have each level needing to make a profit, however case in point if PF can cut a good $800 off normal retail that means the mark up is quite high. I agree with chrism, it doesn't seem very capitalistic if you are going to "force" someone to sell at a certain price point. Good for PF willing to shake the market a little.


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 Post subject:
PostPosted: Fri Feb 29, 2008 12:52 am 
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Don't a lot of companies (Apple) force retailers to sell their products at or near MSRP?


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 Post subject:
PostPosted: Fri Feb 29, 2008 1:24 am 
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I think it's important to note that companies do not force others to sell at a certain price. However, they can legally tell a company at what price they may advertise a product. Online sales are viewed as advertisements, and can therefore be made to use advertised price.

This is a tough subject, it's good and bad for everyone. Take Campag in the states for example. There are a lot of sources where consumers can buy the gray market(read re-routed OEM) product for the same price as a shop pays for it. Once this happens, shops stop carrying the product. Once they stop carrying the product their knowledge of that product begins to fail as well. This is what Campag currently faces in the U.S. Most shops do not stock a single piece of Campag. You'd be surprised at the number of shops that have absolutely no idea how to rebuild a Campag shifter, or install a UT bb. But then when a warranty issue arises consumers often expect their local dealer to go over the top to help them out when they didn't do anything to support the dealer. If Reynolds wants to keep dealers stocking and servicing their wheels, they need to keep them happy and in business. To do this you do need to control how your product is sold.

So while it's good for consumers in the short term it's bad in the long term when in a year you may develop a problem and your local dealer no longer has anything to do with that product. PF has no interest in seeing your problem solved and in fact would probably not even return your contact.

Shops cannot exist to only service products and handle warranties on items they never sold.

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 Post subject:
PostPosted: Fri Feb 29, 2008 1:57 am 
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madcow wrote:
I think it's important to note that companies do not force others to sell at a certain price. However, they can legally tell a company at what price they may advertise a product. Online sales are viewed as advertisements, and can therefore be made to use advertised price.



I wonder how PF's site would be classified. The products are advertised online, however the prices are not. To get the pricing one would have to contact them personally. So really they haven't advertised their product, have they?

It would be nice if a mod could combine the two threads on this topic to make it easier.


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 Post subject:
PostPosted: Fri Feb 29, 2008 2:21 am 
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Is this why sale prices on sites such as BestBuy or Amazon are only shown once you add the item to the shopping cart? Seems like a pretty trivial hoop to jump through, and a pretty far stretch that I'm making with this comparison...

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 Post subject:
PostPosted: Fri Feb 29, 2008 3:07 am 
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Mottsauce wrote:
Seems like a pretty trivial hoop to jump through, and a pretty far stretch that I'm making with this comparison...


Trivial yes, but people have been hanged for things far more trivial.

It has been my experience that with companies legal issues, lawsuits, contract violations, patent infringement etc... it's not about legal or illegal, or even right or wrong. It's just viewed as another cost of doing business. Whether they put it in COSG, Indirect, or SG&A, if the revenue exceeds the costs, they do it. I have seen it work both ways. Manufacturers sticking it to downstream partners/customers - and vice versa.

Who knows. Maybe Reynolds et al or one of their distributors stuck PF with a huge inventory glut of wheelsets and were able to do so because of some obscure clause in the contract. Now they're pissed off that PF has found a similar loophole.

Either way, I have no problem buying gray-market items so long as they are acknowledged as such (no warranty, support, etc.). As the man says, "Yous pays your money, and yous takes your chances."

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 Post subject:
PostPosted: Fri Feb 29, 2008 4:59 am 
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The problem really arose form someone being stupid and posting the prices on the forum. That is what violates the minimum advertising price rules. In order to see the reduced price, you had to contact them for the private price list. They even specifically asked in the email response NOT to post the price info on forums. I hope this doesn't mean the deal will fall through now.


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 Post subject:
PostPosted: Fri Feb 29, 2008 6:06 am 
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The minimum advertising rule only applies to Pedal Force not consumers. They probably put that in their e-mail to cover their own ass.

I'm sorry if I violated some rule and if the Mods want to they can delete my post.


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 Post subject:
PostPosted: Fri Feb 29, 2008 6:53 am 
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Posts: 627
according to pedalforce the wheels are covered..
i ordered a pair of zipp's. better aero and made in the usa.

from their site

http://pedalforce.com/online/product_in ... ts_id=8460

All warranty issues will be serviced by the manufacturers through Pedal Force.

Zipp: See http://www.zipp.com/WarrantyandReturnPo ... fault.aspx

Reynolds: See https://www.reynoldscycling.com/index.php?p_matter=faq

Fulcrum: See http://www.fulcrumwheels.com/repository ... RANZIA.pdf


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 Post subject:
PostPosted: Fri Feb 29, 2008 7:01 am 
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Skunk, you can go back and edit your original post and remove the prices.


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 Post subject:
PostPosted: Fri Feb 29, 2008 1:50 pm 
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Joined: Wed May 18, 2005 6:24 pm
Posts: 4387
Location: BELGIUM
madcow wrote:
I think it's important to note that companies do not force others to sell at a certain price. However, they can legally tell a company at what price they may advertise a product. Online sales are viewed as advertisements, and can therefore be made to use advertised price.

This is a tough subject, it's good and bad for everyone. Take Campag in the states for example. There are a lot of sources where consumers can buy the gray market(read re-routed OEM) product for the same price as a shop pays for it. Once this happens, shops stop carrying the product. Once they stop carrying the product their knowledge of that product begins to fail as well. This is what Campag currently faces in the U.S. Most shops do not stock a single piece of Campag. You'd be surprised at the number of shops that have absolutely no idea how to rebuild a Campag shifter, or install a UT bb. But then when a warranty issue arises consumers often expect their local dealer to go over the top to help them out when they didn't do anything to support the dealer. If Reynolds wants to keep dealers stocking and servicing their wheels, they need to keep them happy and in business. To do this you do need to control how your product is sold.

So while it's good for consumers in the short term it's bad in the long term when in a year you may develop a problem and your local dealer no longer has anything to do with that product. PF has no interest in seeing your problem solved and in fact would probably not even return your contact.

Shops cannot exist to only service products and handle warranties on items they never sold.


I understand all the above, and also the distribution chain.
My original question was how they purchased the wheels. Someone has not done their homework ? For the example of Reynolds, they are a well-known established brand. How can PF buy lots of wheelsets directly from them cutting out the middlemen ?


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 Post subject:
PostPosted: Fri Feb 29, 2008 9:22 pm 
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Location: Kentucky, USA
i hit the link and cant get any Group Buy for wheels to show up? It says "no products available'. Is the wheel group buy gone now??

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 Post subject:
PostPosted: Fri Feb 29, 2008 10:26 pm 
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Joined: Fri Dec 15, 2006 7:45 pm
Posts: 3290
Location: Natovi Landing
chrism wrote:
Or in other words, it prevents some distributor in the middle making their nice fat markup for actually doing very little. I'd certainly be surprised if cutting out some of them would make any difference at all to the amount of innovation and development in the sport. Not saying this is the case for Reynolds wheels (it probably isn't), but there's certainly one other brand on their discount wheel list where that very much is the case in the UK...

I have a feeling that the sort of policy Reynolds describe about forcing dealers to sell at MSRP is probably illegal in the good old United States of Europe.



well said chris. the misunderstanding of economics and what constitutes value-add from some of those in the trade on this forum never ceases to amuse me.

wheels are wheels are wheels are wheels. buy direct, buy intermediated at a higher price but enjoy the chat and coffee with the guy at the store if that's your thing ...


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 Post subject:
Posted: Fri Feb 29, 2008 10:26 pm 


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