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.