Why are tires so much more expensive in the US

[martinSL]

here is US the prices are driven by the customer or, should I say, the customer who is willing to pay higher price. The distributor prices in US are very high for all products including ones manufactured in US. Chances are that places like Canada, Kong Kong or so are the same. Then there is the store markup. And then there are manufacturers or distributors regulations. In US, you cannot sell for less than XYZ if you are an authorized dealer and want to continue purchasing from the American distributor. Distributors from abroad will not sell to any US outfit per their contractual agreements with the manufacturers. Etc. etc. Etc. Simple

[mrfish]

Why can't bike shops buy from the UK? If wiggle or whoever is cheaper than the distributor and offers similar service, then there is no logical reason to shop at the distributor. I don't see such restrictions in any other industry.

The optimum small business model might then change to bike shops being a kind of wiggle franchise, where the consumer pays a mark-up on wiggle sourced items but gets service and advice. Seems like a pretty interesting idea. Since Wiggle will offer me a discount if I spend £500 per annum, I would imagine they would be happy to offer more for if I spend £5000 per month, which would better share the margin.

The optimum larger business model might be the Evans / Planet X model where I develop my own brand to gain access to OEM pricing on parts and deal direct with the manufacturer, which Planet X is currently developing into a fully direct sourced model, i.e. they send Jamie Burrow to Italy to get clothes made to their specs and similarly go to china to get bikes made.

There is a value migration within the cycling industry underway. I expect the wholesale + low value LBS model will die out.

[idler]

Here in Sydney we have one bricks and mortar bike shop that is actually a bit cheaper on many items (eg tyres) than UK on-line retailers - they have most stock on-line but if you go to the shop and "serve yourself" you pay the on-line price -BikeBug at North Sydney. Don't know how they do it - but it can be done and they are dominating the local market.

[sawyer]

@mrfish - well put.

We're seeing the change in the UK, with the big online and online+ high street brands (e.g. Wiggle, CRC, Ribble, Evans, Cyclesurgery) dominating the market.

The full working through of this is being masked by a rapidly growing market that is allowing some small frankly not very good shops to survive, but as this process continues and growth flattens it will get tougher for them.

OTOH, the small shop based around service and advice, which becomes part of the community for want of a better phrase, I believe does have a bright future , and we see successful examples of that too.

[WMW]

In US, you cannot sell for less than XYZ if you are an authorized dealer and want to continue purchasing from the American distributor. Distributors from abroad will not sell to any US outfit per their contractual agreements with the manufacturers. Etc. etc. Etc. Simple

That isn't driven by consumers being "willing" to pay higher prices... but rather monopoly market control.

[WMW]

The optimum small business model might then change to bike shops being a kind of wiggle franchise, where the consumer pays a mark-up on wiggle sourced items but gets service and advice.

Ridiculous.

Do you really think that a shop can afford to pay rent, utilities, and staff and mark up parts what... 10% over what they pay Wiggle and remain in business? There is no way that tiny markup allows them to function. Note, you will have to pay tax also, so now it is 18-19% over the Wiggle price. And I could just sit at home and have it delivered to my door.

The crux of the matter is that Wiggle (and a bunch of other stores) pay *much* lower prices for most of the goods they sell than any US retailer. There is some anti-competitve agreement between manufacturers and US distributors that is responsible for this.

[bura]

Please explain.
Prices in the US (could) should be lower due to the fact that if you are a buyer within the EU and buy from Wiggle which is EU ,too then you pay additionally 18 to 20 % VAT. Exports (Conti,Vittoria,Veloflex,Michelin) to the US do not add VAT to the price so one more reason to be better priced in the US?
Please comment only on the VAT issue ,as I am aware about other points which have been discussed before.

[martinSL]

In US, you cannot sell for less than XYZ if you are an authorized dealer and want to continue purchasing from the American distributor. Distributors from abroad will not sell to any US outfit per their contractual agreements with the manufacturers. Etc. etc. Etc. Simple

That isn't driven by consumers being "willing" to pay higher prices... but rather monopoly market control.

The monopoly survives only because people are willing to support it. Others find alternatives. With the volume of people shopping abroad the monopoly might reach the critical level of it's existence. But this will most likely never happen as many shoppers don't want to deal with abroad companies or purchase domestically from a non authorized shop - no warranty etc. Plus they support their local bike shops (which is fine) and therefore support indirectly the greedy monopoly.

[martinSL]

Why can't bike shops buy from the UK? If wiggle or whoever is cheaper than the distributor and offers similar service, then there is no logical reason to shop at the distributor. I don't see such restrictions in any other industry.
.....

I doubt Wiggles are cheaper than US distributors so US authorized dealers still make larger profits. Plus they want to maintain their status of an authorized dealer for any warranty issues, recalls, ... and to maintain a friendly relationship with large domestic distributors.

[User Name]

Why can't bike shops buy from the UK? If wiggle or whoever is cheaper than the distributor and offers similar service, then there is no logical reason to shop at the distributor.

I agree, especially for tyres.

[Zigmeister]

Not sure where my post went the other day...odd...

Anyway, US bike shops/retailers are required to follow a manufacturers minimum price numbers often.

If they don't, there is recourse through the legal system, loss of brands to sell etc...I think we are all aware of the bike frame manufacturers that do this with their dealers.

The same applies for any other supplier, if they want to put a minimum price on a product, they can and enforce it.

With overseas online places like Wiggle/Probikekit etc...there is no recourse and minimum price that can be set. So they get it from their grey market sources, and sell it way cheaper back to the US customers, undercutting the price by a lot compared to the US retail LBS/online places.

There is no recourse for anybody with this setup, and the local US based shops/retailers pay the ultimate price as the system is just bypassed entirely by foreign markets.

[User Name]

I'm no businessman at all, but....

I figure shops should get tyres where ever they can, then sell them for prices that are competitive with online dealers, even if it's just to get people like me going back to bike shops semi-regularly. I do my own mechanical work, so i pretty much never go to shops any more; the only time I do is very rarely to get little stuff like cables or the odd seat bolt. I'd happily pay a little more locally, and then they've got me back in the shop every couple of thousand kms, and who knows what I else I might end up buying If I keep seeing the same sexy bike over and over?

And on warranty: who cares about a warranty for cheap stuff like tyres, or cheap lights or speedometers, for that matter?

I realise that distributors get shitty with shops for bypassing them, and there's a chance they could get blacklisted (or so the stories go), but I figure something's gotta change.

Incidentally, I'm in Melbourne, and Aussies were reamed on bike tyres for years ($110 for a Pro Race 3, anyone? Not anymore, thank god); and having said all the above, some shops do occasionally sell pairs for decent tyres for good prices, like, Pro3s or 4000Ss for 70 or 80 bucks. However, this isn't common enough for me, and I haven't got time to shop around, just to "be nice" to the local industry, just on tyres. Also, there are some local Ebay dealers that will sell tyres cheaply, but it's too easy to do a bulk UK order with my friends

Is this all too simple?

And while I'm ranting: the bloody local shop guys who piss and moan coz I dare to shop around to save money! Fark me! As if they don't do exactly the same thing when they buy something else! Do they piss away an extra 100 bucks on a set of car tyres, just coz the dealer promise good service? Yeah, right

[jvanv8]

I don't think you can waltz into a random bike shop and be pleasantly surprised at the low prices on high-end bike equipment.
Most shops stock low to mid-range items because that's where the demand is. I'm sure you can find this same experience in rural parts of the UK.

As for comparing Wiggle with a small shop... you can't. Big shops will consistently get more volume and as such, will have some negotiating power on the price. This is fairly known and universal in countries where recreational cycling is popular.

The next factor was first brought up by Bantamben - if they build bikes, they can get even further discounts through OEM wholesale prices.

As far as the notion that UK enjoys lower pricepoints on tires is highly debatable. In fact, the current competitive price in the US for the Competition tire is $79.99 + free shipping and no tax in most states. Currently Wiggle has them for $81.13 (converted to USD, with free shipping within UK).

I myself once needed a tire in a pinch and knew I would have to pay out the nose since I was walking into a local shop, not knowing what they had but I didn't mind given my situation. I got one Continental Competition (only reasonable tubular choice they had) for $134.99. (At the danger of voiding this thread further) I think it only lasted 2 weeks

[mattr]

Sounds like price fixing to me...... is that not illegal in the US?

[bricky21]

They renamed it "Retail Price Maintanence". It is legal.