Giant USA Jump on the Direct Sales Bandwagon
Bicycle Retailer and Industry News today reported that Giant USA's general Manager John Thompson announced to dealers that it will sell bicycles direct to consumers who will collect their purchases at a Giant store.
"Giant Gear also will be sold online under a similar system, except the products will be drop-shipped directly to customers and Giant will handle returns without involving dealers. The local store will get 100 percent of the regular margin on the accessory purchase if they stock the product and 80 percent if they don’t.
"Giant USA is rolling out a beta version of its program in March with a small group of Giant Retail Partner Stores. The company will use a platform provided by SmartEtailing. “Once we’ve refined our tools and processes, by August we plan to implement our omnichannel strategy to the entire U.S. market,” Thompson said in email sent to Giant dealers." - BRAIN
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The article then goes on to explain how the financial breakdown will affect dealers.
An outline of the program would give dealers 100 percent margin on the advertised retail price (ARP) ordered online through the Giant USA website to those dealers who normally stock the bikes that are ordered less a 2.5 percent credit card fee and any financing costs.
Dealers who have not stocked the ordered bikes in the last 12 months will receive 80 percent of the margin on the advertised retail price. Dealers would also absorb freight costs, the same as if the dealer were special ordering the bike. The dealer can combine the bike shipment with other orders to reduce freight costs.
And dealers who sell a bike online through their own Giant supported website will get the full ARP margin regardless of whether the dealer has stocked that particular series of bikes. And only Giant Race Series Retailers will be eligible to deliver orders of Giant’s top-level race models. Giant dealers will also receive credit for sales every 48 hours." - BRAIN
John Tompson closes with the following statement:
“The way consumers buy bikes and gear is rapidly advancing and we want our retailers to win as the environment transforms here in the U.S.,” he said. “Our Giant Web Link is 100 percent committed to helping you grow your retail store’s revenue, profits and business relevance.” - BRAIN
Originally reported by Marc Sani - BRAIN.
MENTIONS: @GiantBicycle
"Giant Gear also will be sold online under a similar system, except the products will be drop-shipped directly to customers and Giant will handle returns without involving dealers. The local store will get 100 percent of the regular margin on the accessory purchase if they stock the product and 80 percent if they don’t.
"Giant USA is rolling out a beta version of its program in March with a small group of Giant Retail Partner Stores. The company will use a platform provided by SmartEtailing. “Once we’ve refined our tools and processes, by August we plan to implement our omnichannel strategy to the entire U.S. market,” Thompson said in email sent to Giant dealers." - BRAIN
Will you be making your next purchase online?
The article then goes on to explain how the financial breakdown will affect dealers.
An outline of the program would give dealers 100 percent margin on the advertised retail price (ARP) ordered online through the Giant USA website to those dealers who normally stock the bikes that are ordered less a 2.5 percent credit card fee and any financing costs.
Dealers who have not stocked the ordered bikes in the last 12 months will receive 80 percent of the margin on the advertised retail price. Dealers would also absorb freight costs, the same as if the dealer were special ordering the bike. The dealer can combine the bike shipment with other orders to reduce freight costs.
And dealers who sell a bike online through their own Giant supported website will get the full ARP margin regardless of whether the dealer has stocked that particular series of bikes. And only Giant Race Series Retailers will be eligible to deliver orders of Giant’s top-level race models. Giant dealers will also receive credit for sales every 48 hours." - BRAIN
John Tompson closes with the following statement:
“The way consumers buy bikes and gear is rapidly advancing and we want our retailers to win as the environment transforms here in the U.S.,” he said. “Our Giant Web Link is 100 percent committed to helping you grow your retail store’s revenue, profits and business relevance.” - BRAIN
Originally reported by Marc Sani - BRAIN.
MENTIONS: @GiantBicycle
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Why spite them? They're pricing their bike at the fair market value of that bike. The only time a shop should have to discount a bike is when it's undesirable, i.e. more than a year old. You as a customer are not entitled to a deal, a discount, or anything other than good service and polite sales staff. Badgering your local shop to sell to you at a loss is one way to ensure that year of free service can never be redeemed. I pity the shopkeep who is giving $630 off a $2500 bike. His job is pretty much gone.
It's pretty consistent across the industry that shops get a 35-40% margin on new bikes. The cost of doing business for an average sized shop (lights, rent, insurance, wages) is right around the 32% mark. At full retail the shop is bringing in 3-8% profit on $2600. That's $78-$208.
It's also a common misconception that the winter is the best time to buy a bike. In the winter many shops are struggling to stay afloat and losing money on a bike they can sell for more next summer is not an attractive option.
I much prefer to price my bikes fairly, and allow customers to earn the right to discounts through our loyalty program. This has allowed us to be competitive on price matching online retailers and ensures that the customers that enable us to survive the winter get the deals they deserve.
PS: As a Canadian your prices are only going to keep going up, every company has released 10-20% mandated price increases. Just a heads up.
I've actually gone into more than one shop and had very frank discussion with the owners.
I’ll flat out tell him, I prefer to support a small local business however; I'm not rich, so I won’t pay MSRP from him when I can save going online. If he is ok with it, I’ll tell him the internet price and if they come close, I’ll order through them. It’s their choice.
Every shop I’ve done this with except one has agreed. Better to make 10-15% on a sale vs. losing the sale. Keep in mind, I have to pay tax buying from them as well.
I got $500 off my 2012 Stumpjumper, I bought a ton of parts from them and ended up buying my Tallboy carbon from them as well. As the shop started growing, the owner wasn’t around as much and so I couldn’t talk about the discount, so I stopped shopping there and went online.
I’ve since bought two new frames, Fox 36 and Fox 34 two set of wheels and a lot more. Do you think if I added up how much a spent and asked that owner if he would rather have a percentage of that money vs. nothing what do you think he’d say?
Business is adapt or die.
My current LBS gives me 10-20% off msrp on anything, including specialized tires. Why wouldn't i buy everything from them when they're at or close to online price?
I've sent quite a few people their way and they take care of me. It's a win win.
Things like shimano parts they'll tell me to get it online because it's cheaper and they can't even buy shimano through their channels at a price that makes sense to resell it.
Honesty like that means a hell of a lot to me
Last spring I ordered a Reign, it took just a few days to arrive, and I got around $500 off. I picked it up ready to ride. The Reign was in high demand and I was lucky they had my size in stock.
I don't spend a ton of money there compared to the roadies, but the owner has recognized my loyalty and treats me well.
My friend bought a YT, and he'll be waiting at least a couple months for it. We hope it'll arrive in time for a planned trip to Moab in March...
5 days later my new frame showed up, free. They warranted it. I don't think this would happen with a online retailer. I suspect my LBS's buying power had something to do with it.
You order online, it goes to the shop, you have go to go the shop to get it. The price hasn't changed. So the only thing that's new is we can shop in our underware? Cool, I guess. Won't put a dent in YT or Canyon though.
If someone had a good bike at YT like prices with product in stock, then they'd crush it with enthusiast bike purchases.
I'd bet a super low percentage of LBS sales is upper middle to high end builds. Most of the bikes i see sold when I'm there are cruiser/ commuter/$500 hardtails
Support your ILBS. Theres LBS and ILBS (independent local bike shops). Specialized stores, Trek, Giant, are are not Local, they are part of huge multinational corporations; posing as LBS and franchised by suckers.
Theres real LBS's out there who still stock quality bikes from smaller, better companies, I prefer to support them.
Most areas the market needs an LBS that offers the big companies like tthat offer a full range of bikes. That's not a bad thing because just a small % of cycling is smaller companies like YT and Ibis only offering a few bikes. Times are changing and we will see a lot of bike shops close in the years coming because of a handful of reasons and those who will stay open will most likely be the big guys in populated urban areas and the small, owner operated shop.
You really are quite off base. A friend of mine owns a small shop that stocks Giant, but also Kona, Bianchi, Breezer, and Volagi. I work for a shop that sells Specialized, and Raleigh, Redline, Haro, Felt..... Blah blah blah. Point is we only servive because of our customer service. We aren't franchised. We aren't corporate monkeys posing as locals. With the way the industry is, specialized (or other big companies for that matter) work for us. If shops don't sell bikes made by Specialized, specialized doesn't sell bikes.
I'd like to see Giant keep a database of what bikes are available on the showroom floor of all their retailers. This way I don't have to phone around to every retailer within a 2 hour drive to find the bike I want in the correct size just to sit on it for a minute and see if I like how it feels.
Manufacturers should also support the test ride philosophy by making it easier for bike shops to keep more bikes on the show room floor and to make them readily available for a proper test ride. Many shops will rent bikes, and then deduct the rental fee from a purchase. However if I want to try multiple brands from different shops, the cost adds up quickly, and rental fees other than at the shop I finally make my purchase are not recoverable. I shouldn't have to wait until Crankworks comes to Whistler in August to test a high performance bike because no bike shops can afford to stock it. Besides I wanted to buy it before the season started, not near the end.
You seem to think you're entitled to more money from me just because.
"Giant" bike manufactures monopolizing the industry.
Smaller bike companies having to go manufacture in Asia to compete
Smaller bike companies having to utilize online retailers to compete with the "Giant" bike manufactures.
"Giant" bike manufactures controlling LBS and now selling online to keep smaller bike companies from competing.
Consumers buying way too much stuff from large on-line dealers and eBay for rock bottom pricing.
Greed!!! Greed!! Greed!! Everyone is f'ing over their own countries!!! From top to bottom!!! Screw Giant!!! Manufacture Local!! Buy local and think small!! Create local jobs, support LBS, Sale it at a reasonable price. Bike Shops stop thinking your entitled and earn your customers!!!
This pc of garbage JT who works for Giant and used to work for Specialized needs his ass whipped!!! People like him are destroying the industry and in my case America!!
To fill that niche we are launching our brand new direct-to-consumer brand in a few short months. Here is our first model: www.pinkbike.com/photo/13162792
As an OEM you dont spend years...no, decades(in the case of Giant)...building up a huge dealer network, just to turn around one day and stab them in the back and go discounted-direct to consumer via the web. That would be hugely unacceptable. There would be rioting in the streets.
You would cut off a revenue stream for your dealers (LBS's), making their business more difficult than it already is.
Dealers would drop the brand and not recommend that anyone purchase a Giant bike, it would hurt Giant.
People buying bikes online would not purchase all those highly profitable accessories that LBS's like to add to a bike purchase.
Do you really want to see your LBS close up shop? Think about it.
YT/Canyon/whoever can do it because they don't have a huge dealer network already established. They can price whatever they want and do not have to worry about adding margin for the dealers.
Personally, I don't really ever go to any LBS's. I do all my own work (except wheel builds) and buy my parts online for pennies on the dollar compared to brick-mortar store prices. But I don't want to see LBS's go away. So I am kind of a hypocrite, still trying to figure out a way to deal with that....
All that said, my next bike will probably be a YT
Unless this is leading to a menu-type ordering program where eventually bike shops will truly only be a middle man, where you cannot buy a bike from the floor, I don't see this how this is a step forward.
Aren't they a gem?
it puzzles me how some " bike dealers" stay in biz.
online direct is a natural transition for most riders.
but shops do make a decent profit on accessories.
starting to see more smaller shops just selling tires,
accessories, apperal, & service.
30% is pretty much the minimum. With high-end bikes, the margin is often around 50%.
No wonder Canyon can sell their own version of a €4000 Trek Remedy for €2500.
You obviously have no clue how things go in reality. If it was that easy that you simply stock a $10.000 bike and its sold the next day, lbs' would be millionaires. But in reality they are going bankrupted one by one.
This is a theoretical example where all these bikes have the same value, just to show that even if you sell everything you have in your store, you won't make enough profit to use that on restocking everything again. You'll have to invest the biggest part again yourself to be able to restock everything you've sold.
The problem is the cost of the goods is too high. That needs to change.
I don't know if they provide the best margin or what, but it seems like I've got easily a half-dozen of FULL-STOCKING(or damn close to it) dealers within 15 mins of me.
Since I like to be able to have a place I can rely on to bring my $4-$6k bike to for any issues, the last thing I'm gonna do is pay full pop for a bike that I can't ride, or even see in person first, all the while possibly alienating a place a might very well need to warranty something for me in the future.
Especially when I can spend 10mins of my time driving to a store that will have said bike in stock, and give me a better deal than MSRP as well
For everyone that doesn't feel like reading a page of fluff:
-Giant now will offer sell direct to users.
-Bike-shops still make money, but it is tiered differently.
-You still have to pick your bike up at a Giant retailer.
-Expect higher accessory mark ups.
Are the bikes going to be built? Or is there a fee?
Whole thing sounds bogus. A way to prop up sales but no upside to the consumer, in fact sounds even more inconvenient.
And most shops wont be able to the good bikes anyway.
way to innovate! corporate "giants"
12 years ago I sold Fly Racing gear. Motorcycle shops are happy to get 35pts but bike shops wouldn't even look at the gear unless they got 50pts!
Otherwise I see only Giant leaning out their supply chain and reduce working capital? Without passing on to consumer? All real B2C firms must be so happy about those dinosaurs, keeping the market price for bikes high up. This will allow yt, canyon, ... to do incremental up pricing of their range.. All good as long as they remain the cheaper alternative..
If this results in less reduced Giants, it'll reduce sales not increase them. I own 3, and two were bought at substantial discount. I wouldn't have bought them otherwise.
BTW, I own 3 bikes all bought at my LBS. I am looking for my first DH bike and I am buying direct to consumer this time if I find the right deal.