Shimano moves to cut off online sales?
I apologize in advance if this has been discussed before, but i searched and could not find it.
A biking buddy who works at a LBS told me about this:
Shimano to slash number of North American distributors | Bicycle Retailer and Industry News
Basically Shimano is cutting the number of distributors by two thirds, effective Jan 1, 2014. My friend says that they're hoping to cut off the online sales (i'm thinking specifically on places like ebay and amazon where parts are much lower than what an LBS can charge).
My initial thought was "well, that's too bad... looks like i'll be riding SRAM from now on". He thinks that Shimano is hoping SRAM will join them.
Anyways, lots to speculate about there, but it seems like a shame for those of us who won't pay MSRP. The markup on bike parts is insane enough and i'll be damned if i'm going to buy Shimano parts for full retail price. If SRAM wants to join them, then it's just going to open the door for other manufacturers. There are already lots of great alternatives to parts like brakes (Hope, Magura, etc.) and plenty of boutique manufacturers for cranks, cassettes, chainrings, etc.
Leave it to Shimano to try to flex their muscle against the rest...
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'95 Fuji Suncrest
Shimano's decision isn't quite so altruistic. Having been a distributor, non-biking, before there are different reasons. In the sporting goods market the hierarchy is manufacturer, distributor, dealer and consumer. The markups are usually, not always, retail or MSRP. Dealer cost is 50% of retail. Distributor cost is 20% - 25% of retail.
Originally Posted by Porch
Distributors make their money on volume sales to dealers. That's why they have a smaller markup. A lot of distributors are really just large volume dealers. They use their extra 25% pricing advantage to cut out the dealers they're supposed to be supplying. I'm 99% sure this is why Shimano is cutting their network so much. QBP has a lawsuit against another distributor because of the exact problem. Distributors sign an agreement not to sell to the general public.
A garage full of steel frames means happiness.
Almost forgot, Shimano makes more money by eliminating all the distributor sales and the 25% discount. It's all about more money in Shimano's pocket not the LBS.
A garage full of steel frames means happiness.
That does make sense and it would be nice if that's the case. I guess time will tell! I'm thankful that we at least have SRAM for competition, it really drives innovation and keeps the prices (somewhat?) reasonable.
Having once owned an LBS and sometimes working at one now, I think there is a serious problem in the supply chain now. It really is often times cheaper to buy Shimano parts from a mail-order company than it is from a distributor like QBP. That makes it pretty hard to compete. I'm not sure that cutting down their distributors helps, and I kind of think it sucks, but I hope that they know what they are doing and it is a step in the right direction.
Already in the US, it seems Shimano parts are expensive by world standards, as didn't they introduce their 'authorized online seller' thing a few years ago and restrict supply? My riding buddies all buy from Europe these days, as it just works out much cheaper. Shimano's changes in the US markets won't stop that.
Seems to me its a problem with their distributors. Ive never been in the bicycle business, but I was once in the aftermarket car accessory business and found the same problem. Cheaper to buy from the huge online retailers, despite having access to the same distributors.
Originally Posted by epic
QBP probably gives huge discounts for volume. One that comes to mind is UniversalCycles. If you order more than $300 you get %15 off and free shipping. Probably cheaper than a typical LBS can purchase parts, despite Universal also getting their products from QBP. Most of Universal's online photos have the QBP watermark. The kicker is, Universalcycles is a local bike store that took the initiative to enter online sales, instead of just playing victim and complaining that everyone orders online and not their store...
If Shimano really wants to level the game, they need to regulate the price that their distributors sell to the retailers for, putting online retail and the LBS who only sells over the counter, on the same playing field.
Put a mountain biker in a room with 2 bowling balls and we'll break one and lose the other - GelatiCruiser
Shimano is there own distributor in most of the other countries they do business in. Cutting down the number of distributors is only a stepping stone to the inevitable. Hopefully when that finally happens they drop the msrp so that shops can compete with sales from across the pond. If they do that and stop the OE gray market from hitting e commerce it would be better for EVERYONE, consumers included.
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