The cycling brands who are eating themselves

I spent many frustrated meetings at bike industry shows trying to explain to brand principals and global sales managers that their cycling product was becoming untenable to distribute or retail in Australia anymore. Consumers could now buy cycling products online for the same price that the bike shops could buy from their suppliers. And it wasn’t because Australian wholesalers were making fat profits. Essentially, no one was making much along the bicycle food chain.

And I knew I wasn’t the only guy having the same argument. The cycling brands couldn’t see what all the fuss was about. Their sales had never been better. The orders coming from their large online retailers were often bigger than those from their national distributors. And quite often, the onliners were securing exclusives, job lot close outs or effectively locking away new products by committing to orders that wiped out production runs.

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So the cycling brands got fantastically drunk on the online boom and their exponential sales increases. They dismissed the concerns and complaints raised by their distributors and retailers; many of whom had helped to build that brands’ success in the first place.

And then the time would come for the international sales manager to make his annual distributor visit. He would call in at lots of shops who no longer stocked his product and be told by bike shop owners that they used to be big fans, but now only buy his product when requested; or that even, they now cut out the official local distributor and bought it online. He sees the spaces in the bike shops where his product used to be, now replaced by a competitor or bike brand alternative. The international sales manager returns to HQ, reporting that sales are up, even if his brand has disappeared from bicycle stores.

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It’s a precarious position for an international cycling brand. What do you think happens when cyclists stop encountering your product, stop touching it, stop being excited by it, stop feeling like it’s going to be supported by their local bike shop if something goes wrong? Online retail sales will plummet and your brand is a potential key stroke from oblivion.

So the brands that ignored the complaints from their distributors and retailers, disappeared not only in physical stores, but fairly quickly, in online stores as well.images (1)

But this didn’t happen to every brand of course. Some were attentive and globally aware enough to respond and turn the scenario around.  They looked at their distribution channels more holistically and made it viable for both distributors and retailers to stock and sell their product. Through sensibly thought out and policed global pricing structures, distribution and manufacturing controls, sales and warranty tracking, the smart brands worked out the key to long term success.

The smart brands have anyway. For the rest, it appears they are eating themselves.

Want to understand how your cycling brand can make sure it stays on the shop floor and online? Drop me a line.

Jonathon

betterbikebusiness.com

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