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Open letter from a fellow business owner.

I came across this letter (below) on the Oregon Bicycle Racing Association’s email list. Written by the owner of a very successful local shop. I think it speaks clearly the idea and belief I share about putting back into your community. Specifically the racing community. Though the lines between “evil” internet mail order shops and “local” brick and mortar bike shops are getting pretty blurry here in Portland as I also came across this tonight: an article about a local Internet-shop pledging to put $50k into local mountain bike trail advocacy.

Holy crap! I’ve made it a point to personally go out and work on the trails that I ride every year all over the Portland-area. Each winter has seen me hiking around with a chainsaw and shovel in the woods. But, $50k?

“Open letter to OBRA members,

Having just passed our 14-year anniversary, I have spent some time reflecting on River City Bicycle’s position in Portland and the biking community. I’d like to thank all of you for the support that you’ve shown River City over the last fourteen years. While we are proud of what we’ve done so far, we would not have been able to give back to the community in the many ways we have if we did not have the support back from the bike community.

Racing sponsorship is a very tricky proposition for businesses. This should be obvious to any fan of the sport, considering the revolving door of trade teams that come and go at every level. From my perspective, it can be a very difficult expense to justify at times, particularly if one just looks at the numbers or at the direct return on investment. But for River City, what we count on most to justify our continued support of racing sponsorship is the fact that each and every one of you is considered to be the expert on bikes to all of your friends and acquaintances, and that you will suggest to them that River City is, indeed, a good bike shop, and worthy of their business, whether or not we support your specific team or event. We do our best to live up to the recommendations that we get from our good customers, and are constantly improving what we do and how we do it. We have a very high caliber of staff here, true bike shop professionals who take their jobs as seriously as you take yours. As the bike industry gets more technical and complex every year, we are able to maintain a high quality of staff for many years, some almost from our inception. This should be considered an asset to the biking community, as I’m sure most, if not all of you, have had bike problems that have had to be fixed by an expert.

To conclude, I would like to thank you for continuing to support not only River City Bicycles, but also all of the sponsors of Oregon bicycle racing. This is a difficult business environment for everyone and we all need to recognize who we count on for support. So when you are thinking about that next bike related purchase please consider that the internet company or national chain that may offer a perceived lower price is doing so without the service or contribution to OBRA and our local biking community that we all benefit from and enjoy. We all vote with our wallets, and we all decide what is important to us in the long run.

To the road,

David Guettler”

Either of the above businesses are easily doing 10x the amount of $ both of my businesses combined do. And both are reaching out to the community, which is a good thing. I feel good about directing business to fellow shops like RCB (rivercitybicycles) and Sellwood cycles because it is clear they both share my vision for the greater riding community and maintaining very high retail and service standards. When I read something like the link above about Universal, I feel conflicted. I should make it clear that I don’t know much about the shop and maybe that is part of the issue, the only people I know who have shopped there order online and go pick it up at the location later. I’ve never heard anything about their culture or commitment to quality and high service standards. What I hear about is a business that undermines a “standard” retail operation (like mine) by selling parts online at very low prices (undercutting standard retail margins?), donating more money than I could fathom putting into anything. $10k a year? That could send a couple juniors I know to Belgium to race cyclocross for 6 months each year! That is a lot of cash.

And I wonder… why do I keep at it? If internet sales are that profitable, I should close up the retail shop and switch to a web-based specialty service.

But, it breaks my heart to think about that. And then I re-read the owner of RCB’s letter. It tells me they must be feeling the pinch too. The letter speaks directly to their customers: “hey, think about us.” As far as I know, RCB does not have much of a web-sales presence. And everything I know (which is a lot) about that shop is mostly great. Great service, great sales selection, great staff. Like I said, if I did not already own a bike shop, I would probably spend my cash there. Or at least get on one of their sponsored teams so that I could get all the sweet deals and hook ups they offer to their teams.

And, what would happen if that shop was to close. Or go web based?

Portland has the unique distinction of having an overabundance of great bike shops. (and framebuilders, and coffee roasters and coffee shops and record stores and movie theatres and organic grocers and food carts and massage therapists and independently-owned everything liberal white folks like.) So, I don’t expect many of the better shops are going to go belly up anytime soon. But, we have to respond to the changes the internet and the web-based way of business bring to the current way of doing business. (writing a letter to the 4000+ OBRA racing community email list is one way)

Or… FAIL.

I wondered what prompted the letter to OBRA from Dave. Was it hearing for the 1000th time “I saw it for sale cheaper online…” in his shop? Or was it just a passing thought in the reflection of 10+ years in the community and the changes he has seen?

I am rambling and digressing. But, mainly wanted to concur. The final paragrah of his letter says it: “please consider that the internet company or national chain that may offer a perceived lower price is doing so without the service or contribution to OBRA and our local biking community”

It is the perception of a lower price. And sadly the perception from behind the computer screen is only dollar signs. And that is only sad because, it is so convenient. If we need info, we google it. If we need to buy something, we google where to buy it. And, there are a couple of those “evil web-based” bike retailers who would be the downfall of small shops like mine, right here in town! So you can buy cheaper and still buy local!

I ask myself: how do we as “non-web based” bicycle retailers. Increase the value perceived in our existence/services? And clearly express that value to our customer base? (I can answer my own question here)

Customers (whether we like it or not) will search out the best value. I have seen loyal, long-time customers become bitter when they feel they are being “over charged” for something they have seen for much cheaper on the ol’ internets. (they will leave and not come in again if they perceive that they have been cheated) I have had loyal customers bring in bikes, brands I sell in my shop, that they have purchased off the web, for less than retail, to have my employees build them. In their mind, they are “supporting local” because they are giving us the work. If they can find the parts cheaper somewhere else, that is not wrong is it? At the end of the day, it is all the same Taiwanese crap, no?

I should stop writing but, clearly this is on my mind. Has been for years. Thanks for penning that letter to OBRA Dave.

Discussion

17 comments for “Open letter from a fellow business owner.”

  1. Hey Molly,
    That letter really hits home for me as well. My girlfriend (your pink Dugasts), and I run a small shop here in Louisville, and we are constantly battling for sales. Its so price driven, and so frustrating when you spend the time with people only for them to go online or to the “Wal-mart” shop here.

    You asked how small shops could increase their value, and I do it by spending time, lots of time, answering questions, focusing on details, being more knowledgeable than anyone else here, but more importantly; throwing my passion for cycling and bikes into every transaction.

    Thanks for posting that up, makes me feel a bit better when a shop of their size is feeling it and being troubled by it.

    Thanks Molly, Mary has the Pink Dugasts laying next to the bed, so she can wake up to them….

    Aaron

    Posted by Hawkeye | April 7, 2009, 4:16 am
  2. Molly,

    I am originally from PDX, currently living/racing in DC area. I often read your website/blog one to see what is happening in the PDX area cross scene and also because I find a lot of your stories funny.

    This conversation is spot on! I worked in a LBS here in DC and it is tough to compete with Performanc or Colorado Cyclist or Nashbar type e-retailers, but those guys do not offer what the LBS does as you and David both dutifully note. However most bike shops suffer from the same thing…attitude that is intimidating to the “average american” customer.

    Sure dudes like us never pay full retail, that is what our sponsorships are for and in return we bring results but more importantly we bring positive association via referrals (at least our sponsors hope we do). But it is the LBS’s job to welcome those referrals with open and “kind hearted” attitude with the objective to educate and get a new person excited about cycling.

    RCB is a great shop, but like most shops they need to re-think about how they sell bikes. Like it or not, the tubes that make up the internet are here to stay. The business model is so rigid that it will eventually fail if it is not redesigned. If I am sitting on a $1200 pair of wheels and I am approaching 9-10 months since I have received these, I would mark them down to move them. Most bike shops sit on stuff like this and end up taking a huge loss on them 2-3 years later.

    I will stop with the drivel but I like the internet for bike parts, though I always check to see if my LBS/sponsorshop can get them first, but often for cross stuff they may not have a dealer/distributor relationship which makes it tough. hence I look on line.

    Great discussion points, keep on with your internet sales, and remember to welcome those newbies in your shop each time they come in like deer caught in the headlights.

    Cheers,

    Ryan

    Posted by Ryan | April 7, 2009, 7:05 am
  3. Just a customer’s prospective:
    I’ve always tried to make it a point to support local shops, but have consistently found that even at the better shops there’s no escaping employees’ elitist, alienating attitudes towards me as a customer. Every time I feel happy with a certain shop around town, I will come in and get condescended to. With regards to RCB, I’ve had about 80% good experience there, but the other 20% got the attitude big-time…really makes me hesitant to go in again after that, but I still do because I’m not going to punish a shop for one employee’s attitude. I’ve spent time & money at just about every shop in town, and honestly have to say the only ones it still hasn’t happened to me at are Sellwood, Revolver, and YES, Universal…the so called “evil” on-line shop. The guys in there have always been helpful, considerate, and no cooler-than-thou attitude.

    The simple answer to the smaller LBS, worried about bigger on-line retailers taking all the business: cut the primadonna attitudes, make it a comfortable atmosphere for ALL customers, and we’ll be happy to shop there.

    Posted by clyde | April 7, 2009, 7:41 am
  4. A gruppo is a gruppo is a gruppo. For all practical purposes the gruppo I get online is the same as the gruppo I obtain from the LBS. If a customer is basing a purchasing decision almost exclusively on price, the LBS will almost always lose the battle when competing head to head against pure online competitors (or inordinately large competitors) that base their business model almost exclusively on undercutting prices. The brick and mortar nature of the LBS generally prohibits them from employing the same inventory and distribution strategies that allow an online retailer to produce price as the product that is sold.

    The LBS operates in an business climate where price has become a marketed product. This is not really a new phenomenon, even in the cycling industry, though I think the economy has really emphasized price for customers more recently. LBS shops still heavily aligned to business models that predate the online retailer are likely feeling the impact harder the last several months than they did over the last several years as price becomes a more heavily sought product.

    The emphasis of price as a product certainly impacts over all market share and changes the dynamics of the LBS, the inventory they carry, the number and type of employees required, etc….

    So does that mean the LBS should fold up and go the way of the dinosaur? No. Price is not the only product that customers seek and there is still a foothold for the LBS.

    Services play a prominent role in the future of the LBS and they will likely live and die by their ability to increasingly translate service into core product. The same dynamics that allow an online retailer to undercut price, undercuts their ability to provide service in the same intimate manner a brick and mortar shop can offer it. Most customers do not maintenance their own bikes, for example. Most customers do not know how to make their bike fit them better. Most customers do not know how to physically modify their bikes to improve performance or reliability. These also happen to be services that are hard to offer online, and often require some form of face to face, service level, presence. When the LBS successfully translates service into product, they will increasingly find this the springboard back wards into traditional product oriented retail model.

    LBS’s that do not successfully navigate those waters and find market place outside the price game will increasingly fail. If I were a brick and mortar LBS I would be very concerned if I were driving customers away due to employee behavior and would be monitoring this closely. LBS growth and enhanced profitability opportunities in this changed landscape should be pointed towards seeking service opportunities not yet marketed provided, or that are currently under utilized or under serviced. Lastly, when possible, I would not rule out collaborative partnerships with some of these online competitors in an effort to gain mutual advantage and mutual market share.

    Posted by todd | April 7, 2009, 11:34 am
  5. What about the teams, clubs, coaches and (gasp) “studios” that basically create a back alley of “pro/bro deals” for the people that used to be the good-old-fashioned bike shop’s best customers?

    The bike industry has an impressive capacity to cannibalize itself, whether through manufacturers ramping up prices and technologies way faster than the market keep up with, or segmenting itself into tiny little niches that make the everyday consumer feel like everyone is getting a better deal than them.

    Ultimately, the industry is shifting away from the archetype of shops being where you buy stuff. “Service oriented economy” I think they call it.

    Posted by joe | April 7, 2009, 12:01 pm
  6. I have settled on Veloshop and Sellwood as my two premier shops, for the sole reason that from my intro in to Cross both have treated me with respect and have been nothing but helpful and encouraging, never had a feeling of elitist or being condescended to, thats why when healthy I always go back!

    Posted by Guy Smith | April 7, 2009, 12:30 pm
  7. Hey now, in defense of studios, I think (hope?) most of them exist to sell products at a premium. ie: no bro-deals in studios. I am in no way of the opinion that one business model is better than another. But yes, if any shop is selling bikes at sub-standard markup. It kills the viability and sustainability of the industry as a whole.

    Posted by Molly | April 7, 2009, 2:35 pm
  8. Thanks Guy. How is your heart?!

    Posted by Molly | April 7, 2009, 2:40 pm
  9. Just using it as an example of how the industry itself is segmenting market and sending customers everywhere but the good-old-fashioned-local-shop.

    Tires and parts are way cheaper online, you go to the bike fitter for the frame or custom build, maybe get one from a team. There’s not much left for a shop to do but build it up and sell you a tube in a pinch.

    Ultimately, a coach/club/team/studio is just as bad for the local bike shop as online sellers that offer lower prices. They all pursue a niche that the local bike shop didn’t adequately fill. Offering lower prices is one way, giving a more involved customization process or offering a more holistic approach to equipment and training are others. Regardless, it takes the big purchases away from the local shop.

    These other venues may help develop the bike community in other ways, but the local shops’ bottom line will continue to suffer.

    Posted by joe | April 7, 2009, 3:42 pm
  10. I started writing a comment rebutting the RCB letter, but it got so long, I ended up making it into a post at my own site.

    The short version is:

    1. Play up your strengths you can offer locally and in person to keep people coming in (like bike fitting, training, group rides from the shop, etc)

    2. Embrace the web in ways that can enhance your business. Sell stuff people can’t find anywhere else (either self-created or locally produced). Keep a blog and twitter account to keep customers up to date. Sell your overstock on eBay for a higher price than you’d get locally.

    The RCB owner is basically saying every shop owner should ignore the web due to internet sales undercutting them, but that’s ignoring a giant potential audience that you could be selling to, and it’s an audience that can be many, many times the number of people that walk into the shop (and it’s just bad business sense to ignore those potential customers).

    Posted by Matt Haughey | April 8, 2009, 6:53 am
  11. [...] being able to check in with cycling friends who live across town that i never ride with any more. molly’s post about an open letter to the racing community regarding local bicycle shops is one of the most [...]

    Posted by blog on blog « Ira Ryan Cycles | April 8, 2009, 8:14 am
  12. I own a store in Kansas City and when we first opened, I had the illusion that we could match online/catalog prices. I was definitely wrong.

    Our prices are now competitive with other stores in the area and we now focus on the service and relationships with the customers. We work hard to get to know each customer and how they ride and what they need for their bikes.

    Before we opened, I worked for a Concept Store and after each transaction I felt dirty inside almost, overcharging for service and selling customers products that they would either never use or not know how to use. I am pretty sure the customers could sense my discomfort.

    At Volker, it is the opposite, you’ll here us saying “you don’t need that,” more often than not, because we know our customers and how they ride.

    Service, tubes, lights, locks, and helmets is how we pay the bills. Everything else is a bonus.

    Posted by Britton Kusiak | April 8, 2009, 9:11 am
  13. It’s not just the retailers that are undercutting the LBS. Trek sells their Bontrager Street Shoe on their web site for $99.99, while my LBS prices it at $109.99, so it looks like Trek is not even supporting their own dealers.

    I buy a lot of stuff on line because the shops in my area don’t seem to stock what I’m looking for. “Dude, that’s totally obsolete. You need a new bike. Let me show this Madone.”

    There are good shops and there are shops that are not. I’m pretty sure the reasons that some survive and some don’t is because of the way those shops are managed, not how their competitors are pricing their parts.

    Posted by Mike | April 8, 2009, 9:13 am
  14. i sometimes buy parts at universal cycles because i know how to work on my bike and I like to do it. I ride my bike to pick up the parts so I don’t pay for shipping.

    I had some awesome service today at veloshop. i’m hurting for work/money right now and i would like to have a couple wheels built. I don’t have the tools to do this at home. jake? (not ryan, not brent) was very helpful in assisting with spoke/nipple choices and it’s very reassuring that you have “quality assurance” on wheel builds. Sure, i might not be able to buy today, but in a month when I want the work done, I’m going to come down to veloshop.

    Posted by miguelaron | April 9, 2009, 12:19 pm
  15. @ Matt Haughey

    There are some good points here. Interestingly, I live in Northern California, where we have plenty of bike shops, and I do as much business with shops like Clever Cycles (pdx) and Hiawatha Cyclery (mpls) for bigger ticket items as I do the locals. Why? It’s largely due to their online activities — blogs, flickr, etc. I know that they know what I’m talking about when I ask about generator hubs and lights, Rohloff and other IG hub bits, etc and that I can order online midweek and have my (admittedly oddball) parts by the weekend.

    The alternative is trying to explain what I need to the locals who don’t quite get it. It may be that there are good shops in SF or Berkeley who would have what I need, but those cities are ~30 miles from where I live– functionally the same as being in another state given my family responsibilities and our inadequate public transit options.

    Posted by louis | April 15, 2009, 2:57 pm
  16. The one thing that brick-and-mortar shops have over Web sites is real and informed customer service. I have never gotten in-depth customer service from a Web-based retailer. I have almost always gotten it from a neighborhood bike shop. Buying online is fine if you’re mechanically proficient enough to service your own bikes; but that’s NOT the majority of most bicycle riders.

    What places like RCB and Veloshop (and — full disclosure here — my own beloved Citybikes) offer customers is that face-to-face encounter with someone who loves bicycles just as much as they do; and whose greatest desire in that moment is to help them enjoy themselves as much as possible while riding their bicycles. Those encounters on a human scale are invaluable and I believe firmly that they’re what keep customers coming back into the brick-and-mortar shops.

    Posted by beth h | April 15, 2009, 7:31 pm
  17. [...] local brick and mortar bike shop? When you are thinking about that next bike related purchase please consider that the internet [...]

    Posted by The death of the LBS. Film at 11. « Bike Monkey Magazine | April 21, 2009, 8:59 pm

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