ADVrider

Go Back   ADVrider > Fluff > Sports
User Name
Password
Register Inmates Photos Site Rules Search Today's Posts Mark Forums Read

Reply
 
Thread Tools Rating: Thread Rating: 315 votes, 4.90 average. Display Modes
Old 05-15-2013, 12:14 PM   #28756
Gummee!
That's MR. Toothless
 
Gummee!'s Avatar
 
Joined: May 2004
Location: NoVA for now...
Oddometer: 28,072
Quote:
Originally Posted by Aurelius View Post
A friend of mine quit his stressful job in IT and opened his own bike shop two years ago. He seems to be doing quite well with it, from what I can see. His store usually has as many customers in it as the well established and much better financed chain stores in the area, although much of that could be due to its excellent location. The big downside is that he has almost no time to himself, since the shop is open seven days a week from 9:00 AM to 7:00 PM.

One thing he did tell me that I found interesting was that he makes very little profit on bike sales: the big money is in parts, which he typically makes 70% profit on. I've been trying to interest him in capitalizing on that by selling parts on line, but so far he hasn't shown any interest.

Another possible downside is that none of the major manufacturers (Trek, Specialized, Giant, etc.) seem interested in doing business with small shops. In the case of Trek and Specialized, it required a major financial commitment which he wasn't prepared to make. In reality that may not matter much, because Trek & Specialized have saturated the area with dealerships, and it's questionable whether trying to sell what everyone else in the area is already selling is a good business strategy. Many customers go to him precisely because they're NOT interested in any of the big brands.
In *most* shops the shop is the big profit center. Bikes for sale are what get people in the door, but don't make the $ till you get to the gucci stuff.

Get over $5k/bike and you're talking $/transaction. Till then? Not so much.

One of the big ways to promote the shop is get involved in the community. Bike safety days at the elementary school, rides, support the local Team in Training, etc. Get the name of the shop out there ASAP. Shop rides are a great thing 'cause inevitably someone needs a tube, patch kit, pump, etc. All high margin items.

Speaking of which... Most shops I know keystone* most of the stuff they order. QBP actually has a program on their website where they'll actually label stuff with your profit margin already calculated.

M

*keystone = double the cost and call it retail
__________________
I'm a cyclist that rides motos, not a moto rider that rides bicycles.
Gummee! is offline   Reply With Quote
Old 05-15-2013, 12:46 PM   #28757
YakSpout
Obstacle Allusion
 
YakSpout's Avatar
 
Joined: Dec 2003
Location: all by myself
Oddometer: 5,852
Quote:
Originally Posted by Aurelius View Post
A friend of mine quit his stressful job in IT and opened his own bike shop two years ago. He seems to be doing quite well with it, from what I can see. His store usually has as many customers in it as the well established and much better financed chain stores in the area, although much of that could be due to its excellent location. The big downside is that he has almost no time to himself, since the shop is open seven days a week from 9:00 AM to 7:00 PM.

One thing he did tell me that I found interesting was that he makes very little profit on bike sales: the big money is in parts, which he typically makes 70% profit on. I've been trying to interest him in capitalizing on that by selling parts on line, but so far he hasn't shown any interest.

Another possible downside is that none of the major manufacturers (Trek, Specialized, Giant, etc.) seem interested in doing business with small shops. In the case of Trek and Specialized, it required a major financial commitment which he wasn't prepared to make. In reality that may not matter much, because Trek & Specialized have saturated the area with dealerships, and it's questionable whether trying to sell what everyone else in the area is already selling is a good business strategy. Many customers go to him precisely because they're NOT interested in any of the big brands.
That's true for most retail. The big-ticket items are low margin and you make your nut on the parts/accessories.

Most bikes shops hold true to that as well. They make money on fits, service and the crazy markup on tubes, energy bars, etc. They probably break close to even on clothing.

Not many folks are buying component groups at retail with so many discounts available online, but how many of those people can install the new parts?
YakSpout is offline   Reply With Quote
Old 05-15-2013, 12:47 PM   #28758
Gummee!
That's MR. Toothless
 
Gummee!'s Avatar
 
Joined: May 2004
Location: NoVA for now...
Oddometer: 28,072
Quote:
Originally Posted by YakSpout View Post
Not many folks are buying component groups at retail with so many discounts available online, but how many of those people can install the new parts?
The answer to that last question is 'not nearly as many as think they can!'

M
__________________
I'm a cyclist that rides motos, not a moto rider that rides bicycles.
Gummee! is offline   Reply With Quote
Old 05-15-2013, 12:51 PM   #28759
YakSpout
Obstacle Allusion
 
YakSpout's Avatar
 
Joined: Dec 2003
Location: all by myself
Oddometer: 5,852
Played hooky from work yesterday to go for a ride and watch Stage 3 of the ToC.

Peloton coming down Copper Hill towards us with 70mi to go:



We rode back to my in-laws' house, got cleaned up and drove over to the finish line for the end of the race.

Leaders about 140m from the finish, they start the sprint and Orica GreeneEDGE's leadout man is popping:

YakSpout is offline   Reply With Quote
Old 05-15-2013, 12:52 PM   #28760
YakSpout
Obstacle Allusion
 
YakSpout's Avatar
 
Joined: Dec 2003
Location: all by myself
Oddometer: 5,852
Quote:
Originally Posted by Gummee! View Post
The answer to that last question is 'not nearly as many as think they can!'

M
Which brings us back to service as a profit center.

"I could have installed that for you for half of what it's going to cost you for me to fix it."
YakSpout is offline   Reply With Quote
Old 05-15-2013, 12:53 PM   #28761
Gummee!
That's MR. Toothless
 
Gummee!'s Avatar
 
Joined: May 2004
Location: NoVA for now...
Oddometer: 28,072
Quote:
Originally Posted by YakSpout View Post
Which brings us back to service as a profit center.

"I could have installed that for you for half of what it's going to cost you for me to fix it."
BTDT S'how I learned to wrench on things in the first place.

No! Don't do that! NOW y'all tell me!

M
__________________
I'm a cyclist that rides motos, not a moto rider that rides bicycles.
Gummee! is offline   Reply With Quote
Old 05-15-2013, 12:56 PM   #28762
YakSpout
Obstacle Allusion
 
YakSpout's Avatar
 
Joined: Dec 2003
Location: all by myself
Oddometer: 5,852
Quote:
Originally Posted by Gummee! View Post
BTDT S'how I learned to wrench on things in the first place.

No! Don't do that! NOW y'all tell me!

M
I got that t-shirt, too.

YakSpout is offline   Reply With Quote
Old 05-15-2013, 01:00 PM   #28763
Gummee!
That's MR. Toothless
 
Gummee!'s Avatar
 
Joined: May 2004
Location: NoVA for now...
Oddometer: 28,072
Quote:
Originally Posted by YakSpout View Post
I got that t-shirt, too.

Coupla things I learned REALLY early on:

Don't take both sets of cones off an axle
Don't unlace a wheel completely when all you need to do is replace a rim.
Watch the torque!
Headsets should NEVER be loose (and they're expen-SIVE!) I still have a Mavic HS and a few older 'assorted' HSs in my bin of stuff to remind me.
If it creaks, see to it ASAP. Especially if it creaks near the BB.
If there's a special tool needed, you really DO need it. I have a French threaded crank remover. Probably never need it, but I have it!

etc etc etc

M
__________________
I'm a cyclist that rides motos, not a moto rider that rides bicycles.
Gummee! is offline   Reply With Quote
Old 05-15-2013, 02:14 PM   #28764
Aurelius
Beastly Adventurer
 
Aurelius's Avatar
 
Joined: Oct 2002
Location: Altamonte Springs, Florida
Oddometer: 22,305
Quote:
Originally Posted by YakSpout View Post
Not many folks are buying component groups at retail with so many discounts available online, but how many of those people can install the new parts?
That's one thing he does which I've told him is really, really, dumb: he installs stuff for free! No labor charge on anything bought in his store, and he's even installed parts at no cost that were purchased elsewhere. He may think it's a good way to attract customers, but what will happen is the same thing that's happened in my line of work: customers/clients will be appreciative the first time you do it, but the next time they'll expect it. Devaluing your work by giving it away for nothing is never good for business.
__________________
Dizave opined: Why do you care where the premises come from? They are above reproach. For all intents and purposes, you can just make up all your premises, since they can't be proven anyway. That's why we need premises.
Aurelius is offline   Reply With Quote
Old 05-15-2013, 03:06 PM   #28765
Gummee!
That's MR. Toothless
 
Gummee!'s Avatar
 
Joined: May 2004
Location: NoVA for now...
Oddometer: 28,072
Quote:
Originally Posted by Aurelius View Post
That's one thing he does which I've told him is really, really, dumb: he installs stuff for free! No labor charge on anything bought in his store, and he's even installed parts at no cost that were purchased elsewhere. He may think it's a good way to attract customers, but what will happen is the same thing that's happened in my line of work: customers/clients will be appreciative the first time you do it, but the next time they'll expect it. Devaluing your work by giving it away for nothing is never good for business.
I can vouch for that. Shop I used to work for gave a discount to a local club. First few times it was 'gee thanks!' then it was 'where's my discount?!' The attitude of gratitude went buh-bye quickly.

M
__________________
I'm a cyclist that rides motos, not a moto rider that rides bicycles.
Gummee! is offline   Reply With Quote
Old 05-15-2013, 04:22 PM   #28766
Tallbastid
Let's get tropical
 
Joined: Apr 2011
Location: Northern VT
Oddometer: 1,316
Quote:
Originally Posted by Aurelius View Post
That's one thing he does which I've told him is really, really, dumb: he installs stuff for free! No labor charge on anything bought in his store, and he's even installed parts at no cost that were purchased elsewhere. He may think it's a good way to attract customers, but what will happen is the same thing that's happened in my line of work: customers/clients will be appreciative the first time you do it, but the next time they'll expect it. Devaluing your work by giving it away for nothing is never good for business.
Yeah, that's nice but doesn't seem like it would pay the bills.
Tallbastid is offline   Reply With Quote
Old 05-15-2013, 07:58 PM   #28767
Gummee!
That's MR. Toothless
 
Gummee!'s Avatar
 
Joined: May 2004
Location: NoVA for now...
Oddometer: 28,072
I brought the hurt tonite. While I can't get over a hill with the lead guys, when the road flattens, watch the funk out. I've gotten fit enough that I can pull, recover, place in the sprint, recover, pull, recover, and place 2nd in the final sprint behind the Cat 1 in the group who was sucking wheels the whole nite.

Oh, and new record HR: 160 Legs blew on the first hill at 152, but after that, I felt much better.



M
__________________
I'm a cyclist that rides motos, not a moto rider that rides bicycles.
Gummee! is offline   Reply With Quote
Old 05-15-2013, 11:11 PM   #28768
kbasa
Colnago!
 
kbasa's Avatar
 
Joined: May 2002
Location: Marin County, California
Oddometer: 67,319
Oh, like!
__________________
IMHO.

Fuck Cancer. Ride bikes. - dave + tina
kbasa is offline   Reply With Quote
Old 05-16-2013, 06:27 AM   #28769
Tallbastid
Let's get tropical
 
Joined: Apr 2011
Location: Northern VT
Oddometer: 1,316
Quote:
Originally Posted by YakSpout View Post
That's true for most retail. The big-ticket items are low margin and you make your nut on the parts/accessories.

Most bikes shops hold true to that as well. They make money on fits, service and the crazy markup on tubes, energy bars, etc. They probably break close to even on clothing.

Not many folks are buying component groups at retail with so many discounts available online, but how many of those people can install the new parts?

I have experience with this with what I've done in sales; though it was a much different industry. Our $1-2k products would only be marked up 10-15%. While it was still decent profit off a sale that took a salesman working at $18/hr 20 minutes to make, the problem (in our case) as the products we were selling took up lots of precious retail space. OTOH, smaller items would be keystoned and take up much less space. The best items we had were the 'impulse buys' at the counter; little odds and ends that were useful, but hardly necessary. While checking out, customers would see them and throw them into the sale, all the while buying goods at 200% cost.

I could see that with a bike shop as well - I imagine you'll sell lots of tubes, pumps, locks, grips, tires, etc. at 200% cost, in order to get people in the door you'll need the bikes in the window. I also believe in some decent rides aspiring riders can come in and kick the tires on and maybe convince themselves to spend a little more on a nicer ride.

I'm still looking around for stats on who buys what in terms of bikes. My area is a fairly large scene for true, high dollar mountain/road riders, but I know to stock the 2-3-4k bikes means lots of overhead. I also know once you're getting into those price ranges, riders are informed and they know what they want, IOW chances are they won't want what you have in stock. I read somewhere (maybe here?) that the majority of bike sales are in the $200-$500 range; for bike pathers and ride-with-the-kids types. While easy to sell stock in that price range, you'd still have the issue of precious real-estate being occupied by bulky, low margin goods. One thing I know is I'll be looking for a smaller - is - better retail space so I'll either have to stock less or find a creative way to display bikes while leaving room for the smaller, high margin goods. One thing Gummee and Aurelius have stated is the big three may not be interested in working with me. I'm fine with that - everyone sells those bikes and for probably cheaper than I'd be able to. I've been researching some lesser-known brands I could order the high buck stuff from, and trying to find some lesser-known but still quality $200-$500 range rides.

Installation is huge, and again my experience has shown me people are willing to pay for being able to leave the shop with their goodies installed and ready to dispaly/ride/try/review when they get home. The install prices my company charged in my last job were almost crimina - but people paid it. Again, I have no intention of becoming wealthy or sacrificing my name for a higher profit, but as many of you have said, I know installation can be high-margin.

One last thing; I know many, many people (myself included) purchase bike parts on the internet at a huge discount. IMHO, you lose three things doing this;

1. The experience of being at the shop, experiencing all the cool shit, talking with likeminded people, looking at your dream ride, and, in the vendors eye, the impulse buys, the self convincing (I should get new brakes, shouldn't I?) I plan on making the shop (if this happens) a destination instead of a chore. Creature comforts go quite a ways here, and I think anything that makes a customer feel welcomed and comfrotable in your store is a good investment and use of real-estate.
2. Experience and expertise afforded by knowledgable sales people
3. Hassle free returns and free fittings.

Especially in the area I'm looking to open shop in, there is a big emphasis on keeping it local. I know this won't make everyone skip the internet, but I'll never be convinced the internet is goign to 'kill' the LBS, so long as the LBS doesn't screw their customers.
Tallbastid is offline   Reply With Quote
Old 05-16-2013, 06:59 AM   #28770
Gummee!
That's MR. Toothless
 
Gummee!'s Avatar
 
Joined: May 2004
Location: NoVA for now...
Oddometer: 28,072
Quote:
Originally Posted by moodfart View Post
Installation is huge, and again my experience has shown me people are willing to pay for being able to leave the shop with their goodies installed and ready to dispaly/ride/try/review when they get home. The install prices my company charged in my last job were almost crimina - but people paid it. Again, I have no intention of becoming wealthy or sacrificing my name for a higher profit, but as many of you have said, I know installation can be high-margin.
You've developed skills over time, you should get paid for that. Any yahoo can install a widget if things are perfect. Its when they're not perfect that skill comes into play.

Quote:
One last thing; I know many, many people (myself included) purchase bike parts on the internet at a huge discount. IMHO, you lose three things doing this;

1. The experience of being at the shop, experiencing all the cool shit, talking with likeminded people, looking at your dream ride, and, in the vendors eye, the impulse buys, the self convincing (I should get new brakes, shouldn't I?)
2. Experience and expertise afforded by knowledgable sales people
3. Hassle free returns and free fittings.

Especially in the area I'm looking to open shop in, there is a big emphasis on keeping it local. I know this won't make everyone skip the internet, but I'll never be convinced the internet is goign to 'kill' the LBS.
1. Group rides do the same thing. You get to see the gucci stuff that the other riders are on. Forums (like this one!) are another way to get ideas. Weight Weenies, RBR, Velocipede Salon, Paceline, et al are all places where 'serious' cyclists hang out and kibbitz. Oh, and sell barely ridden stuff for less than cost. Like my recent Ergonova handlebar purchase...

2. Depending on the shop you go to I've found that I've been riding longer'n some of the shop rats have been alive. I've seen shite come and go and come around again.

3. At an LBS?! Depending on the LBS, sure. Across the board? No. ...and fittings are only as good as the person doing the fit. AMHIK

Not trying to dissuade you, but esperienced cyclists CAN do away with the LBS. I/we am not your audience. Only reason I go in is to hang out with my riding buddy that works there. What you want is the n00bs, the inept at wrenching, doctors, lawyers, and mtn bikers that keep breaking their stuff.

So, I'd say set up accounts with the 'elite' brands like Moots, Seven, Firefly, Niner, Santa Cruz, etc. and sell those. Get a few locals riding whatever it is you think fits your riding area and work from there. You may have to do a 'cost + X%' for a select few riders. AKA they're the shop's sponsored riders/racers.

Work on anything that comes in the door. I can tell you from personal experience that while its nicer working on the gucci stuff, the lawn furniture bike owners are MUCH more appreciative of your efforts.

I remember reading a thread somewhere else where a guy was kvetching about mechanic lifting his bike into the stand and grabbing TT along with brake cable. He was concerned that they were scratching his gucci bike. Yes, people like that DO exist!

If you're a 'destination town' develop a website with trail maps in there. When the map prints, make sure your shop logo/info are on em. I'm sure you can figure out the superlatives needed on the website... Preeminent shop in the area, blah blah blah

Sponsor trail-building days. Get people involved in the trails they're riding. It won't bring out many people, but it will bring out people.

There's more...

M
__________________
I'm a cyclist that rides motos, not a moto rider that rides bicycles.
Gummee! is offline   Reply With Quote
Reply

Share

Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On

Forum Jump


Times are GMT -7.   It's 02:28 AM.


Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
Copyright ADVrider 2011-2014