No, Your Bike Shop Is Not Ripping You Off

No, Your Bike Shop Is Not Ripping You Off

One of the most important rules of the Internet is “Don’t Read The Comments.” RKP‘s comments are a happy exception, partly because they’re thoroughly moderated, and mostly because RKP readers tend to be interested in riding bikes, as opposed to sniffing spokes and arguing about the results. But sometimes I get paid to Read The Comments, just to see what cyclists are saying about my clients and their products.

Judging by chatter in the online birdbath, one of the more popular consumer topics among the spoke sniffer* crowd is how their LBS** is ripping them off because prices from online retailers are so much cheaper.

You will note there are two parts to this notion.

The second part—the part about online prices—is unarguably true, at least for anyone with a web browser and a hankering to see what bike stuff costs. We’ll come to that in the next installment, including exactly how it is that online retailers can sell stuff at such low prices. But the first part, the whole notion of consumer off-rippery by bike shops, is utter doo-doo, although most cyclists don’t know it.

They don’t know it because they have no way of knowing it because the answer is buried deep in the arcana of how the bike business works, and because even most people who work in the bike business don’t know it either. And the bike-biz people don’t know it because they don’t know the answers are right there, hiding in plain sight. They’ve never looked for those answers because hey, it’s the bike business and there are so many things in it that don’t make sense that what’s one more? And the things in the bike business that don’t make sense don’t make sense because the whole bike business don’t make sense to begin with. Make sense?

If you answered no to that question, you’re beginning to understand the wacky world of the bike industry. If you answered yes, you’re probably lying. If you’re in the bike business and answered yes, you’re a psychopathic liar and you really ought to know better. But I digress.

Bike shops, by and large, aren’t ripping their customers off. If they did, they’d be making a lot more money than they are.

Here’s a couple simple ways to prove this to yourself. Take a good look at the building the shop is in and the neighborhood around it. See any Apple Stores, Nordstrom’s, or Victoria’s Secrets in the vicinity? Didn’t think so. Those are high-profit businesses. Bike shops, generally, are not. Next, walk around to the back of store (or wherever the nearest available parking is) and see what kind of car the owner drives.

I rest my case.

The retail end of the bike business is a life of brutally long hours and wafer-thin margins. You start out in this line of work because you really, really like bikes, enough to devote the rest of your life to them. But once you’re in that line of work, you don’t get to ride bikes nearly as much as you would if you had a regular nine-to-five gig. (For the record, the distribution end of the business is even worse, although retailers will unanimously dispute this.) In all too many cases, you make less on a per-hour basis as a bike shop owner than the manager of the burger joint next door. But at least you work a lot more hours.

The typical bike shop owner is getting a lot of things, but rich ain’t one of them. To understand why, we need to look at some hard data.

There is an organization called the NBDA—the National Bicycle Dealers Association—which keeps tabs on this sort of thing. They also do a lot of other worthwhile stuff, like representing retailers’ interests to distributors and trade shows, presenting educational programs, and so forth. Every even-numbered year, they put out the NBDA Cost Of Doing Business Study, an 82-page behemoth full of facts, figures and charts, revealing pretty much everything there is to know about the financial side of the retail bike business in precise and, I don’t mind telling you, mind-numbing detail.

As you might expect, the contents of the CODBS are a closely guarded secret, strictly off limits to anyone who’s not an NBDA member. Unless you have 150 bucks and a credit card, of course, in which case they’re willing to make a special exception and sell you a copy.

The CODBS tells us that bike shops make their money in three different ways: Bikes, PARCS (Parts, Accessories, Rubber, Clothing & Shoes), and Service. Typically, 45% of IBD/SBR*** (local bike shop) dollars—more than two billion of those dollars in 2014—come from new and used bikes. 34.5% comes from PARCS, and 15% from Service, plus some miscellaneous items like rental bikes and fitting/coaching services. I’m leaving these out for purposes of readability, just as I rounded the three numbers above.

So bikes make up almost half of your retailers’ gross dollars. And—here’s my point—zero percent of their net profits.

Let me repeat that: your typical bike shop doesn’t make a nickel off bikes. Even worse, it’s the same darn nickel that bike shops in aggregate haven’t made off bikes for the past thirty years, which is as long as the NBDA has been keeping records. So for practical purposes, bike shops—whose main business, after all, is selling bikes—have never turned a profit selling bikes.

Bike shop sales nationwide have been more or less flat since 1990 (more about that another time), even though the number of units sold has gone down as mass market stores nibble away at the less expensive price points. So bike shop owners in this country have sold something like $50 billion worth of bikes since the turn of the century. With bupkis to show for it.

That’s something of an exaggeration, since in reality bike shops sell bikes to bring new bike owners back into the store where they will hopefully buy equipment and service, but you can understand the impact all those zero-sum sales have on a shop’s end-of-year profit picture.

Sure, some shops are doing better than others. But according to the CODBS, those higher profits come from internal efficiencies like faster inventory fill rates and resulting higher turnover, not from bikes and not from higher prices on everything else.

To reiterate, the profit categories in a bike shop are Service—which makes up about 15% of gross sales—and PARCS, at 35%, more or less. So 100% of the profits come out of  half the dollars sold.

Trouble is, at one-third the gross sales of bikes, Service doesn’t do much to move the needle. Compare bike shop labor rates with your local car dealer—or vacuum cleaner service center or shoe repair place, for that matter—and draw your own conclusions. As for PARCS, bike shops perform about the same as sporting goods stores, which is like, um, well let’s just say that’s not the compliment it might be.

Apple makes almost double the margin on an iPhone 6 that you bike shop does on all the PARCS in the store, on average. A mainline company like Starbucks makes something like five times the net profit margin on every dollar earned as a bike shop.

Trust me, there’s only one person getting ripped off at your typical bike shop, and that’s the owner.

Which is part of the reason bike shops in the USA have been dropping like flies over the past fifteen years. But that’s a topic for another time. Next time, we’ll talk about why Internet prices are as low as they are.

Special Bonus Section: Vocabulary Items:

*Spoke sniffer is an industry term for cyclists obsessed with comparing minute details of product spec and lecturing their fellow sniffers about how product managers ought to have done their jobs. Don’t be one.

**You may be familiar with this term already. Online denizens (particularly in the UK) often refer to their local bike shop as their LBS. It’s an expression so ubiquitous among consumers that it has its own Wikipedia entry, but one which nobody in the bike business ever uses.

***Independent Bicycle Dealer and Specialty Bicycle Retailer, respectively. Suppliers generally use the former, despite (or perhaps because) retailers prefer the latter.

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  1. Miles Archer

    Same for chains vs independent stores?

    If I thought my LBS was ripping me off, I wouldn’t go there. The reason I bought my last bike from the shop that I did is the owner fixed my previous regular ride out of a used parts bin and charged me less than $5 while I waited. The chain store shop down the street had a two week backlog.

    For what it’s worth, both of those shops are now closed.

    1. Rick

      Hi Miles,

      Re your question about chains vs independents, the CODBS says multi-door (that’s industry lingo for “locations”) stores average about the same profitability as bike shops in general. But we should keep in mind this average includes over-extended stores which just opened a second location and are hemorrhaging cash as well as established operations with very good efficiencies and business practices. So it’s hard to generalize.

      As far as really large chains selling specialty retail bikes (Performance, REI, Scheels, Sports Chalet and many others), no one knows, since they don’t report their financials to the NBDA. Through a project conducted on behalf of one of my clients I do know the gross margin of at least one major chain is about the same as a large bike shop’s, but I can’t speak to the the costs side of the business.

  2. Jay

    I like my local bike shop. They are friendly. They know me. I try to get to the LBS weekly rides. They are the first place that I go for parts and most basic needs. Unfortunately there are things that they cannot do well, at least the really small shops. Clothing is a reasonable example: The amount of money that has to be tied up in inventory makes it difficult to offer any sort of selection in a small shop. I would prefer to make such purchases at my LBS whenever possible, but it seldom is. With margins so slim, my LBS cannot afford to tie up dollars in inventory that will be mostly static. They focus on inventory that turns over, otherwise there’s no cash flow.

    I would love to see someone develop a cooperative that would allow a LBS to leverage online sales in a way that brings customers into the store. Think of it as with a brick and mortar service component. Performance Bike Shop sort of have that as a business model, but I am not thinking in terms of chains. I would like to see something for independents that preserves their independence.

    1. Rick

      Hi Jay,

      You’ll be pleased to know there is a service like the one you describe. Several, in fact:

      SmartEtailing supplies webs solutions, including e-commerce, to about a thousand US bike shops. Generally, retailers use the functionality to let regular customers order products for delivery or to pick up in-store. To your point about inventory costs, retailers can even sell an item online and have it delivered to the customer direct from the manufacturer’s warehouse. Perfect for inventory-intensive items like apparel and even worse, shoes.

      SmartEtailing also offers a service called Buy Local Now. If you go to, for instance, and look at products, you’ll see a big blue button that says Buy Local Now. Click on it and you’ll get a map of retailers in your area who either have that item or can get it within a couple days. When you click on the retailer, it takes you to their website and (depending on how they’re set up), directly to the product you’re looking at so you can purchase it.

      I just checked their website and BuyLocalNow claims to have generated not quite 3 million referrals to local bike shops representing $17 million in retail sales in the past couple of years. So they seem to be doing something right.

      Finally, and in keeping with your “co-op” notion, There’s a company called Shopatron, which allows consumers to order direct from manufacturers and have the order brokered and fulfilled through participating local bikes shops, either in-store or via mail. That’s a simplified version of the business model, bur it does give you a basic idea of how it works.

      Disclaimer: I worked for SmartEtailing in 2012-13 as their director of client services. They’re nice people and they do good work.

    2. Father Klunker

      Park Tool, Smart E-tailing, etc, go part way to the goal,but I personally believe something like the aftermarket auto parts business model will eventually arrive. Google bike accessories, get a hit for a QBP/BTI/J&B/etc. outlet. Click on your desires, enter your credit card info, then select shipping: get choices of 1) UPS/FedEx delivery to the spot under your rosebushes in 6 working days, pay more to get it to the rosebush in 2 days, or at about the same price as UPS, delivered to your LBS, where you can pick it up.IF all/most items are already at LBS, no ship required

      Encourages traffic at LBS, encourages LBS stocking fast moving goods.

      Downside is someone has to develop a serious inventory control system, but the bonus might be that if 3 stores are sitting on a rare part that is NLA at regional warehouse, they can also get that item inventoried and perhaps match up with a seller. No more Ebay hassles


    Good stuff, Rick. Keep the data flowing, it’s far more interesting than speculation and goofballery.


  4. Frederick Beseler

    Good article. I don’t know how any LBS’s stay in business…I have always appreciated the fact that they have overhead…building costs, utilities, payroll, advertising, taxes, benefits like health insurance, etc. I always try to buy local and buy American.

    1. Paul Frankenbeller

      I’d bet dollars to donuts, that nothing on your bike, or that you wear on your body is american.

    2. John R Moser

      Buying local is good for a temporal individual—a person at a given time—but not good for the local economy. The things that make economies efficient—that raise standards-of-living, allow for better welfare, and increase jobs—all cause an on-going turn of transitional unemployment: in order for people in general to get richer, things must get cheaper; and for things to get cheaper, jobs must be displaced by either technical progress or trade.

      Technical progress reduces the amount of labor (wage-hours) invested in producing a good or service, which ultimately means fewer hours are worked to gain the dollars required to buy those goods and services. Trade either shifts the labor to a better area (e.g. America’s fertile basin for food production, or Canada’s wooded resources for lumber production), a better-equipped economy (lower costs of living, better existing capacity for e.g. manufacture), or a lower-wage economy (lower standard-of-living); that last one is unsustainable in the long run. Largely, sustainable progress must reduce the hours worked, not simply the wages paid per hour.

      Reducing hours worked as such means someone moves out of a job; prices come down (eventually); more goods are bought with the newly-available buying power; and new jobs are required to meet the buying demand, replacing the lost jobs. If you reduce jobs too fast, your unemployment goes up, you have recessions, and your economy crashes; if you do it slowly, the economy keeps up, hovers around stable unemployment rates, and the standard-of-living increases. Further, as prices come down (or rise more-slowly than incomes), luxury goods become affordable to lower-income brackets, thus becoming commodity goods; this lowers the barrier to market entry by increasing the market, which causes more pressure on prices to come closer to costs, reducing profit margins (a big driver of that “prices come down” thing).

      That means shopping at your local bookstore keeps the bookstore employees in their jobs, but keeps you and their patrons more-poor; ordering your books online shifts the bookstore employee jobs around—creating different jobs locally and other jobs nationally and globally, and not necessarily filling the next job with the guy who just lost his. The latter option allows *more* total purchasing, which means the broad span of far more people than the bookstore employees become wealthier; that’s the general pattern.

      This has some additional consequences.

      As seen here, LBS are expensive to operate. They’re also your service centers. As they lose the parts and accessories market, they’ll have to make up the margin loss there. That margin currently subsidizes their *services*: they should, by rights, be charging you $25 for a tire change, but they charge you $15 plus an extra $10 profit on the tubes and tires.

      Either consumers will accept the cost of bike servicing as prices go up or the LBS will vanish in favor of larger department stores like REI. In the end, we’ll still need the same number of wrenches; on the other hand, all these places have to pay rent, buy extra tools that don’t break a lot, light the area, heat the area, and so forth, so having 10 bike shops is more-expensive than having 10 wrenches in 1 bike shop.

      So, one day, it may just be places like REI with bigger service centers doing all the wrenching on your bike. The wrenching will probably also cost less—not just due to consolidating the above, but due to Park Tool inventing new, specialized tools that make certain jobs take half the time. That, however, means we’ll need fewer wrenches, because if 7 people can get all the work done that 10 used to, then Park Tool just invented unemployment for 3 people.

      It may grind away all your romantic ideals about the world, and that’s fine; the world you live in is the end result of grinding away the last generation’s romantic ideals about the world. America was once a farm country, and advances in agriculture got rid of good farm jobs as the rise of manufacture came about, prompting old men to cry about how the good, solid backbone of hard farm work had withered and died; now America is an IT and services nation, and old men cry about how the good, solid backbone of hard manufacture jobs has withered and died. Your LBS used to be the cobbler, and someone spit on the steps of that shop when it opened and cursed them for picking over the remnants of the shoemaker’s grave. You’re entitled to the same, I suppose.

    3. Padraig

      I’m going to let this one fly, despite some misunderstandings of economics, but I’m also going to serve up a little reminder: If you need to write an essay of your own, you might want to start a blog.

      Our commenting guidelines, should you need a refresher, can be found here.

  5. Emil

    I try everything I can to patronize my local shop. I don’t fit the mold of a typical cyclist and my local shop spends a lot of time ordering stuff for me. The service dept is outstanding and caters to my whims without quibble. There are even times that my local shop has encouraged me to buy certain parts online and bring them to the shop for installation! Overall this is much more satisfying than shopping online and I’ve made friends and learned as well.

  6. Scott G.

    My latest LBS experience is similar to Miles, I go into to get a derailleur hanger aligned.
    I get a lesson on how to use the hanger tool and the hanger is aligned, how much I ask ?
    No charge, so I buy some stuff. Another LBS has the puppy dog sale technique down solid,
    he’ll lend you a Lynksey for your weekend rides. Lots of Lynskeys in group rides around here,
    wonder why ?

  7. Scott Goodwill

    My local bike shop (LBS) Elevate Cycles in Clifton Park, NY is fantastic. I don’t know how they keep the place open. Great service, great prices.

  8. Jackie Gammon

    As a shop owner, I really appreciate this article! I’m always amazed when a small portion of my customers have this notion that I think I am wealthy. My shop is in a building that is well over 100 years old, so there are always projects going on… and on some days that is quite visible. And like my repair log, most of those projects or bikes get completed by me… the margins simply aren’t there to let someone else do them.

    Lastly, a big THANK YOU for those of you that support your LBS… we need more people like yourselves!

    1. Aaron Duffin

      Ha I totally get the hundred year old building/project… I have been asked many times if we just opened when I’m up on a ladder fixing something…. nope just patching holes to keep the money in.
      As well as the customers that think I’m wealthy… then see me driving my 20 year old diesel truck or getting groceries on my old commuter.

      Funny how these things gain you more respect than if you were a rich prick.

      A HUGE thank you to our amazing customers that support our small businesses!

  9. Jorgensen

    There are a few items left out that make the retail bike business more scary. Dating, bikes lose value on the display floor once a new model arrives or is announced. So, that will kill full mark-up fast. Assembly and “after service” bikes have to be assembled, it has been decades since I had to assemble a bike by the clock, but not all way back took the same amount of time, in general, the cheaper the bike the longer it took to assemble well. After the sale, a free service was given, still is by most on all accounts. Hopefully that service to answer questions, take up slack in stretched cables yields some goodwill and possibly additional parts, accessory revenue, but not nearly as much now as pre Internet. Dating also refers to sometimes the willingness of a distributor to let the shop not pay for all of the bike order in 30 days… So, the shop better have the pulse of his local consumer, or have cash tied up in inventory rather than to buy what is wanted NOW. Inventory turn and total shop revenue, way back a shop was lucky to turn their total inventory in dollar terms 3x in a year, the most profitable shops I knew of did 5x which is amazing, and really requires skill and even more total inventory to have enough of what is wanted to exploit the desire of the consumer.
    Now I just saw a mobile shop, a Sprinter van packed like a race team support vehicle,they will come to you… I really wonder how that works profitably, but the overhead is less, another potential attack to a fixed based shop.
    I the see internet shops abroad that have prices that are on par with what local shops buy parts for… That gives consumers a skeptical view of who is making the money? The local shop must wonder how they do it too. So maybe the question should be, why are the Domestic retailers being attacked by the parts makers and distribution framework?

    1. Flubadub

      An attack on a fixed location shop? No. The shop could easily have a van and do mobile service. With a better stock of parts, they might be better at it.
      Where is the complaint about bike-share ruining the LBS? And as someone not in the industry I will eschew their jargon.

      Is agile competition attack, or just businesses competing? A challenge, but not an attack. And now I have justification to never buy a new bicycle, too. Awesome! Just service and parts/accessories. I’d not open a bike shop, I know too many mechanics and their lifestyles afforded by low wages for skilled labor. I’m lucky to live in a metropolitan area with several good shops.

  10. barconlubsterrsexxy

    This is the most retarded piece of shit logic I’ve ever heard. So because the owner of the shop isn’t driving a gold plated train powered by shovel fulls of puppies they must be acting fairly? There are different scales of ripping people off, and just because they’re not getting rich off it doesn’t make it OK. Maybe head back to grade school and learn some critical thinking skills…

    1. Duffy

      I wonder if you might elaborate your point? Perhaps give us all an example of your LBS ripping you off such that we might better understand your point of view. As it is, you suggest there are different scales of ripping people off and I wonder what scale of such off-rippery you’ve encountered.

    2. Author
      Rick Vosper

      I must say I rather like the phrase, “driving a gold plated train powered by shovel fulls of puppies.” But on the ripoff charge I think my logic is sound.

      In the context of retail sales, “to rip off” does not mean “to charge higher prices than the bargain-basement leader,” it means “to make excessive profits from.” Since bike shops are not making excessive (or even, relative to most consumer products businesses, reasonable) profits, by definition they cannot be ripping anyone off.

      Always glad to clarify my critical thinking process.

  11. SteveP

    I await your next instalment – retailers are between a rock and a hard place in the US as the Big Guys (manufacturers and distributors – often the same people) can dictate terms and will cut off anyone who doesn’t follow their dictates. It used to be a free market in the USA, but no longer. Look at how some control the entire distribution chain. And while some in retail think “no online sales” is a good thing, it’s probably illegal and merely prolongs the inevitable. I suspect the industry will have to reinvent itself at some point

  12. Aaron Duffin

    This is great to get our side out there, we all don’t go into business to rip people off. We go into business for the love of the bicycle business. It’s not a get rich quick scheme or the best way to invest your millions of dollars.
    Personally the greatest payoff is seeing the new customer come back and tell me all about their weekend on their new bike. It’s those smiles and stories that keep the lights on!

  13. Odran

    “Let me repeat that: your typical bike shop doesn’t make a nickel off bikes.” LMAO. This was where I stopped reading.

    1. Author
      Rick Vosper

      Odran, I’m a little curious about this point. Do you think I’m lying about what the CODBS says about profits on bikes, or the CODBS is deliberately misleading the NBDA members, or the NBDA itself is part of a huge cover-up involving the International Bike Cabal, or what, exactly?

      As I said repeatedly, we’re talking about net profit. If you buy something for a dollar and sell it for two dollars but it costs you a dollar in the process, your net profit is still zero.

      Relative to bike sales, factored into that net profit are all the expenses directly related to selling those bikes. These include assembly, warehousing, six months worth of bikes at a time, staff, free service and tune-ups, all those sorts of things. And historically, there’s never been more than a percent or two of profit, either plus or minus, over the entire time the NBDA has been keeping stats.

  14. AC

    I love local bike shops. Unfortunately my sense of value doesn’t let me shop there more. My question: given that 100% of the profits appear to come from PARCS and service, why isn’t more effort put into this? Why the disdain in so many shops for riding a brand they don’t sell given they don’t make money on the bike sale anyway?

    For example, a part that I can buy online for less is worth more to me if you have it in stock. Brake pads, chains, etc., the stuff that can mean riding or not riding this weekend. If you have it when I need it, I will pay what you ask. But if you don’t have it, I can order it and receive it as fast or faster than you. You’ve basically lost the sale when you begin to utter ‘We can order that for you…’

    Service: I would pay for expert service. All too often, it’s a kid with Jack of all trade knowledge. I’ll work on my di2, shock linkages, etc. myself instead. I have ONE shop, 45 minutes a way, where I will make the drive solely because of the expert mechanics. This is by far the exception however.

    Bottom line is it sounds like this study provides useful data that isn’t being used. Customers vote every day with their wallets. Blaming them isn’t the answer. Bike shops need to evolve.

    1. SJC

      Profits: PARCS and service don’t draw in customers off the street – pretty bikes in the windows do that. Bike sales also generate a ton of service work; people are more likely to go back to the shop they bought from when their bike needs service, especially if you’ve treated them well There are some shops that have garnered a strong enough reputation for expert service that they can do most of their business that way, but expert mechanics are few and far between, and most shops don’t draw enough service business alone to justify eliminating bike sales. I work at a pretty large shop with a good service department that moves work orders very fast (typically 1-2 day turnaround, even during the busy season), and still at least half of the bikes we service were sold in the shop. As for shops being brand-snobbish, I can’t say I’ve ever seen that. Any shop that refuses to work on brands they don’t sell isn’t going to last very long. I can understand turning down warranty-related work since they may not have any access to the regional brand rep, but general service should not be an issue. Unless you’re talking about people saying “I don’t like [X bike] – I think [Y bike that we sell] is way better,” in which case it’s likely that they just don’t have much experience riding on other brands (since they can get the stuff they sell at a discount, and are therefore more likely to ride it).

      Keeping stuff in stock: There are approximately a bajillion different bike standards out there right now. Trying to keep a little of everything in stock would quickly turn into a nightmare of organization. And having products sit in inventory for years on end is bad business, especially with bikes since standards get updated and components become obsolete relatively quickly. There’s a shop in town that’s still got 10+ year old parts sitting in the shop, brand new, at full retail. They’re nice parts, but no one is ever going to buy them. Shops have to cater to the majority of their clientele – if 90% of their business comes from college students fixing up old beaters to make them rideable again, they’re going to mainly stock cheap, low-end parts. It sucks for the 10% who are looking for nicer stuff, but that’s life.

      Service: Expert bike mechanics are hard to come by. It’s expensive to get the certifications, especially on a mechanic’s salary, so unless the shop helps you out with it, it’s unlikely you ever get them. And most people don’t stick with it as a career because, as I already said, the pay is pretty horrible. Most shops will have one or two highly skilled mechanics, but the vast majority will be, as you put it, kids with jack-of-all-trades knowledge.

    2. Jeff

      All to often we get bikes that were purchased online still in the box it came in and a customer that looks confused when I tell them how much it will cost to assemble. When you buy online it is not always a bargain. What you do not get is expert service, a proper fit, or the chance to test ride the bike. Never ever ever buy a bike until you ride it. As for service parts your local bike shop makes very little on the parts. What you get is a knowledgeable staff with combined years of experience that you will not get from the Internet. Oh and that wet behind the ears kid in a few years he will be the guy you go to because he learned from other experienced mechanics. That is if your local bike shop survives long enough. So do everyone a favor ditch the Internet and start walking the hallowed aisles of your local bike shop before there are no more.

    3. Paul

      Some are evolving by selling beer, opening an in-store café with good coffee and hosting events.

    4. Alex

      Your “sense of value”… Ha!

      Here’s the bottom line… Your once-a-year purchase of brake pads and cable tips aren’t enough to keep a well-paid professional mechanic at your LBS. It just doesn’t generate enough revenue.

      Your “sense of value” is what keeps you purchasing larger, more expensive items from European mail order sites. And I get it, I really do. They are cheaper online to you than they are to your LBS from the manufacturer. It’s a messed up business model. However, what you can do to keep a pro wrench working at your LBS is to man-up and buy all your stuff there. It may cost you a little more, buy fairly soon you’ll find a renewed “sense of value” when you see extras that come with being a shop regular. Perhaps it’ll be a free used tire to get you to finish off the season. Or a free drive-train clean with a simple gear adjustment. Certainly it’ll mean that your stuff gets taken care of. But you have to take the plunge and spend a little more upfront. I know it hurts. The economy sucks, you’re working too hard, it’s money to feed the family, etc, etc. But that’s the game. Fwiw, you’re also helping your local economy as your money stays local. Suck it up and stop buying mail order. Stop looking for reasons to justify your desire to save a few bucks and start thinking about the ramifications of your spending habits.

    5. ibc

      “But you have to take the plunge and spend a little more upfront.”

      I think one of the biggest problems that LBS’ have is that their sense of the cultivation of loyalty runs in the wrong direction. As a retailer, you earn your customers through your actions. I’ve dealt with too many retailers who think customers need to prove themselves in order to win over the retailer. I understand the sentiment, but it’s a recipe for going out of business.

  15. Rob

    I’ll be interested to read the next instalment. The matter of “how it is that online retailers can sell stuff at such low prices” has received little scrutiny from specialty (there goes that word again) cycling media that are, at least in my estimation, afraid to write anything that could offend their advertisers.

  16. Jerry Nepon-Sixt

    I shop at my local bike shops as much as possible. I shop online for the convenience more than the price. I do all my own maintenance and repairs, and mainly need to buy consumables (tires, tubes, brake pads, lubes, etc) and replacement parts. Not one of the bike shops within 20 miles of me carries even a large percentage of what I need, or maybe more truthfully, what I prefer in those categories. I can go one place to get Phil Woods grease. Another place to get Conti tires for my road bike. No one carries the Schwalbes I prefer on my touring and hybrid bikes. I can get a replacement chain almost anywhere, but rarely can I find the cassette I need. If I’m outfitting a bike for touring the local shops carry nothing in the least suitable. And forget it if I need something for a bike that isn’t using close to the latest and “greatest” groupset – you just can’t get the parts.

    So I can drive all over town, or browse 5 or 6 different web sites and MAYBE be able to find some of what I need. Or I can go online and find it all at a good price, often with free shipping, and have it delivered to my door. If my bike shop has it and I need it while I’m there, I buy it. Otherwise it’s just too frustrating. I understand their position – they can’t carry everything. But for someone with many bikes and no desire to drive around to get parts for my bike their inventory doesn’t match my needs.

  17. DaSy

    As is fairly well known within the bike industry, the best way to come out with a million dollars running a bike shop is to start off with two million.

    I ran a bike shop for several years, and the article is a very fair representation of that experience. In the end it was unsustainable, and all I came away with was the full workshop of tools. I set up as a mechanic, working from my home workshop, and made more money (which was still a pittance), and often bought parts from online retailers as it was cheaper than buying through distribution with my trade accounts.

    I actually bought a pair of Dura Ace wheels for myself, whilst working in the shop, from an online retailer as my trade price through the distributor was £100 more even with the added staff purchase reduction!

    All too often bike shops are used for people to come and see the bike in the flesh, get some expert advice on sizing and suitability etc, only to see that time investment disappear out of the door to go and purchase it online for a few pounds cheaper.

    I can see it from both sides, but I think that eventually the independent small bike shop will disappear, in favour of these homogenised brand specific concept stores. The thing that most of my old customers missed once the shop closed, beside a decent mechanic and wheelbuilder, was the meeting place, and somewhere to just chat about bikes with like minded people, maybe organise an impromtu ride or a group holiday etc.

    The world of retailing has changed, and the old bike shop is coming from a time-gone-by. The ones that seem to survive are the ones that embrace online sales, low prices and a fairly hard sales pitch. The ones that disappear are the ones run by bike lovers, with lots of knowledge to pass on and lots of passion, but you have to sell to stay alive. I miss the days of just hanging around in my favourite bike shop talking, drinking coffee, and sharing a box of jaffa cakes.

    1. Scott

      Couldn’t agree more. I, too, ran a shop. Had my business for 12 years before eventually selling it to a starry-eyed investor who had grand plans to open up 100’s of shops all over the country. He’s getting a hard lesson in the bike industry right now.

      Everything you said is spot on. I used to buy parts online and pay “retail” *cough, cough* since it was much cheaper than my vendors. I think you are dead on about the independent bike retailer disappearing. There will need to be a total reinvention of the industry or it is doomed in my opinion. Not likely to happen.

      The big eye opener to me was when I announced that the shop had been sold, all of my regulars asked what I was going to do in retirement. Many of them honestly thought I’d made my millions and was cashing in for the easy life. Hell, the main reason I sold the shop was so that I one day could actually retire! I’m glad I’m out and done with that industry and feel for anyone left in it. My advice is to get out if you can. I was lucky and found a buyer.

    2. Retail Death

      Dead on, DaSy. I see a vertical future for the bike biz. Look at PON with Cervelo, Focus, Santa Cruz, etc and Dorel with Cannondale, Sugoi etc, not to mention Trek and the Big S. Manufacturers and distributors will be the retailers of the future.

  18. Jim

    I am all for supporting local small businesses, but I do have to say that nearly every time I go to the shops I leave disappointed. 2 recent cases (within the last 4 weeks):

    – Went to local road bike boutique shop for new bar tape and maybe bottle cages. Snobby vibe and when I asked a few questions I think they were just annoyed I wasn’t ordering a new custom frame or something.
    – Took my mountain bike to a different shop for some service I didn’t want to do, so had them just do a full tune-up. Ended up taking 2 weeks, bike wasn’t ready when I was told to pick it up, so service was rushed and a bunch of items missed. Was easier just to redo the issues myself instead of taking it back.

    I am more than willing to pay more money for the service and convenience of the LBS. But if they are not going to provide that then It makes more sense for me to spend that money on more/better tools (BB/headset tools, derailleur hangar tool, torque wrenches, etc) and do all of the work myself. Bikes aren’t that complicated and at least I would have the bike ready when I needed it and I know that it’s done right. Unfortunately these are not the only poor experiences I have had with a multitude of shops over the years.

  19. Dan Murphy

    LBS discussions always get a good response.

    My LBS is a relic. It’s an old barn >100 years old, barely standing, and has no bathroom. They used to sell nice bikes (Merlin, Serotta, Bridgestone, etc.), but now just sell Trek, etc. Except for the yearly BMX bike I buy for an unknown child at Christmas, I haven’t bought a bike from there since the early 90’s and he has nothing I want now. The owner is a great guy and a good mechanic (he rebuilds Campy shifters).

    Like others, I do most of the work myself and order online. The LBS has very few parts in stock, so I rarely bother unless I’m stuck for a shift cable or something like that. He didn’t have Look Keo cleats last week. But when I need him, he’s there and has very fair – almost embarrassingly low – labor charges. The chain store down the street would charge 2-3 times more and look at you cross-eyed when you mention Campy.

    So, even though I spend very little money there, I do what I can. I steer anybody I talk to to go there and he’s gotten a couple more regulars that way. A few years ago, I did a total refit on my ’97 Merlin and had him build it up instead of doing it myself.

    Man, I don’t know how these guys survive. The local chain store gets a lot of traffic and sells a lot of stuff, but like the author mentioned, nobody at the shop is driving a Benz. My LBS hangs on somehow, I really don’t know how. I give credit to anybody that even goes into the store, because compared to the glitzy chain store, it’s kinda pathetic looking – but that’s the way I like it.

    Even though a number of people here do their own work, an overwhelming majority of people need the LBS for repairs. There’s a lot of guys I know who ride regularly that want absolutely nothing to do with repairing their own bike. If they want a new bike, they just go down to the bike shop and see what they have. These guys know nothing about Kirk, Sachs, Crumpton, IF, Firefly, Eriksen, etc. – they just want a bike. And I actually understand that.

    But I sure wouldn’t want to own a store.

  20. Chris McGrath

    I read this article with great interest and while I agree with a lot of what was typed, this installment offers no solutions. Why does the LBS continue to crumble: because the manufacturers want it to. I’m a Campagnolo-phile. I sold a lot of it but can somebody tell me what value Campagnolo NA adds to the distribution channel? Shimano is no different. There is no logical reason why it is possible for US consumers to buy parts from Europe for less than a LBS pays through a North American distributor. I sent letters to Hawley USA and QBP regarding this issue with no effect. Those channels have the buying power to challenge the manufacturers but they choose not to. People would shop at LBS if prices were competitive; they aren’t. Likewise, “manufacturers” screw LBS channels trough both their product cycles and by dumping inventory at the end of the year. I had issues with Parlee doing this. Their response was “everybody had the opportunity to buy old inventory”. True but I wasn’t a tax free internet behemoth with a wider distribution model. The LBS model is broken; it has been for a long time. Shops grew during the MTB boom and continued on with the marketing myth of the yellow jersey. The internet is a more efficient distribution model and few manufacturers are interested in supporting small spread out specialty shops. I’ll give props to Specialized because they do protect their brand but you’ve got to sell your soul an almost become a concept store unless you’re an established juggernaut. The days of the specialty store are numbered; who thinks Canyon has a poor business model?

  21. Jeff Archer

    Another nail in the LBS coffin will be all the new “standards”. In the not too distant past, we could stock a handful or kids size tires, road tires and 26″ wheel mountain bike tires. Maybe a couple dozen SKUs? Now, we have 26″ 27.5″, 29″, fat bike, 27.5+, 29+ and all from multiple vendors plus the tubes to go with all of them (Schraeder and Presta valves). Couple hundred SKUs now? OK, now lets talk bottom brackets, 68, 73, PF30, 90, 92 plus all those brand specific “standards”. Headsets, don’t even get started. Cane Creek has a whole website dedicated to deciphering those. Plus, you’ll need to figure out what fork is compatible. Hubs, 100, QR20, QR15, Boost 110, 142×12, Boost 148, 135 and 18 different fat bike hub “standards” (front and rear). Wheels manufacturing has a multi-page fold out poster with all manner of derailleur hangers. I remember when stocking 8 different diameter seat post seemed excessive. All of this costs money to stock and in three years when nobody uses QR20 anymore, that inventory is basically value-less.

    I’ve been working on and selling bikes for 35ish years and wouldn’t trade it for anything. There are always going to challenges and we just need to figure out how to do it and eek out a living (I must be doing it right since my car is only 8 years old!). At one time, the Bike Nashbar catalog was going to kill the industry. We survived, but now it is Amazon and Euro web sites.

    We have some of the greatest customers out there and we concentrate on the ones who “get it”. We support a huge array advocacy organizations, spent 12+ years building 30.5 miles of local trails, have 3 weekly shop rides and are the ones who stay late on Friday night (getting home late to the family dinner) replacing a broken spoke so you don’t miss the Saturday morning ride. Amazon doesn’t. Like Rick mentioned, we aren’t getting monetarily rich doing this but it is great to go home after getting someone their first new bike in 25 years so they can burn off those excess 35 pounds……..happened again about 4 hours ago.

    So, find a local shop that supports cycling and support them. Not all shops are great but I can’t imagine there are too many places in the US that doesn’t have a good one within 30 minutes. I wish I was a more eloquent writer and had a couple of hours to spend on this reply but it is time to go to bed so I can get up and do it all again tomorrow……. which beats the hell out of punching a time clock in a cube farm!

    1. Author
      Rick Vosper

      Hey Jeff, good to hear from you. For those of you who don’t know him, Jeff is one of the world’s leading OldSchoolCyclists with respect to mountain bikes.

    2. Dan

      All of changing “standards” can be annoying, but I find my store benefits from them. Very few customers want to take the time to learn all the sizes before they can order the one they need online, so they just come in and let us take care of it.
      And the frequency with which people come in to have parts they bought online installed, only to find out they bought the wrong thing, is pretty high. Typically at that point they just want it done, and are happy to full price to get the correct part from us that day. And no, sorry, I don’t want to trade you for the part you brought in.
      It can be annoying but if we stay educated on all the different standards it can play to our advantage.
      All that being said, I’m having a hard time choking down these “boost” hubs right now.
      And I agree, it’s an exhausting job but I wouldn’t trade it. Happily ignoring my engineering degree while I own a bike shop and live on pennies.

  22. duder

    Just because you’re not good enough at the business to make a decent profit doesn’t mean you’re not ripping me off. I’m not going to support you just because you’re local. Get better or find a different business. If you want to play with the big boys, then you need to get some investment together and run it like a company with a good reason I should be your customer.

    Almost all of the good online shops started as local shops and invested in marketing, tech, customer service, inventory, and supply chain smarter/better than their competition. All of the LBS I do frequent don’t whine about online shops, they bucked up and found the investment and supply chains required to maintain good inventory at good prices.

    Customer service at the local and online shops I use is exceptional, and their sales people actually know shit like “will this obscure part fit my obscure bike”. Yeah prices are great, but they also stock more stuff, have faster shipping, better hours, lenient return policies, and great warranty handling.

    If you want to be successful you have to offer me more value than your competition. Start by having a large demo fleet and a good selection of in-stock bikes. Trying before buying is a big advantage. This is part of the reason bike shops are “dropping like flies”, because fewer, bigger shops tend to be better for riders, which is A OK with me. The local shops I frequent have large demo fleets (or can get one-off demo bikes) and large inventory.

    Riders are picky. Offer a lenient return policy, where you can ride something, decide you don’t like it for whatever reason, and return it with a “satisfaction guarantee”. That makes me a very happy customer, and yes your competition is already doing it.

    If you have to order me a part, get it to me fast, none of this “we’ll wait till next Tuesday’s QBP order to save $10 on shipping” crap. Online shops have overnighted me parts for no extra fee on several occasions so I could get the part in time for a race or trip, when LBSs were either closed or just couldn’t get it in time.

    Community does matter. If you support racing or trail building, I will probably shop at your store more often.

    If you don’t have the space or money to be big, then you have to specialize in something so you can maintain a good inventory. One of the smaller local shops I frequent only sells mtb. They don’t waste floor space on lycra and handlebar tape, so I can go in and try knee pads and full-face helmets on, which is a huge advantage over online.

    I think one cool idea would be to have the bike equivalent to an “auto mall”, where there are several dealers next to each other, so

    1. I can check out a bunch of different brands at once
    2. If shop A doesn’t have a part, hopefully shop B next door does

    Currently if I need: new tires, cassette, a BB, and a pair of shorts, I’ll probably just order it online, because I’ll inevitably have to visit 3 different shops all over town to find the stuff I want. Having several shops right next to each other would help the inventory problem immensely.

  23. Bikesy

    Food for thought. It’s something we always discussed when we were putting Bikesy together ( if the smaller shops can’t compete on margins against the online warehouses then what can they compete on?
    I love old school marketing ideas like flyering . Couple that with a good hidden coffee machine for regular customers and can you build a nice little following?
    Kevin Kelly’s 1000 true fans springs to mind . Not just good customers but real evangelists that will sing the praises of your shop all day long on your behalf. Regular emails to customers with exclusive use codes (hell you can even issue unique codes to each customer to track which ones get spread for you and used where), in store social nights with the local pro rider and group rides.
    Organise the kit for your local bike clubs (believe me its a pain in the a*se for their committee) and you become their default store when you combine it with a 10% off club exclusive.
    And it goes without saying – plenty of local press at every opportunity..
    All the things an online warehouse retailer can’t do as well as you to build a healthy following. How you translate that into sales of profitable kit then is down to you.

  24. EVO

    Perhaps I’m missing something… $50 billion since the turn of the century. Which century? If that means 15 years, than either that averages out to a phenomenal average retail price, or somewhere there are a LOT more bikes than in my neighborhood.
    $50 billion = $50,000M and 15 years = ~750 weeks.
    That means ~$65M/week in sales. At an arbitrary average of $2.5k/bike, that means 26,000 bikes traded every week. Or $50M/15 yrs/ $2.5k/bike = ~1.3 million bikes per year.
    Either I got something wrong, or someone is bad with math, which might explain why they’re not making any money.

  25. Brian

    Great article.. Can’t wait for the next installment…

    Retail is an ever changing business. Many companies are pressuring the retailers to change how they do business.. Their are some really good ideas out there.. However, the one thing I am noticing is that with all the suggestions the companies give us at the shop level, they seem to act in a way counter productive to that. Here we are in what should be the peak selling season, and all we see online is “New 2016 models from (Fill in the blank)” We are told to hold our margins, yet our product just got devalued. I have spent half my life in the bike biz, and it seems to be in the internet era, it’s a race to be the first guy to drop the new products…

    Shops can still survive and thrive. But, it will take more than the traditional bikes, parts, and service approach. Emphasize service and offer things the other guys can’t or don’t offer. It’s easy to get turned off by a few people that hit you with “I can get it online cheaper…”, but remember, that doesn’t represent everybody… Or even the majority of people. Online sales still only make up 2% of retail sales here in the US..

  26. Jeff Koenig

    Enjoyed your post, Rick – good mix of facts told in a relevant way.

    Anything posted online that could be interpreted as “you are not paying a fair price for your stuff”, always invites the reactions of barconlubsterrsexxy, duder and odran. Why needs to be understood. Entitlement marketing is dead. The appeal of shop & buy local campaigns by chambers of commerce and similarly aligned interests is gone.

    There are no hard boundaries on generational attitudes, but that bell curve of consumers with Millennials and younger Gen-X at the center do not care about merchant profitability. It isn’t exactly malicious, they just don’t understand economics. “Entitled” is not a stereotype, it’s the result of lessons they were never taught. Folks like the commenters I listed are not thoughtful, they are reactionary. The world, at least of retail, belongs to them (and why shouldn’t it in their minds?)

    They demand their discounts, and when the discounted price is the norm they demand more discounts. They don’t feel special enough without them. Yet, they will happily demand raises of their employers for being no more than five minutes late most of the time and getting all their work done (barely). If they ever had to compete for their jobs with foreign nationals the way merchants do for customers, their tune might change. Or maybe not. They are also likely to argue against international trade deals that outsource domestic jobs to cheaper foreign labor markets. Ironic isn’t it? For one’s job, he would advocate for a sort of national price-fixing on labor and keeping those cheaper foreign labor markets out. But when it comes to spending their money and not just earning it, then let the Chinese factories float cheap goods our way, forcing domestic manufacturing jobs to disappear.

    Rick, younger consumers are a conflicted population. They don’t understand, they react. They cannot be reasoned with. So what do we do? The solutions must be solved within the industry between suppliers and retailers. It’s the only way. I was just reminded of two great quotes, from Henry Ford who said, ‘If I had asked people what they wanted, they would have said faster horses’ to Steve Jobs who said ‘people don’t know what they want until you show it to them.’

    If quality bike stuff were not online, the aforementioned three commenters would not have their expectations set so low and the LBS would no longer be such a “rip-off”. Indeed, the LBS would likely be more profitable and ones such as these might be willing to work with their loved products in a job that rewards them for their work. Funny how economics works, eh?

    I love barconlubsterrsexxy’s appeal that you go get more education. Only someone utterly bereft of an education in economics would make such a statement, but then he’s posting anonymously, another phenomenon of the internet age that removes any filter on civility.

  27. Chris

    I used to shop online….

    I built bikes that way, thought I was saving money. Always had a plan and a budget, never met either. Same with parts, figured as long as I had saved money I was winning. I would have extra chains, shifters, rotors, pads, cassettes, derailleurs, tires and tubes. There were always things that came up I couldn’t plan for. Brand specific things, none of my local guys sold those brands so I would have to call out of town, wait for them to come in, then drive all the way to pick them up. I was young, it made sense to me then, not anymore.

    Now I happily pay more, I understand that shops have salarys, overhead, specialty tools, and experience tons of experience. I know that when you get a new bike theres no point in having extra 9spd parts when the new rig is 10. Being able to run in the door, grab a new set of gloves and say “throw this on my next bill” is awesome. The best thing to have as an avid cyclist is a relationship with a good local shop. The time and headaches you save are huge, also avoiding the shame of bringing in your bike cause you failed to figure out how to put the online pieces together is priceless. They will help you in a bind, toss you the odd deal and be there whenever you need a hand. Online shops offer none of that just a price.

    Bike shops are just like any other small business, some will survive some won’t. The better ones have taken classes, toured other shops, listened to customers and changed with the trends. They’ll always be around because we need them, some people just haven’t figured it out yet.

  28. Pingback: Why It’s (So Much) Cheaper Online | RKP

  29. patrick

    I worked in several shops for 12 + years starting in the early 80’s and it was the same battle then. Low margins on bikes were the norm back then. I used to think it was the perception that because bikes are such a large ticket item, customers percieved us as car salesmen and wanted to negotiate on the price. During this time mail order shops were coming up and along with them was the customer who would spend 30 minutes of my time asking about parts, never buying anything.
    After a local ride, back then, in a conversation with a friend who was a dealer rep and a customer who recently purchased a bike at another shop asked my rep friend ” so do you think the shop made any money off me?” My friend’s reply: I sure as hell hope so!” At one shop we invested heavily in clothing and accessories and only carried couple bike brands. We were able to do well.

    In the end I worked at 5 different shop during that time as a machanic. All of the owners were constantly stressed from scrambling to make rent and payroll.

  30. Pingback: A Shady Day and Great Riding!

  31. Earle Young

    I have never been a shop owner, but worked in shops long enough to become an expert mechanic. I have seen first-hand how long and hard shop owners work. I worked for some legends in the business — Peter Rich, Ben and Richard Olken, Clay Grubic, Roger Charlie. They all worked incredibly hard, were devoted supporters of cycling, and because they were considered very successful in bicycle retail, managed to support a middle class lifestyle. Really smart business guys, they could have made many multiples of their income in some other business. They all treat their employees well, and encourage mechanics to become expert. When I left the bicycle business, I had more than a decade of experience working on high-end bicycles (and every other kind), and was paid at the high end of the scale. I finished my bachelor’s degree in journalism, got an entry-level job at a newspaper (a business with extraordinarily low pay scales), and was rewarded with a 20 percent raise over the bicycle business. Five years later, I was making 40 percent more than in my best year in bicycles. The thought that the LBS is trying to rip off customers is ridiculous.

  32. Pete

    I feel ripped off when an owner makes promises he won’t keep. Such as yes I can do that (match) the Campy 11 speed gruppo build price you have parted out on Colo Cyclery. Then the price charged comes out 900 dollars more because all of a sudden he wants to use the QBP MSRP. And no that doesn’t include the 200$ build fee. When an owner has a custom imported Italian steel frame and fork for over 15 days now and keeps making excuses why he has missed his targeted completion date by 5 days running now , I feel ripped off. When the excuse is it’s nice out everyone wants work done, I am the only one in the shop…makes me feel ripped off. Additionally it is apparent this guy has never built a power tap rear wheel. Sorry not particularly a happy camper when I spent 900$ more than expected AND the build is taking way too long.

  33. Jcr3w

    I read your article trying to get a handle on why parts are way more expensive at the local shop than I can find on the internet, and not by scouring, these parts are the first to show up on a google search. Are shops relegated to buying strictly from brand dealers? I feel like every other mechanical industry buys parts and puts a mark up of 10-15% on them and then labor cost, which is about the same as an auto mech., 60 bucks an hour, though the auto guy gets more hours per service. I would be willing to get on that train, but when the group set I would like to purchase is literally double the cost its hard to choke that down.

    1. Author
      Rick Vosper

      Wow. There’s so many good points here I hardly know where to start. Here’s some brief responses:

      1. The mail-order guys show up at the top of your Google search for two reasons. First, because they pay for those big results at the top (they actually bid for positions, so each time you click it costs them a buck and a quarter or something). The second is also in two parts: for the main page listings, they get higher rankings because their so big and more people go to their sites, and because they have fulltime employees doing SEO for them. building product tags into their metadata and alt tags into images and all that good stuff. Bike shops don’t have the people, time or training to compete on either basis.

      2. Yes, shops must buy only from authorized Shimano distributors. Here in the states there are five, I believe (haven’t checked recently). Dealers tell me those prices are all the same. Whether this comes from price fixing from Shimano or among the distributors or both or just by virtue of an amazing coincidence, I don’t know.

      3. Correct. Bike shops generally take a modest markup on parts for installation and recoup those lost profits on service. Top mechs at good bike shops are now close to parity with auto guys on a per-hour basis, and many bike shops have gone to flat-rate installations and repairs.

      4. You’re absolutely right, literally double the cost is hard to choke down, and we can’t blame consumers from preferring to buy stuff at half price. But when bike shops are forced to buy at higher prices than their online competitors are selling for, there’s not a lot they can do. As I mention, components and other non-bike items are where bike shops have traditionally made most of their profit. But now that primary revenue source has been gutted it’s no wonder bike shops are going under in record numbers.

      One US retailer told me thirty bike shops went out of business in the thirty days between mid-February and mid-March of this year. If you check the chart in the article, there’s about 3600 bike shops less (probably less because that chart only goes through 2014), if shops continues going out of business at this rate (they probably won’t, this is just to give you a sense of scale) there would be zero bike shops left in ten years.

      Hope this helps.

  34. James

    This is a local ad for a local bike shop that pushes high end bikes..

    “..Looking for part-time (bike builder) and full time (sales/mechanic). Part time does not require experience just a good attitude and the will to learn.”

    Bike builder requires no experience? The bonehead they hire will get to learn assembling your $5000 bicycle.

    1. Stephen Barner

      An old thread, to be sure, but that last post deserves a response. Salaries for help at shops are forced low by what customers are willing to pay. To stay in business, a shop owner needs to keep his or her eye out for that young person who has mechanical aptitude and who will quickly ramp up to be a competent mechanic. OJT is the norm in the bike biz. There are no widely distributed bike mechanic training programs, no courses as your local vocational school, no accessible way for young people to learn the trade except through OJT.
      That new hire isn’t going to be working on $5,000 bikes. He’s going to be doing repetitive tasks on entry-level bikes that are carefully checked until he has the knowledge and skill to work up the chain. He may get some simple repairs, but these will be mundane things like flats. Bigger repairs will begin with those bikes that are already lost causes from a profit perspective. The low income person who just wants to get the kid’s Huffy running right.
      I’m betting that the vast majority of people who were ever hired by a bike shop for non-sales support started out just this way. It was certainly my perspective from the 15 years I was in the business. It was a good three years before I was even allowed to touch a Campy part, and that was only after I bought my own Paramount. There are all kinds of shops out there and all kinds of owners. If your local guy does indeed hire a newbie and then lets him near a $5k bike with a wrench, he deserves to fail.

  35. They Make Good Profit

    I’m sorry, I find this very hard to believe. I paid over $2500 for a bicycle, only to find years later that the most expensive parts of my bike, the rear/front derailleur and shifter kit were considered entry-level model brand worth $200, tires and rims about $300, what’s the other $2000 for? The crankshaft, $5 plastic pedals, and frame? Even if I am underestimating the cost by a couple hundred dollars, the bike store DEFINITELY made $1000 profit on the sale, and not the pennies claimed in this article.

    1. Author
      Rick Vosper

      Obviously I can’t speak to your particular case. But if you think dealers are regularly making $2000 in profit on a $2500 bike, obviously the thing to do would be to open your own bike shop. Then just let the cash roll in and retire in ten years. Buy a Mercedes, maybe even a yacht. You know, just like all the other bike shop owners do.

      But back to business.

      As far as the “pennies claimed in this article,” you have three options. First, the retailers who gave data for the Cost Of Doing Business Study are hiding their enormous profits from their own trade organization. Second, the NBDA cooked the books and published fake numbers in a study designed as a reference for its own members. Third, I have the “real” CODBS numbers in my hands and for some perplexing reason chose to lie about it…despite that fact that this would have been a much more spectacular story if I exposed the incredible profits bike shops make.

      Regarding the last one, I’ve never worked in the retail end of the business in my life so I have no dog in that fight. Other than that, I’ll let you make up your own mind as exactly how such a transparent fraud as this article came to be perpetrated on the unsuspecting public.

  36. John

    Their feminine bicycles remained very attractive in the women category. Moreover, the vintage Schwinn tandem bicycles got immense popularity as family cruisers, back in 1950’s. During that time, one in four bicycles that were sold in the US was made by Schwinn.

    1. Author
      Rick Vosper

      Thanks for the comment, John. I would mention that the one-in-four number is only true for bike shop sales and does not include the much larger total amount (about 60% market share) of mass-market bikes. I got this from a conversation with Richard Schwinn and confirmed it with Schwinn’s former EVP of Marketing. So using the two numbers we come up with a Schwinn market share of 1 in 10. This independently confirms Richard’s claim that Schwinn never had more than a 10% market share.

  37. Bob

    Not to be the lone ##shole, but I’ve heard this argument many times before, and while the data seems accurate, and the point is well made, I have to say… Sounds like a personal problem, bike shop owners. I don’t know what to tell you guys. I don’t know the intracacies of your industry. I do know that high-end bikes are a luxury item, and every single other purveyor of luxury items can set themselves up quite nicely, while still competing with online prices. Take high-end, designer-licensed modern furniture. That’s a luxury item, in many ways very similar to a high-end bicycle. It’s generally made in Italy or France, or the United States. It has a closely-guarded brand identity, and must share market space with a slew of bad copies. And like some may scoff at $10k for a bike, just as many scoff at $10k for a couch. Yet high-end furniture dealers aren’t being undercut by 40% online. They aren’t asking their customers to spend many thousands more just for the good karma of keeping a failing business’s doors open. Sure, you might find a slightly better deal online, but the market is largely stabilized… Most people will buy in person for the added value of customer service, rather than save 4-5% online. And that’s really what this comes down to. You can shout all day long that our local bike shop isn’t “ripping us off”. And you’re right. But they are asking us to spend oftentimes 50% more on the same part than some online shop. That is the reality, and that is not our fault, and it is not fair to ask a consumer to pay 50% over the street price of a part because you haven’t figured out how to stabilize your market. Again, I have no solutions for you, merely observations. Every other brick and mortar retailer of luxury goods makes fine money. I’m sorry you can’t. I will point out that many bike manufacturers will only make their products available to brick and mortar stores… Maybe squeeze them on that aspect. If they want to be saved from the horror of being a mail-order bike brand, then they will have to pay for that. I don’t know. Again, every other luxury item retailer has figured it out.

  38. Bradley Woodley

    I am a friend and customer to my local bike shop in Salem Oregon. My main problem is I wish I had more money to buy more and had more space in my home to put it. All my bikes are all aftermarket builds, my shop helps me select, but mostly my choice. He orders it in and I pay. In the end I get what I like, want, and enjoy. Great service, pleasant environment, and great owner. Need more like him in the world, but I like just working with him on my bikes. I will ride till I can’t anymore. I really pray and hope he doesn’t go out of business, it would break my heart. The owner is a good friend and great businessman. I also hope BMX never dies.

  39. Ellie Davis

    Thank you for pointing out that you should research a bike shop. My husband has a really nice bike and is needing a few repairs done on it. I’ll have to do some research and find the best bike shop in the area.

  40. Bryin

    There is a lack of real business knowledge here… bike shops are not, in most cases, a REAL business. In any case, retail is pretty bad business. Ask the people at SEARS. You have unlimited competition, constantly declining margins and no pricing power. Major retailers are shuttering stores all over and these are huge companies with many economic advantages. Why would you think the LBS should be any different?

    A real business operates in expectation of ECONOMIC profits NOT ACCOUNTING profits. Accounting profits are Revenue – expenses… Economic profits are Revenue – expenses – OPPORTUNITY COSTS. Opportunity costs are what is given up to start the business, such as interest on the money invested and the salary that could be earned if the owner were not running the business. Once opportunity costs are factored in there are hardly any shops earning a profit.

    Most bike shops have no hope of earning an economic profit. The owner has simply created a job for themselves that they prefer to doing something else. Which is fine if that is their preferrence but they need to have the right expectation.

    Even if a bike shop has the ability to make a return that satisifes the owner the problem is that the BUSINESS is not really worth anything. Simply put, there is nothing about most shops (there may a very rare exception) that can not be duplicated. I know a fellow that started a shop with $20k and a credit card… and he is making a living. There is no competitive advantage to be gained by a bike shop.

  41. Gummee!

    The people that read RKP aren’t your typical LBS customers. We’re ‘enthusiasts’ and have different definitions for ‘what is a good bike?’ or ‘going for a ride.’

    The best customer for the LBS are the mom-n-pop with kids. The ones that ride casually and haven’t a clue how to work on bikes.

  42. Shaylee Packer

    I didn’t realize that Bike shops owners work extended hours. Is this to ensure that their customers spend less time without their bikes? I will have to pay attention to the area the next time I take my bike in to get looked at. As you mentioned, there usually aren’t any high spending shops near by.

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