The Most Important Industry Move No One Wants To Talk About
It’s been just over sixty days since Trek’s bombshell announcement at the company’s August dealer event.
Prefaced by the phrase “we play offense!” Trek president and longtime Packers fan John Burke told retailers and media folk that his company would henceforth sell its bikes direct to consumers. Those bikes, he said, would be fully supported by the company’s network of nearly two thousand local retailers. And all of this would happen by the end of September.
From the cyclist’s viewpoint, Burke’s omnichannel announcement sounds like a pretty sweet deal. Any Trek model, in any size and color variation from the company’s vast product portfolio, available within a few days with all the convenience of online shopping and all the service and support of your hometown Trek dealer. Heck, for a modest upcharge, you could (usually) get the retailer to drive the fully built-up and tuned bike out to your home or office and deliver it, literally, into your waiting hands.
The consumer media reported the announcement with a certain cautious excitement and then quickly went dark. But, within the industry itself, Trek’s omnichannel initiative (more about that name later) has been the hottest topic of conversation since Lancegate.
Except that no one on the supplier side of the industry wants to talk about it.
A spokesperson from Specialized declined comment. A spokesperson from Giant declined comment. A spokesperson from Accell Group (Raleigh, Diamondback, Redline, and many others) declined comment. Executives from CSG (Cannondale, GT, Schwinn, and others) did not respond to repeated phone calls and emails.
For the record, guys, the usual response when your competition pulls the rug out from under you, and you’re sitting on your butt, wondering what the heck happened, should be, “It’s an interesting proposal, and we’re studying it carefully.” Then you wait and see.
If the initiative turns out to be a disaster, you can claim you were against it from the get-go. If it’s successful, you wait until the innovator has done the hard work of troubleshooting all the inevitable bugs and then launch your own version, hopefully with enough new wrinkles that you can claim yours is different and perhaps even better.
But that didn’t happen here. Response to Trek’s announcement is being flat-out stonewalled by every major player in the industry. And I do mean every.
A spokesperson from the NBDA, the industry’s retailer association, declined comment, even declining to comment on whether Trek’s direct-to-consumer internet sales initiative conflicts with the NBDA’s own Commoditization and eCommerce policy paper, which flatly condemns direct-to-consumer internet sales.
To be fair, there’s a strong case to be made that Trek’s program does not conflict with NBDA policy. Although the sales are made online, the bikes are assembled and fulfilled by authorized Trek dealers. And before you ask, yes, the NBDA declined to comment on that part, too.
As I said, no one in the industry wants to talk about the Trek Connect program. Except Trek, of course.
Trek brand communications manager Eric Bjorling is happy to oblige. Starting with the confusing terminology behind the program, which even most Trek reps seem not to understand.
“Trek Connect E-Commerce is the title of our overall retailer-centric e-commerce platform,” he says. “Omnichannel is a generic term meaning multiple channels through which a brand can interact with a consumer.” Omni-, in this case, meaning either directly from Trek or through Trek retailers.
The onsite consumer experience on the Trek site will be about the same as it is currently, Bjorling says. “We know from our research that consumers come to Trekbikes.com to research the bikes they’re interested in and learn about the brand. The link to order will be obvious without being obtrusive. (It) will be easy to find on the bike pages so as to continue the intuitive experience we’ve developed without being a barrier to what most people come to the site for.” So no hard sell, then.
Interestingly, given the sheer size and resources Trek brings to the initiative, the company’s sales expectations seem fairly modest. “The percentage of business done through the site will be small when compared to traditional retail,” Bjorling says, “but what it will do is offer the brand and our retailers’ locations to a customer base that wants to shop online and may look elsewhere if there are no options.”
In terms of the nitty-gritty, the site accepts Visa or MasterCard, and customers are charged a flat-rate sales tax in each of the 45 states that collect it. The buyer’s card is charged at time of shipment. Pretty standard stuff, although some retailers in higher sales-tax states may complain that the flat-tax policy makes the same bike (slightly) cheaper from Trek than from their own stores.
Regarding the go-live date originally promised by the end of September, Bjorling will only say “We’ll be going live very shortly.”
In fact, the whole Trek Connect initiative seems downright reasonable in big-picture format. Retailer comments have fallen into two camps, as they almost always do. There’s the sky-is-falling contingent (“Now is the time for all Trek dealers to drop them!!!!,” says one dealer in the Comments section of BR&IN. “walmart, here comes trek,” says another, who has apparently forgotten how to operate their caps key.)
But a much larger and more thoughtful element is asking tough questions about how the program will work at a very detailed level…which, as always, is where the devil hangs out. Not-very-sexy but critically important items like returns and allowances, sales tax variations, processing of credits back to retailers, maintaining continuity of customer service, that sort of thing. All important stuff, and all stuff that has to be addressed before a program of this magnitude can launch successfully.
Yet, despite an almost total lack of (reasonable) systemic objections, when Bicycle Retailer polled its readers last month (only a small segment of whom are actually retailers), the tally was almost exactly two to one against other brands enacting similar programs.
Which is just flat-out crazy. Because there’s an elephant in the room that everyone in the bike industry acknowledges, but no one wants talk about. Just like Trek’s direct-sales initiative itself.
We’ll talk more next week about the elephant, the room, and how it impacts the sales strategy of every brand in the bike industry. See you then.