|   Why does mail order cost less than an LBS? | Nat
Oct 3, 2002 3:26 PM | | I was thinking about how if I buy shoes or clothing by mail order, it's priced at MSRP just as it is at the LSS (local shoe store) or LCS (local clothing store). However, bike stuff is generally less expensive by mail order than at the LBS. Why is that?
This isn't meant as a troll, but I'm trying to understand the economics involved. |
| I can think of 2 reasons | Toddy_Too_Hotty!
Oct 3, 2002 3:48 PM | | 1.) Mail order companies typically are much larger, and empty out their inventory many more times per year, allowing them to make less profit per total inventory, but recovering it in volume. Many companies like grocery chain stores and Walmart would only make about 3% profit if they sold everything in their store in one day. On that alone, they could not survive. BUt since they sell everything in their store many, many times per year, that 3% gets multiplied many, many times leading to a larger profit.
2.) to stay competitive....remember, you have to pay shipping and handling, so in order not to lose customers to lbs, they have to lower their prices. |
| re: Why does mail order cost less than an LBS? | Blacksheep
Oct 3, 2002 3:57 PM | | The LBS must charge more for their parts to cover some of their higher costs (rent in a good area, insurance, payroll). The LBS, generally being a smaller business, must also buy in smaller quantities from their suppliers and therefore cannot bargain as effectively for low prices. Don't get me wrong--mailorder is no paradise for a businessperson, but generally a warehouse costs less to rent, and there are no customers to slip on your salesfloor and sue you. The mailorder outfit also has the advantage of not having to hire bike experts and salespeople--any chump with opposable digits can pick parts out of bins. Also, in a statistically significant number of instances, people who receive the wrong part (or order it) won't ever get around to returning it. |
| Not always the case... | GirchyGirchy
Oct 3, 2002 3:58 PM | | Because LBSs oftentimes order large shipments from a company all at once, the shipping charges, spread out among the parts, is tiny. So if it's something I know I can't find cheaper, I have them order it for me, and save a few bucks. |
| re: Why does mail order cost less than an LBS? | none
Oct 3, 2002 4:10 PM | | It's simple, they buy 10,000 shimano derailleurs per year at a huge discount, rather than the typical LBS which orders 100.
With larger inventory, they can buy a shipping distribution center in the boonies, this means low rent costs. Once this has been set up, an online establishment means very, very low costs in the way of overhead.
Furthermore, since they ship so much stuff, massive discounts from UPS/Fedex are at their fingertips. The real shipping costs to them are very minimal, but they know the consumer doesn't realize it, so they go ahead and charge a lot of $$ for shipping, which brings them more profit! Customer seldom complains because they know they aren't wasting money paying for sales tax so it all works out. |
| I appreciate all the replies so far, but... | Nat
Oct 3, 2002 4:37 PM | | those same arguments can be applied to the shoe or clothing business, correct? I can get a pair of shoes from a small retailer for $90 or online for the same amount. Same goes for clothing. The clothing and shoe industries are subject to the same economic forces as the bike industry, are they not?
So why the difference? |
| Looking for shoes | Nat
Oct 3, 2002 4:39 PM | | I was checking out a pair of shoes at a local store. I looked online and saw the shoes for the same amount at the e-retailers. That's what got me thinking about this topic. |
| Looking for shoes | Blacksheep
Oct 3, 2002 5:03 PM | | The manufacturer of that shoe probably demands that all of its dealers sell the product at its set price. This prevents dealers from competing each other to death and guarantees that the shoes always have a certain high priced panache to them. This rarely happens in the bike industry--although coincidentally, Carnac shoes has a set-in-stone MSRP policy. |
| Perhaps that's what it is then? | Nat
Oct 3, 2002 5:36 PM | | The manufacturer prohibits price reduction. |
| I wouldn't want to buy anything fit-related online | GirchyGirchy
Oct 3, 2002 6:18 PM | | I ordered a new Specialized helmet one time, and it was too big, so I had to send it back. Went to the LBS, tried on some Treks and got a good fit, and the owner gave me $5 for the hell of it.
Unless I knew they would fit perfectly, I wouldn't order something from an online retailer that requires a good fit. I learned my lesson.
I also try to support my LBS, the owner's been great to me so far. I'll gladly pay a few bucks more to keep him in business.
Am I off topic? I can't decide, lol...sorry |
| I wouldn't want to buy anything fit-related online | mbiggy
Oct 3, 2002 7:09 PM | | why not? I do. Just go to the LBS, find what fits, and the specifics on the product, then go on line and save 50 bux |
| I wouldn't want to buy anything fit-related online | Blacksheep
Oct 3, 2002 7:24 PM | | mbiggy--
Not to be harsh, but that's a really lousy thing to do to your LBS. If everybody did that the LBS would be gone. Keep it up and you'll have no place to pull that stunt at--or get anything installed either. |
| It's really hit-and-miss, isn't it? | Nat
Oct 4, 2002 4:50 AM | | I buy a lot of fit-related stuff online because usually I know exactly what I want and then try to find who has it. I live in a city that's not quite big enough to find what you want in a local store, so I use the internet and UPS (really quite amazing actually, that one can find something from across the country, click a few buttons, and poof! it's at your doorstep in 2 days) to get what I want. If I only bought from local stores, I'd be buying my clothes from Wal-Mart and Sears. I do end up returning a lot, so I pay the $8 to send it back, no big deal.
Another thing you can do is buy three of the same item in different sizes close to what you think you need, knowing that you'll have to return two of them. You end up paying for return shipping but only pay once for forward shipping. |
| Your statistical sample of one shoe is a little limited. | Bianchi4Me
Oct 3, 2002 9:58 PM | | Looking through the Nashbar and Performance websites will give you dozens of shoes selling at 1/2 of MSRP or less. Same thing for clothing. Just take a stroll through their blow-out pricing section, and see if the prices are the same as what your LBS is charging. I think you just happened to pick a particular shoe that's not really representative of the category as a whole. You'd need to average the cost of all the comparable shoe models at each business to get a realistic conparison.
The other factor you need to keep in mind is that the owner of the LBS probably knows what things are selling for online too. So logically he is going to choose to stock brands that are NOT being blown out at huge discounts online. As previously discussed, some brands are better than others at enforcing minimum pricing agreements. That type of brand selection is easier to do with clothes than parts, since most people make clothing selections based on what's available on the rack. A lot of folks walk in the door knowing exactly what part they want, but they usually haven't already made up their mind what shirt or shoe they are going to buy.
Example: Nashbar was doing a combo deal where you got their SPD pedals for $9.99 if you bought a pair of shoes. Got a pair of closeout shoes for the Mrs.. They were being blown out for $15 because they were a small size. So we got the shoes, AND a pair of SPD pedals for $24.99. I haven't seen THAT kind of deal at any of the local bike shops around here. |
| hit and miss | witchdoctor
Oct 3, 2002 10:32 PM | | i try to support the local shops as best i can (as a former business owner i know the dent mailorder can take from them). if i need a specific item and its going to have to be ordered- i might as well order it myself. if the local shop has something in stock that i want, ill buy it. BUT- (this happened to me last week)- i ordered some stuff a few weeks ago and one of the items was an xtr front vbrake, $37. while i was picking up a few things at a LBS i said "hey throw me a rear xtr vbrake (just to match the front one i have), i wouldve paid $50-$60 to supposrt the guy but when he rang it up it was $128! needless to say it went back on the shelf and ill buy the match online for $37. ill help out but i wont pay quadruple. |
| Your statistical sample of one shoe is a little limited. | new
Oct 4, 2002 3:41 AM | | Agreed, I got a pair of shimano mtb shoes from pricepoint for 70% off retail. No idea if any shop really sells them at retail price since no lbs around me even carries cycling shoes (go figure). Oh, I'm sure they could "special order" it, but unless I've suffered brain damage from a fall, I'm not going to wait 2 weeks paying full price for something that I can order myself and get it delivered in a few days. |
| I wasn't talking about bike shoes actually. | Nat
Oct 4, 2002 4:36 AM | | This was a pair of hiking shoes I was referring to. I looked at more than one brand and cross-referenced their prices too, and they were the same price whether online or in a store. The clothing I was talking about was a pair of khakis and a button shirt. None of the items were sale-items or in the "blowout bin."
I was comparing and inquiring about bike industry practices versus non-bike industry practices. |
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