Saving money online costs more than you think! A reason to buy local.
At the shop we have a very simple pricing policy. We mark our prices at the suggested retail price the manufacturer gives us. Sometimes we are contractually bound to mark goods no lower than this price. We can sell them lower but we can't advertise lower prices (i.e. price tags or online sales). This is called MAP pricing. Where there is no MAP price point we simply mark the product at the applicable price given several factors including quality, demand, profit, cost to us, shipping charges etc etc.
If the products we carry can be found somewhere else for lower prices than we have them listed at we gladly meet these prices with proof that they are in fact cheaper somewhere else. Asking us to give a discount isn't begin cheap or dishonest at all. We appreciate your business more than you can imagine and we understand your need to save money and simply be a good consumer.
Recently a customer brought to my attention a product they were looking at online from a website that sells lots of goods online. I told them as I tell all customers looking for a price match that I will meet the price as long as it doesn't LOSE us money. After all, even if I only make $5 on a product we should have made $50 on its worth it to make $5 rather than nothing and lose the business. And I'm sure that customer appreciates our willingness to help them and they will in turn become repeat customers next time they need something - hopefully.
However this time was different. The product in question was marked well below cost. It was brand new and shipped to them for free. I simply told the customer I couldn't help them and they should buy online since this was an exceptionally good deal. Then I went online and did some searching of my own. Every product on this site was marked near or at cost. There was little margin to be made. Even worse the product has a very strict MAP policy from the manufacturer. Likewise the maker of the product recently eliminated distributors to try and eliminate MAP non-compliance. If caught selling below MAP your dealership is automatically pulled and you no longer deal with their product.
This works very very well... When enforced. I called said maker and informed them of the situation on the internet only to hear they knew of it and wished to do nothing to stop it. I was also told about ways the site gets around being punished for violating a signed contract to follow MAP. You see, they buy from distributors until all distributors are informed of the violation and close them down. Then they simply open new "businesses" locally with new resale licenses and Federal ID numbers so everybody is none-the-wiser. They then buy product as "Generic Shop" and sell it under their old name. Unless serial numbers are tracked there is no way to tell where they get the product from and thus its very hard to enforce MAP. Rule breakers are always 1 step ahead of rule enforcers. Never-the-less the maker wished to do nothing to even TRY to prevent them from undercutting the rest of us. You see they were just too big to enforce the rules against. It would be bad for business for the manufacturer.
The question you might have is why? Why sell product at a loss or close to a loss? The answer is simple. They really do want to put us out of business. They don't want the competition. Its bad for their profits and market share. They want more market share. Online retailers don't have local markets. They want the customers that the shops have. In trying to do so they offer "Loss Leaders" or product they know they will lose money on so they gain the customer. After you buy once you are very very likely to return and buy again. This time something that actually will make them money.
This brings me back to buying local. We follow the rules. We do whats best for us, the makers/distributors and most importantly the customer. After all it is you that makes us who we are. We suggest product we like and enjoy and believe in. Not product that will sell well and make us lots of money.
According the the National Bicycle Dealers Association the margins in shops are falling. This is bad news. This means dealers have to sell more product to make the same amount of money they did years prior. And thats hard when online retailers are working so hard to steal you away from us. I don't know about you, but the shop owners I knew my whole life never made loads of money. They were always modest and frugal. So I don't think they have a lot of margin left to lose. We are losing margin to online retailers with no shops to keep running and fewer employees to pay. Their overhead is lower and their market is larger. The more they grow the more we - the independent bike dealer - die. And they are succeeding in killing us.
However they don't have something we do. Faces. We have people willing to help you. Willing to let you know what works, whats new, show you how product works and whats new and cool. They don't have group rides and personal training advice. They don't have mechanics with years of grease built up under their finger nails. They don't have relationships with you and your riding family. They don't contribute jobs, volunteer hours, money and labor to your local community. They take your money happily and they keep it. And when we the IBD are gone, you won't have an industry left to support you. You won't have a local shop to help next time your bike breaks. You won't have someone to lean on when you need help or someone to lead rides when you want camaraderie. You won't have that place with the after ride beer and a place to hang out and share stories. You won't have a community. You'll have a computer.
Please think about that next time you buy those pedals or chain that saved you $50 online. It actually cost you much more than you think.