Say it ain't so Shimano!

On Thu, 14 Aug 2003 17:49:52 GMT, Jim Edgar
wrote:

The LBS ends up looking like they are gouging when
all they are trying to do (in general) is make a decent margin.

This way, they keep companies like Excel, CC, REI and Super-Perform-Bar from
undercutting local dealers on price. I can't really view that as a bad
thing.

Forget the price. Most people need the local retailer to tell them
what they need to buy and then to install. The world is not
rec.bicycles.??? clever.

Frequently, the retailer doesn't have the item in stock. On small
parts, the retailer doesn't care to order immediately for selling the
part because of minimums that the distributor has. Online sources
have enough volume that they can stock stuff. I wonder if the
approved online retailers will have small parts?

On Thu, 14 Aug 2003 15:49:44 -0400, ajames54
may have said:

But the point is that a number of manufactures would / could over
order on their component groups and then sell the extras on to
different distribution points as a way of further reducing their
costs ...
Say .. you need 100 units @ unit price of $1
you buy 200 units at $1 (assuming no volume discount)
you sell 100 units at $1.10 to an unauthorized distributor.
you now keep 100 units with a cost of $0.90

The distributors wouldn't touch that deal. First, the goods are
unpackaged; the distrib would have to box and label them manually, and
the appearance would not match the genuine retail-channel Shimano
product that the stores *expect* to get for their money. Second, if
the Shimano rep came in and found an obvious pile of OEM-channel parts
on the shelf, how long do you think that the distributor would be
handling Shimano? No, there's no danger of this happening, in my
opinion.

The only real way to combat this is if the un authorized
distributor is some how unable to resell them. There will
obviously be some that is going into the retail channels but
those retailers that do buy this stuff will not be able to use
the online business under cut legit retailers.

The online business does not need retail packaging to display its
wares. It also does not need expensive brick-and-mortar in a high-tax
retail area. It also does not need to have as much staff for a given
level of sales. And an online merchant can limit the scope of his
line to a much more profitable and limited selection than any lbs
would credibly be able to operate with. Thus, the online merchant,
*even when buying from the distrib*, is still likely to be able to
undercut the lbs somewhat due to lower expense loads. When the online
merchant can tap into the OEM channel through a back-office deal, the
difference can indeed be too much for the lbs to compete with *on that
item*. But the lbs will still get the business for the stuff that the
online merchant simply does not have, and that's often quite a
lot...and the online merchant is still only going to reach a fraction
of the market anyway, since the majority of the US still does not shop
online.

I don't know if this was part of the thinking but currently many
"counterfeit" products are made in the same factories that make
the real thing... it is just that the parent company does not get
paid. If this is a problem for shimano then this action would
help combat it...

It is my understanding that Shimano does not contract its fabrication;
as of the only time I heard, they had adequate in-house production
capacity. (This information is quite old, and may no longer be
accurate.) The sort of counterfeiting you describe was a significant
problem for certain trademark owners in the past, but the bigger
threat today is the copycat maker who simply produces a near-duplicate
of the item, either with or without infringing the trademark in the
process. In fashionable wearables, this remains a common problem. I
do not think that the bike aftermarket is a big enough target to
attract this sort of activity; it's generally only seen with high
volume merchandise that has significant public recognition and demand.
The DuraCell battery is a frequent subject of such activities; I've
spotted counterfeit DuraCells in a number of places, including EBay,
over the past year. Somehow, I don't think that the number of
freewheels or cassettes that Shimano sells via legit aftermarket
channels would be enough to get the attention of a counterfeiter, even
if there was an importer salivating at the opportunity to bring them
in.

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Werehatrack at wrote on 8/14/03 12:20 PM:
Shimano is probably charging its distributors substantially more for
the cutthroat-priced items than the OEM-channel resellers are paying
to their sources, so the distributors are likely not the cause of the
price disparities. There are reasons for this; OEM-channel goods are
packed in bulk, not packaged for resale. OEM-channel goods are sold
under a different accounting calculation system, which puts a lower
support cost load on the product. Combined, these may add up to a
difference between OEM and Distributor that (based on my knowledge of
such matters from other markets) can easily be a factor of two or
higher. If Shimano identifies that an OEM purchaser is reselling OEM
goods as spare parts *directly*, then they have every reason to cut
off the offender's OEM purchasing privileges and make them go through
the distributor channels. However, I rather suspect that most of the
OEM goods are flowing via a source that's less obvious, and there's
probably more than one involved. I doubt that Shimano will close
those lines anytime soon, whether they want to or not.

Since CC, Excel, Per-Sup-Bar and REI all have "in-house" brands, they would
all qualify for OEM pricing as they - OOPS - order 500 or so more sets of
XTR groups than they produce frames for, just to create an obvious example.

_That's_ where they undercut the small dealer and standard distribution
network, and I believe that is what Shimano is attempting to prevent.

In the ultimate scheme of events, it's actually in Shimano's interest to
maintain a more diverse distribution network which includes smaller shops
and dealers. When a BIG-HONKING-RETAILER'S buyer sits down and says,
"Y'know, I wanna pay $X rather than $Z" they need to listen if the B-H-R
represents 60% (or even quite a bit less) of their annual sales.

Shimano is definitely smart enough to understand that part of the equation
as well.

-- Jim

Paul Kopit at wrote on 8/14/03 12:58 PM:
some snipping
Shimano's business is OEM and supporting retailers. They couldn't
care less about the home mechanic because the overall volume is
meaningless. Shimano will likely sell almost the identical number of
derailleurs and not have to listen to the local retailers' complaints.

What's forgotten, is that irrespective of price, it's easier and
faster to buy many components on the internet than to have to wait for
a local source to order from a distributor.

I think the key point is that if I were a smaller independent retailer,
there'd be no reason to _stock_ Shimano bits, because all I'd hear all day
is,

"dude, i can get this on cheapxtr.com for $30 less!"

If Shimano gains enough trust from local retailers that the pricing won't
get whored, there's no reason for them _not_ to stock Shimano parts, rather
than just special order the stuff.


-- Jim

"B. Sanders" wrote in message
...
"B. Sanders" wrote in message
...

There *are* alternatives to ShimaNO.

To lend authority to my assertion, Bulltek Sports sells packaged
non-Shimano
MTB component groups. Other online shops will likely follow:

http://www.bullteksports.com/catalog/MTBGruppos.htm

-Barry



Looks like it's time to get used to GripShift. :^(

Mike - First the XT group going roadie now this.

I suppose it's too much to ask that Shimano make it so that distributors
can provide pricing to LBS's so that they can compete with large mail
order and OEM stuff. That would allow for fair competition after all.

I hope Brandford does well without Shimano. This could be the start of
a trend against Shimano. That's too bad but they seem to be asking for
it.

--Bill Davidson
--
Please remove ".nospam" from my address for email replies.

I'm a 17 year veteran of usenet -- you'd think I'd be over it by now

"Paul Kopit" wrote in message
...
On Thu, 14 Aug 2003 17:49:12 GMT, "Chris"
wrote:

Riders no longer save 10-20 bucks, and have to go to a dreaded
(gasp) local bike shop (oh no) and get the part from an actual
person.

Most often I can get the part online and have it installed before the
local shop gets their order placed. Frequently, the online seller is
more knowledgeable than the local shop.

It has been my experience that the internet sellers provide only a
product description and a "buy it now" button. Although most of the big
internet sellers do have customer service departments, I am not willing
to go through the phone touch-pad maze, hold and muzak necessary to get
to someone who may or may not be able to answer my question. This is
why I only buy mundane, can't-go-wrong stuff over the internet. For the
arcana, there is nothing better than a knowledgeable LBS. I am lucky to
be living in a town where there are a number of good stores -- all of
which give discounts to members of the local bicycle clubs. So even on
the hard to get stuff, I can get a pretty good price. There also is a
Performance in town, which rarely has anything in stock except clothes
and is populated by a bunch of kids who just spew the usual urban myths
about wheel weight ("a pound off your wheel is like a million pounds off
your frame, dude"), etc. But you can get Shimano dirt cheap (when in
stock), and their re-branded slicks are pretty good (when in stock). --
Jay Beattie.

The idea is to get a handle on all of the re-sold gray-market OEM stuff
that's been flooding the market. Shimano sells the stuff much cheaper to
bike manufacturers, in order to keep people like TREK, Giant & Specialized
spec'ing their stuff. This strategy is used so that the bikes look like a
great value vs buying all the stuff separately (which is what makes the
product manager want to spec them).

Perceived value is the key here. If Shimano can increase the perceived
value of their components, they sell more of them. Sales to OEM dwarf sales
to the retail channel... I doubt they really care all that much about it,
*except* for the fact that it props up the value of their components to the
OEM.

The irony, of course, is that the OEMs are cutting their own throats by
devaluing the product in this fashion. When they backdoor stuff really
cheap, they diminish its value. Of course, they're looking at it from the
standpoint of either having too much inventory or the opportunity to buy a
greater volume for a bigger discount.

Given the relatively large number of mail-order places Shimano has
"authorized", I really don't think a good case can be made that Shimano is
trying to price-fix their merchandise. They are, however, trying to level
the playing field for retailers *and* increase perceived value to the OEMs
by cleaning up the supply chain.

The extent to which this increases prices remains to be seen. Overall,
Shimano will sell about the same amount of product, just less of it to OEMs
and more of it through the normal wholesale outlets (distributors). The
effect on Shimano's bottom line will be a positive one, as higher-margin
distributor sales replace lower-margin OEM. Overall this would appear to be
a negative to the consumer... the only way I can put a silver lining on it
is that, if Shimano makes excess profits, the laws of economics dictate that
others will come in to fill the void. And, from a highly-biased standpoint,
if it helps the LBS to survive, that might not be such a bad thing either.
There are a few of us who aren't total scum.

--Mike--
Chain Reaction Bicycles
www.ChainReaction.com

"Jean" wrote in message
...
Perhaps this is old news to most folks here, but I was looking for some
bike
parts today and I encountered the following web page:
http://www.branfordbike.com/shimano/shimano.html . The page says that only
a
few select online bike stores will be allowed to sell Shimano stuff on the
web. A little googling indicates that the authorized stores are Supergo,
Performance, Bike Nashbar, Excel, Colorado Cyclist, and REI. The web page
states that any store that is not authorized and that continues to sell
Shimano stuff online will be put a list of banned retailers that Shimano
will send to Shimano distributors.

Discounting Shimano's "ensure that consumers are provided with the highest
levels of service ...blah, blah, blah" spin about why they have done this,
what is the real reason behind the policy? Was this policy forced by the
Supergo-Bike Nashbar-Performance conglomerate and designed to kill most
other online stores? Or is someone at Shimano just trying to encourage
people like me to by Campy equipment?


Jean

On Thu, 14 Aug 2003 22:09:54 GMT, Jim Edgar
may have said:

Since CC, Excel, Per-Sup-Bar and REI all have "in-house" brands, they would
all qualify for OEM pricing as they - OOPS - order 500 or so more sets of
XTR groups than they produce frames for, just to create an obvious example.

_That's_ where they undercut the small dealer and standard distribution
network, and I believe that is what Shimano is attempting to prevent.

Rightly so, in my opinion, if that's happening to any significant
extent.

In the ultimate scheme of events, it's actually in Shimano's interest to
maintain a more diverse distribution network which includes smaller shops
and dealers. When a BIG-HONKING-RETAILER'S buyer sits down and says,
"Y'know, I wanna pay $X rather than $Z" they need to listen if the B-H-R
represents 60% (or even quite a bit less) of their annual sales.

Shimano is definitely smart enough to understand that part of the equation
as well.

Yes, the same thing happens when Wal-Mart sits down to negotiate the
prices for things like tires and batteries for its auto centers; the
margins are slim in the best of circumstances, and they get even
slimmer when the big customer starts playing hardball.

If the lbs, as a breed, gets badly endangered, the cycling industry as
a whole will suffer in my opinion. This is not a product which lends
itself well to being relegated to the Wal-Marts and REIs and other
major marketers exclusively, but like a plethora of other goods, too
much pandering to the big-box stores will drive the neighborhood shops
under. Fortunately, Shimano is neither the only game in town anymore,
nor (in my opinion) necessarily the most cost-effective. Frankly, a
lot of their low-end stuff would be better sold under an alternate
name to avoid diluting the value of the main brand. They do have some
inexpensive items, but the problem is that a lot of them are cheap as
well.

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pull WEEDS if replying via e-mail.
Yes, I have a killfile. If I don't respond to something,
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On Fri, 15 Aug 2003 01:32:55 GMT, Werehatrack
wrote:
and is populated by a bunch of kids who just spew the usual urban myths

Oy. Do they import these cretins from California, or californicate
them to order locally? (Isn't there a law against the latter in
Oregon?)

I suspect that they grow like fungus does
on camera lenses in Houston.

--
Rick "Fun guy" Onanian