Are Shimano and others just gouging in the US market because they can (and damn the impact on local retailers)?
And somehow the bike retailers get furious at their own customers for seeking out the lower-priced options, instead of being furious with shimano for ripping them off.
This is false (unfortunately); while CR/Wiggle does sell their own bikes with Shimano builds this is no different than any other bike manufacturer, yet the trek or specialized at your LBS is still significantly more. You cannot purchase any Shimano parts at Chain Reaction.
this is a relatively recent development, you could last year. i'm not sure if they've clamped down globally or just stopped shipping to north america.
>this is no different than any other bike manufacturer
it's different in that CR is a retailer as well as a manufacturer. I assure you that even if the situation has changed recently, they definitely were selling off their OEM parts. it wasn't some sneaky thing, they were literally advertising what they were doing.
- It's common for global manufacturers to sell products at different prices depending on regional market conditions. So EU distributers may get better pricing than US distributers.
- Some retailers may be able to purchase products cheaper because of volume or preferential relationship.
- Most commonly, the products beings old are actually OEM products originally sold at a significant discount to a bike brand (who have massive minimums, arbitrary product mix requirements - think a mountain bike brand buying road parts because that's the "package" Shimano sells to get favorable pricing, and big incentives to prevent them from purchasing from SRAM or some other parts manufacturer). The bike brand takes its excess parts and sells them "under the table" to a retail outlet (that they may have actually discretely partnered with at the outset).
My opinion is that yes, Shimano, specifically, doesn't care about brick and mortar retailers. Shimano considers it a relic of the past and are partially unaware (or apathetic) of the reality that their actions and distribution model is accelerating the death of the brick and mortar shops. That said, Shimano USA might care about US brick-and-mortar retailers, but they don't have enough influence to prevent Shimano Global (Japan) to affect any real change.
Shimano has seen steady growth, so they have no incentive to change. But that growth has been at the expense of the very partners that played a significant role in helping them gain market dominance.
I'm generally of the opinion that, at least in the bike industry, the shops and online outlets selling massive volume at discount aren't really in any better financial shape than their mom and pop competitors. When I first got into the industry I was regaled with stories of success of competitors like The Clymb and how they were 'killing it'. Turns out, the only thing they were killing was themselves. The Clymb, despite assurances of their brilliance, sold back in 2015 for $100,000 despite millions and millions in sales (the buyer assumed 18.5MM in debt) - https://www.oregonlive.com/silicon-forest/2016/01/the_clymb_...
Manufacturers don’t sell direct for a variety of reasons that steadily become less compelling as the costs and complexity of shipping, advertising, and retail management fall.
How long before non tech firms follow the path of tech firms and sell direct?
And that's the view of more than a few consumers in terms of how they view their bike shop. Anything that can be sold direct, will be.
It sounds like they're being overly aggressive with their price segmentation. When setting up your first lemonade stand, you learn that you should set prices at the sum of costs for goods, labor, and overhead, plus a profit margin, hoping that the output of your manufacture delivers more value to your customers than that sum. Shimano doesn't want to be paid a flat rate for the value they add, they would prefer that everyone to pay exactly as much as they could possibly be willing to pay.
If I'm a shop and I want to deal Fender guitars, I have to sign a dealer agreement which says that I agree to buy $x worth of apparel, parts, guitars I don't want because I don't think I can sell them etc on top of the sometimes unreasonable numbers of guitars/amps they also make you buy.
The companies have all the control and they know it. A lot of brands are also making you pay a separate fee to be able to sell online and most absolutely prohibit you as a US dealer from shipping overseas.
All of these things + operating costs make the margins at your average local music shop very very slim. I ran one of the best shops in the world and we still struggled with this kinda stuff.
The traditional evolution for a guitar maker is like this: A guitar technician tours with famous guitarists and starts customizing instruments for them. They start their own brand for making new guitars. They have a small team in a small shop and they hand make good but expensive guitars. Then they move manufacturing to Japan. Still pretty good stuff, moderate price, available for the people who really want to get it. Third phase is to move manufacturing somewhere else and sell barely adequate quality guitars with just your brand. Make flashy paint jobs, sell to the masses as "first guitar" etc. Original owners might be out at this point.
Some decades later introduce some old models revived at high quality again.
Locally, the bike shops that are doing well all have a side-business - several have brewpubs or cafes, other have training facilities.
That's kinda opposite of a lot of (good) HN advice about pricing.
Here, we (mostly) agree that you set your prices to capture as much of the value you're providing to the customer as you can, not some simple markup on your costs. If the customer gets 10k/month value from your startup, of course you don't price it at $1k - even if it only costs you $500 to provide it.
If I had been running a lemonade stand on the island where Fyre Festival was failing to eventual, you can be sure my pricing would have been regarded as predatory and obscene to all the "cost plus a profit margin" folks.
I reckon the big error here - is tradition wholesale and retail chain ignoring the fact that geographic market segmentation is rapidly disappearing for many things. Shimano think they can gatekeep their markets, and sort-of can at retailer level using distributor contracts. But they totally can't stop consumers buying online from wherever it's cheapest, and that includes dark shift and/or knockoffs from AliExpress et al. Shimano will slowly kill their distributor network, who'll go broke or give up stocking Shimano as more and more consumers use them as a showroom and then go buy parts/bikes online. That'll happen more or less slowly depending on Shimano's brand strength, but the smaller and less discounted distributors will go (or skirt the wholesalers) first, and sooner or later the only place to see a Shimano bike will be a few major specialist bicycle retailers or on late night TV watching the Tour De France.
In the UK (and perhaps other parts of Europe) manufacturers aren't allowed to force retailers to sell at a particular price. The manufacturer can 'recommend' a price (or indeed print a price on the package) but the retailer can sell for whatever price they want [1]
Any binding 'minimum advertised price' or 'resale price maintenance' agreement would be price fixing, violating competition law.
[1] https://www.gov.uk/government/publications/resale-price-main...
If I buy an expensive custom modular synthesizer from the US, I'm going to get hit with import duties as well as VAT. As a business owner I can claim back the VAT, but the import duties are a non-trivial and non-recoverable extra.
If buy a synthesizer from Thomann in the EU, I can also claim back the VAT. And there are no import duties - at least until January 2021 in the UK.
So the final cost for a UK business buyer is 20% less than the nominal price.
Does the US charge import tariffs on these items? I have no idea. But if it does, that would explain some of the differences.
And it usually works the other way. The standard price in pounds for US tech sold in the UK is 1:1 with the US dollar price.
The base iPhone 12 Pro Max is $1099 in the US. In the UK it's £1099, which is more than $1400. Even without VAT it's more than $1200.
In Spain it's €1259, which is closer to $1500.
Duties are another funny thing. At least in Canada, bike stuff from China has variable duties:
> Importing a complete, assembled bicycle will cost you 13 per cent in duty. If you're just bringing the frame in, that's a five per cent tariff, and if you're importing complete wheels, there's a 6.5 per cent tariff.
So, if you import tires and rims separately (even in the same package), there's no tariff! Frame + other parts, and you only pay on the frame.
https://www.cbc.ca/news/canada/british-columbia/what-you-nee...