Been wondering about this for a while, then some recent direct dealings with a manufacturer, bypassing the distributor and retailer, prompted me to ask the question.

I haven’t done any proper research, so I may have got this wrong, but there seems to be several ways for a manufacturer to get their product to the final customer.

For example;

Lynskey make a frame, sell it Hotlines ( a distributor) who then sell it to CRC (a retailer) who then sell it to the customer.
Looking at the “Due in Stock” dates on Hotlines’ and CRC’s websites, I suspect they are both selling the very same frame. If CRC sell it first, it gets despatched to the customer direct from Hotlines. Is that how it works ?

Ay Up, didn’t used to have a UK distributor, then they did, then they didn’t, then they did, now they haven’t.
So why don’t Ay Up use a distributor ?
Why don’t Lynskey sell direct ?

Nicolai have a dealer network, they also sell direct from their website.
I guess they’re just trying to appeal to riders who want dealer support, while still making the frames easily available to those who don’t live near a dealer.

Specialized have a dealer network too. It seems that dealers either have a range of Specialized products or none at all. So, if you want just a Specialized tyre, you have to go to a Specialized dealer.
The also all seem to all sell at the same price. I take it that’s part of their deal with Specialized.

CRC own Hotlines and Decade Distribution so they are selling the same frame to whoever buys it first.

There is no bike industry as such, just lots of little outfits doing their own thing.

Lots of niche names owned by big multinationals as well whose sole interest is money.

Lot’s of different ways.

It will be changing soon though. Some if it is archaic and would not exist in other similar industries.

Bear in mind that a manufacturer may have no desire to sell direct as it requires an infrastructure they may not wish to invest in or want to spend the time at the sharp end. It is easier to import containers and pass to a distributor to pass on to retailers.

However – people like Canyon seem to be making this change which is interesting.

People are awarded territories also that are closely guarded and fought about. i.e some suppliers simply will not speak to you if there are others selling in the area regardless of whether they would be the best outlet or not. It can be quite political to a degree BUT to be fair on the otherhand people like to do business with those they trust and this naturally means a certain inertia in the way things are done.

It seems that dealers either have a range of Specialized products or none at all.

Most distributors will require a shop to take on a whole range/brand or have none of the products at all.

Looking at the “Due in Stock” dates on Hotlines’ and CRC’s websites, I suspect they are both selling the very same frame. If CRC sell it first, it gets despatched to the customer direct from Hotlines. Is that how it works ?

Yes, if a store doesn’t have it in stock then they are waiting on the distributor. It’s unlikely that a distributor will post directly to a end user or you end up with the situation that shops hold nothing in stock and get it all posted out to their customers at the distributors cost.

“CRC own Hotlines…”
Now that’s the sort of thing I find interesting.

“Most distributors will require a shop to take on a whole range/brand or have none of the products at all.”
Doesn’t that lose them sales though ?
What about a small LBS that hasn’t got the customer base to warrant holding £1000s of stock.
They might decide it’s worth stocking a good choice of cheaper, faster moving items like tyres, yet Specialized won’t supply them unless they also stock frames and bikes etc.

“There is no bike industry as such, just lots of little outfits doing their own thing.”

Well, yes, but then that’s sort of what I’m asking.

Trout makes and sells lights himself directly.
Magic Shine import lights from China and sell them directly.
Hope, Exposure etc, sell through dealers.
Why the different approaches ?

all distributors tend to have a shop too, just with crc/hotlines it’s the other way around.

billys – Ison
24seven – leasure lakes

Remember that CRC/Hotlines also own certain brands (e.g. Nukeproof, Ragley), so they are coining it in by accumulating all the margins that each of the constituents of the supply chain normally have to share between themselves.

You might also ask how this affects competition in the retail environment. For instance, CRC can offer a “sale” price on a Hotlines-supplied item when no other retailer has ever had the item in stock. I believe this breaks some OFT(or other) rule about items having to be sold at the full price somewhere before it can truely be called a “sale” price.

As above – buy a Nuke Proof Mega from CRC you buy it from the people behind the whole operation.

Doesn’t that lose them sales though ?
What about a small LBS that hasn’t got the customer base to warrant holding £1000s of stock.

Specialized is a poor example of that – they are a very sought after brand. They will offer better rates depending on the volume of stock taken, but they have so many shops that want to sell their bikes it’s not really in their interest to waste time with a shop that’ll shift a few tyres.

Many smaller brands will have dealer and stockist prices, the latter requires a bigger initial order but is rewarded with things like longer payment terms, advert listing, signage, better trade prices, different quantity breaks, staff purchase etc.

I design and manufacture very high spec lights, hand made in small numbers.

There is a market for that sort of thing. As there is for handmade frames, and stuff.

The Industry as you will know, is a huge and multifacetted beast, incorporating design, manufacturing, technology, retail, the press and the customer.

Having so many parties sat at the table, its not difficult to see that getting a true understanding of the industry isn’t the work of a few minutes.
😉

It’s the same for most consumer orientated “industries” isn’t it?

Just play an imaginary game of follow the money and you’ll get the gist of it.

I’m not involved so not certain but my take on it is this:
I think it’s partly to do with economy of scale, if Trout’s light sold in huge scales would he still be selling direct? Could he handle those orders? Probably not, he would either need to develop an in house distribution centre (as I believe On One have) or ship them directly from manufacture to a distributor cutting out a whole lot of time and investment for a company.

Distributors will try and make demands of a manufacturers such as: They want Sole distribution rights for the UK market, meaning no one else can bring the product into the UK market, in exchange for this they will take X amount of units at Y amount per unit.

A lot of the time it does’nt……

Good point about the costs relative to currnecy fluctuations.

I have seen increases in the price of raw materials, parts and services this year.

i imagine more people will move to sell direct too. mr pooperstar had it right all along!

jontydewolfe – Member

all distributors tend to have a shop too,

Notable exception being Silverfish, who seem to be getting rather large in terms of their range of stuff. Their warehouse is just bonkers big. It’s suprising to see in cubic metres how big the UK market for nice canadian frames and fancy french race ‘sleds’ actually looks like.

I suppose if you sell direct it risks undermining your dealer network somewhat, but to have a linked ‘proper’ shop like Stif (jungle) or Bromley (evolution) you need staff, space, location and start buying in from other distibutors in order to have a complete range of bike stuff.

I figured silverfish would have a store too, nice they don’t though. I’d be miffed as a shop if my distributor sold stuff at a better price then i could directly to my customers!

wonder how many more distributor owned shops there are…

No-one’s mentioned Halfords yet…

A lot of the time it has started the other way round.You start a shop,find a nice product that is’nt imported,bring it in yourself and then form a seperate distribution company.

I’m not aware of shops linked to Extra, Madison, Fisher, Chickens, Jim Walker or Zyro, who are among the biggest parts distributors. Very happy to be proved wrong though!

maybe it’s something the smaller guys do to try claw some pennies back

Madison used to have Freewheel, but they all went.
That was the first mountain bike boom. I always thought it was a shame that Two Wheels Good in Leeds became Freewheel.

its a simple market and one of perception…

buy it cheap and sell it cheap trying to make out the quality is all that

manufacture it yourself make it high quality..product sells itself even if the price is higher

It’s like any business to be honest – it depends on the resources and strategy of the manufacturer.

Specialized love IBDs, but dip a toe into vertical integration with stuff like the Concept Stores, and they use distributors in smaller markets. They’re quite protective of IBDs, making sure that there aren’t too many Specialized dealers in any area.

On-One / Planet X sell direct, cutting out a lot of the bottom end of the supply chain.

Boardman sell into Halfords exclusively because that gave them massive volume very quickly.

Other firms like Ragley and DMR use a distributor to get stuff out into shops.

There’s no one way the business works to be honest. The supply chain choices interact with a load of other business strategy.

Specialized mainly sell on the basis of being a massive, safe brand, and providing good service. The way to guarantee that customer interaction is to either own the retailers, or work very closely with the ones you have.

Boardman and PX / On One both go down the route of providing very high specs for the money, but take different angles on it. Boardman use the volume provided by Halfords, where PX cut out distributors and retailers.

Firms like Ragley are pretty niche and offer something completely unique, both in terms of the product and their marketing. They bring things to market pretty quickly – ie, massive head tubes, but they don’t have the muscle to be using the high tech development techniques the massive brands can.

Mr Thoopthar isnt daft.

Its a cyclical industry