Possible demise of CRC / Wiggle

Assuming that the owners loaded it up with debt to fund the purchase

Do we actually know that’s what’s happened?

Do we actually know that’s what’s happened?

No, but that seems to be the standard business model – saddle the company with debt to finance the purchase, then use that to bleed it dry.

I assumed they were forced into it because of some vulnerability in an unmaintained external library or something like that.  Figure it gave them a good opportunity for a complete redesign

From there they had a Product Owner who either didn’t understand the requirements, couldn’t articulate them for  the devs, or just couldn’t prioritise them properly.  Or maybe a combination of all three.

Senior management with absolutely no clue about either the customer or the technology.

Just a typical software project, really.

Amazon admit that the website was purely built around the transaction. The idea was always that you could go from typing in a description to it being shipped in the shortest number of clicks possible.

And thats what makes Amazon perfect. I don’t go to Amazon, navigate my way through various menus and then idly browse their wares – you’d be there for the rest of eternity. I log on, type in what I want into the search bar, scroll through a few of the results to make sure I’m buying cheapest/best and hit buy. CRC I’ll have a bit of a browse, compare products, see what offers there are, maybe think “whilst I’m here….” and have a look at another category etc. Website is still garbage but I personally don’t think you can compare Amazon with CRC in terms of what their sites provide (or are meant to provide).

Just a typical software project, really.

I’ve only worked on one major project, but I do recognise yr description.

:D

Just a typical software project, really.

Launch with minimum viable product, and iteratively improve it once live. Presumably pushed live as it was because of changes the business needed that customers don’t actually need (unified live stock control I suspect).

Anyway, the problems predate the websites launches, and the downtime and reduced functionality, so they are not really what has brought the group to where it is… they are just very visible to us, the punter. Year on year losses that predate the change are more likely the issue… that was never going to be followed by a bumper year in 2023, with or without the updates. If the ultimate owners were in it for the long term, it’s probably all solvable.

Whilst the signs of financial troubles are well known, it’s probably best not to speculate.  Look at what happened to Northern Rock.

If you want to buy a product and Wiggle or CRC have it at the right price, I’d just buy it on a credit card to secure additional protection.  They get the sale and your money is safe.

Do we actually know that’s what’s happened?

Money stopped being free due to rising interest rates, and the holding company aren’t willing to fund the losses with their own capital so are pulling the plug. WiggleCRC has been loss making for a while. Where do you think the money was coming from to fund those losses?

Then the merger/acquisition of CRC and then buying up of bike24. CRC was number 1 and Wiggle number 2 (or was it the other way around – I forget). Nothing wrong with it I guess and the competition commision allowed it to happen. But when bricks and mortar places do that it might be to increase the number of stores or to broaden the appeal with a bit of diversity. None of that here – CRC was just more of the same. It was purely to take out the opposition and reduce consumer choice.

That was probably the point at which I stopped using either. Although Rose and bike-discount probably contributed as well by being by far the cheapest source of drivetrain bits which is the bulk of my purchasing.

Even the search/filtering was mostly overlookable as a lot of people are probably looking for a specific item, and probably got there via google anyway. So as long as the MAxxis Minion DHF, EXO, MaxxTerra, 29×2.6 is in stock, I don’t really care if it’s miss-filed under XL gloves. The filters were only really useful for finding kit you don’t care about. I want some XXL gloves in red, don’t care if they’re 661 Raji, Troy Lee XC, or some other brand.

Which brings up the Amazon point, now that google is so good, I’d probably just google for 661 Raji or Troy Lee XC and buy from wherever was cheapest. 10 years ago I’d have put in a big order with CRC or wiggle when building a new bike for all the group set, fork, finishing kit etc. These day’s I’d almost certainly be splitting that between more shops as it’s become easier to see who’s cheaper, and al sites have got their checkouts down to less than a minute or so with paypal, google pay etc even if you don’t have an account.

WiggleCRC has been loss making for a while. Where do you think the money was coming from to fund those losses?

I believe people have been implying that Chiggle had been “loaded with debt” from its own purchase by VCs, rather than just operational losses.

Personally I expect it’s the latter.

I ordered stuff yesterday afternoon, it arrived half an hour ago… 👍

I believe people have been implying that Chiggle had been “loaded with debt” from its own purchase by VCs, rather than just operational losses.

VCs don’t load a company with debt, it would be a drag on growth.

Private Equity do, to increase their leverage and profits.

@oceanskipper mine came this morning. :-P

@a11y

Thought it prudent to buy spare Ragley mech hangers for the kids next bikes.

Great minds think alike. ;-)

And thats what makes Amazon perfect. I don’t go to Amazon, navigate my way through various menus and then idly browse their wares – you’d be there for the rest of eternity. I log on, type in what I want into the search bar, scroll through a few of the results to make sure I think I’m buying cheapest/best and hit buy.

FTFY

Amazon is an utter hole, unless you know exactly what you want they will list any old shit so you buy that instead.

Signal Sports North America closed down a few days ago. No warranty support there now.
If you’re on LinkedIn there more info here
https://www.linkedin.com/posts/hapseliga_opentowork-activity-7121056597061107712-PtXR?utm_source=share&utm_medium=member_android

It shows the normal personnel not just the faceless PE side.

This is a few days old so I may have missed someone else posting it.

Shame that their demise will only bring back a smaller CRC.Wiggle equivalaent and will not bring back the LBSs that we lost.

 (unified live stock control I suspect).

This answers the question about why the new website was rolled out. Wiggle, CRC, and Hotlines all had their own individual systems, so staff were having to manually move stock between websites, which is why prior to the new website, something could show as being out of stock on one of the sites, yet still in stock on the others.

However the whole rollout was a disaster. Hotlines couldn’t process shop orders for a few weeks, as the functionality for B2B sales hadn’t been implemented correctly/fully.

The major fallout from this if Nukeproof disappear, are all the LBSs who have sold them.

A customer’s warranty legally lies with the selling retailer, so if those LBSs no longer have the backup of the manufacturer, they’re going to have a significant liability.

I can’t believe anyone thinks Amazon’s catalogue, search and UI is anything other than a complete mess. If you try searching for a specific item, unless it’s something  bought by millions of others, it will show scores of completely irrelevant products first. Add in all the third party marketplace sellers who have the put incorrect details in the various specifications fields and you’ve got a recipe for disaster.

Bikester, Probikeshop etc. goes

https://www.pinkbike.com/news/signa-sports-uniteds-internetstores-gmbh-declares-insolvency.html

Looks like it’s a MUCH bigger story than just loss making bike part retailer goes south.

This just posted on Pinkbike,

https://bnn.network/politics/rene-benkos-real-estate-empire-on-the-brink-a-crisis-unfolding/

sounds like the golden goose of leveraged investment stopped paying out and rather rapidly caused the loss leader market domination group of companies to be unaffordable to keep funding their losses.

I’ve been trying to work out how much a percentage of the whole group the Chiggle group is. It’s really hard to be sure with the complex structures of companies reporting differently. I reccon it’s about 30-40% ish, so if the group does bad that’s a large proportion of the problem.

interesting. I’m sure this will get a more twisted plot as this continues to come to light. I’m still unsure of the full scope or potential impact on the rest of the bike industry both in the U.K. and the manufacturing base overseas.

Neil SuperstarComponents

Bikester, Probikeshop etc. goes

And Fixie Inc who used to make some interesting stuff.

@iamtheressurection

Do you not think it’s unhealthy to want a business to fail

Businesses have to fail in order for there to be progress.

Rene Benko, Signa’s owner has been investigated for corruption, bribery, fraud etc in Austria, a few cases come up. He seems to have attracted the prosecutor’s attention there for a while. I’m sure it’s all legit though.

50% holding in Selfridges as well

Billions of Saudi investment in the Selfridges funding deal. Plus taking out billions more against the property. Well I’m sure that’s all legit

Turns out this flogging bike stuff is small fry in the big picture.

Neil SuperstarComponents

Businesses have to fail in order for there to be progress.

I think the world is a bit more nuanced than that.
Yes, learning from mistakes should bring progress, but it’s hardly the only way and in no way does a mistake have to be terminal.

Would be competitors who think they can do it better or differently don’t wait for the incumbent to fail first.

So, we seem to be in the territory of discussing morality in business dealings.

is there a responsibility on the previous  owners to realise they are getting into a deal with the devil and think about maybe less growth/profit but greater long term stability?

or to put it another way, how much responsibility does J P McManus bear for the sale to the Glazers?

Signa Sports Group is a division of Signa Holdings but without knowing much more about the overall corporate structure it’s impossible to say whether problems in the former will affect the latter.
Everything else is speculation.

or to put it another way, how much responsibility does J P McManus bear for the sale to the Glazers?

I guess another way to think about it is that anyone who was fairly competent at running an online bike shop and sold out is now sitting on a fairly large pile of cash and there is about to be a rather large hole in the market…

Frank you have that the wrong way around. The apparent problems bubbling in Signa Holdings is looking to be the reason for them pulling funding from Signa Sports.

without the cash flowing in to fund Signa Sports losses it results in the companies folding which we are seeing.

my point is that the root cause of this flux in the bike industry originated far away, but it doesn’t alter that the sports businesses fundamentals weren’t viable as standalone businesses.

Neil Supsetstarcomponents

Can’t see them surviving in their current form as their balance sheet will be laden with debt from the acquisition – it’s not like you’re buying a well-oiled machine with a smooth running website and fulfilment operation. With huge oversupply across the industry, stock probably won’t be worth as much as book either. Maybe someone will buy the brand and goodwill to improve their industry presence?

Isn’t the issue that nobody knows if the balance sheet is loaded from debt by the acquisition?
from road.cc

The acquisition of Wiggle CRC by Signa Sports United during the period in question also brought “significant one-off legal and professional and staffing costs”, adversely affecting net profit by over £36 million, though SSU also fully repaid and waived all shareholder debt and intercompany loans, amounting to £312 million, as part of the deal.

regardless, CRC\wiggle is having a fire sale of stock, not paying invoices and not buying any new stock.  Seems at best this will result in a much smaller enterprise emerging at the end.

They’ve clearly stopped paying Google as they’re no longer appearing in the sponsored product ads .

it’s impossible to say whether problems in the former will affect the latter.

I think the issue sounds like its probably started at Signa Holdings, they’ve withdrawn their letter of credit from the Sports division; not because they have no faith that the sports division can recover from the downturn in discretional hobby spending, but because they might need that line themselves. Because Sports rely on Holdings to underwrite what they do, without it they risk folding, and the whole pack of cards starts to look decidedly shaky. It probably means that at its core, Wiggle/CRC is mostly viable, and if it get carved away successfully can probably, with a bit restructuring, stand on its own. Let’s hope that for the sake of the folks that work there, and its suppliers that’s what happens

Very interesting discussion and great we have Neil in the thread. What I am curious about is whether at the heart of the business there is a fundamentally  profitable model. What is the gross margin? Outside of costs like web redesign and on-going leveraged debt payments does the day to day trading make a viable profit or is their pricing model so flawed (trying to achieve market share) they would never have been profit positive?

The question is… if Chiggle sold things at business viable prices how much turnover would they lose?

I get the feeling that a lot of people don’t understand how business costs work. Yes you might have 30% margin but once you take out of that gross profit all the costs such as marketing/staff/warehouse/insurance/etc you can end up negative.

now if you sell at cost you aren’t getting your money back, yet you are still paying all the other bills ontop of the stock transaction of no value.

the answer to this tells you the value of the business exstock. Next part is Stock is generally worth 10-25% of what you paid for it in a fire sale. Add the two together and is it more than the debts?

lots of questions

Neil SuperstarComponents

Developing that Vitus E-Mythique with the Bafang motor must have cost a bit, there are no other mainstream brands using that motor and from the emtb review, it sounds like they spent a lot of time working with Bafang to improve the quality of switches and connectors and other bits.

And they’ve also just brough at that Nukeproof with the SRAM motor.

Maybe they’ve not been on sale long enough ro recoup the development costs.

Those brands must be worth a fair bit??

I get the feeling that a lot of people don’t understand how business costs work. Yes you might have 30% margin but once you take out of that gross profit all the costs such as marketing/staff/warehouse/insurance/etc you can end up negative.

My company has to make 50% gross margin on it’s products just to break even. On paper we make millions in gross margin, but we also have millions in costs, which have to paid before we turn an actual profit..