Having a discussion tonight with a mate about YT Industries place in the market Vs Santa Cruz. Now neither of us are the biking equivalent of Donald Trump or Alan Sugar but one of us reckons YT’s margins per unit/bike would be better than Santa Cruz due to their direct sales model where the other reckons Santa Cruz margins are better despite the distribution/retail chain because Santa Cruz products are higher retail price than Yt and sell more due to their marketing drive.

Any ideas/ insight?

SC put a lot into the brand and sponsorship with a big athlete program there which doesn’t come that cheap. From my experience they also look after their dealers well and support their product too. Not sure how that hits on the bottom line per bike though

That’s part of the discussion that SC’s bricks and mortar and it’s Syndicate team has a massive presence – we are in Morzine at the moment and SC bikes are probably the majority brand here but how much difference does that make to the bottom line Vs Yt’s direct sales business model and smaller physical presence?

Probably data that we’ll never get to know!

YT have alot of sponsored riders, one is the highest paid rider ever (probably)

They also throw bikes at Warner, Tippie etc for promotion.

I would imagine Santa Cruz makes YT look like the biking equivalent of a hobby farm.

one is the highest paid rider ever (probably)

lots of that is sponsorship

YT have alot of sponsored riders, one is the highest paid rider ever (probably)

Having seen the SC lot around the world there it’s a massive fleet of people from Peaty & Gracia, Syndicate, the EWS team, local riders in most countries and a serious looked after list. The list of sponsored events is long and big

Canyon is probably the more interesting comparison with it’s push straight into Grand Tour road teams along with a set of high profile riders and teams in the MTB world

SC put a lot into the brand and sponsorship with a big athlete program there which doesn’t come that cheap.

lol

Yeah. And YT only have Martyn Whitely running the YT Mob, ie. the most experienced WC team manager on the circuit with Aaron Gwin – the top paid DH racer in the world, Neko Mullally US National champ, Val Holl, The top Junior Woman on the circuit. Andreau Lacondeguy – the best big jump freerider in the world and total bad ass, Cam Zink the clean cut American version, Not to mention Yannick Granieri, Bienve Aguado Alba, Ethan Nell, Adolf Silva, Angel Suarez, Austin Warren, Erik Irmisch, Bryan Regnier, Jordie Lunn, Tippie, Schley, Warner

https://www.santacruzbicycles.com/en-GB/syndicate

https://www.santacruzbicycles.com/en-GB/santa-cruz-enduro

https://www.santacruzbicycles.com/en-GB/free-agents

https://www.santacruzbicycles.com/en-GB/nomads

https://www.santacruzbicycles.com/en-GB/factory-racing

Chuck on top of that  the local and national supported riders and it’s a big commitment. Then as I said the races and events like Ardrock, and more

YT only started selling bikes outside of Europe a couple of years back

per unit profit margin has dick all to do with how many sponsored riders there are (or how badass you happen to think they are, LOL). it’s just total marketing budget that matters.

Yep, it’s just proving a point there. It’s a big marketing and engagement effort there. It’s also solidly world wide, after that working well with your shops and dealers with a big demo programme taking bikes out to locations. Then add in dealer support for a custom build program. It’s a big investment but they probably do make a better margin per bike over a big range, how they then invest that is next up for discussion with a rolling new model/model update program.

Plus point is that all gets spread across a much bigger market as they are properly integrated in each country.

I think Santa Cruz will make more per bike due to their customers willingness to pay more for a brand they can show off to last year’s model Santa Cruz owners with.

And why is this important to any of you actually spending money rather than bitching on forums?

Is the bike you bought OK?

OH LOOK , AN ANGEL DANCING ON THE HEAD OF A PIN!!!!!

And why is this important to any of you actually spending money rather than bitching on forums?

Personally I’m interested in business models, strategies and marketing. Manufacturing scale and efficiency also what brought you to the thread?

I wouldn’t know these days, it wasn’t long ago SC were just another small volume boutique brand, if you wanted a SC you found a dealer ordered a frame and then winced as the LBS trotted out the cost of your ‘custom build’ and 10 years ago if you’d managed to keep it twice the price of the same sort of spec Trek or Spesh you’d done well.

Their marketing is amazing though, they’ve managed to keep their high value mystique whist becoming mainstream – what do they sell? A range of FS carbon and Alu bikes in the same broad niches as Trek, Spesh, Kona etc etc, they’re not radically different in terms of geo, or weight or anything else, they’re typically very good, but they’re never really first out of the blocks for the latest trends.

As someone who’s worked in sales and marketing my whole adult life I’m slightly in awe of them and their current range.

the C and CC is frankly genius, but I simply can’t understand how they get away with it, but they do – they can still sell a boutique ‘frame only’ range for £3k a frame or whatever, at the same time as a full build with basic bits for roughly the same money, or a high end build for about a grand more – really by any sensible terms it shouldn’t work, each route to market should hurt the other, but somehow it compliments each other, even though I’m 101% certain that producing two types of the exact same thing would be horribly inefficient and I’d bet they don’t they manage to convince people they do. Really buyers should look at CC frames and ask if they’re mad? I could buy a C built, sell all the bits and the frame would end up owing me maybe £800 why buy a CC? But they do, C buyers should be saying “so, let me get this right? I give you £5k for a mountain bike, but the frame isn’t quiet as good as it could be? Are you taking the piss?” But they don’t.

I see more SCs now than Spesh which is insane.

But I bet YT sell 5x as many bikes as SC does.

YT only started selling bikes outside of Europe a couple of years back

The qusetion is who has the best margin per bike sold Mike. I’m not argueing SC is the bigger company.

FFS

But I bet YT sell 5x as many bikes as SC does.

If they do people must not like to be seen on them!!

It is great marketing but it’s well backed up, how long were people waiting for Capra warranty in the early days? I’ve seen SC replace questionable claims in under a week and pay the shop for the strip and rebuild

Not sure on the UK side but I’ve had the options for swapping out build kit components for a sensible price

At the top end they are on par with the mainstream brands Spec/Trek etc I’m guessing a few % difference on the build kit volumes there too

Yep they have maxxed out one the aspiration in the marketing and it’s the brand to have to be seen at a point, while back it was a Yeti with matching forks

One of the cutest marketing tricks they did was let you pick the frame colour, everybody else wanted to advertise what spec you could afford by the paint job, from a distance you could be on the 3k or 7k bike and nobody really knows

The qusetion is who has the best margin per bike sold Mike. I’m not argueing SC is the bigger company.

FFS

Margin is also a function of scale, splitting the dev and head office cost over 5000 bikes or 50,000 bikes makes a difference. It gives you buying power and leverage with the suppliers and frame builders, it means your price per frame is less as the mould cost is split over more finished bikes. That is why it’s a really relevant factor here

The qusetion is who has the best margin per bike sold

Really? It’ll be SC by miles. If you look at Intense’s pricing pre and post direct and it’s about 20% cheaper cutting out dist channel and retail – assuming margin is roughly equal for Intense. SCs are way more than 20% more than YT like for like and they’re both made in the same part of the world.

But I bet YT sell 5x as many bikes as SC does.

They don’t

https://www.owler.com/company/santacruzbicycles

http://www.hoovers.com/company-information/cs/company-profile.yt_industries_gmbh.8adb1f9bb33eee80.html

and just to put things in perspective

https://www.owler.com/company/giant-bicycles

If they do people must not like to be seen on them!!

I see a LOT of Capra and Jeffsey about, and a lot of Tues in the alps, the only V10 I saw was Minnar’s in a shop window.

I do see a lot of SCs too, but not nearly as many.

The rest, warranty support and all that, perhaps for another thread, there’s enough tribal brand bashing to go around. I’m here for the marketing and business model, for my sins I find it interesting.

The rest, warranty support and all that, perhaps for another thread, there’s enough tribal brand bashing to go around. I’m here for the marketing and business model, for my sins I find it interesting.

In the world of selling you have to accept stuff goes wrong, there was a thread about snapping bike a while back… the responses to the companies warranty policy was one of the best bits of marketing you could have. See Hope for another example, shit goes wrong but we sort it – again some days too much shit goes wrong but you can get a lot of good will with solid customer service.

I see a LOT of Capra and Jeffsey about, and a lot of Tues in the alps, the only V10 I saw was Minnar’s in a shop window.

It may be a time thing but outside of the EU they are still small fry, I think I still had to deal with import duty myself in Australia if I wanted one – great headline price, crap landed price.

As above, today in Leogang the YTs vastly outnumbered any other brand

SC have been in business around twice the length of time YT have.
SCs annual revenue is twice YTs
SC employ 4 times as many staff as YT
YT sell 5 bike models, (7 if you were to count the larger wheel sizes as a separate bike).
SC sell 12 bike models
Both companies spend a lot on marketing, advertising and supporting riders, racing etc.

None of the above will tell you which company has the largest profit margin per bike/unit.

But go ahead and type pages and pages of irrelivence instead of simply admitting you do not know the answer to the OPs question.

But go ahead and type pages and pages of irrelivence instead of simply admitting you do not know the answer to the OPs question.

Where’s the fun in that – bah humbug 😕

From a business perspective, surely the question is return on investment, not margin per unit. Obvious investments are production facilities, warehouses, office equipment, etc. An overlooked one is stock, that has to be financed until it is sold. If you have high volume, you can turn over your stock much faster, so the financing costs are lower and you don’t need as large a margin per unit to make the investment worthwhile. Other costs such as warehouses, marketing, and offices should also be lower per unit sold for a high-volume business. On top of that, you will get economies of scale on production tooling and R&D, plus discounts from suppliers. That means that a high-volume, low-margin producer can make a higher return on the same investment than a high-margin producer with lower volume. Also, being a global supplier means that you can even out seasonal variations in sales a bit more so you don’t have facilities sitting idle for 6 months of the year. Comparing margins between different business models may not be much use because their cost structures are completely different.

But go ahead and type pages and pages of irrelivence

It will be, but you’ve told the world you have a man  crush on a small Spaniard who rides upside down a lot, and frankly that’s priceless 😂

The world?

now that truely is priceless.

Ps. Badass just means tough and uncompromising

SC need to be careful.  I always thought of them as a premium and expensive brand.  They need to be rare to be special.  Whereas now they’re still expensive, but they’re two-a-penny.  Maybe that’s a local thing but I’ve gone off the idea of owning one.

Anyhow, the oddest thing about this thread is that you seem to have used Trump as a synonym for successful business.

I think for our discussion we view the premium pricing buying you a cast iron warranty, life time bearing support and a bricks and mortar shop that you can walk out of with an assembled bike and back into should there be problems.

Is that worth the £1500 – £2000 price difference to a remotely warrantied unassembled YT? That’s a question for the consumer to answer and a separate thread

The premium price doesn’t buy exclusiveness – the tan Nomad is everywhere in Morzine/PDS!

Trump bikes-a range of gold plated fat bikes!

<div class=”bbp-reply-author”>Superficial
<div class=”bbp-author-role”>
<div class=””>Member</div>
</div>
</div>

<div class=”bbp-reply-content”>

SC need to be careful.  I always thought of them as a premium and expensive brand.  They need to be rare to be special.  Whereas now they’re still expensive, but they’re two-a-penny.  Maybe that’s a local thing

It definitely is just local- in the UK Santa Cruz do have that premium perception just because they didn’t sell that many here, and we’re really pretty parochial, in the US they’ve pretty much always been seen as good quality but basically normal commonplace bikes. While stuff we consider to be workhorses over here, like the Orange Five, were exotic in the states.

</div>
I don’t think they’ve got anything to worry about from that point of view tbh, UK sales will be a drop in their global bucket.

Are people confusing the profit made by the shop with Santa Cruz’s profit. Santa Cruz do not see the profit on a £7K bike  – they see the profit selling to the dealer at a trade price of I guess about £4K. This is more in line with YT’s profit on a similar spec’d bike.

As a longer think through this taking 2 examples there

Capra CF 29r Frame £2150 Delivered

Nomad CC Frame £3200

First one the shop will have some level of negotiation on the frame price for you.

The bike shop will buy the frame from Jungle which gives them a margin for holding, selling, building.

jungle will buy the frames from SC in bulk to an order that was probably agreed 12 months previously, they will take a margin to cover holding, shipping, warranty time, demo fleets and marketing in the UK along with any sponsored riders etc.

SC will design a frame get it made and sell it on.

So the margin will be spread over 3 groups but then so will the costs and risk, SC themselves can be a leaner organisation as they sub contract a lot of the stuff out, only have a limited number of “customers” world wide  same as the importer only has a limited number of customers to deal with.

If you look at what YT can take if it all runs smoothly it could edge out the SC margin to just them.

It definitely is just local- in the UK Santa Cruz do have that premium perception just because they didn’t sell that many here, and we’re really pretty parochial, in the US they’ve pretty much always been seen as good quality but basically normal commonplace bikes. While stuff we consider to be workhorses over here, like the Orange Five, were exotic in the states.

For me the reputation has always been solid, well thought out and well put together bikes. Orange is just a blip in the world market really, I think I saw 2 in 6 years in Oz despite them having a dealer out there, just no appeal at the price compared to everything else.

If you want the workhorse brands it’s Spec and Giant from a traditional point of view, churning out a bike at a price point every year, there will always be the entry level enduro for those short of cash. But you can see one touch one and try for size in just about any decent sized town in the country.

I’d say in general the jury is still out on how a direct sales model works on a global stage, the EU is perfect for it, no tax issues, no duty and limited hassle shipping. When it’s a week each way for warranty parts or wrong size returns that bites you. The halfway house is somebody like Commencal who had a landed direct sales model in Oz where bikes were held locally but still sold direct online. Is there margin in the YT model to have a mirror DC set up in the US to handle the north american market? When does that hit the direct sale margin?

The final spanner flinging round is that man Trump who just threatened tariffs on bikes as part of his last tantrum

https://www.bikebiz.com/business/trump-targets-bike-tyres

That could seriously impact where things are sent through.

Gross or net?

Haha, the numbers on that owler website are complete and utter tosh. SC annual revenue $5.4m, I’d say it’s at least 100 times that.

$5.4m, I’d say it’s at least 100 times that.

Care to show your working?