Post by JimRatliff on Dec 17, 2013 15:34:53 GMT -7
The following is excerpted from a series of newsletters by John Neugent on the future of the local bike shop given the "gorilla in the room" of Amazon and their stated direction of moving into bike goods just as they have with books. Neuvation Cycling is primarily an Internet direct retailer of wheels but has recently branched out a bit to include bikes.
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Industries Are Changed From The Outside.
Major industry changes are similar to natural disasters. Hurricanes, tornados and earth quakes can devastate regions the same way new technologies or business models can devastate industries. You plan for them but you never really expect them.
We all know about dozens of products that have become obsolete but consider the advertising business. Most newspapers are struggling and most magazines are gone. Internet advertising strategies continue to develop at light speed as search engines mine our every move so ads now follow our thoughts. (do some web product searches and see what happens to the Google AdSense ads above) All of this happened in less than 15 years and much of it in the last five.
The Internet Tsunami has restructured the way we get digital information - music, video, news, and information.
Main Street - the stores we shop in - is next. the old mail order catalogs and even the first generation of Internet companies compete fairly well with Main Street shops, but there is a new generation of retailers that are destabilizing not only Main Street but traditional Internet stores. The bike industry and many, many others are facing a major tsunami similar to the one faced by the advertising industry. It won’t happen as fast because our products are not digital, but the outcome is going to be just as disruptive. I don't see this as being good or bad, but I believe we need to look to the future to see what best fits our customer's needs. It's not going to be fun, because disasters never are.
When a customer walks in the door I am always asking myself why they came in. Granted, we are a very special retailer but, not surprisingly, often it’s not to buy something or for service. Outside of those two obvious reasons, they come in for information or entertainment (with entertainment being a big part of every visit!).
I am not in the business of pulling teeth so almost every visit is an extension of people’s love of the sport. The shop of the future will focus on those needs as well as offering competitive pricing on everything they offer. Just as the most effective leaders tell people what they want to hear, the best shops will deliver what the customer wants. There is no magic in that part. The magic is in what form it takes and how to make money doing it.
Respect is the Holy Grail of communication whether it’s between spouses or shop owners and customers. It’s the one thing that humans need most in all of their interactions. Respect comes in many forms. It’s about paying attention, caring, appearance and, if you are a shop owner, how much you charge.
The funny thing is that respect goes both ways.
Most consumers don’t understand that the entertainment they get from shopping comes at a price. That price being the profit margin the store makes on the sale. A shop owners' time costs the same whether they are servicing a bike (the average rate for service is about $1 a minute) or giving out information. We think nothing of paying a handyman $40-60 an hour to work on our house but expect to shop for free and then buy "off of the web". Obviously we never really shopped for free. When the competition was local the model worked, but now with the Internet and the jungles of Amazon a new model is needed, because with the Internet we do "shop for nearly free" but it is a dramatically different experience in terms of human interaction.
I just went to Amazon to buy a bike part I needed for a bike build because all of my suppliers were out of stock. Much to my delight and despair, I found one for wholesale - the same price I would have paid my suppliers. How can Main Street compete when Amazon's "everyone" price is the same as the Main Street store's "Distributor Price". And how long will there even be distributors?
John Neugent
Major industry changes are similar to natural disasters. Hurricanes, tornados and earth quakes can devastate regions the same way new technologies or business models can devastate industries. You plan for them but you never really expect them.
We all know about dozens of products that have become obsolete but consider the advertising business. Most newspapers are struggling and most magazines are gone. Internet advertising strategies continue to develop at light speed as search engines mine our every move so ads now follow our thoughts. (do some web product searches and see what happens to the Google AdSense ads above) All of this happened in less than 15 years and much of it in the last five.
The Internet Tsunami has restructured the way we get digital information - music, video, news, and information.
Main Street - the stores we shop in - is next. the old mail order catalogs and even the first generation of Internet companies compete fairly well with Main Street shops, but there is a new generation of retailers that are destabilizing not only Main Street but traditional Internet stores. The bike industry and many, many others are facing a major tsunami similar to the one faced by the advertising industry. It won’t happen as fast because our products are not digital, but the outcome is going to be just as disruptive. I don't see this as being good or bad, but I believe we need to look to the future to see what best fits our customer's needs. It's not going to be fun, because disasters never are.
When a customer walks in the door I am always asking myself why they came in. Granted, we are a very special retailer but, not surprisingly, often it’s not to buy something or for service. Outside of those two obvious reasons, they come in for information or entertainment (with entertainment being a big part of every visit!).
I am not in the business of pulling teeth so almost every visit is an extension of people’s love of the sport. The shop of the future will focus on those needs as well as offering competitive pricing on everything they offer. Just as the most effective leaders tell people what they want to hear, the best shops will deliver what the customer wants. There is no magic in that part. The magic is in what form it takes and how to make money doing it.
Respect is the Holy Grail of communication whether it’s between spouses or shop owners and customers. It’s the one thing that humans need most in all of their interactions. Respect comes in many forms. It’s about paying attention, caring, appearance and, if you are a shop owner, how much you charge.
The funny thing is that respect goes both ways.
Most consumers don’t understand that the entertainment they get from shopping comes at a price. That price being the profit margin the store makes on the sale. A shop owners' time costs the same whether they are servicing a bike (the average rate for service is about $1 a minute) or giving out information. We think nothing of paying a handyman $40-60 an hour to work on our house but expect to shop for free and then buy "off of the web". Obviously we never really shopped for free. When the competition was local the model worked, but now with the Internet and the jungles of Amazon a new model is needed, because with the Internet we do "shop for nearly free" but it is a dramatically different experience in terms of human interaction.
I just went to Amazon to buy a bike part I needed for a bike build because all of my suppliers were out of stock. Much to my delight and despair, I found one for wholesale - the same price I would have paid my suppliers. How can Main Street compete when Amazon's "everyone" price is the same as the Main Street store's "Distributor Price". And how long will there even be distributors?
John Neugent
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