How to compete with the "big boys" - New Startup
Discussion
I Would just like to start an informal discussion with regards to how one would go about starting a cycling company, that had the potential to compete with the big boys in the industry.
Here are a few points that I am keen to discuss:
- Initial funds? How much would be needed for initial stock? (buying enough to get good discounts to keep prices low)
- Setting up this initial infrastructure? Would it ideally be a large warehouse with an efficient order processing facility, and would you NEED to have a shop front? Or would you have to start out with a shop and build the premises as the business gets bigger?
- Website? Would it be worth having an all singing, all dancing website from the outset?
- Distribution? How does one go about getting in contact with suppliers, and how do you decide which brands to stock? Would you start with a couple of brands and buy A LOT of bikes to keep prices down? I.E stick to say Giant and Cube to start out with and then once you start expanding, speak to the likes of Trek and Specialized? (I understand you have to be in store to buy a Trek bike)..
This is all theoretical at the moment, and I'm just intrigued as to how the likes of Cycle Surgery, Pedalon etc managed to get a large chunk of the UK market competing with Wiggle, CRC, Halfords etc.
Here are a few points that I am keen to discuss:
- Initial funds? How much would be needed for initial stock? (buying enough to get good discounts to keep prices low)
- Setting up this initial infrastructure? Would it ideally be a large warehouse with an efficient order processing facility, and would you NEED to have a shop front? Or would you have to start out with a shop and build the premises as the business gets bigger?
- Website? Would it be worth having an all singing, all dancing website from the outset?
- Distribution? How does one go about getting in contact with suppliers, and how do you decide which brands to stock? Would you start with a couple of brands and buy A LOT of bikes to keep prices down? I.E stick to say Giant and Cube to start out with and then once you start expanding, speak to the likes of Trek and Specialized? (I understand you have to be in store to buy a Trek bike)..
This is all theoretical at the moment, and I'm just intrigued as to how the likes of Cycle Surgery, Pedalon etc managed to get a large chunk of the UK market competing with Wiggle, CRC, Halfords etc.
Cycling company or a bike shop - One end of the spectrum about £10k the other end about £100m
Might be worth looking into if they are any franchise opportunities, this way you get all the bang of a big brand, buying power etc but sensible start-up costs. Evans used to be a franchise (no idea if it still is)
We have royals very local to me, they operate from one shop (plus a trade/discount counter), Nice shop, nice stock, good online brand etc, I can't see them having invested any less £100k+ (probably many times more), getting off the ground. They are a reasonably niche player - all things triathlon, with the average bike price being c3k+.
Might be worth looking into if they are any franchise opportunities, this way you get all the bang of a big brand, buying power etc but sensible start-up costs. Evans used to be a franchise (no idea if it still is)
We have royals very local to me, they operate from one shop (plus a trade/discount counter), Nice shop, nice stock, good online brand etc, I can't see them having invested any less £100k+ (probably many times more), getting off the ground. They are a reasonably niche player - all things triathlon, with the average bike price being c3k+.
Don't compete with the big boys. Start ups can't (unless very well funded).
Focus on the things small guys can do better, or things that the big boys can't do at all. It it's a bike shop then service, not just customer service but bike repair. Local rides and groups etc.
As en example this guy is my local. He is VERY well regarded as a mechanic (worked for Shimano at the Commonwealths). He sells accessories etc but not bikes. Any time I've been in he's got at least 20 bikes to fix. He gets a very good name but he'll never be rich at £25/h. Overheads will be minimal though.
http://www.bicyclerepair.co.uk/
Move into selling bikes and the overheads mount up. Bikes take up lots of space. Both for sales and repair.
It's a growing market but I'd want to find a way of limiting the costs. Focusing on one area, e.g. clothing or accessories/parts, or repair is one way. I wouldn't want to compete with Evans etc.
Focus on the things small guys can do better, or things that the big boys can't do at all. It it's a bike shop then service, not just customer service but bike repair. Local rides and groups etc.
As en example this guy is my local. He is VERY well regarded as a mechanic (worked for Shimano at the Commonwealths). He sells accessories etc but not bikes. Any time I've been in he's got at least 20 bikes to fix. He gets a very good name but he'll never be rich at £25/h. Overheads will be minimal though.
http://www.bicyclerepair.co.uk/
Move into selling bikes and the overheads mount up. Bikes take up lots of space. Both for sales and repair.
It's a growing market but I'd want to find a way of limiting the costs. Focusing on one area, e.g. clothing or accessories/parts, or repair is one way. I wouldn't want to compete with Evans etc.
Thanks for the comments guys, I know a lot have mentioned that a small bike shop is the way to go but I was speaking in theoretical terms, what sort of things you would have to consider in order to build a business big enough to compete with them.
A famous saying has often been brought up that you need 10 million to make a million in this trade, I think there is evidently some truth in this.
But undoubtedly in the future, with the bike industry expanding as quick as it is, there is likely to be a new big-time player competing for a share of the market.
A famous saying has often been brought up that you need 10 million to make a million in this trade, I think there is evidently some truth in this.
But undoubtedly in the future, with the bike industry expanding as quick as it is, there is likely to be a new big-time player competing for a share of the market.
If you really wanted to compete with the big boys as quick as possible then you're going to want to keep your overheads low.
The way I'd do it would be to get a largeish but cheap warehouse go the online route. Get a reputation for offering great customer service. Do the social media thing well (I mean really well). Only once you've build up the online side can you start to open shops.
I reckon with £100k-200k you could make a real good start. Of course you could start with as little as £20k but it would take you longer to grow.
The way I'd do it would be to get a largeish but cheap warehouse go the online route. Get a reputation for offering great customer service. Do the social media thing well (I mean really well). Only once you've build up the online side can you start to open shops.
I reckon with £100k-200k you could make a real good start. Of course you could start with as little as £20k but it would take you longer to grow.
jammy_basturd said:
If you really wanted to compete with the big boys as quick as possible then you're going to want to keep your overheads low.
The way I'd do it would be to get a largeish but cheap warehouse go the online route. Get a reputation for offering great customer service. Do the social media thing well (I mean really well). Only once you've build up the online side can you start to open shops.
I reckon with £100k-200k you could make a real good start. Of course you could start with as little as £20k but it would take you longer to grow.
This was exactly the thoughts of my self and potential partners. It will mean relatively low overhead costs in terms of premises, somewhere on an industrial site would be perfect.The way I'd do it would be to get a largeish but cheap warehouse go the online route. Get a reputation for offering great customer service. Do the social media thing well (I mean really well). Only once you've build up the online side can you start to open shops.
I reckon with £100k-200k you could make a real good start. Of course you could start with as little as £20k but it would take you longer to grow.
Would this affect our ability to sell bikes though, people would evidently want to come into the store in case of anything wrong.
Or would it be better to sell all the accessories, clothing, tools etc to start out with - and aim to be as cheap as possible on everything.
Where do companies stand on free shipping these days? Is it a key aspect of enticing the buyer to purchase from a particular retailer? I was thinking of setting a Min order of 25 pounds for free delivery, and then eventually tweaking this depending on the average order size.
I have seen the warehouse business model (the eventually opening brick and mortar stores) become quite an effective business model in other industries.
The founder of Vulpine is or was a member of my club. I cannot imagine he started with much more than large 5 figure sum. He now (under 2 years I think later) employs 6-7 staff and is doing very well.
Get the market right, get your marketing and product right and it seems to be a booming business (cycling).
I reckon cycling cafes are a great idea. I've thought about opening one, but not that seriously yet.
Get the market right, get your marketing and product right and it seems to be a booming business (cycling).
I reckon cycling cafes are a great idea. I've thought about opening one, but not that seriously yet.
Don't sell cheap. Selling cheap is a mugs game - they'll always be someone who is willing to sell cheaper and then all you're doing is eating into your profits.
Sell at a fair price but offer unrivalled customer service. Free shipping, free returns. Get the bikes to the customers within 24 hours if you have them in stock. Offer live chat with well informed, knowledgeable reps.
Not sure why customers would want to visit your premises - if you're selling nationally then only a small percentage of orders will be local anyway.
Sell at a fair price but offer unrivalled customer service. Free shipping, free returns. Get the bikes to the customers within 24 hours if you have them in stock. Offer live chat with well informed, knowledgeable reps.
Not sure why customers would want to visit your premises - if you're selling nationally then only a small percentage of orders will be local anyway.
jammy_basturd said:
Don't sell cheap. Selling cheap is a mugs game - they'll always be someone who is willing to sell cheaper and then all you're doing is eating into your profits.
Sell at a fair price but offer unrivalled customer service. Free shipping, free returns. Get the bikes to the customers within 24 hours if you have them in stock. Offer live chat with well informed, knowledgeable reps.
Not sure why customers would want to visit your premises - if you're selling nationally then only a small percentage of orders will be local anyway.
Customer service is definitely the key then? As long as you are there or there about with price?Sell at a fair price but offer unrivalled customer service. Free shipping, free returns. Get the bikes to the customers within 24 hours if you have them in stock. Offer live chat with well informed, knowledgeable reps.
Not sure why customers would want to visit your premises - if you're selling nationally then only a small percentage of orders will be local anyway.
The aim would be to get everything to the customer next day where possible, with the ease of returns if needed, as well as a solid internal infrastructure to ensure the orders can be processed quick enough.
How much are you looking at per consignment on a trade courier type deal? Is it all dependent on quantity of units per month? I worked at a company who used DPD, who inform the customer of a 1 hour time slot for delivery which I found to work very well, but didn't manage to find out how much it cost to deliver. Are we talking £2-3.
It's definitely a project that would take a while to plan and configure, and will take a lot of research and getting different people's opinions, but something I think is definitely possible.
z4RRSchris99 said:
I can't see you being able to offer anything more or cheaper than the CRC wiggle PlanetX etc lot
What are your reasons for this mate? Anything in particular? I'm not saying your wrong by the way
But that's the whole point of the discussion. What limiting factors are the going to be? We are obviously assuming that there is a fairly large 'pot' to start out with for investment of premises, stock, infrastructure, website etc.
okgo said:
The founder of Vulpine is or was a member of my club. I cannot imagine he started with much more than large 5 figure sum. He now (under 2 years I think later) employs 6-7 staff and is doing very well.
Their doing extemely well for themselves. I bumped into him at an event a few weeks ago that 1 of his staff ran (a screening of Katherine Bertines film Half the Road), an had a quick chat with him. A tough start, but they are now reaping the rewards, which given the 2 signings the team he part sponsers have just made, even more rewards to be reaped I think.They do seem to have got their target just right though, and run a very good twitter marketing ploy. Not my type of clothing, but certainly well reviewed, and photos have come out of well known people wearing their clothes, the likes of Chris Hoy.
On the flip side, I recieved this in my inbox from an online shop I'd used previously, which makes the point perfectly.
http://www.disciplineofthree.com/blog/do3-retail-o...
If your USP is going to be price, then you're going down the pile 'em high, sell 'em cheap route. You'll need to find cheap suppliers that you can make some margin on and then make sure your overheads are kept at a minimum.
No DPD - they're not the cheapest courier.
You'll struggle to do free shipping and returns.
No live chat, it's expensive having staff sat around waiting to answer customer questions. Same with phone support. Only do email so they can be answered at your convenience rather than the customers.
Cheap and great customer service do not go hand in hand! Just look at Ryanair.
No DPD - they're not the cheapest courier.
You'll struggle to do free shipping and returns.
No live chat, it's expensive having staff sat around waiting to answer customer questions. Same with phone support. Only do email so they can be answered at your convenience rather than the customers.
Cheap and great customer service do not go hand in hand! Just look at Ryanair.
All the above really... I think it will take a LOT of money to get a reasonable income.
Cost it this way - If you take 1 of each item that most cycle shops/dealers sell (for example have a look at Spa Cycles, a long established quality touring bike shop). Just to stock 1 of each item is a considerable sum. To get the necessary quantity discounts I suspect you would have to buy 100+ of each item (maybe I'm mistaken?). If not doing this (ie getting stock as/when required) then the customer doesn't get the stock quickly and soon goes elsewhere. I plan my purchases well in advance, but had an experience with an online shop (shan't mention name) who don't seem to keep much in stock - the part ordered turned up after 1 week, was the wrong part so I sent it back and the correct replacement arrived 2 weeks later. Although they got there in the end, I won't use them again even though they are a little cheaper in most cases. So you need (INHO) to firstly have a good service, and secondly the stock.
The only other way (as I can see it) is to have something unique/very specialist eg folding bike specialist?
Good Luck
Cost it this way - If you take 1 of each item that most cycle shops/dealers sell (for example have a look at Spa Cycles, a long established quality touring bike shop). Just to stock 1 of each item is a considerable sum. To get the necessary quantity discounts I suspect you would have to buy 100+ of each item (maybe I'm mistaken?). If not doing this (ie getting stock as/when required) then the customer doesn't get the stock quickly and soon goes elsewhere. I plan my purchases well in advance, but had an experience with an online shop (shan't mention name) who don't seem to keep much in stock - the part ordered turned up after 1 week, was the wrong part so I sent it back and the correct replacement arrived 2 weeks later. Although they got there in the end, I won't use them again even though they are a little cheaper in most cases. So you need (INHO) to firstly have a good service, and secondly the stock.
The only other way (as I can see it) is to have something unique/very specialist eg folding bike specialist?
Good Luck
What I am failing to understand here is, why it is not possible to achieve a 'sell em cheap stack em high' type policy as well as achieving a substantial level of customer service at the same time? Is this because the margins wouldn't allow for the staffing levels required to achieve this?
Would it be more effective to aim for unrivaled CS level, and just aiming to be COMPETITIVE on price as a pose to being the cheapest?
Would it be more effective to aim for unrivaled CS level, and just aiming to be COMPETITIVE on price as a pose to being the cheapest?
Gassing Station | Pedal Powered | Top of Page | What's New | My Stuff