Not that long ago, anyone who talked about selling bikes online would have been laughed out of trade shows or conferences.
These days, the entire industry is trending toward online sales.
As Americans have gotten more comfortable buying everything online, interest in online bike sales has skyrocketed. This helps explain why the number of brick-and-mortar bike retailers in the U.S. plummeted by nearly 45 percent between 2001 and 2016.
At Brooklyn Bicycle Co., we’re aiming to stem the tide of brick-and-mortar closures by supporting Independent Bike Dealers—even as we utilize an online sales model.
If that sounds far-fetched, hear us out. In general, our bike shop partners are enjoying higher net effective margins than shops operating on a different model, and the feedback we’ve received from our partners has been highly encouraging. Here’s a closer look at how we’re looping IBDs into the online sales game—and how they’re benefiting in the procesings.
How IBDs Can Cash In on the Growth of Online Sales
In a nutshell, this is how our model works: Even though we sell our bikes online, we involve IBDs in every purchase. That’s because we don’t ever ship bikes to customers’ homes. Instead, we exclusively fulfill our orders through independent bike dealers, whom we pay to assemble our bikes. IBDs can also cash in by becoming stocking dealers; in that case, instead of only paying shops to assemble a bike, we give them the bulk of the margin they would have made had they sold it themselves.
Bottom line? Every time we sell a bike online, dealers benefit from the sale.
Sell merchandise without paying to stock it
Our stocking dealers benefit from our online sales regardless of whether they carry our merchandise in-house. This means dealers can save on stocking expenses, which lowers out-of-pocket costs and increases margins.
Stop worrying about being cut out of a sale
Because we never ship directly to our customers’ houses, bike shops don’t have to worry about being cut out of a sale. Dealers might not make the exact margin as they would from a purchase made on their floor, but they’re also not losing a sale because a customer prefers to buy from behind a computer screen. There are plenty of people who will never be comfortable buying a bike on the floor of a retail shop; this model allows brick-and-mortar retailers to profit from their purchases anyway.
Piggyback on online retailers’ marketing efforts
When it comes to online purchases, dealers won’t make 100 cents on the dollar. We retain some of that money to account for things like credit card processing fees. Most of the funds that are left over after accounting for fees accrue to our marketing budget. We then spend many of those marketing dollars locally with our partners. This means IBDs benefit from major enhancements to their own marketing efforts (without having to pay for it).
Tap into a potential customer base
We currently have around 150 partners who stock our bikes, and we enlist another 415 shops around the country to assemble bikes for our customers. This means that of the 3,000 or so bike shops in the U.S., we’re sending customers into upwards of 15 percent of those shops. These IBDs benefit from an enlarged local customer base and potential future sales. For example, a customer who has purchased a bike through our site and picked it up at a local bike shop might return to that shop to buy a helmet or other accessories.
No sales model is perfect. We’re continually adjusting our model to make sure it’s as fair as possible for all parties who have a stake in the game— our customers, our stocking dealers, our other partners, and so on. In pursuing a bicycle sales model that is fair to all parties, we’re hoping to change the way the bike industry thinks about online sales. Instead of online retailers siphoning business from brick-and-mortar shops, we’re advocating for a model in which partnerships between online retailers and IBDs benefit everyone involved.
