This week, one of the largest and most respected brands in the IBD channel announced that they will begin shipping mostly assembled bikes directly to consumers' homes - similar to consumer-direct brands like Canyon.
Changes like this were inevitable. Brands see a responsibility to their employees and ownership to build direct relationships with consumers and transact in multiple ways.
This choice can make you angry. But the reality is that not every consumer wants to shop the same way. Brands are compelled to provide consumers with choice.
The addition of a new sales channel for a brand does not reduce the value of the IBD as a partner. The IBD channel represents the majority of distribution currently, and will be significant moving forward.
Independent retailers can still thrive in this environment if they are strategic.
What does that mean for your business?
The competitive landscape is shifting
While this change is not surprising - we must recognize that it represents a significant shift in the IBD channel. It is a clear signal that every business in the bike industry needs to take decisive action to support their long-term strategy.
In 2015, the first major bike brand activated their online shopping cart. In subsequent years the majority of other IBD bike brands have followed suit. Bikes sold by major brands in recent years have been largely fulfilled to consumers via the local bike shop. While the overall volume of these types of sales has been relatively low - it is growing.
Assuming other brands will eventually offer D2C fulfillment as an option - some portion of D2C sales will bypass the bike shop entirely. We can also assume that restrictions will be lifted to some extent for independent bike shops to also deliver mostly assembled bikes to consumers’ homes.
Having a premium IBD quality bike brand no longer insulates a local bike shop from ecommerce competition.
In addition to the shop closures, consolidation, expanding national chains, and brand owned retail that is disrupting the physical retail space - these digital disruptions add further complexity to the competitive landscape.
You may have thought that you could ease out of the COVID boom. That unfortunately isn’t the case.
There is an urgent need for you to evaluate the structure and strategy of your business. There are multiple paths to long term success for local bike shops - but to improve your outcomes you should be very intentional about your plan.
Plan for long-term success
Regardless of how you choose to structure your business, most business models will require an active stance to build your brand, attract new customers, and nurture loyalty.
With the competitive landscape shifting, anyone who stands still runs the risk of being left behind.
We’ve seen a growing number of bike shops choose the path of adding ecommerce to their business model. A significant segment of that group has added paid Google Advertising programs as a tactic to actively compete for more sales.
Clearly, the major brands recognize the growing opportunity in ecommerce and digital advertising. These are big companies planning for the long term.
Any retailer who was on the fence about how well they were insulated from the shift to ecommerce should urgently reconsider.
The overwhelming majority of consumer purchases originate online - regardless of where money changes hands. Winning search traffic and converting sales involves having an effective digital strategy. Now is the time to take action.
Use data to build loyalty
Your point of sale data warehouses a treasure trove of product, consumer, and transactional data that you can mine for sales.
As the market shifts, and new purchasing options open up for riders, it is essential that retailers compete for customer loyalty.
At a minimum, every retailer should have an ongoing email marketing program that promotes their local brand and available products to customers. We recommend that retailers send a minimum of one promotional email each month to their entire customer base.
To further unlock your data you should consider signing up for an automated email program like the one offered by SmartEtailing. Programs like this read your POS data on an ongoing basis and automatically send personalized and relevant emails to your customers to improve engagement and conversions.
As the pace of new riders to the sport eases - creating sales growth through returning customers is the best way to positively influence your results.
Profitability is more important than ever
Margins are very thin in this business. Especially now as you consider the potential downside risks of carrying inventory during a time of uncertainty.
In the near-term, there will be a careful balancing act in managing inventory to meet demand while preserving margin. Long-term each purchasing decision will carry more weight because inventory investments will need to produce better returns.
Your local stock is an asset for competing against pure online sellers. You have product on your floor ready for pickup. The right inventory choices make your business more compelling to shoppers.
Effective use of your inventory dollars keeps your business more nimble to navigate a rapidly changing market.
The change announced this week proves beyond a doubt that change is here and that companies are willing to make bold, future-focused decisions.
The IBD channel has sustainable value
During times of change, it is natural for you to worry. In my experience, a certain degree of worry and anxiety is healthy for keeping a business competitive. But that anxiety should be met with a sound strategy to compete over time.
What is your competitive advantage?
- A local brand that riders can connect with
- Physical space to create experiences
- Friendly and knowledgeable staff provide a human connection
- Professional service and repair
- Inventory on-hand to meet immediate needs
- Product that consumers can interact with
- The ability to personally engage with riders
- A preference by Google to serve local search results
- You can likely name many more
In addition, you have access to all of the same tools as your competitors. Effective ecommerce websites and digital marketing tools are accessible to all businesses at a reasonable price.
If you choose a strategy that blends physical and online retail, you not only have a level playing field - you have an advantage.
We are here to help as you navigate change. SmartEtailing has the software and services to position your business for long-term success.
You won’t find any other company more committed to a thriving network of independently owned local bike shops. And we do that within the context of whatever changes take place in the strategic landscape.