CHAIN REACTION: Net profit

It’s been a good year for the bike industry and next year looks even better. But beneath the headline figures, are some interesting and important trends that have already been noted.

Starting with the obvious – online sales are growing and taking share from the High Street. Fine if you have shops and an e-commerce business, but less so if you don’t sell online. It’s not just clothes, parts and accessories, it’s actual bikes that are sold online. The e-genie is out of the bottle and who wouldn’t bet on more bike brands relaxing their strict ‘no online’ policies in the immediate future?

Can we look forward to a price-orientated world with a handful of crushingly dominant retailers and no room for the little guy? Not at all. It’s true the internet makes it easier for customers to find the best prices, but it’s also true that the internet is great at ‘making a market’ for more niche products. There’s never been a better time to be a specialist. The internet opens up national or even international markets, and reduces the cost of doing business, so making all sorts of niches commercially viable.

What about if you want to swim in the mainstream? Is it too late to compete? No. Customers are loyal to a point, but have short memories and will happily flit from one retailer to another, especially for parts and accessories. These days you can’t own web customers, you only borrow them. Customer relationship marketing and branding are paramount for the online retailer. Look at the ads on any major website or in any magazine and it’s the major internet retailers with a strong brand message who predominate.

If they thought the war was already won, would they be spending like sailors?

THE LITTLE BRANDS
Life for the manufacturers will get a lot less predictable as links between marketing effort, consumer preference and sales are now much more direct. A brand that gets its consumer marketing right can expect to win share right away, because barriers simply don’t exist anymore. If you’re a big brand and doing well, it can be hard to spot the little brands nibbling away at your lunch and to understand how they’re doing it. The main job of the marketing department is to get consumers wanting its brands because if they do, they will find and buy them.

So, what’s new here? Bike manufacturers have always taken marketing seriously, right? Yes, but much of it was directed at the trade rather than consumers. A brand manager once revealed that when considering his advertising, end consumers were third on his list of priorities. He said: “Dealers stock bikes that win the group test in magazines and customers buy the bikes that dealers stock. So I keep the publishers and dealers happy, and the customers look after themselves.” Sensible. Or it is until customers started using the internet to research bikes and go shopping. Now, cycling websites help them decide which product or brand they want and they go off and buy it. In the companies that understand this best, the marketing departments are jumping for joy because they’ve got consumer marketing to do and so much of it is new and exciting.

CONSUMER MARKETING
The internet gives customers choice by making information available and putting buyers and sellers together, but this isn’t always a good thing. In fact it can be a pain if you’ve slaved for years to build a position that now looks precarious thanks to the whimsical bike-buying public. But that’s where we are. It’s exciting to watch innovative online consumer marketing.

Now, I can own up to a vested interest. We online publishers have done remarkably well at building audiences. Last time I checked, there were 1.8 million unique users across the main UK cycling websites – that’s eight times the number of people that buy cycling mags each month.

The online audience is extremely well developed but it’s only now, as bike companies have become very serious about consumer marketing, that the online advertising is really taking off. The 1.8 million users of cycling websites represent the untapped potential of a sleeping giant. Am I excited about the changes in the bike industry? Not half.