Roughly translated, neos means new, which is an appropriate name for the fresh faced distributor headed up by Richard Allmark with a new take on the traditional distribution model…
NEOS is debuting a new distribution model, how long has it been in the works?
Around 18 months ago but the real work began a year ago, with a view to starting in spring 2015. The last six months have been flat out preparing for launch. We are a few months behind schedule, but IBD response has been remarkable and has helped me tweak a few details to make the proposition really compelling. NEOS is Greek for new, and although I can’t claim that all of these ideas are completely new or unique, the model as a whole is new, the brands are new to our market and this is my new venture.
Can you sum up how NEOS CYCLING works with IBDs through your consumer site?
Appreciating the spectrum of consumer online buying behaviour is key to this. At one end are consumers who are online resistant, shopping only in bricks and mortar stores while at the other end are online-only shoppers. In the middle is a huge variance like online researchers who buy in-store or click & collect shoppers. The aim of NEOS is to bring a complete offering to all of these consumers. Our research shows many online shoppers feel guilty about not supporting local IBDs. Fundamental to NEOS CYCLING’s B2C platform is the first class network of IBDs. Like other online stores, NEOS entices consumers to buy from us. We geotag consumers and link them with their nearest or favourite IBD in the network.
From the first order onwards, that preferred IBD receives commission on that consumer’s purchases. The consumer is made aware of this and that the IBD will provide face-to-face advice, returns management and click & collect. This removes any consumer guilt and drives footfall into that IBD. When that new customer is in-store, what then? Simply handing them a box isn’t enough. This is the chance to convert a casual online purchase to a committed long-term customer. We expect some of the consumers we are catching online may have never visited that IBD. The IBD carries the brands in-store too, giving that touch and feel experience. This means they can sell in-store and make great margins plus earn commission from the NEOS CYCLING B2C channel. Our IBDs get two revenue streams for the price of one.
There will be online promos?
NEOS CYCLING will be actively seeking online shoppers to bring them into our network. Whenever we run online promotions we inform the NEOS IBDs well in advance. They can decide whether or not to run the promo or to simply match price should that be requested. We never ask IBDs to stock up for one of our promos, we simply check the sell through for that period and then issue a credit note on their account to support their margin. This means there’s no excess inventory in-store which means there is no need to clear stock and depress their margin.
We’re sensitive to IBDs needing strong profit margins and not spending too long matching prices or clearing stocks. At the season end, NEOS will collect excess inventories and run a central clearance channel, cleansing the supply chain, supporting the IBD margin and still giving commission to the IBD network for sales made in our clearance window. A credit note is then issued against the returned inventories which is used against the new season buy in.
It’s early days, but have you had much dealer reaction yet?
I really couldn’t have hoped for a better reaction. We are only trying to capture 50 to 60 of the very best for 2015. Our digital and search engine marketing will be focused on areas where we have a NEOS IBD. Our dealer network list will be published in our consumer ad programme and online. The NEOS model has been created to work with and support the specialist IBD without ignoring the need for a strong online presence. We don’t sell to anyone else. Our suppliers are totally on board and want long term brand growth.
This article originally ran in May’s edition of BikeBiz, which you can download or read online for free. Alternatively, you can get BikeBiz magazine through the post for free.