Specialized, one of the biggest bike brands in the world, recently announced it would start selling its bikes direct to consumers online. The announcement has caused waves in the cycle trade, but how are retailers reacting to the news? BikeBiz digs into the response
This piece first appeared in the March edition of BikeBiz magazine – get your free subscription here
Direct-to-consumer bike sales are nothing new in this industry.
Canyon, founded more than 20 years ago, has sold bikes directly to the public since its inception, while in recent times more big names have launched into the direct sales market, including US supermarket giant Walmart, which unveiled its own high-end bike brand, Viathon, in 2019.
While the trend to online sales has been no secret, especially to those retailers feeling the sting, the news that Specialized Bicycles would now be offering direct sales to its customers online may have been eye-opening for many.
The decision to make bikes available over the internet is an unexpected move from California-based bike brand Specialized, owing to the unequivocal words of its CEO Mike Sinyard, who 10 years ago assured dealers: “We will never sell bikes over the internet.” Sinyard, who founded Specialized in 1974, has long been critical of online sales in the bike industry, and the impact it has on local shops.
While the brand has a history of selling shoes and accessories direct to consumers online, earlier this year Specialized announced that for the first time the public would be able to order their brand new bike from Specialized.com, and get a range of delivery options for their machine to be delivered directly to their door.
The news has been met with a cocktail of feelings – from consternation, to inevitability, and even some positivity at consumers being given more options – while the UK wing of Specialized says its relationship with retailer partners will remain key to the business.
BikeBiz has canvassed its readers to see how the industry is reacting to the news…
The new Specialized business model will offer two delivery options to customers – Ship to Home and Specialized Delivery.
Ship to Home will be the basic delivery option, allowing customers to order their bike to be shipped to their desired location, pre-built but with some assembly, with a ‘rider care specialist’ on hand to offer over-the-phone advice.
Specialized Delivery is a premium delivery service, which will see the bike delivered by a professional technician who will then ensure the bike fits and is properly set up. The technician will then go over basic maintenance and stay with the customer while they go for their first spin.
Shaun Wells, the owner of Cookson Cycle in Manchester, also understands the decision to sell bikes online, but has his own concerns about the impact on stock. He said: “Just another online channel for consumers to buy – though holding back stock and offering a personal delivery service I don’t think is great. Standing in your shop with a bike that is not available to order via the local dealer but the consumer can order direct – this ring-fenced stock is awful.
“Maybe Specialized could have asked their large dealer network to take delivery of the bike, build it and hand-deliver, similar to the model Giant offer.”
Following the ongoing supply issues the bike trade is facing, it’s not a surprise that bike shop owners are fearing the impacts of a new online model from Specialized, further splitting stock from the shop floor.
Wells added: “I think others will follow. It happens in other industries where consumers can buy direct – I don’t agree though, I think bike sales require more customer interaction and dealer support. If shops close down, who is going to look at warranty work etc. It’s not like buying a camera or phone that you can just send back in the post easily.”
Paul Cheynard, a data analyst from Connecticut in the US, said: “My thoughts are mixed. I see this move as bad for smaller shops that don’t bring in the large shop revenue, so I believe we’ll see small shops lose Specialized bicycle access as the company moves to support big shops and company-owned stores.”
A spokesperson for Specialized UK said: “The exceptional service, community, and choice that our aligned retail partners offer riders will remain a key part of the Specialized eco-system, now and into the future. We continue to communicate directly with our aligned partners, working in partnership with them towards a clear vision for the future.”
The following is a letter sent to Specialized UK by Ray Wookey, founder of Energise E-bikes in Kent, setting out his concerns…
Dear Specialized UK,
I am writing to you about the concerns that we have in relation to the decision which Specialized have made to start selling products direct-to-rider.
We value the relationship that we strive to build when our customers visit us for the first time. We spend time with them in understanding, through asking appropriate questions, their requirements and identifying the products that meet their needs and expectations.
Once a suitable product has been decided on, we then accompany the customer on a considered test ride to reinforce their decision making. All of this helps to build a strong level of trust in both ourselves and the brands that we sell.
Maintaining a consistent and high level of footfall is key to the survival of the high street store. The introduction of direct-to-rider will greatly decrease our footfall and undermine the work and efforts that we have made in building our business.
In going direct-to-rider, Specialized are taking away the customer experience and disjointing the customer from their local bike shop.
Many of our sales throughout the year are from repeat business and customer recommendations. Direct-to-rider will have a severe negative impact on our repeat business as it does not allow us to build a relationship with the rider.
Furthermore, the lack of a commission for the LBS that would be the end users’ local shop does not follow what other brands who support us offer. Many other brands provide us with a fair commission when goods are purchased from their website for delivery direct-to-consumer. This helps to support and grow the LBS, without whom Specialized would have no dealers to help undertake warranty repairs for the products that were sold directly to the rider. This would be a negative result for the Specialized brand.
As an example, we used to be a Brompton stockist before Brompton had their own retail stores. On several occasions we spent considerable time discussing and demonstrating the product to potential customers only to find that in not having the colour option that they wanted, the sale migrated to Bromptons online web shop. This resulted in us not only losing the sale but losing the time that we invested in the customer. Brompton, like yourselves, did not offer a commission on the sale. This experience resulted in us dropping the Brompton brand from our range.
It certainly does not feel coincidental that direct-to-rider is being launched at the same time as the revised warranty charter. Specialized needs its dealer base to support the warranties on bikes being sent direct! Again, without the dealer base how will Specialized cope?
It would appear that Specialized wants all the rewards for selling the product without the hassle of dealing with irate customers when things go wrong. Instead, the stress and frustration are being handed over to a shop that has not had first contact nor developed a relationship with the customer.
One final point: We understand that you are implementing a click and collect from the dealer offering the dealer 50% of your standard stocking margin. As a brand, Specialized provides typically 10 points less margin than other brands we stock and certainly is the lowest margin of any brand we offer. To have further erosion of what is already a low base is completely unacceptable. Altogether this scheme is ill-considered, one-sided and would prompt us to consider whether we continue to stock the brand at all.
I doubt we are the only retailer expressing our concerns and would like to know what plans Specialized have in supporting its network of dealers with appropriate commissions on direct-to-rider and click and collect sales?
Energise E-bikes, Kent