Author Topic: novice with delusions of grandure  (Read 4207 times)

Jon

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Re: novice with delusions of grandure
« Reply #30 on: October 20, 2014, 03:35:11 PM »
Quote
Contrast this with even the most basic of bike shops. The proprietor has taken a substantial financial commitment to acquire the lease, for which they will probably remain responsible even if their business subsequently fails............................ As a 'proper' business they will be paying tax on their profits and they will almost certainly be handing over 20% of the price of everything they sell to the VAT man (although they will of course be claiming back the VAT on the purchase price of whatever they buy).

I hope you don't mind, I've shortened your quote!  ;D

Online-only businesses will still have to pay the bulk of this as well, surely? Obviously they don't need to fit out a shop but the locations (and rates etc) will be similar, they'll still employ people - possibly more to answer queries and pack stuff  - rent a fair-sized warehouse, need a decent computer system They will still need to maintain a good stock because who orders online these days if you have to wait for more than a week? Plus they need to include the extra expense of postage. But I don't think I'm too wrong in saying that there aren't many online bike companies the size of Tredz who don't have a store presence as well. Wiggle springs to mind and that's about all.

Back to my point about Tredz online/store prices..  I can see why they do it but I just don't like it and I don't think I've ever come across it in any other area. I can't think of any other purchase I've ever made where this has happened. (Of course it may have happened many times without me knowing!) Maybe it's because I'm familiar with the way the bike industry works and I've come to expect a certain feeling of violation in my dealings with them!  :o (6 for an inner tube? Bloody highwaymen! ;D ) I'm quite happy to be corrected but if I was buying a camera/fishing gear/surfboard/audio/guitar/anything hobbyist and walked into the store clutching cash in my hand eager to buy at the price advertised online only to find prices 25% higher I'd be surprised. Dismayed even.  ;D

Anyway, it sounds like I'm having a go at Tredz when I'm not really meaning to - it was just one throwaway comment which made me think a bit, especially about whether it happens in other areas. I'm now genuinely interested if anyone has come across this pricing model in other retail areas.
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domparkes

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Re: novice with delusions of grandure
« Reply #31 on: October 20, 2014, 05:44:42 PM »
The thing is, e-commerce is a 'disruptive technology' when it comes to retailing.

Once upon a time, the barrier to entering the retail market was pretty high. You needed to invest in a shop, for a start, and in all the things to go in it as outlined previously. Then along comes e-commerce, and the entry barrier is lowered significantly. I would never claim that e-commerce is cost free (far from it - big online retailers spend fortunes on automation technologies, adWords/markerting, IT function etc), but the point is that someone can enter the market on a very small scale selling through a third-party e-commerce platform like ebay. And unlike a shop, it can be done initially on a truly part-time basis. It's then not such a huge step to sign up to a specialist e-commerce solutions provider and start selling through your own e-commerce website, going on perhaps to grow the business organically as and when sales increase. All this can potentially be done from home (spare room/garage full of stock, PC in a corner of the living room etc), at least until turnover is sufficient to pay for dedicated business premises. Without the overheads of a shop, it's possible to be very competitive on price, winning sales from the LBS in particular. OK, you can't yet benefit from massive purchasing power, but then nor can the typical LBS.

I would guess that Woolly Hat Shop is probably an example of an e-commerce business which has gone down the above start-up/expansion route (just a guess though - I may be wrong).

I think then that my previous main point still stands - in the price contest between the LBS and 'the whole of the web', there will nearly always be someone on the web selling whatever it is you're after for considerably less - and often at a price that a shop-based business simply couldn't match.

Now I agree that the cost model changes radically when an e-commerce business steps up to the big time. But there are still potentially big cost savings to be made over shop-based retail. Key among these is the different premises requirement. Yes, a decent-sized e-commerce business needs space. But unlike a shop, which will pay a premium rent for a premium location with decent footfall or suffer the consequences of choosing a poor location, an e-commerce operation just needs plenty of cheap space and reasonable access to transport links. It could be an industrial unit, an old farm building, a warehouse, etc etc etc. Or even a decent-sized double garage. There are also no shopfitting costs. Also unlike a shop, you can scale your workforce requirement exactly to fit demand. At the outset, you may be able to do everything yourself - perhaps in the evenings. Then as things get busier you could devote more of your working day to the business, and then eventually take someone on. But initially you might only take someone on to work one or two days a week, or perhaps short hours for five days a week. Contrast that with a shop, where the staffing requirement is from the very outset at least 40 man-hours per week in order to open for five days a week with one person in the shop at all times. And there is very little flexibility as to when those hours must be worked. Yes, the person doing the work can be the proprietor, but as pointed out previously time spent manning a shop (including an empty one that's not currently earning you any money) is time not spent supplementing your income by doing something else.   
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Steve ;)

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Re: novice with delusions of grandure
« Reply #32 on: October 20, 2014, 06:38:12 PM »
Maybe a new thread should be started up.
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Brendawg

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Re: novice with delusions of grandure
« Reply #33 on: October 20, 2014, 07:41:24 PM »
The grumpy old man thread?
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Jon

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Re: novice with delusions of grandure
« Reply #34 on: October 20, 2014, 07:56:23 PM »
I think Rich should feel proud of starting a thread that could be published as The Idiots Guide to 21st Century Retail.  ;D Although it may need to be condensed before publication.
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Pace Ian

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Re: novice with delusions of grandure
« Reply #35 on: October 20, 2014, 08:04:49 PM »
Heh, he's probably thinking 'I'm not going riding with this bunch of miserable gits!' 😆
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Jon

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Re: novice with delusions of grandure
« Reply #36 on: October 20, 2014, 08:15:26 PM »
You started it.  :P  ;D
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Pace Ian

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Re: novice with delusions of grandure
« Reply #37 on: October 20, 2014, 08:22:04 PM »
I've got to live up to my stereotype, miserable moaning brummy c-word 😜
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Richardgarner1

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Re: novice with delusions of grandure
« Reply #38 on: October 20, 2014, 10:33:10 PM »
Haha lol, it's our God given right to moan, besides at least I know now not to mention e-buying ever,

Pilau

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Re: novice with delusions of grandure
« Reply #39 on: October 21, 2014, 12:04:57 AM »
Wow! There's a lot of reading there, I'll save it for a rainy day!! ................ Oh Shit! It's raining!! GOD, PLEASE STOP IT RAINING! PLEASE!!!

caf

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Re: novice with delusions of grandure
« Reply #40 on: October 24, 2014, 11:01:23 PM »
You don't go online for a few days and I miss my opportunity to roll out the soap box. rats.

Anyway back to the jackets - I bought an endure jacket from Tredz, was about 60 - it keeps we pretty dry and the wind off. I'd like a 100+ jacket - but one crash and rip and it's lovely Gore-Tex-edness would be ripped, so I spent as much as I wouldn't shed to many tears of damaging.

Ah the LBS debate, I buy online and in local shops, I don't mind paying a little bit more in a bike shop than online, to have it in my hands and also be able to return/exchange with less faff is worth it also to be able to pick the staff's brains for info when I'm unsure about things.

Also....Welcome Richard!