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Interesting and very upsetting if true!(23 posts)

Interesting and very upsetting if true!52-16SS
Mar 27, 2003 12:15 PM
I'm not surprised if the following is true:

What ever happened to ethics - greedy SOB's
re: Interesting and very upsetting if true!Akirasho
Mar 27, 2003 12:40 PM
... just another aspect of the flaws of capitalizm... which is far less about service to the customer as to protecting and growing market shares...

Restricting goods to a few vendors is nothing new... indeed, I've purchased from "grey markets" before because it might have been the only way to get what I, the customer wanted... case in point... I wanted a pair of Sidi G4 shoes in a scheme only offered in Europe... Veltec flat out refused to fool with my request (again, the customer waving money in his hand...) so I went with an Euro vendor instead.

I've also purchased a lot of goods from Total Cycling... which is arguably a "grey market" hub... got what I wanted (customer with money in hand) and at some point... the manufacturers got their monies too (might have been a smaller markup than they might have liked... but a markup nevertheless)!!!

I know that I'm oversimplifying... and at times, buying certain goods through certain routes can be detrimental (buying back your own radio at a pawn shop for instance) but many times... I fundamentally believe that it IS greed oriented... after all... who can challenge Shimano???

Be the bike.
And this effects me how ?MR_GRUMPY
Mar 27, 2003 12:44 PM
If I need to buy something, I'll just get it from one of the six you mentioned..............Thanks..
Less competition = higher prices (nm)52-16SS
Mar 27, 2003 1:04 PM
I don't think so ..MR_GRUMPY
Mar 27, 2003 1:11 PM
If Performance raises their prices, I'll just get the part from Colorado Cyclist............
I think so ..filtersweep
Mar 27, 2003 1:18 PM
You are missing the point- Shimano will ultimately be controlling the price. It is similar to CC selling road frames, components, etc. at FULL MSRP- which I guess is really only good if you live 10 hrs away from a decent LBS.
If that is true......................................MR_GRUMPY
Mar 27, 2003 1:22 PM
People will buy more Campy stuff. I don't think Shimano would stand for that.
I think so ..52-16SS
Mar 27, 2003 1:23 PM
There will always be someone with a cheaper price. If you have to underbid 100's of competitors instead of just 5 your price will be lower then the lowest of the 5.
That's called a cartel, not free marketlaffeaux
Mar 27, 2003 1:57 PM
If competition is limited, the relatively small number of retailers do not truly complete in a free market, and they are free to price match. Ever wonder why when you call for a plane ticket, every airline quotes the same price?

In a truly free market anyone can buy and sell, and the seller(s) with the best combination of low priced products and high service levels usually win.

Admittedly there's not enough in the memo to know for sure what these new policies are and their impacts, but reduced competition is often bad. I say "often," because there are companies like Trek that limit who they sell to (i.e. if you sell their bikes on-line, you loose the right to sell the products), and personally I feel that their supporting the LBS is healthy. Maybe Shimano is attempting the same thing.
Mar 27, 2003 1:54 PM
Who are the other shops not mentioned?
re: Interesting and very upsetting if true!bill105
Mar 27, 2003 1:19 PM
This is whats perfect about capitalism. A producer doesnt have to sell anything to you whether you have money or not. Its called the free enterprise system. As far as a manufacturer limiting his distribution points, it makes it entirely more manageable, cheaper and those who do get to distribute can claim competitive advantage. Those distributors also value the relationship they have with the manufacturer more and work harder to keep it. Think for one second. As a distributor, do you want to maintain control over quality, have some input as to customer contact and have the rights associated with your own product? Do you want to ship goods to thousands and thousands of distributors and keep up with who is a good distributor reputible shop or honest company? Limiting distributors doesnt equal screwing anybody with higher prices. Its a strategy of operating a controllable business for long term gain, not a short term cash out. As far as the Sherman Act, its not as clear as the writer of the link makes it to be. In my business, bigger distributors get bigger incentives. This makes the distributor work harder. It also breeds entreprenuerism. People wanting to fight the "system" are free to go out and invent a better mouse trap and sell and distribute it in any way they see fit and that helps the end user.
Mar 27, 2003 1:28 PM
Business is business...The strong win, and the weak loose.
re: Interesting and very upsetting if true!52-16SS
Mar 27, 2003 1:41 PM
So it would be all right to sell your goods to one distributor for 9.99 and to another for 9999999999.99 just because he's got big ears, and big ears does not go well with your company's image as being streamlined
re: Interesting and very upsetting if true!bill105
Mar 27, 2003 1:48 PM
Thats absolutely correct. Like the previous post stated. The strong will survive. And if the dumbo eared distributor was paying 9999999999.99 for a 9.99 part, that just points again to survival of the fittest and whats great about capitalism. Work hard, make better product, make better money as opposed to communism or solcialism which is every loser has a job and we all get the same choice of crappy goods.
The way it works.........MR_GRUMPY
Mar 27, 2003 2:00 PM
One distributor buys 100 thingys a year. Another buys 10,000 a year. Still another buys 12,000 a year. Four more buy 9,000 a year.
Why should you take the trouble to sell to the goof that only buys 100 a year??
In my business, we give the best price to the biggest distributors, and if we don't like someone, we send them to buy from our main distributors.
The way it works.........52-16SS
Mar 27, 2003 2:06 PM
"if we don't like someone, we send them to buy from our main distributors"
But you don't tell your main distributors not to sell to him or you will cut the distributer off, do you?
don't know what you're talking about, but it ain't capitalism...dante
Mar 27, 2003 1:47 PM
What you're talking about is price fixing, and it's highly illegal b/c it's *against* capitalism. True capitalism means that if Shimano sells x to a distributor for $5, that distributor can turn around and sell it for $20 or for $5.50, it's out of Shimano's hands. Price fixing is Shimano selling x to a distributor for $5, then telling the distributor that it can't sell it for less than $20 or Shimano won't sell them anything else.

Grey market merchandise is fine by me, all it is is a gruppo that some bike shop splits up and sells piece by piece. Shimano gets pi$$ed b/c they sell OEM stuff at different prices than aftermarket, so they don't want the distributors to pass on the savings b/c then nobody would buy their aftermarket crap.

I applaud the small companies that are standing up to the larger companies and demanding that the price-fixing stop. My guess is if it goes to trial you'd better believe the bike shops will win...

yes it is...bill105
Mar 27, 2003 1:56 PM
Sure it's capitalism. First, do you think Ford Motor Company will let you open a dealership out of your house just because you have the money? No, they wont. Do you think they will tell you what you can and cannot sell a car for? Yes, they will, or you dont distribute for them anymore.
Here comes the revolution !!!!!!!!.....................nm.MR_GRUMPY
Mar 27, 2003 2:08 PM
Another reason I'm glad I ride Campagnolo (NT)davidxy
Mar 27, 2003 4:16 PM
doesn't make senseDougSloan
Mar 27, 2003 4:26 PM
Shimano will still sell to every shop, just with the restriction that most cannot sell mail order. So, apparently it has nothing to do with Shimano choosing to do business with only the largest retailers, unless all the others only can buy from a "distributor," like QBP or the named internet sellers.

My bet is that this scheme was initiated from the web retailers' side, something along the line of "give us an exclusive market, and we'll pay more." I can't see Shimano wanting to protect certain retailers out of the goodness of its heart.

I've heard several shops tell me their cost for Shimano parts was just as high as retail at Excel or Performance. So, the latter must be getting some good wholesale volume discounts already.

Not sure of the legalities. My bet is that it will be tested in the courts, though.

re: Interesting and very upsetting if true!slide13
Mar 27, 2003 5:51 PM
I work at a LBS and have spoken to a Shimano rep with regards to this. They are doing it to try and protect the LBS. So many internet dealers are getting Shimano products so cheaply that the LBS cannot compete. Online retailers are selling Shimano parts for barely more then we have to pay for them. A bike shop cannot stay in buisness making a few percent on the parts it sells, it just doesn't work. Shimano is trying to keep its products from being undervalued and in turn trying to help LBS's be able to stay alive. It isn't a perfect system. While Shimano will not be selling parts to a lot of retailers online, they have other places they get them. Often surplus parts that large bicycle manufacturers buy for bike builds get sold to them and then sold online for rediculously low prices. These are the parts without the box and instructions.

I see both sides. It sucks for the consumer because it means Shimano parts are probably going to cost more online now then they did, or at least be harder to come by at such discounted prices. From the retailers perspective it is what needed to be done. They can finally make a small, but reasonable profit on Shimano parts and still be relatively close to what online places are charging. They need to turn profits so they can keep the doors open and pay the employees (like me:)
re: Interesting and very upsetting if true!russw19
Mar 28, 2003 9:16 AM
Exactly as said by Slide13. This is to protect your local shops. You know, the guys you go see and talk to who pay the guys you are asking for all your information, before you decide to buy a rear derailleur from a Mail Order House to save $5. Don't get me wrong, I am all about saving money in this economy, but think about the consequences of these actions long term. If the LBS goes out of business because they can't compete with Mail Order, who is going to fix your stuff for you when there's a problem? I have a very good friend who works for Shimano. He's Shimano's head mechanic on the Sea Otter Tour. He tells me that Shimano was deliberately trying to make their components as "install and forget" friendly as they could. They started to see in the late 80's and early 90's that this problem was going to get out of hand. The internet has quadrupled the problem. It's very easy to get all the info you need about a derailleur and find the best prices out of like 30 different places with a 5 minute Google search. The shop is not an integral part of the buying process anymore. So Shimano saw that coming and tried to make it so their parts would just be replaced instead of being fixed. Now the problem is that you can buy a Dura-Ace derailleur online for near what the shop pays wholesale. There is no chance in hell the shop can turn enough of a profit to keep up with Mail Order.

This move is soley designed to try to level the playing field. It is not aimed to hurt the end consumer, but some will see it that way. It is long term and designed to help the LBS compete. If the shop around the corner closes up because they can't compete (and they can't right now.. it's a very bad time to own anything but the biggest and most profitable shops) you lose in the end.

Think of the source of the complaint, and who Shimano is raising the prices for. They are raising prices for companies that buy in large lots only to match what they sell parts to people that buy in smaller lots. You won't see anyone at your LBS protesting this, just grey market mail order houses who are getting rich off undercutting the competition. As a broke a$$ student, I see the other side of this issue too, but where would most of us be without the LBS?