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Litespeed trying to prop up used bike prices(22 posts)

Litespeed trying to prop up used bike pricesNessism
Nov 14, 2003 7:17 AM
More specifically, American Bicycle Group (parent company to Litespeed, Quintana Roo, Tomac, & Merlin) has started a separate entity named Preowned Bikes to resell bikes acquired through their new Trade-In program. Idea sounds OK: trade in your old Litespeed for a new one. Preowned bikes then cleans up the old rig and resells it for a profit, and for the benefit of brand image by keeping resell prices high. This is where the plot gets a little shaky in my mind. Ebay is full of used Litespeeds offered by Preowned bikes but the offer prices are too high. Most of these rigs are going unsold, and thus are relisted. For example, they offer a used Tuscany with Ultegra for $2500 when one could buy a new one for that. No doubt, they will get the clue soon enough when no one buys their overpriced bikes.
Time will tell.

Ed
InterestingChicago_Steve
Nov 14, 2003 7:25 AM
I think that they'll have a bit of a learning curve with the used bike market on eBay; however, its an interesting idea to move more current Litespeeds (trade-in program).

I posted a similar thread on it over at MTBr and got some good feedback...

http://forums13.consumerreview.com/crforum?14@@.efba3cc
Who cares???gala7516
Nov 14, 2003 7:28 AM
The market will adjust itself if this is a good idea or not. If you like it, great. If not, there are so many other options for a bike.
market has a way of working these things outDougSloan
Nov 14, 2003 7:34 AM
The only advantage I can see some might find in this is sort of like the "certified" used cars from a retail dealership, if they might carry some additional warranty or value added in the form of repairs or rehabilitation. Also, some might be more confident buying used from a known entity rather than an anonymous person over the internet, given all the fraud. Nonetheless, still can't see paying anywhere close to new cost.

Doug
market has a way of working these things outrussw19
Nov 14, 2003 8:22 AM
Doug's right, the market will sort this out one way or another.

If a lot of the bikes are going unsold, they can only relist so many times before they still have to pay the listing fees. Sooner or later paying listing fees for bikes that don't sell will get old for them.

It also adds an interesting twist to anyone's dealer agreement with Litespeed. If Litespeed is selling used bikes online, shouldn't that open up the market for their dealers to sell online as well? Ride the bike around the lot or have an employee take it out for a day, claim it as used and put it on the web...

Sounds like ABG just popped the lock off of Pandora's box if you ask me. Who knows what new problems this will cause them.

Russ
pretty stupid to sell through eBaycyclopathic
Nov 14, 2003 7:36 AM
they'd have better luck selling it through their dealer network, that's were first time buyers are not eBay. That of cause if there're dealers who're not already fed up dealing with ABG.
Fed up with ABG?TJeanloz
Nov 14, 2003 7:39 AM
Our guys at ABG were always the best and easiest to deal with of all of our suppliers. Maybe they just liked us more than other shops, but they definitely didn't do anything to make us "fed up".

I think selling through E-Bay is a decent idea - moving used bikes through dealers would be pretty problematic, but I'm sure if a dealer wanted access to this inventory, ABG would oblige them.
Fed up with ABG?cyclopathic
Nov 14, 2003 7:47 AM
as with any big company it depends who you deal with. I am glad you have good experience; a couple dealers/friends of mine were not very pleased with the way ABG was handling requests and esp warranty. Much better luck with Specialized, Trek, Cdale, and even Giant
Huh,TJeanloz
Nov 14, 2003 7:55 AM
I guess it does depend on who you deal with. We rarely had a warrenty claim that took more than 2 days - and often they would overnight us a new frame before we sent the old one back, so the customer wouldn't miss more than a day of riding.

I've never thought of ABG as a big company (ala Trek), they were always great to us.
re: Artificial Price Settingjrm
Nov 14, 2003 7:53 AM
I think they are over estimating the pull of the lightspeed brand name. Their forgetting that there are other people making Ti frames for say half to 2/3s the price of their frames.

I think that maybe lightspeed should examine its manufacturer processes as a means to cut the cost of production. If they dont theyll price themselves right out the market.
I'm sure they appreciate the recommendationTJeanloz
Nov 14, 2003 7:57 AM
I'd be surprised if it costs Litespeed any more to build a ti bike than any other American manufacturer. They've always been able to command a premium for their brand name, and it's always been a big premium.

This might change, but for now they remain the king of ti.
Really....jrm
Nov 14, 2003 8:07 AM
Thats exactly it though its as if they assume that since theyve allways been able to commmand a high price theyll be able to in the future.

IMO: once you change a pricing strategy alot of things change on the competitive front. Especially when when you inflate the price.
Marketing, Marketing, Marketing,TJeanloz
Nov 14, 2003 8:12 AM
Litespeed has had the best marketing in the industry for years. This has kept them at the front in pricing. As long as they're able to keep up their marketing efforts - and there's no reason to suspect they won't - their bikes will continue to be too expensive. I bet they spend as much per frame on marketing as they do on raw materials and labor.
If you're really boredterry b
Nov 14, 2003 9:15 AM
Take the bikes they are offering on eBay, enter the details into the Pre-owned Bikes web estimator and then compare prices. Not only are they trying to prop them up, they're trying to make a healthy profit. Interesting business model assuming anyone bites.
Trade-in deal was greatlitespeedchick
Nov 14, 2003 10:33 AM
My husband just swapped his 2001 Ultimate for a 2004 Vortex and he was super-happy with the deal. (and he's one of those guys who never likes anything) They gave him $2600 on his Ultimate w/ Dura-Ace...he seemed to think that was better than he could expect to do on Ebay + no hassle + no risk. He got the advertised price on a new Vortex and was able to buy it through a LBS. Litespeed happy, LBS happy, husband happy...where's the downside?

Well, actually I'm not happy...'cause his new bike is prettier than my new bike.
I don't see how they can make that workgtx
Nov 14, 2003 10:41 AM
IMO the second the bike is becomes used, it's worth half retail, and continues to depreciate from there. A three year old bike would definitely be worth less than half retail IMO. So how can LS make that work? Furthermore, I would not ride on any used carbon fork or lightweigt bars or stem--if I bought that bike from a shop I would expect them to be swapped for new ones. Anyway, that does sound like a great deal for your husband.
It all depends on their ability to sell themterry b
Nov 14, 2003 10:49 AM
They're giving $2600 on trade-ins and turning around and trying to sell them for $3600. Their strategy is to sell to less discerning customers than you (and me for that matter.) They're hoping that the hype associated with these bikes being certifed will overcome our natural tendency to say a used bike should be drastically slashed. They're also hoping that the used bikes will perhaps be better appointed (in terms of components) than the equivalent new bike that can be had for a similar price, end of season. Think of the "Lexus Certified Pre-owned Vehicle" advertising.

It all depends on them finding customers willing to pay through the nose, something I think that Litespeed is already used to.
yeah, but...gtx
Nov 14, 2003 10:59 AM
I wouldn't pay $1600 for that bike. Won't $3600 buy you a brand new OCLV with 2004 DA? Also, who "certifies" the bike--the shop? If so, is LS setting up their dealers for a lawsuit? Or do they go back to LS for inspection and new decals, etc.--that would seem way too expensive. And what shop is gonna want a bunch of used bikes on the floor? It just doesn't make sense to me.
but, yeahterry b
Nov 14, 2003 12:33 PM
I wouldn't either, but they're not aiming at us, they're aiming at people with a tad less skeptical view of used bikes. People that would normally walk into an LBS and say "$6000 for Vortex, you gotta be crazy." Those people are going to say - "look, I can get a Vortex, certified by Litespeed for half price."

As far as the LBSs are concerned, I think Preowned Bikes is taking them all, tuning them up, "certifying" them and selling them on eBay.
Easy,TJeanloz
Nov 14, 2003 10:58 AM
The fact of the matter is that basically all of Litespeed's frames must cost about the same amount to make. They all have roughly the same amount of ti in them (2-4lbs), they all have the same number of welds, they all have the same finish (pretty much). So the difference in price has to be a function of demand rather than cost. I bet the gross profit on a Ghisallo is well over $1,000.

By offering the "trade-in" program, they can reduce the price of their bikes to something nearer to cost, get loyal customers onto their higher-end bikes, and get more new Litespeeds onto club rides - which WILL enhance their sales. Probably 1/2 of all Litespeed sales are peer-pressure driven: "my buddy just got a Classic, I need a Vortex." I think it's just marketing, pure and simple.
preciselyterry b
Nov 14, 2003 12:37 PM
What the discussions of this novel idea overlook is the fact that there is already so much margin in the bike at the MFGR level, that they can easily offer what appears to be an obscene trade in price, still make some margin, get free happy testimonials and flood the streets with their brand name.

The question is, will the program continue if they end up sitting on a whole bunch of used bikes that they cannot move. Of course, all they need to do is reduce them to whatever it takes to sell them and get them out the door (thus re-capturing at least a little bit of the margin they lost by taking the trade in.) Worst case is that their margin goes down for a while which may be a small price to pay if the program gets lots of riders on shiny new Litespeeds.
MaybeFez
Nov 15, 2003 9:54 PM
$2600 may seem good for tradein on a used Ultimate. But considering how much a 2004 Vortex must cost at THIS TIME OF THE SEASON, I think the profit margin on the new bike more than compensates for the high tradein value.