An article in todays Washington Post (thats Washington D.C., not Tyne & Wear!) features interviews with born-again cyclists who spent their $3000 budget on bikes and bits from online stores.
Will the same happen over here? Accessories have more profit potential but are easier to sell online than bikes...
Bicycle Shops Are Peddling Harder
By Jackie Spinner
Washington Post Staff Writer
Monday, June 12, 2000
Robert Hensley hadn't been on a bicycle in 30 years--the one at the gym didn't count--when he decided in January to get serious about cycling.
And he quickly realized he'd have to get serious about spending, too. Who knew all of the equipment required to be a cyclist? The water bottles, the water bottle cages, the gloves, the shoes, the butt balm (don't ask), the shorts, the special shirts.
He had started with a $350 bicycle, bought at a shop nearby, but by the time he added all the essentials, Hensley, an associate pastor at St. Margaret's Episcopal Church in Northwest, had spent more than $1,000.
"I never even knew some of the gear that was out there," Hensley said. "It's amazing stuff."
Hensley's buying spree resulted from his decision to participate in a 330-mile ride from Raleigh, N.C., to Washington, to help raise money for local AIDS service organizations. The five-year-old event, held June 22-25 this year, is part of the national AIDSRidesUSA program, which requires participants to raise a certain amount of contributions to be able to participate. (For the D.C. ride, it was $2,000).
As the event has grown--more than 2,000 riders are expected to make the trip this year--it's become an annual boon to the local bike industry, which has taken its share of spills in recent years and is facing stiff competition from online stores.
One of the biggest spills occurred last fall when Alexandria-based Bikes USA, which had 21 stores around the country, including 11 in the Washington area, filed for Chapter 11 bankruptcy protection and closed its doors. Some independent cycling stores also have disappeared.
"It's a nice boost," Michael Sendar, owner of the Washington-based Big Wheel Bikes chain, said of the AIDS ride's impact on business at his five stores.
There are no hard data on how much the ride contributes to the local economy. Likewise, it's even harder to assess the effect of surging online shopping on the industry. Most bike shop owners are reluctant to admit that online shopping is eating into their profits.
Bike shops don't make big profit margins selling bicycles. The industry standard, Sendar said, is about 35 percent. The profit is larger on apparel and accessories--as much as 50 percent.
That markup is undoubtedly what has driven some cyclists to the growing array of online sites that sell bicycle gear. Some of the favorites of the AIDS ride participants are www.Gear.com, www.Performancebikes.com and www.Bike.com, according to interviews with about two dozen riders.
"The bike shops are concerned about it," said Fred Clements, executive director of the National Bicycle Dealers Association. "The early trend is to begin to take some of the accessory business away, but bikes are a different story."
Lisa Kane, a systems consultant with Andersen Consulting, estimated that she spent more than $1,500 on equipment and other costs associated with participating in the ride. And she made most of those purchases online.
"I saved a significant amount of money," said Kane, a Falls Church resident whose prior online purchases consisted solely of airline tickets and books.
Hensley said he also bought everything but his bicycle on the Internet.
Denise D'Amour, who last month opened Capitol Hill Bikes in Southeast with partner Laurie Morin, said she knows people have come into her store to try on clothes before buying them online. But like owners of other free-standing shops, D'Amour said she will concentrate on bike sales and on service.
"We're going to rely on people who want something now and don't want to pay shipping charges," she said.
She was going to rely on people like Eric West.
West and his wife, Natalie, rode bicycles up until four years ago, when their first child was born. And then they had another baby and the bikes stayed in the garage.
When they decided to participate in the AIDS ride, they had to update their gear. West began ticking off the list of the purchases he and his wife have made in the past couple of months.
West, a partner at West, Lane, Schlager Realty Advisors, bought a new bike. That was $2,000. His wife overhauled her old bike with new pedals, a new seat, new tires, water bottles.
"This is adding up," Eric West said, as he continued with his list, which included bike shorts, gloves, a trip computer, mirror, new helmet for his wife, and energy bars to eat during all the training rides. By the time the Wests were done, they had spent nearly $3,000 at bicycle shops around the Washington area.
He didn't spend a dime online.
"I didn't think to go on the Internet," he said.
Thomas Cheng, an information technology consultant who lives in the District, said the bottom line for most riders is that the bottom line doesn't matter. It's a sport for folks who like to spend their disposable income, no matter how little or how much, on something they enjoy.
"I saw many riders doing the [AIDS]ride last year on $50 department store mountain bikes--no toe clips, no computer, no cycling clothes," he said. "For most riders, the pleasure they derive from participating in the ride justifies the money they have to spend."
© 2000 The Washington Post Company