Why I’m saying Yes to SRAM and No to Shimano.

I recently came across this amazing article, explaining Shimano’s current marketing practices from a dealer perspective.  As a bike shop consumer, I had heard some similar complaints (albeit not as detailed) from friends who work in the bike industry.  I highly recommend clicking through, but in essence, the complaint is that Shimano sells bike parts, in bulk, to online resellers that buy in huge volumes.  The discounts that Shimano gives those high volume resellers are so significant that the online resellers can sell Shimano parts for less than the wholesale cost that brick and mortar stores pay.

In other words, a brick and mortar store’s cost to buy Shimano components is more expensive than the customer can buy the parts for online (not to mention free shipping and no sales tax).

So a customer has the choice of spending $150 to buy a component online, or going to the bike shop…but the bike shop has to pay $165 for the same part (their cost), and then pay to light, heat and man their store, and then charge sales tax on top of it all…so they end up charging $200 when it’s all said and done.

Capitalism!  Free Market Economy! you shout.  Shortsightedness! I respond.

Those consumers that buy the components online…where do they get the components installed?  Sure, some self-install, but a great many do not–where do they go?  And if a part breaks, where do they go for warranty service?  Do you think they’re shipping stuff back to sleazybikeparts.com, or do you think they’re going to their local bike shop and complaining?

Separately, does Shimano think that most customers will pay 30% more to buy locally, rather than having parts dropped at their doorsteps?  Buying online is cheaper and often faster and more convenient, in terms of getting the parts in your hands.  Shimano’s discount practices not only ensure that online parts are cheaper–they make it impossible for a local bike shop to compete in the marketplace.  So what’s the long-term result of this?  Is it anything other than forcing local bike shops out of business?  Does Shimano really believe that LBS’ can stay afloat just charging for the price to install parts that customers buy elsewhere online?

The end result is to push the margins of LBS tighter, to drive up service costs, and to generate more unhappy consumers.  The end result is to push more LBS out of business.  Service and repair industries are fundamentally based on providing the service–and the parts–necessary to keep a product operational.  Profit is made (hopefully) on both components of the transaction.  Taking away product sales by making LBS prohibitively priced in comparison to online retailers cuts one of the bike shop repair business’ two legs off.  So what does that mean?

That means, for me, a return to SRAM.  Candidly, I’ve viewed Shimano parts as often being superior to SRAM in the past, based on a few not-great experiences with SRAM.  But the actions of Shimano undercut my values so sharply that I don’t wish to support them any longer.  Where it’s practical to do so prospectively, my business is going to SRAM.  For the same reasons that I don’t wish to support bike brands that undercut their dealer chain by selling bikes direct online, I don’t wish to support bike brands that undercut their dealer chain by driving sales online in an indirect fashion.

So long, Shimano.

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8 thoughts on “Why I’m saying Yes to SRAM and No to Shimano.

  1. wow, bad stuff on Shimano… I only have one bike that has Shimano (my monster cross) and that’s just because I wanted bar-end shifters and didn’t want TT-bike style… my other bikes all have SRAM and I really like it… I know some folks who talk crap about SRAM breaking/etc, but I haven’t had problem one with any of my stuff… admittedly I don’t do the miles and events you do, but still haven’t had anything thing to complain about and I had a early Rival silver set (still have shifters and RD) and they work great… Crazy to think you can build an Ultegra level C-Dale Hi-Mod for $1500 online… thanks for all the great posts!

  2. Great post – but I can’t entirely agree with it. Help me understand why you feel that Shimano should change their business practice of selling at lower cost for bulk purchases instead of the LBS changing their business model to present a compelling argument to customers. Quite a few other industries face similar issues, but yet brick-and-mortar still exists via exceptional customer service. For example, a LBS owner could focus on support of community to subsequently draw in new cyclists (and the attendant service/accessory sales that come with it), as well as supporting group rides/clubs/race teams. I’ve seen this model work, and work well. Recognize your strengths within the current strong Internet shopping construct, and grow accordingly.
    SRAM, on the other hand, basically promotes price fixing, and has unfortunately developed a reputation for the occasional product hiccup. They do provide strong after-sales care, but I’m not sure how you’ve decided that one approach is better than the other.

  3. Last year I bought a pair of XTR pedals for Arts Cycle for my stores floor. Saved on shipping too. I like shimano. Many times a customer has walked in to get a crank installed after buying it online. Consequently, not one Sram product has came thru that way.

    I still do business with shimano but Ive changed the way to do business with them.

  4. This is an old post, I know, but I just stumbled across it.

    As a shop, I agree wholeheartedly.

    I would point out to Todd, that not every shop is either, a racer shop, or big enough to have all kinds of time and money to throw at community development. Many of us are mom and pop type places, and it’s all we can do to be open, and get all the work done, let alone do all the superfluous stuff you’re advocating for (much of which is great for cycling in general, but not really all that helpful to the bottom line of a particular shop). Also, a race team doesn’t make you $, it costs you profit margin, as the primary reason riders join a team, is to get steep discounts on parts, bikes, accessories, etc.

    No, I’m afraid that Shimano shouldn’t be allowed to dump product, plain and simple. There are rules in the world about it, and how they get around them is a source of befuddlement to me. Price fixing has nothing to do with it, and it’s far from just Sram that does it.

    Most industries selling a commodity, have MAP (minimum advertised price), and if a seller is found to be advertising products below that, they get a nastygram at a minimum, and often lose their ability to carry that brand. You can of course, sell stuff at a total loss if you like, though why you would is beyond me. But these sites are advertising simply criminal pricing.

    So while the wild west of the internet might give one the impression that nothing but the lowest price should matter, if you want a support structure, the community you seem to want to encourage, and the possibility of getting something taken care of, the day before a big ride, you’ll have to accept the dealers have the right to mark up a product in order to pay for overhead.

    I would also, as an occasional but inconsistent reader of you blog, point out the number of times you write the name Trek, and then balance that, with what you wrote above, as they are one of the largest dumpers of Shimano product to cheappartsRus.com, (Chain Reaction in particular, but there are others too) as well as the biggest offender in the rush to consumer direct, cutting out the dealer along the way, style marketing. In case you hadn’t heard, read up on them, their practices are nothing short of nausea producing, and now Giant is following suit, nice.

    You wrote-

    “For the same reasons that I don’t wish to support bike brands that undercut their dealer chain by selling bikes direct online, I don’t wish to support bike brands that undercut their dealer chain by driving sales online in an indirect fashion.”

    • Well said. I clearly was once a true believer in Trek–but I’ve had a bit of a rebirth in recent months, based on their change in market strategy and the decision to sell direct online.

    • MAP systems are illegal in the EU. This is where a large portion of the problems come from with shipping from bike wholesalers from the UK.

      In addition, the US recently upped their min import values from $200 to $800 a shipment I believe, making these smaller purchases way simpler.

      That all being said, including evidence of product dumping from manufacturers (Trek, Giant, etc) would be helpful instead of blindly stating online. One thing that this cheap pricing from Shimano does is devalue complete bikes as a whole – the value of a full 105/Ultegra/DA group is half of what it once was, which would seem rather much against that manufacturers seem to want.

  5. Changing brands as you have on principle is a bold step. I considered this as well at one point and discussed it with my LBS to see how they felt about it. They are well aware they can’t compete on price, especially for components and so on, but are happy to fit parts. I am happy to pay for their time and expertise, but often if I want something specific, it needs to be ordered in specially, something I can do myself for less and often quicker as well. A dilemma arises in my mind about this.

    In any case, I figure that any servicing requirements and resulting repairs I’ll leave to the LBS. Same for anything that needs to be sized like helmets and shoes.

    Any big ticket item that they don’t carry I’ll source myself to have fitted. So far so good.

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