The Carbon Commodity Conundrum: What to Do About It (Pt. 2)

In this, the final installment of my groundbreaking and award winning series on how carbon fiber bikes have become a commodity, we'll explore the most important link in the chain:  the consumer.  What he/she does right, and what he/she needs to improve.

Why is this the most important?  Because you, the consumer, ARE the market.  With some exceptions that are still up for discussion (650b/27.5 wheels), brands and manufacturers aren't going to do much unless they believe you, the market, will buy it.  You vote with your dollars, and they need your vote.  If this is true, and it is my aim to prove it to you, we're gonna need to get a little philosophical, and you're gonna need to come with me.

First, and most importantly, you need to know what kind of riding you're into.  For some, this is going to seem laughably easy, but if you're new to the sport, this can be a really difficult thing to nail down.  Some of the best sales training I've received taught me to help the customer write the script to his/her movie, starring them and their bike.  In that movie, what's going on?  Where are you?  Where are you going?  How far from home are you?  Are you riding at a comfortable pace, or are you pushing yourself?  Anybody there with you?  Are they your friend or competitor?  Are you riding to be social or to get/stay fit?  Figuring this out is THE MOST IMPORTANT thing you can do as a consumer.

Second, be realistic.  Did you picture yourself elbow to elbow with the pros, in the sprint to the finish in one of the classics?  That's not going to happen.  Think you're going to get fit, get competitive, and wind up a Cat 1/2?  If you need to get fit, that's probably not going to happen either.  My point is, most of us are not competitive, and of those who are competitive, we are nowhere near the front of the pack.  For the vast majority of cyclists, life is a lot better when we don't compete and just enjoy riding for riding.

This is why this is important: if you're with me so far, you don't need a carbon fiber bike at all.  You may think you want one, you may actually want one, and the sales associate with whom you're working may want to talk you into thinking you want one, but you definitely do NOT need one.  You may ask, "but so what, what's the harm in wanting a carbon fiber bike?"

Because carbon fiber is expensive, and every bike model from every brand at every price point is a study in economics.  It's no coincidence that every one of the big brands has a bike with similar parts within a couple hundred dollars of each other.  Those brands need a bike at a given price point to be competitive, so every bike is a give and take, a compromise.  Want a better rear derailleur than your competitor?  That costs more, so maybe you specify a less expensive, lower quality front derailleur, which is not as noticeable.  Want nicer wheels?  Then you need to cover the expense of those nicer wheels by specifying a less expensive part somewhere else.  This is ABW's Fourteenth Law of The Bicycle Industry: There are no free lunches when it comes to the parts on a bike.

Know what the most expensive part of a carbon fiber bike is?  Yup.  With very few exceptions that don't pertain to this conversation (wheels), the frame is the most expensive part of the bike.  You want a carbon fiber frame, the other parts are going to be less expensive and lower performance.

Again you may ask, "so what, what's the harm in that?"  Here's another place where I need you to come with me:  the bicycle frame has relatively little to do with the overall quality of the riding experience.  It's true.  When you take into account the wheels, shifters, brakes, saddle, bar tape, gloves, shoes, shorts, etc, whether or not you're riding a carbon fiber bike isn't going to have much to do with whether or not you're enjoying your ride.  Put another way, switching out the quality of the shorts you're wearing will have a far greater impact on your enjoyment than will switching out to a different frame.

What's that you say?  You want data?  Sure.  Below are MSRPs from The Big 3 for their least expensive carbon bikes, along with the general level of components found on them.

Trek: Madone 3, $1979.99
Spec: Roubaix SL4, $1800.00
Giant: TCR Composite 2, $1850.00

Trek: Mix of 105 components, in-house parts
Spec: Sora, in-house parts
Giant: 105/Tiagra, in-house parts

Compare the Madone 2.1 (aluminum frame) to the Madone 3, and you will see they have nearly identical components and parts, but the Madone 2.1 costs $550 less.  With that money saved, you have a lot of choices in gloves, shorts, shoes, and possibly even upgrades that will have a far greater effect on the actual quality of the ride experience.  Or, you can put it in your espresso and beer fund, either of which make a great excuse to stop on a ride, and either of which will boost the enjoyment quotient.

The bottom line is the number.  Unless you get paid to ride your bike, you don't need carbon fiber, and your hard-earned money is better spend elsewhere.

If the first thing you thought upon reading this is, "yeah, but isn't aluminum really stiff and unforgiving and uncomfortable," we'll cover this in the next post.  That's a horribly outdated, even ancient misconception.

The Carbon Commodity Conundrum: What To Do About It (Pt. 1)

We've got this problem, wherein everybody is making a carbon fiber bike, many of them look the same, prices are all over the board, and we're given what sometimes feels like conflicting information from sales people and marketing departments.  How can every carbon bike out there be the best (as the marketers would have us believe)?  What do we do about the problem?

First, we need to accept that solutions must be found at every level of the supply chain - manufacturers, bike brands, bike shops, and consumers.

At the manufacturer and brand level, they're already doing some things right, and definitely need to improve some things.  What they do right is product design and development.  Believe it or not, it's very, very difficult to buy a bad carbon bike from any of the big names any more.  If it says Trek, Specialized, Giant, Cannondale, Raleigh, etc. on the downtube, it's going to be a good bike, period, end of sentence.  Since I troll the comment sections of Bikerumor and VeloNews, I know how the skeptics out there are going to react - who the fuck is ABW and how the fuck would you know?  Here then is my attempt to establish credibility:

I have worked in the bike industry for 17 years.  I have worked in retail as a mechanic and as a store manager.  I have worked in the industry.  I am friends with engineers and industrial designers.  I have experience with brands with a variety of supply chains, from limited run, semi-custom frames to aluminum and carbon fiber made in Taiwan.  I'm not going to give brands because I don't represent any brand and to do so would be dishonest and would jeopardize my relationships with those brands.

The reason I know that bike brands are doing PD and D right is because, without exception, engineers and industrial designers in the bike industry could be making a shit ton more doing similar jobs outside the bike industry.  They are smart, well-trained professionals, and they design bikes because they love bikes.  They do not design bikes because they're out to make a quick buck.  Compared to their colleagues outside the bike industry, they hardly make any bucks at all.  They do it for the bikes and for the experiences those bikes offer.

So again, I don't care what the name on the downtube is, if it's carbon fiber and you're looking at it in a bike shop, it's going to be a great bike, because there are passionate people behind it.  If it's a carbon bike and it's not in a bike shop though, all bets are off.  We'll discuss this in greater depth in part 2 of What to Do About It.

What the brands need to improve is their supply chain management and their model year cycle.  While it is a fact that you almost cannot go wrong with a big brand carbon bike, that fact also means that improvements at this point are incremental and evolutionary, not revolutionary.  But every year, the big brands come out with new and improved models that, while they may be incrementally better, devalue the prior generation of products at a level disproportionate to how much better the new stuff actually is.  In English, and with completely arbitrary numbers for demonstration purposes only: the newest generation may be 5% better than the prior generation, but it devalues the prior generation by 25%.  The effect on bike shops is they have product they need to move before it loses any more value.  The effect on the consumer is you may be tempted to buy, or worse, pressured into buying, a bike that is not really the best bike for the kind of riding in which you want to engage, simply because it's a "good deal."

At the shop level, they're also doing some things right and need improvement on others.  What they're doing right is, they really do want you to get a bike you'll love.  Understand that there is little or no incentive for a sales person to steer you wrong when it comes to getting you on a bike.  While some shops will offer spiffs for selling certain moldering inventory, it's really, really rare.  Some shops operate on commission, which does offer a direct incentive to up sell the consumer.  Understand that commissions are also not that common, and you can always ask.  If you and the sales person both know that he/she is going to make more if he/she sells you a more expensive bike, it takes away some leverage and will keep you both honest.  As important, understand that you get what you pay for, and if the salesperson talks you into a more expensive bike, you're also getting a better bike.

What shops need to improve is inventory management, which goes hand in hand with the improvements needed at the brand level.  Shops are getting better at this, but too often, through a combination of poor business sense and pressure from the brands, shops end up with too many bikes.  They sit on the floor, gathering dust until the next model year is introduced, their value drops by 25 - 50%, and the shop has to blow them out.  This creates tremendous pressure and lots of incentive to sell to the consumer the product that's already on the floor.  Most of the time, that isn't a problem, and you'll get a great bike, but occasionally, it means a shop will put you on a bike that isn't the best fit for your body or your riding style, just to get that bike out the door and to avoid needing to order something for you.  It's this pressure that makes it harder to believe the sales person when he/she tells you that bike A is better than bike B.

I'll hold off on telling you consumers what to do, because you're the most important part of this whole equation.

The Carbon Commodity Conundrum: What Causes It? (Pt 2)

A long time ago, many bikes were made in the U.S.  Then, still a long time ago, some brands started making bikes overseas, and some brands were started overseas.  At that time, a long time ago, overseas manufacturing was sort of behind the scenes.  Trek and Specialized proudly proclaimed "Designed in the U.S.A." and you had to search to find the little "Made in Taiwan" sticker on the head tube.  Many shops just removed the Taiwan sticker.  If customers knew, they didn't seem to care.  

That seemed to change in the late 90s and early 2000s.  I can't cite a specific time when overseas manufacturing transitioned from being unknown to being a secret to being just the way it is, but I was working in shops when it happened, which would've been during those years.  I recall many conversations with customers about economics and trying to explain why you could have a Trek 820 for $329.99, or made in the U.S.A.  But you couldn't have both.

People accepted that (sometimes grudgingly), and the only proof needed to back up that statement is the fact that today, something like 96% of all the bicycles sold in the U.S. are made overseas (this according to a study by the NBDA.  That statistic includes all bikes sold through all sales channels, including department stores).  People just wanted a cheap bike, and overseas manufacturing delivered it.  I'd hear grumbles about how Trek or Cannondale used to be made in the U.S. but people still bought them, and there was no problem because people couldn't know about the economics of overseas manufacturing.  At that time, you couldn't look on Hong Fu or Alibaba to see something that looked remarkably like what you wanted to buy for a fraction of the price you were seeing on the sales floor at the bike shop.  This made it easier to trust marketers and sales people.  When they said this bike was more expensive for reasons X, Y, and Z, and that it was worth it, we accepted that, bought the bike, and enjoyed it.  Of course, there were exceptions.  There is always the customer who cannot view a bike as anything but a recreational toy, and for that customer, bikes should not be expensive because toys are not expensive.

But now, we have this pseudotransparency offered by the interwebs.  When we see the new offerings by Brand X, and we then jump on the interwebs and find a Hong Fu that looks almost exactly the same, and the Hong Fu is half the price, we can't help but wonder how we're being ripped off.  For the purposes of this argument, that couldn't have happened before the internet.  Yes, there were industry insiders with access to catalogs offered by overseas manufacturers, but a paper catalog is much easier to control than a website, so customers never had a clue.  Now, when the sales person tries to sell you Brand X, it's harder to believe the marketing.  It's harder to believe that Brand X is better enough to justify paying what you perceive to be a premium price.

This is really what has caused the Carbon Commodity Conundrum.  What we're talking about is value, an inherently subjective variable.  A Hong Fu, no matter whether it is a good frame or not, decreases the value of all carbon frames that look like it, simply because it exists and we can see how much it would cost to own it.

But so the fuck what.

This is why it matters: because there is a difference.  Stick with me through a painfully obvious analogy.  Let's go shopping for black t-shirts.  Let's go to a nice clothing store, not to Walmart, someplace where we'll get service.  So we go to a nice place, and the guy we talk to tells us how the black t-shirts they sell are Egyptian cotton, stitched at a reputable place in Colombia where the workers make a decent wage and the quality is high.  He gives us a once over, guesses our size, but takes a tape measure to our neck and sleeve to make sure.  His guess was right.  He tells us these shirts are cut longer so they stay tucked in.  They add a little Lycra to the fabric mix so they stretch a little when you move.  They're great shirts.  And they cost $45.  Fuck?!

Why the fuck would I pay $45 bucks for a fucking black t-shirt when I can go to Walmart and get a 3-pack for $9.99?  Better yet, why would I go to fucking Walmart when I can hop on the good ol' interwebs and get em delivered to my door?  I'll bet that guy at the men's store was full of shit too.  Lycra?  I don't see any Lycra?  How does it feel?  The fuck do I care how it feels?  Feels good enough.  Looks good enough.  That guy and his fucking shop are fucking gougers!

See what I did there?  Sub out "carbon frame" for "black t-shirt" and you have the carbon commodity conundrum.  Here's the rub: in the above, painfully obvious analogy, there is a difference, and we could get proof - we could look at the tag on the shirt.  With frames, there is no such tag, and when there is, we often choose to not believe it.  High modulus?  The fuck does that mean?  Why should I pay more for it?  Gougers!  Open mold but custom specified layup?  Looks the same as a fucking Hong Fu.  Gougers!!!

In some cases, there's not going to be a difference between the Hong Fu and the Brand X, and we truly are getting ripped off.  Let me state emphatically that I do not believe this happens often, and certainly not by any of the Big 5.  In more cases, the differences are real, but possibly the value therein is overstated.  That's marketing.  And I think in still more cases, the majority of them in fact, that there really is a difference, it matters to some riders and not to others, but that nobody is trying to rip anybody off.  You see any mansions in the Hamptons and private jets that came from the bike industry?  Fuck, you see any second homes or nice cars?  There's just not enough money in the industry to make a true rip off worth it.

So.  Find a nice bike shop.  If, when you walk in, you're not greeted with a smile, find another shop.  If the sales process doesn't involve you answering a lot of questions about the kind of riding you like, find another shop.  If you feel alienated because you don't wear lycra, have a neck tat, shred the gnar, etc, find another fucking shop as fast as you can find the door, and don't be afraid to throw a big ol fuck you over your shoulder on the way out.  When you find a nice shop, listen.  We've been doing this a long time and we like you.  We want you to like your bike.