Tuesday, February 18, 2014

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.

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