How Do They Stay in Business?

stratrider

Within the last 10 years, we have seen big boys like BikeE, Vision,
and Burley ultimately fail to stay afloat with recumbents. Within the
same period, we have seen the birth of Bacchetta, Volae, Barcroft, and
others as well as the endurance of Easy Racers and RANS. So how do
they do it? Are these companies making a profit after they pay their
bills? How do they get their products in the dealers store? RBR in
State College, PA (great store by the way) stocks no dual 26 LWB
RANS. Jays in Philly (also nice store) stocks only RANS but is also a
dealer for Easy Racers and Bacchetta. I just don't get it.

Jim

Victor Kan

On Apr 24, 9:54 am, stratrider <jrei...@enter.net> wrote:
> Within the last 10 years, we have seen big boys like BikeE, Vision,
> and Burley ultimately fail to stay afloat with recumbents.

From what I've read, each of them failed for different reasons and the
main "fault" wasn't really specific to being in the recumbent bike
businesses, though obviously if they were just yet another DF bike
maker, they'd probably do things differently.

> Within the
> same period, we have seen the birth of Bacchetta, Volae, Barcroft, and
> others as well as the endurance of Easy Racers and RANS. So how do
> they do it? Are these companies making a profit after they pay their
> bills?

Don't forget Catrike and Wizwheelz. I think Catrike made some of
their financial results public last year, didn't they (and if I
recall, they were in the black)?

> How do they get their products in the dealers store? RBR in
> State College, PA (great store by the way) stocks no dual 26 LWB
> RANS. Jays in Philly (also nice store) stocks only RANS but is also a
> dealer for Easy Racers and Bacchetta. I just don't get it.

I guess those of us *currently* in the recumbent market have different
needs and expectations than those in the DF market.

We need more hands on experience with the products since there's so
much more variation, but we also realize we're not going to be able to
walk to the LBS, try everything and get what we want. This obviously
contributes to the market remaining smaller than it might otherwise be
since some folks who'd like a recumbent don't even know they exist.

When we shop around different places, it's not so much to find the
best price and/or service on basically the same product, it's to find
the product, period. We're used to doing it. It's not a good thing
to have to do it, but we've done it, and I suppose we find it
worthwhile to do it.

We probably also do more (and more substantive) research ahead of time
and have been used to buying blind sometimes, then selling if
dissatisfied. So while I might not be able to try a dual 26 LWB RANS
in the local shop, if I've ridden a 26/20 Stratus, and know that I
hated it (just personal preference for me), and if the consensus is
that the dual 26 RANS bikes are more of the same, but bigger, then I
know not to bother. If I love the 26/20 Stratus and want something
like it, but dual 26, then I'd feel pretty comfortable having the
local RANS dealer with just a Stratus and Rocket on the sales floor
order the dual 26 for me, without feeling like it's a risk for either
of us.

In the case of Volae and later Bacchetta and Easy Racers, they've made
buying "blind" less risky by offering pretty generous return policies
when buying from them direct at MSRP (though at least in the case of
Bacchetta, bypassing the bike shop is a last resort). If they do a
good job in getting the bike sized and setup properly to minimize the
likelihood of returns (and from what I've read, they do a great job
with it), then more of their product gets out into customers' hands
and stay there even if there's no local bike shop available to handle
it.

stratrider

On Apr 25, 10:57*pm, "Edward Dolan" <edo...@iw.net> wrote:
> "stratrider" <jrei...@enter.net> wrote in message

> It seems when they try to grow their company is when they fail. That is what
> happened to Vision anyway. I think they need to stay small and sharply
> focused. The recumbent market itself is very small and it will never grow
> much. Overall, I see less cycling today than I did 30 years ago.
>

Ed, I think you are absolutely right. I think BikeE also go too big,
too Corporate.

Jim

Jon

"stratrider" <jreilly@enter.net> wrote
> Within the last 10 years, we have seen big boys like BikeE, Vision,
> and Burley ultimately fail to stay afloat with recumbents.

And don't forget the really big guys, Trek and Cannondale also tried
recumbents... In those cases, we might debate whether they really
understood the recumbent market or invested enough in marketing.

> Within the same period, we have seen the birth of Bacchetta,
> Volae, Barcroft, and others as well as the endurance of Easy
> Racers and RANS.

Also, a number of European, Canadian, and Australian
manufacturers have been around "a long" time. And a few
Asian-based frame makers have gotten some attention
with recumbent offerings.

> So how do they do it?
> Are these companies making a profit after they pay their
> bills? How do they get their products in the dealers store?

There are many business models that work. And probably many
more that don't work. %^) Given their history and continuing
operations, it's almost certain that RANS and Easy Racer are
likely profitable. Probably not "oil company" profitable,
but stable. There's a lot to be said for business models that
don't end up paying CEOs multi-million dollar bonuses! %^)

> RBR in State College, PA (great store by the way) stocks no
> dual 26 LWB RANS. Jays in Philly (also nice store) stocks
> only RANS but is also a dealer for Easy Racers and Bacchetta.
> I just don't get it.

In the US, the local bike shop survives perhaps only somewhat
better than the local hardware store or neighborhood supermarket.
For commodity bikes, they cannot compete on price with the
mass marketers.

LBS generally operate on pretty small capitalization. Higher
cost inventory that doesn't turn over reasonably quickly is an
investment that few can afford. For most bike shops, recumbents,
tandems, touring bikes, all fit that description. Note: in DFW, it's
easier to find several recumbent bike models in stock than any
upright touring bikes!

Many LBS owners/employees are cycling enthusiast, racers,
MTB'ers, used-to-be's, wanna-be's, club riders, etc... They
stock and sell best what they know and love. Few of them
know and love recumbents. It's a tough market for recumbents
to increase availability, from many perspectives.

But recumbents are a market niche, and not a fad. There's
money, if not millionaires to be made selling them.

Jon

Tom Sherman

Jon Meinecke wrote:
> "stratrider" <jreilly@enter.net> wrote
>> Within the last 10 years, we have seen big boys like BikeE, Vision,
>> and Burley ultimately fail to stay afloat with recumbents.
>
> And don't forget the really big guys, Trek and Cannondale also tried
> recumbents... In those cases, we might debate whether they really
> understood the recumbent market or invested enough in marketing.
>
It is clear that the R200 did not have support inside Trek, since the
"champion" of the bike died in an automobile accident shortly before the
bike's introduction.

Both the Trek and Cannondale recumbents were overpriced compared to the
competition. Trek and Cannondale may have believed that their
reputations might allow for higher pricing, but that was a non-starter
to the already converted recumbent rider. Furthermore, neither bike was
something the upright roadie looking for a more comfortable ride would
be interested in.

If Cannondale or Trek had a 20-pound high racer for $2500 US, they could
take a large share of the performance oriented recumbent market.

> [...]
> In the US, the local bike shop survives perhaps only somewhat
> better than the local hardware store or neighborhood supermarket.
> For commodity bikes, they cannot compete on price with the
> mass marketers.
>
> LBS generally operate on pretty small capitalization. Higher
> cost inventory that doesn't turn over reasonably quickly is an
> investment that few can afford. For most bike shops, recumbents,
> tandems, touring bikes, all fit that description. Note: in DFW, it's
> easier to find several recumbent bike models in stock than any
> upright touring bikes!
>
> Many LBS owners/employees are cycling enthusiast, racers,
> MTB'ers, used-to-be's, wanna-be's, club riders, etc... They
> stock and sell best what they know and love. Few of them
> know and love recumbents. It's a tough market for recumbents
> to increase availability, from many perspectives.
>
The experience of the past decade indicates that a LBS should either be
a recumbent specialist with a wide range of product or stick to
uprights. Selling one line of recumbents with one or two bikes on
display will NOT be successful (another reason Trek and Cannondale
failed in most cases). The one Trek dealer [1] successful at selling
R200's was Wheel & Sprocket, which was already a recumbent specialist
dealer at their Hales Corners location.

> But recumbents are a market niche, and not a fad. There's
> money, if not millionaires to be made selling them.
>
[1] Dave Doty at Valley Bikes blowing out the leftover R200's at $600 is
another matter altogether.

--
Tom Sherman - Holstein-Friesland Bovinia
The weather is here, wish you were beautiful

stratrider

On Apr 29, 7:38*am, "Jon" <jonm...@none.non> wrote:


> Many LBS owners/employees are cycling enthusiast, racers,
> MTB'ers, used-to-be's, wanna-be's, club riders, etc... *They
> stock and sell best what they know and love. *Few of them
> know and love recumbents. *It's a tough market for recumbents
> to increase availability, from many perspectives.
>

Agreed. So perhaps Volae has the right idea. Sell directly to the
buyer with a return policy that limits the buyer's risk.

Jon

"stratrider" <jreilly@enter.net> wrote
On Apr 29, 7:38 am, "Jon" <jonm...@none.non> wrote:
>> owners/employees [...] Few of them
>> know and love recumbents. It's a tough market for recumbents
>> to increase availability, from many perspectives.
>
> Agreed. So perhaps Volae has the right idea. Sell directly to the
> buyer with a return policy that limits the buyer's risk.

A friend reported that someone he knew had recently started
working at a local bike shop. He had asked that person
if the shop carried any recumbents and got the response that
the bike shop owner "hates recumbents".

I have no non-hearsay confirmation of this, but I've tried
constructing a rational case for a LBS owner "hating
recumbents". Not being interested in selling them, I can
understand. Having reasons why upright bikes are "better"
for some purpose, I can understand. Even thinking that
recumbents are "not bicycles" from a UCI perspective...
But, hating them? That suggests something else.

It seems unlikely that he would seem recumbents as
taking market share. It's possible, perhaps that he
or someone he knows was injured on a recumbent,--
blew out their knees with bad technique. Or perhaps
he thinks recumbents are inherently less visible or
unsafe in operation... If I'm in the shop again, maybe
I'll play dumb and ask about recumbents. %^)

At a more local local bike shop I have experienced
first hand dismissive disinterest, if not disdain for
recumbents. This was a Trek dealer and when the
R200 was in production I once asked the owner
if he had seen one or planned to get one for test
rides. He just said "we don't get much call for those"...
Hmmm, I wonder why? You don't have any to show
and most people don't know they exist... When
someone does ask about them, you don't even
engage them in conversation about them!

I've sometimes thought that a "travelling" recumbent
show might be an effective way to market them. If
there were a way to tie this in with LBS, manufacturers
could bring in their whole product line for a weekend
event and let the LBS take the orders. Really, all
it would take would be a truck or a trailer and a
driver/rep...

I'd love to be able to try out a RANS Seavo. But
at $5000+ I doubt any of the LBS and even not-so-L
BS will have one on the showroom floor.

Jon

ryancycles

> > But recumbents are a market niche, and not a fad. *There's
> > money, if not millionaires to be made selling them.
>
> I strongly suspect that Rolf Garthus of Hostel Shoppe is a millionaire. He
> carries a large line of different recumbents and sells many of them mail
> order. He produces a catalog every year which is the best recumbent catalog
> I have ever come across. Here is his website:
>
> http://www.hostelshoppe.com/

I would suspect that his wife has a good job or comes from money (no
dis-respect meant), of course I could be wrong. There are a few
successful recumbent retailers in the country but they can be counted
on one hand. Even after a huge amount of effort by a lot of people
myself included.
On the demise of RCN.
I'm afraid that just as I was partially responsible for the creation
of RCN I'm partially responsible for it's demise. When Bob was
describing the financial condition of the magazine I advised him to
shut it down and cut his losses. Although it comes under the heading
of wisdom through hindsight, I'm very familiar with the problems
associated with a small business as I was also foolish enough to get
into the bike business and ended up basically penniless. (If it wasn't
for my wife I'd probably be living under a bridge someplace.) IMO
recumbents should have been a mainstream product many years ago. I'm
sure some of you have read my rants about the bike industry before,
but for those that haven't I'll repeat what I believe is the major
reason for the almost total lack of acceptance of recumbents by the
bike industry, (i.e. bike shops).
Industry statistics haven't changed much over the last few years.
94.5% of riders ride for recreation and fitness, 5.2 % for
transportation and .3% race their bikes. It's the .3% who are the
problem. All of them are testosterone poisoned young guys and all of
them work in bike shops. They all believe, as one said to me, "you
have to be willing to endure pain and suffering to be a real
cyclist!". When you walk through the door of the local bike shop if
you're not under 40 and 5% body fat you'll be only grudgingly accepted
as a possible customer. If you should ask about recumbents you might
cause the Dude to become catatonic. A slight exaggeration perhaps, but
I've had numerous encounters with these idiots and it's not far off
base. It's been almost thirty years since I got involved in the bike
business and as far as I can see there has been little change in the
attitudes of bike shop employees and I doubt that there ever will be.

Anyway, I'd like to apologize to Bob for encouraging him to get
involved in the business those many years ago.

Dick Ryan

Jon

"ryancycles" <ryancycles@comcast.net> wrote

> Industry statistics haven't changed much over the last few years.
> 94.5% of riders ride for recreation and fitness, 5.2 % for
> transportation and .3% race their bikes.

Yes, and some percentage ot the recreational and fitness riders
have bought the "club required" equipment. Gotta keep up
with the Jones... (There's a joke in there.)

> It's the .3% who are the problem. All of them are testosterone
> poisoned young guys and all of them work in bike shops.
> They all believe, as one said to me, "you have to be willing
> to endure pain and suffering to be a real cyclist!".

Yes. And there's also the "bad fit" exclusion for anyone
who doesn't find an upright bike comfortable. Either
the bike isn't properly fitted or the rider isn't properly fit!
Blame the victim! %^)

But I suspect the largest income from bike sales must
come from the "middle ground". In the large "regional"
bike shop, there are whole sections of diamond frame
bikes that couldn't possibly make a racer or technical
MTB'er happy.

In the case of the smaller LBS Trek dealer who wasn't
interested in the R200, he didn't appear only interested in
pushing fast bikes. The bread and butter of his shop appears
to be kid's bikes, hybrids and entry-level MTBs. In a shop
with maybe 40 bikes on display, he has 1 or 2 "higher end"
road bikes.

Jon

Tom Sherman

ryancycles aka Dick Ryan wrote:
>>> But recumbents are a market niche, and not a fad. There's
>>> money, if not millionaires to be made selling them.
>> I strongly suspect that Rolf Garthus of Hostel Shoppe is a millionaire. He
>> carries a large line of different recumbents and sells many of them mail
>> order. He produces a catalog every year which is the best recumbent catalog
>> I have ever come across. Here is his website:
>>
>> http://www.hostelshoppe.com/
>
> I would suspect that his wife has a good job or comes from money (no
> dis-respect meant), of course I could be wrong. There are a few
> successful recumbent retailers in the country but they can be counted
> on one hand. Even after a huge amount of effort by a lot of people
> myself included.

I suspect some of the bigger recumbent specialist dealers make a lower
middle class income.

Around here, Wheel & Sprocket has billboard and radio advertisements,
but none of those mention recumbents. I imagine that Wheel & Sprocket
also sells a magnitude more uprights than recumbents.

> On the demise of RCN.
> I'm afraid that just as I was partially responsible for the creation
> of RCN I'm partially responsible for it's demise. When Bob was
> describing the financial condition of the magazine I advised him to
> shut it down and cut his losses. Although it comes under the heading
> of wisdom through hindsight, I'm very familiar with the problems
> associated with a small business as I was also foolish enough to get
> into the bike business and ended up basically penniless. (If it wasn't
> for my wife I'd probably be living under a bridge someplace.) IMO
> recumbents should have been a mainstream product many years ago. I'm
> sure some of you have read my rants about the bike industry before,
> but for those that haven't I'll repeat what I believe is the major
> reason for the almost total lack of acceptance of recumbents by the
> bike industry, (i.e. bike shops).

Better to close up while one can still pay their debts, than the other
way around.

> Industry statistics haven't changed much over the last few years.
> 94.5% of riders ride for recreation and fitness, 5.2 % for
> transportation and .3% race their bikes. It's the .3% who are the
> problem. All of them are testosterone poisoned young guys and all of
> them work in bike shops. They all believe, as one said to me, "you
> have to be willing to endure pain and suffering to be a real
> cyclist!". When you walk through the door of the local bike shop if
> you're not under 40 and 5% body fat you'll be only grudgingly accepted
> as a possible customer. If you should ask about recumbents you might
> cause the Dude to become catatonic. A slight exaggeration perhaps, but
> I've had numerous encounters with these idiots and it's not far off
> base. It's been almost thirty years since I got involved in the bike
> business and as far as I can see there has been little change in the
> attitudes of bike shop employees and I doubt that there ever will be.
>
This sounds like most bike shops. At many shops that sell mostly
uprights, one has to talk to the "recumbent guy", as all the other
employees will have nothing to do with them.

> Anyway, I'd like to apologize to Bob for encouraging him to get
> involved in the business those many years ago.
>
Did Bob Bryant enjoy his decade and a half in the magazine business?

--
Tom Sherman - Holstein-Friesland Bovinia
The weather is here, wish you were beautiful

ryancycles

>
> Bob Bryant was no doubt happy as a lark running his newsletter. Why
> shouldn't he have been. He was doing what he liked to do best in this world,
> test riding recumbents. He was getting over $30. a year for a bimonthly that
> remained amateurish right up to the end. To call RCN a magazine would be to
> wildly exaggerate.
>
> I am now subscribing to a computer magazine (PC World) that truly is a
> magazine. It is not expensive and it comes out every month. I think Bob
> Bryant was a good writer and editor, but he did not know how to run a
> business. It may be that Dick Ryan was a good recumbent designer and builder
> and that he also did not know how to run a business. Everyone thinks it is
> easy to run a business, but it is not. If it were easy to run a business,
> Tom Sherman would get his own engineering consulting business instead of
> continuing to be a hired hand.

Although I certainly knew nothing about running a business when I
started, I did when I quit. Unlike many of the people in the business
when we closed the doors we had no debts. Does anyone remember "Fat
City Cycles?" they welded the first 10 bikes that I built. When they
went under they owed friends, relatives and the city of Somerville
hundreds of thousands of dollars. Or "Merlin Metal Works", the owner
of Merlin told me that over the course of their ten years in business
they lost over a million dollars. The major mistake I made was
thinking that because people who bought the product were so
enthusiastic about if that it woud be a no-brainer to get it into the
market place. I failed to understand the depth of the ignorance and in
many cases the outright hatred of something different by the bike shop
people. When I started in the business there were about 7000 bike
shops in the country. Many of them were mom and pop operations run by
people who were in the business because they loved bikes but who
hadn't a clue about business. Most of them have been weeded out and
now there are about 4000 shops. But as has been discussed here nothing
has changed at the employee level of the bike shop business. It is
very difficult to sell a product when the people who should be
profitting from it bad mouth it. There has never been a recumbent
company that had the money to do the serious marketing required to
popularize recumbents with the exception of Trek and Cannondale.
Unfortunately both companies had internal strife that resulted in no
support for the products. Recumbents should be main stream products.
The success of shops such as Hostel Shoppe and Wheel and Sprocket at
selling them should be proof enough that a market exists.

When it comes to magazines as far as I know most depend on advertising
for their income. I'm sure PC magazine has no shortage of advertisers
whereas RCN had trouble getting any at all!
Dick Ryan

Wilson

"Tom Sherman" <sunsetss0003@REMOVETHISyahoo.com> wrote in message
news:fvgs4t$o6n$1@registered.motzarella.org...
> Wilson wrote:
>>
>> "Tom Sherman" <sunsetss0003@REMOVETHISyahoo.com> wrote in message
>> news:fvgp9a$e25$1@registered.motzarella.org...
>>> Wilson wrote:
>>>> Ed's pal Thomas Sherman maintains a stable of expensive recumbents so
>>>> perhaps he would be an exception to the idle rich class with more money
>>>> than brains type recumbent owner.
>>>
>>> Expensive? Both my RANS Rocket and my Wave to Tailwind conversion have a
>>> total investment of less than $1200. Both Sunsets were less than $2K,
>>> and Dragonflyer was just over $2K. Compared to a Ti-Rush or Bacchetta
>>> Aero, none are expensive.
>>>
>>> --
>> Well let's see. About $2,400 for the RANS (so we don't have to deal with
>> capitalization issues) bikes. You told me you think the lilac Sunset is
>> worth about $2,000 so I'd value the two of the around $4200. Then the
>> $2,000 Dragon Flyer (I thought you had two of them) brings the total up
>> to around $8,400. That's a bit more than what the so called normal
>> people have invested in bikes.
>
> That is about half the manufacturer and dealer profit on a luxury SUV,
> about the same as a set of high end golf clubs, less than a country club
> membership, the same as a top end phonographic cartridge, less than some
> speaker cables, about the same as a luxury skiing weekend at a snooty
> resort, or about 5 seconds of the US occupation of Iraq. Seems like an
> excellent value to me.


If I had to choose I'd sure pick $8400 of recumbant bikes over a phono
cartridge or speaker cables. Concerning Iraq it would depend on which 5
seconds you are referring to. Some 5 seconds over there would certainly be
worth $8400 to me.



>
>> But then it's no where near some of the BROL folks level of investment in
>> rare metals and composites. If I read Ed right he's saying anyone who
>> spends $2000 for a recumbent bike is in the idle rich with more money
>> than brains class. You meet Ed's membership requirements for that class.
>
> I worked about 75 hours last week. Does that make me idle?


You'll have to take that up with Ed.

For the most of my life I've avoided those kinds of hours. Much of the time
I've been paid based on specific results and I tried to get the job done
without investing those kinds of hours. If I did get in that situation I
would take steps to see it didn't happen again. I realize I've lived
something of a charmed life in that regard plus I've never been
involuntarily out of work for even one day.

Tom Sherman

ryancycles aka Dick Ryan wrote:
> On May 3, 10:19 am, "Edward Dolan" <edo...@iw.net> wrote:
> [...]
>> I too am appreciative of what Dick Ryan has accomplished in the world of
>> recumbency, but I just wish he had been able to get the price of his bike
>> out of the stratosphere. Recumbents are more expensive now than ever. Is
>> Hostel Shoppe carrying a single recumbent for less than $1000.? I rest my
>> case.
>
> About the cost of building bikes, the key word here is "BUILDING", not
> "MANUFACTURING", nobody I know of in the recumbent business
> manufactures bikes, they build them.

What about J&B/Sun? They were able to bring a bicycle to market (the
EZ-1 SC) at about half the price that Easy Racers used to sell it for.
Of course J&B manufactures their bicycles in a factory in Taiwan, while
the Easy Racers EZ-1's were welded one at a time by Fred Markham. J&B is
likely making more profit per unit than Easy Racers did.

> A friend of mine once took a tour
> through Trek's factory. At the time one of their products was a carbon
> fiber bike (not their oclv frame) the frame tubes and lugs were made
> elsewhere. The frame was glued together. The tubes and lugs were
> placed in a jig that pressed all the tubes into the lugs after they
> were coated with glue. Approximate time to manufacture a frame, 7
> minutes. It took me seven minutes to put a shipping box together. I
> don't know what our labor costs were as a percentage of the cost of
> building, put I'm sure it was a few of orders of magnitude greater
> than Trek's.[...]

Trek also probably pays half as much for a derailer or other component
as a LBS or small builder does at wholesale. Large discounts are
available when components are purchased by the shipping container.

--
Tom Sherman - Holstein-Friesland Bovinia
The weather is here, wish you were beautiful

Jon Bendtsen

ryancycles wrote:
> On May 3, 10:19 am, "Edward Dolan" <edo...@iw.net> wrote:

[cuuut]

> About the cost of building bikes, the key word here is "BUILDING", not
> "MANUFACTURING", nobody I know of in the recumbent business
> manufactures bikes, they build them. A friend of mine once took a tour

I think cruzbike has their frame manufactured in Asia, and probably
the seat, but i dont know where the parts are put together. I would
expect most recumbent manufactures to buy manufactured wheels from
Asia.

I can easily imagien that it is expensive to start manufacturing,
so when you dont have a huge number you build them by hand.





JonB