The chance of a lifetime: You are asked to start a bike shop. How should it be done?

[T.W.R]

F.F.S Could you just hurry up & start the bloody company yourself instead of trying to gamble other peoples money!
Realistcaly, any business is just a bloke looking for maximum return on his dollar with the skills god gave him.

that's funny....that's exactly what most dealerships are doing already gambling someone elses money....usually the banks money

[Scorp]

What the? why would it be sold back to the US, buy from US (well UK in my example) freight heaps of parts together to NZ, then sell in NZ and post out to customers (in NZ)

Okay. Here we go...

1. US online bike stores buy in bulk quantities to satisfy mainly, the US market. Ditto for online UK stores. Although both obviously do sell overseas as well.

2. If you're going to set up an NZ based online store that's going to compete with US and/or UK online stores - it's going to have to buy in the same quantities as US and UK stores.

3. The UK market is roughly 12 times, and the US market roughly 60 times the size of the NZ market.

4. This means, in order to obtain the same economies of scale as US and UK operators, you're going to have to buy between 12 and 60 times as much stock as you can sell in NZ.

5. If you have 12 to 60 times as much stock as you can sell in NZ, you're going to have to sell it to people in bigger markets. Markets with 12 to 60 times as many people in them - most likely in the US and/or the UK. Which means sending the gear from NZ to those countries.

6. US and UK operators are closer to most of their supply sources than an NZ operator would be, so an NZ operator will have to pay more for shipping the stuff to NZ in the first place. And more to fulfill US and UK orders too.

7. Therefore the only way for an NZ online store to truly compete with a US or UK online store, is to set up in the US or UK because 90% of their market is there, not here.

That's what I'm getting at. There are already online NZ motorcycle gear suppliers and as far as I can tell, their prices are pretty much the same as NZ bike shops. The above is almost certainly the reason why.

You can only get the same economies of scale as the big boys, if you operate in the same markets as them.

[Robert Taylor]

What the? why would it be sold back to the US, buy from US (well UK in my example) freight heaps of parts together to NZ, then sell in NZ and post out to customers (in NZ)

That is a spectacularly naive statement. And Im not going to spell it out any further for you because others very ably have.

[Pixie]

The future is: Buying everything including the bike on-line with servicing performed by mobile mechanics.

You won't like it,but you created it and will be stuck with it.Until,of course, an enterprising individual opens a retro style store and you all flock to the things you are moaning about in this thread.


Look,You're Kiwis,you live in a third world country with first world desire for toys,but are only willing to pay the lowest price.
You will only invest in property but want business to provide you with everything you think you deserve.

[bogan]

Okay. Here we go...

1. US online bike stores buy in bulk quantities to satisfy mainly, the US market. Ditto for online UK stores. Although both obviously do sell overseas as well.

2. If you're going to set up an NZ based online store that's going to compete with US and/or UK online stores - it's going to have to buy in the same quantities as US and UK stores.

3. The UK market is roughly 12 times, and the US market roughly 60 times the size of the NZ market.

4. This means, in order to obtain the same economies of scale as US and UK operators, you're going to have to buy between 12 and 60 times as much stock as you can sell in NZ.

5. If you have 12 to 60 times as much stock as you can sell in NZ, you're going to have to sell it to people in bigger markets. Markets with 12 to 60 times as many people in them - most likely in the US and/or the UK. Which means sending the gear from NZ to those countries.

6. US and UK operators are closer to most of their supply sources than an NZ operator would be, so an NZ operator will have to pay more for shipping the stuff to NZ in the first place. And more to fulfill US and UK orders too.

7. Therefore the only way for an NZ online store to truly compete with a US or UK online store, is to set up in the US or UK because 90% of their market is there, not here.

That's what I'm getting at. There are already online NZ motorcycle gear suppliers and as far as I can tell, their prices are pretty much the same as NZ bike shops. The above is almost certainly the reason why.

You can only get the same economies of scale as the big boys, if you operate in the same markets as them.

If you don't sell in the US you don't have to compete with the US market, if you want to set up shop in NZ you just have to price compeditively in NZ, if its and online shop in NZ then you will want to be compeditive with online shops overseas that ship to NZ, got it?

I've bought things from the UK and the postage is pretty bloody expensive if you only buy one, but buy 10 parts (different or the same it doesnt matter) the postage cost per part drops a lot. The post i told you to read (I'm guessing you didnt, or didnt understand it) shows that buying 10 items from on overseas online store and reselling in NZ in smaller quantities means you can offer the same price to NZ customers as they could get the part here from the UK, this takes into account postage and GST as well. Now if you can buy from the wholseller that supplies the overseas online store, the cost would decrease and you could make a tidy profit is my theory, so far nobody has poked any holes in it that I'm satisfied with.

That is a spectacularly naive statement. And Im not going to spell it out any further for you because others very ably have.

Oh FFS, if you have nothing useful to say, say nothing at all please. Coming into threads as you do and defending the bike industry with little or no factual basis (other than I work in it and know wayyyy more than you) (i should clarfiy that to little or no factual basis understandable to those outside the industry) is a waste of time and does nothing for your cause. If you want us to see how good the bike industry is, provide some fucking reason for why you disagree. I outline my logic a few posts ago and asked you to find holes in it, you've yet to show me any, if there are please spell it out. Also you said you knew of someone who was doing something similar, I would be curious to go have a look if they have a website up and running.

[Robert Taylor]

If you don't sell in the US you don't have to compete with the US market, if you want to set up shop in NZ you just have to price compeditively in NZ, if its and online shop in NZ then you will want to be compeditive with online shops overseas that ship to NZ, got it?

I've bought things from the UK and the postage is pretty bloody expensive if you only buy one, but buy 10 parts (different or the same it doesnt matter) the postage cost per part drops a lot. The post i told you to read (I'm guessing you didnt, or didnt understand it) shows that buying 10 items from on overseas online store and reselling in NZ in smaller quantities means you can offer the same price to NZ customers as they could get the part here from the UK, this takes into account postage and GST as well. Now if you can buy from the wholseller that supplies the overseas online store, the cost would decrease and you could make a tidy profit is my theory, so far nobody has poked any holes in it that I'm satisfied with.



Oh FFS, if you have nothing useful to say, say nothing at all please. Coming into threads as you do and defending the bike industry with little or no factual basis (other than I work in it and know wayyyy more than you) (i should clarfiy that to little or no factual basis understandable to those outside the industry) is a waste of time and does nothing for your cause. If you want us to see how good the bike industry is, provide some fucking reason for why you disagree. I outline my logic a few posts ago and asked you to find holes in it, you've yet to show me any, if there are please spell it out. Also you said you knew of someone who was doing something similar, I would be curious to go have a look if they have a website up and running.

No need to defend myself, as for logic Scorp makes a whole load of sense, as have others. I wish I had all the time in the world to monotonously prove your folly but others already have. Now Ive got work to do as I hope you have.

[Pixie]

Because its up to the manufacturers. We are an insignificant little country at the bottom of the world and dont have any muscle. Have you travelled a lot overseas? If so you will know that.

But but but,we are nukular free and clean and green and were the first country to give women the vote..Everybody should love us

[Pixie]

What the? why would it be sold back to the US, buy from US (well UK in my example) freight heaps of parts together to NZ, then sell in NZ and post out to customers (in NZ)

excuse me,but does your plan also include shipping "heaps" of motorcyclists to NZ to be your customer base?

[bogan]

No need to defend myself, as for logic Scorp makes a whole load of sense, as have others. I wish I had all the time in the world to monotonously prove your folly but others already have. Now Ive got work to do as I hope you have.

Course I got work to do, though I was genuinely interested to find out what was wrong with my logic, ah well, hopefully scorp will do a better job of educating me

[bogan]

excuse me,but does you're plan also include shipping "heaps" of motorcyclists to NZ to be you're customer base?

think you're overestimating the impact the new ACC levies will have , there are plenty of bikers here, not enough to get deals direct from the manufacturer, but surely enough to buy from international wholesellers

[sidecar bob]

The old codgers who are bumping into trees are far outweighed by the young guns that think they know how everything should be done, yet are too timid or broke to put it to effect themselves. Prefering to convince the jaded old bastards to put their hard earned cash into hair brained ill concieved ideas, so they can loose it all.
The school of hard knocks & tough surprises makes one a little more wary than doing a uni degree.
What ive discovered is that the more money you have, the more free advice you get on how to spend it from people that have none.

touchee touchee
While originally not meant to be taken literally, on second thoughts why not?
One of the original drivers for wholesalers was the efficient distribution of goods and the efficient movement of money to pay for these goods. Both activities being labour intensive.
A lot has changed over the years.
Today paying for goods is fully automated, and modern warehouses are full of robots doing the picking and packing. Transport isnt a problem. So there is no real barrier to individuals or retail shops ordering direct from the factory.
Except old codgers who keep bumping into trees

[Scorp]

If you don't sell in the US you don't have to compete with the US market, if you want to set up shop in NZ you just have to price compeditively in NZ, if its and online shop in NZ then you will want to be compeditive with online shops overseas that ship to NZ, got it?

Erm... you're joking right?

Of course you have to compete with US online stores! Just like NZ high street bike stores also have to compete with online US stores. That's the whole point of this thread isn't it? That the internet (which is global) is competing with NZ retail.

If a bike shop owner had said on this thread: "I don't have to compete with the US market, I just have to price compeditively in NZ", he'd have been well chewed up by a lot of posters here.

The key problem, as put forward on this thread is that...Overseas Online shopping prices are killing NZ bike shops.

Most of the online operators offering the best prices are in the USA. The reason they can offer such good prices is because they can bulk buy and realize huge economies of scale. If you set up the NZ based online store you're talking about, you may indeed be able to match UK online store prices, you also be able to match and even beat NZ bike store prices. But you will never be able to beat US online store prices.

As such, your online NZ business model will suffer the same problems that existing online NZ stores, and existing NZ mainstreet bike shops suffer - namely that bikers can buy cheaper from US based websites.

All you'd be doing by setting up your new online store, is adding to the existing internal market pressure.

By way of illustrating this, here's an example of prices for one item (I'm choosing this example simply because I bought one from an NZ bike shop on Saturday).

Item: Shoei Raid II Helmet (Wine Red)

NZ Bike Shop price to me: $549
NZ online price: $549 plus p&p
Australian online store price: AUD$679.95 plus p&p. Total: NZ$883 plus p&p
UK online store price: (STG£215 + £57.95 p&p = £272.95) Total: NZ$588.57
US online store price*: (US$273.59 + $67.34 p&p = US$340.93) Total: NZ$478.31

So as you can see, the only way to beat the NZ bike shop price, is to buy online from the US. This pattern holds true for all the other gear I've been looking at over the last month.
I know the above example is just one product, and I know it's not parts. But the market forces at play are the same.

The post i told you to read (I'm guessing you didnt, or didnt understand it) shows that buying 10 items from on overseas online store and reselling in NZ in smaller quantities means you can offer the same price to NZ customers as they could get the part here from the UK, this takes into account postage and GST as well.

Oh, I read it and understood it perfectly. But why should I buy from an online NZ store as opposed to a physical NZ bike shop, when the retail price is the same?! (N.B. Your quote above says: "offer the same price".) Especially when the guy who owns the bike shop knows me, will let me try stuff on, and will give me discount in return for loyalty?

P.S. 10 items hardly constitutes buying in bulk.

Now if you can buy from the wholseller that supplies the overseas online store, the cost would decrease and you could make a tidy profit is my theory, so far nobody has poked any holes in it that I'm satisfied with.

Okay, here's the hole. Watch out, it's a big one...

How do you propose to carry the same stock range as guys like Revzilla and also compete on price? If bikers in NZ can buy online from these mega-stockists cheaper than they can buy online from you, who do you think they're going to buy from?

Just because you have calculated that you can buy in bulk and sell at a profit - doesn't mean you can actually actively compete in the marketplace with the big, big boys. Nor does it explain how you're going to tackle the very same market phenomenon that's pressurizing high street retailers, i.e. mega-stocking US online operators like Revzilla.

*The US/Aus Shoei entry level helmet which seems to correspond to Raid II is called the TZ-R. I could be wrong, but the features look the same.

[bogan]

The old codgers who are bumping into trees are far outweighed by the young guns that think they know how everything should be done, yet are too timid or broke to put it to effect themselves. Prefering to convince the jaded old bastards to put their hard earned cash into hair brained ill concieved ideas, so they can loose it all.
The school of hard knocks & tough surprises makes one a little more wary than doing a uni degree.

Don't be taking it so personally, I'm enither planning on putting it into effect, or convincing someone else to do it. I merely wish to understand why industry types are stating again and again that it cannot work, yet can't back thier statements up. The reasons given so far do convince me that its not a foolproof or easy idea to put into effect, but I'm far from convinced it's impossible . I spose what I'm trying to say is I don't like naysayers, and thats what many in this thread are coming off as.

[bogan]

Erm... you're joking right?

Of course you have to compete with US online stores! Just like NZ high street bike stores also have to compete with online US stores. That's the whole point of this thread isn't it? That the internet (which is global) is competing with NZ retail.

read what I wrote, I said you would have to be compeditive with overseas online shops.

I'll give you an example, a part costs $70NZD if you buy it in UK, but you're not in UK and the cheapest you can get it here is $84NZD, this is because there is extra freight costs associated with shipping from UK, bike shop here could do it for $124NZD. So to be compeditive which price do you need to sell them at here?

So as you can see, the only way to beat the NZ bike shop price, is to buy online from the US. This pattern holds true for all the other gear I've been looking at over the last month.
I know the above example is just one product, and I know it's not parts. But the market forces at play are the same.

agreed, as things are now, I'm trying to figure out If they could be different, If things were as I think they could be they whole discusion would be moot wouldnt it?

Oh, I read it and understood it perfectly. But why should I buy from an online NZ store as opposed to a physical NZ bike shop, when the retail price is the same?! (N.B. Your quote above says: "offer the same price".) Especially when the guy who owns the bike shop knows me, will let me try stuff on, and will give me discount in return for loyalty?

Refering to my above example, the price matched would be the $84 equivalent to the overseas online store, it is still a lot cheaper than the part from the bike shop here.

P.S. 10 items hardly constitutes buying in bulk.

Exactly, if things look possible at 10 items, surely it will look a lot better at 100!

Okay, here's the hole. Watch out, it's a big one...

How do you propose to carry the same stock range as guys like Revzilla and also compete on price? If bikers in NZ can buy online from these mega-stockists cheaper than they can buy online from you, who do you think they're going to buy from?

Just because you have calculated that you can buy in bulk and sell at a profit - doesn't mean you can actually actively compete in the marketplace with the big, big boys. Nor does it explain how you're going to tackle the very same market phenomenon that's pressurizing high street retailers, i.e. mega-stocking US online operators like Revzilla.

You're right, that is a hole, but I'm not thinking bout that atm, my assertion was only that parts could be brought to NZD and be compeditively price with international online stores, If I'm right about that then I can think about the other bits (I cant be assed trying to do both at once), many have disagreed and said that parts cannot be brought here and be compeditively priced with the online shops so I'd like conclude that point first, make sense?

[Scorp]

Hi Bogan,

First, an apology for misreading your earlier post. Hands up to that one. But I think you see where I'm coming from on the economies of scale argument. And competing with the US operators.

Secondly...

I'll give you an example, a part costs $70NZD if you buy it in UK, but you're not in UK and the cheapest you can get it here is $84NZD, this is because there is extra freight costs associated with shipping from UK, bike shop here could do it for $124NZD. So to be compeditive which price do you need to sell them at here?

To be competitive all you'd need to do is undercut the retail price less maybe 15% for store discount. So somewhere around the $100 mark ought to do it. But only if you can buy the parts, ship them in, store them, advertise them, and sell 100% of them at a profit. Unsold stock will really kill your overall profit.

But you'd also need to be able to source the parts from a supplier who'd be happy for you to undercut NZ prices for your proposed inventory. This could be harder than you think, as the UK wholesaler may already have some very good customers here they'd wish to keep happy.

And thirdly...

You're right, that is a hole, but I'm not thinking bout that atm, my assertion was only that parts could be brought to NZD and be compeditively price with international online stores, If I'm right about that then I can think about the other bits (I cant be assed trying to do both at once), many have disagreed and said that parts cannot be brought here and be compeditively priced with the online shops so I'd like conclude that point first, make sense?

... the more I think about your 'parts-only' plan, the more I think you could be on to something. If you could identify and stock a small inventory of a few dozen of the most in-demand parts across the widest possible number of motorcycles, then advertise them right here on KB, and run distribution from a small home-based unit, you could probably build a strong small business.