Join the Campaign for E-Fairness Now

salestaxfairness_10In the remaining weeks of this Congressional session, it is expected that the U.S. Senate will be voting to reauthorize a long-standing ban on Internet access taxes. Senators who support e-fairness (Internet sales tax reform) are urging their colleagues to take this opportunity to add an e-fairness measure to the bill.

The issue is that independent brick-and-mortar retailers are at a significant competitive disadvantage because they are required to collect state and local sales taxes, while many of their large online competitors are not. Combined state and local sales tax rates range from 6% to 10% in most states and can top 12% in some cities, according to the Tax Foundation.

Many small businesses, as well as the National Bicycle Dealers Association, favor a level playing field in which all retailers — whether they operate online, through a physical location, or both — are subject to the same requirements to collect sales taxes. Allowing remote retailers to skirt their obligation to collect sales taxes gives these companies a significant competitive advantage over brick-and-mortar businesses.

A coalition of independent business groups (Advocates for Independent Business) is now Continue reading

Bike Shop Survival is in Everyone’s Interest

shopexteriorWhen people in the bike world think of cycling infrastructure, they usually think of places to ride. Bike paths, bike friendly roads and off-road trails are all part of the necessary network for riding a bicycle.

But there is more to infrastructure than asphalt, concrete and off-road trails. Many bicycle dealers are becoming increasingly vocal that they are infrastructure too, and that a robust future for cycling in America revolves around bike shops.

The dictionary describes infrastructure as the “underlying base or foundation for an organization or system.” By that definition, bike shops can definitely be considered as infrastructure. It’s a rare cyclist who hasn’t taken advantage of a bike shop sometime in their life for bikes, accessories, test rides, repair, service and advice.

Bike shops as infrastructure is more than mere semantics. If bike shops are infrastructure, the fight for the future of the independent dealer becomes much more than a marketplace issue. If bike shops are infrastructure, the continued decline in the number of bike shops across the country is every cyclist’s and bicycle advocate’s problem.

From a bike dealer in Kansas, “Having a pony in the race does not mean that we aren’t telling the truth. The big question Continue reading

Zane’s Reinvents the Wheel

reinventcoverMany successful bicycle retailers have interesting origin stories, but very few openly lay out their operating philosophies and strategies for the rest of the world to see.

An exception is Chris Zane, owner of Zane’s Cycles in Branford Connecticut. His book Reinventing the Wheel traces his history in bicycle retail, getting his first tax ID number at age 12, buying his first bike shop at age 16, and building Zane’s Cycles into one of the largest bike shops in the country today.

The book is much more than a tale of one bicycle store owner’s history though. It presents great detail about his operating philosophies developed throughout the years.  The prominence of these sometimes “out of the box” concepts has also allowed Zane to move into a speaking and writing career beyond the bicycle industry.

The core of Zane’s philosophy is building customers for life. He has calculated that the average value of a lifetime customer to his business is $12,500. He writes, “that means that my average customer will spend $12,500 on my products and services over his or her lifetime, $5,000 of which is profit. Of course the only chance I have ever seeing that kind of return on the relationship is if that customer keeps coming back and back again. Better yet I want customers to come back with their kids their relatives and five friends.”

This big picture view has led him to look well beyond today’s transaction. It is the philosophical underpinning Continue reading

Are Bikes the Black Hole of Bike Shop Profitability?

Black_hole

A new financial study confirms a sad truth about bicycle retailing: most bike shops do not make a profit on the sale of new bicycles.

This may be old news to many, especially retailers wrestling with unruly income statements and stiff price competition, but the new report uses hard numbers to show that the failure of new bicycles to generate retail profit is much more than urban myth.

In fact, the report shows that new bicycle margins do not even cover their share of the basic operating costs of the average bike store. Overall store profitability is only possible because sales of higher margin items such as parts and accessories drive the averages up, categories now facing increasing price competition from on-line retailers.

The source is the NBDA Cost of Doing Business Survey, conducted by market research firm Industry Insights every two years since 1993. It is different from many surveys Continue reading

Bike Shop Metrics Are On the Rise

bikestorephotoThe average bike shop today is bigger than in the past, both in dollar volume and physical size, according to a new retail study from the NBDA conducted early this year.

The Specialty Bicycle Retail Study, published annually since 2004, reports average store sales of $997,761 in 2013, average store size of 5,562 square feet, and $179 in revenue per square foot, all record highs.

While these numbers are incrementally higher than the previous year, comparing the latest study to the one done a decade ago illustrates some of the striking changes in the bicycle retail marketplace. In the 2004 report, the average store average dollar volume was just $540,000, average store size was 4,822 square feet, and the average store produced just $111 in sales per square foot.

Clearly, the retail marketplace has changed, and mostly in good ways. The bad news? There are a lot fewer stores to enjoy the ride. There were 4,704 Continue reading

Recalls Call for Retailer Action

nbdalogo4c_smallRecalls have been much in the news lately, and the bicycle industry has not been immune with recent fork recalls from Trek and Scott.

Retailers play a central role in assuring that defective products are identified and removed from use, and that consumers are protected. They also have ongoing obligations to protect the public from defective products.

As part of the NBDA’s Bicycle Mechanics Certification program development, project director Rich Kelly asked attorney Jim Moss to take a look at the mechanics of recalls, and to clarify the legal rights and obligations of the retailer. Moss specializes in legal work in the outdoor market, and is advising the NBDA on legal issues related to certification.

Here’s his overview of dealer obligations in recalls that can be applied to today’s recalls, as well as those in the future:

Product Safety and Recalls: Your Obligations as a Retailer

Retailers are a key part of the process of producing, selling Continue reading

Dealers Question Recall Reimbursement

recall

Last week’s recall of 125,000 bicycles for defective forks was bad news for everyone involved.

But the solution has been energetic and purposeful, as bike shops nationwide leap into action to notify the public, fix the recalled bikes, and file the paperwork.

All this is necessary and even heroic, but many shop owners are expressing dismay at what they say is inadequate reimbursement being offered by the manufacturers for this huge and important effort. One compay has offered to reimburse dealers either $5 or $15 per repair, depending on the fork model ($5 for replacing skewer with washers, and $15 for fork or fork leg replacement).

Many dealers are saying their hard costs are much higher than that, and that the recall is a significant financial burden as they venture forth to solve a problem they did not cause.

The overall financial impact on an individual dealer goes way beyond the time a recalled bike spends in the repair stand, they point out. One Texas dealer estimated it takes about 45 minutes of dedicated shop time to process and repair a recalled bike needing the simpler “washer/skewer” repair, and maybe 70 minutes for fork or fork leg replacement.

Even if the time estimate is a little high or a little low, the fact remains Continue reading