What Does Specialized’s Bold Decision to Offer Consumer Direct Sales Mean to Dealers?

By Bill Plock

What’s the saying, “If you aren’t changing you are choosing?” Well Specialized recently announced a choice—to deviate a from long standing partnerships with independent bike shops by now offering products directly to consumers via their website. Dealers will still be able to carry products of course, but in a three tier formula, consumers can order and ship to home, order and pickup at a local store or shop like normal. Specialized hopes to capture a wider market share with this strategy and believes the impact on dealers may be minimal. 

But will it?  Can they grow the overall demand for Specialized products and keep the net sales of dealers relatively the same? That seems to be their hope in a recent zoom meeting with dealers across the country, but time will tell. It’s really the margins that are at stake and the net profitability of carrying Specialized versus other brands. If more customers choose the order and pick up at store option, dealers will see a substantial hit in margin but still get the customer in the door to hopefully buy some accessories. 

It’s no major surprise, especially with the emergence of consumer direct brands like Canyon taking more and more market share that Specialized played this card. Pricing will be consistent so that for example if you want a Specialized Tarmac, the price you pay from Specialized will be the same as you pay from a dealer. No doubt they hope to pick off on-line shoppers who don’t have a dealer close by, don’t like to shop, or are mechanically inclined and know exactly what they want and how to assemble the bike.  

When asked, Steve Heal, General Manager of Wheat Ridge Cyclery, one of the largest Specialized dealers in the world expressed some bittersweet feelings. “We have been a parter for so long, it hurts of course, but we love their products and will continue to support the brand. I personally am not shocked, but was surprised a bit with the timing considering we still have substantial backorders yet to be filled. It’s a bit of a bummer some bikes will be held back for on-line orders that we are still wanting and have ordered for our showroom floor.”

Heal went on to say, “Customers still want to touch, feel and try bikes and when they buy from us not only are our sales people trained to get them just the right bike and right size, they get lifetime free adjustments and a free tune within a year of purchase. Customers know they are supporting a local business, so we anticipate continued strong sales of Specialized bikes and accessories.” 

For now, customers can purchase Specialized on-line but pick up from a local shop. In that case the shop “gets the sale” but at a lower margin than from their own inventory. Customers can also have a mostly assembled bike shipped to their house and for a fee dealers like Wheat Ridge Cyclery will get it ready to ride and will still service warranty claims. 

Retail is always a changing environment. Russ Chandler, owner of Full Cycle/Colorado Multisport in Boulder, a Specialized dealer, sees this as an opportunity. “Retail is about relationships with customers. Something we try very hard to develop and grow. We sell a lot of Specialized products, but we are an independent bike shop and we can choose the very best products to sell. Specialized made a business decision they think will add more profits to their company—so good for them, that’s ok!  Of course we will continue so sell and service Specialized products. We recognize service is the key to business and will happily service any Specialized product. We hope more people get the bike they really want, regardless of brand or where they bought it and we will take care of them.” 

Specialized may be a pioneer with this move, a position not new to the company that started in 1974 with founder Mike Sinyard literally pulling Italian bike parts around the Bay Area on his bike and selling to small shops; and later in his famous VW bus that sits in the lobby/museum at Specialized headquarters in Morgan Hill, California. 

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