Setting up shop

Having assembled and/or repaired so many bikes these last few years my mother asked me why don’t I start a bike shop myself. To be honest with the stresses of day job in IT outsourcing the thought has crossed my mind. The only thing hindering me from making the jump is the difficulty of making it work financially. The economics at play are not exactly favorable for a new comer entering the market. New bike shops go broke all the time, but there would definitely be demand for a a player redefining the service bike shop provides.

Despite the low odds I think little ingenuity can go a long way. Having experienced so much bad service from local bike shops (LBS) I would know exactly what are the key areas to fix. In my experience to be attractive a new player would need to provide competitive prices for extensive selection of spare parts to be able to tackle the threat of online shops. Another challenge is being able to fulfill demand for maintenance work during peak season. To be to accomplish this the whole game has to be reinvented.

One crucial aspect is that the cost structure of a typical bike shop needs to be trimmed down. Keeping parts in stock is just very expensive. The only way getting around the need of storing lot of inventory is to outsource it. I think the answer lies in keeping just the essentials in stock and refer your clients to a reliable online partner instead. With sufficient courier volume of orders and returns you could bypass the monopoly of importers all together.

Another crucial element is the service hours. Optimally you should be able to serve during cycling hours. For an entrepreneur there is a real danger is ending up spending all evenings and weekends at the shop. Since at a typical bike shop there is no constant flow of customers during office hours employees are multi-tasking between shop work and customer service. The fact is bike mechanics do not necessarily make the best customer service agents or sales people. Finding a partner that can draw in people and handle customer service would be the optimal solution.

Geography is another obstacle. Typically maintenance service providers are limited to serving their immediate neighborhood or people passing though. So consequently bike shops tend to be located on routes in expensive street-front premises. Finding a location somewhere in the outskirts of the city in an industrial area would surely be much more economical. You would still need to be based along big transportation routes so that customer can mentally base you somewhere.

Normal people typically drive their bikes until something fails and they don’t have means to transport the bike to a shop far away. The only real alternatives are either offering flexible pickup service or doing repairs on the spot. Due to a need for eclectic mix of spare parts second option is generally limited to minor repairs like fixing punctured tires. Pickup by a courier van could work. For the service experience to be efficient online booking for collection and deliveries would be required.

The fact is cycling in the Nordic countries is a seasonal sports for most people and all local bike shops have to work around that reality. The survival tactics are almost like something from your grade school a biology book. Some shops try to survive over the long winter omnivorously proving gear for winter sports. Other close shop and hibernate over the winter. To me the optimal solution would be to migrate down south for the winter.

For a typical customer shops full of bikes and too many to choose from is a nightmare. Restricting bike sales to just few models and makes would limit the need for floor space. Also by organizing special test drive events you could minimize the need for keeping all sizes stocked at the shop. Alternatively you could just give up selling new bikes all together. Even with the message boards on the Internet there would definitely be a need for specialists giving advice and helping customers build bikes on their own.

Offering these more consultative services such as bike fitting and maintenance courses in addition to traditional shop work is becoming more common. There are even players that help you find suitable or sell used parts on the Internet. You could even diversify to route guiding and group driving courses if you had some rental/test bikes. Setting up a hang out “cycling country club” somewhere outside the metropolitan area would serve as a place to start rides and store the priced bike in a secure place. With a transportation solution to and from home the clients could even enjoy a post-ride beer watching Le Tour.

So I do think there is an opportunity as long as you work around the constraints of the industry. Setting the service experience as the most important goal is rather surprisingly an easy way to differentiate. You could start simple uniting a bike shop and a café. Eventually with years of work you could end up with a place to visit or a make a pilgrimage to. Is that already a business plan you could put some money on?


3 thoughts on “Setting up shop

  1. Hi,

    I think it might be interesting for you to offer your own custom brand. Basically you would offer a few frames and other gear to choose from and deal with assembling it. In addition you would provide support. Some people, me included, might interested in getting a “domestic” bike rather than some more known brand.

    • Yeah,

      I think you are absolutely right. I just think the finnish market may be too small for another small bike brand so I would have to shoot for the European or Nordic market instead. Collaborating with a known player (eg. PedalForce) or just otherwise facilitating with group buys might also work. On the other hand to me the beauty of Chinarellos is in the missing labels (think Muji for bikes). I’m planning on another write up on bicycle branding. It definitely is an interesting subject.

      • Well. Pretty much nothing prevents you from gauging possible interest. There might very well be some pent up demand for something like this.

        Good point about collaboration. Pedal Force Nordic anyone?

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