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New Players Tapping Online Channel

Published April 16, 2008

BY LYNETTE CARPIET

PARK CITY, UT—Sales of cycling gear online is nothing new. A quick Internet search turns up dozens of sites—including one that scours the Web for the best deals and presents results from more than 30 online sellers.

However, new players are entering the fray, realizing it’s a sales channel that has yet to be fully tapped.

Backcountry.com, a highly successful online retailer of outdoor gear for climbers, hikers, skiers, snowboarders and paddlers, recently added bike accessories, parts and clothing from more than 60 top brands to its vast online store. It hopes to begin selling complete bikes next spring.

The site, which launched in the late’90s with hardly any startup capital, has seen its sales climb hastily from $1 million in 2000 to $137 million last year.

Dustin Robertson, chief marketing officer for Backcountry.com, said the site offers a wide selection of premium products consumers can’t get at a local bike shop due to floor space and warehouse restrictions.

“Everything we sell is only high-end,” he said. “That’s what we’ve done in the outdoor industry, too. That’s the Backcountry brand—we play at the top end.”

Robertson admits that the industry wasn’t too receptive to the company at first. But its online sales experience in the outdoor and ski industries helped win over skeptical bike brands, which see many online sellers market low prices and undercut their brick-and-mortar dealers.

Robertson said Backcountry.com will not compete with e-commerce sites like Performance Bicycle or REI that cater to the mid-market consumer. He also doesn’t see the site stealing sales from local brick-and-mortar shops.

“The Internet is influencing offline sales,” he said. “In the outdoor industry, we recognize that we draw sales offline and that’s great. The Internet is a better research medium than a shopping medium. We all use it every single day for research, for customer reviews. Every dollar online drives $7 offline.”

Suppliers Reach Out. More bike companies, too, are coming around—if they haven’t already—to the fact that consumers are using the Internet for product research and purchases and they’re modifying or coming up with new online sales policies.

Last month, Nirve expanded its online reach by allowing specialty retailers who are SmartEtailing clients to sell its bikes on the Internet.

And Trek, which had resisted selling directly online to consumers, last fall began selling closeout Nike product through its online store. More recently the company has broadened the lineup of products it sells through its Web site to include some new model-year parts and accessories.

Some manufacturers are catering to online consumers by partnering with Shopatron, an e-commerce provider that directs orders from manufacturers’ Web sites to retailers located near the consumer. Consumers have the option of picking up orders in-store or having their items shipped by the retailer.

Through Shopatron, a shop handles fulfillment, allowing it to generate in-store revenues and enabling manufacturers to sell directly from their Web sites.

Companies currently working with Shopatron include Dahon, Louis Garneau, Thule and Swany America, a cycling glove manufacturer, as well as many cycling apparel manufacturers.

Other suppliers, like Shimano, have never sold directly through their Web sites, but made their product available through authorized Internet sellers. Shimano doesn’t actively seek online sellers, but it began an Authorized Internet Retailer program a few years ago, said spokesperson Devin Walton.

Pearl Izumi, which has allowed online sales of its products since 2000 and sells directly through its own Web site, has a separate online agreement.

It requires that its online sellers commit to a broad assortment of in-season products, provide strong and accurate brand representation and adhere to a stringent pricing policy.

“Regardless of how they purchase, more and more consumers conduct online research prior to making a purchase decision,” said Cache Mundy, who handles marketing for Pearl Izumi.

“We have experienced some increase in demand to sell our products online,” he added, noting that service providers like SmartEtailing have increased availability of its products on the Web.

Brick-and-Mortars Cash In. SmartEtailing has offered its retail clients e-commerce capabilities for nine years, though the option became standard in more of its Web site packages only three years ago.

Company co-founder Mark Graff said retail clients use the shopping cart function to varying degrees depending on their comfort level, but the pay-online-and-pick-up-in-store option is one that’s proving more popular than shipping product to consumers’ doors.

“I’m noticing more and more retailers commenting on the fact that their customers are telling them they like the convenince of starting the shopping process online whether it involves shipping or it culminates in-store,” Graff said.

REI spokeswoman Megan Behrbaum said the pick-up-at-store option has been wildly popular with online purchases of bikes and related products with about half of those who shop online choosing it over shipping.

The co-op began offering this service in 2004 as a way to make shopping more convenient and as an option for those wanting to forego shipping costs, she said.

REI has seen its direct sales channel—including online and catalog sales—increase every year: from 2005 to 2006 by 19 percent and from 2006 to 2007 by 16.1 percent, she said.

Many smaller specialty shops have been cautious and slow to jump onto the Internet sales bandwagon.

Graff believes this caution stems from retailers wanting to ensure that the online experience is being handled the same way as in the store.

“The more locations they have, the more challenging it is for them to think about: How do we make sure we know how to handle the customer’s experience online that wants to pick up the product after buying online?” Graff said.

Even so, more specialty shops seem to be giving it a try, according to Fred Clements, executive director of the National Bicycle Dealers Association.

“We don’t have a study that measures that. My sense is more are on the Web and showing product and more are doing sales online to reach customers in local markets the way those customers may want to buy,” Clements said.

Bernie Racher, owner of Trail Head Cycles in Hillsboro, Oregon, said about 20 percent of total sales in summer are through his shop’s eBay site, which links from the store’s homepage. Online sales balloon to close to 70 percent of his total sales during winter.

Specializing in freeride and downhill bikes and accessories, Racher said he sells many odd parts and products a lot of other shops don’t care to carry.

He tried selling directly through his own site, but couldn’t get enough traffic since it wasn’t being listed high on search engines and he didn’t have much of a marketing budget to help promote it.

His eBay site, however, has received more than 800 positive consumer reviews. Racher has sold online since 2004.

“We have customers that don’t want to go to a shop, and people research online so you have to have information online,” Racher said. “You have to or you get left in the dust.”

The Same Rules Apply. Key to being successful with Internet sales is only selling what’s in stock, handling warranties and returns in a timely fashion, and being available to customers at all times for questions regarding products or orders, Racher said.

Robertson also said that Backcountry.com’s success—much like that of brick-and-mortars—boils down to customer service.

“We ship quickly and let [customers] know what’s going on,” he said. “If they put their derailleur on their bike and aren’t happy with it, they can send it back to us, no questions asked. We have the best service and we never compete on price.”

Backcountry.com invests heavily in product content, with a dedicated in-house department that writes all the product descriptions and shoots all the photos.

The site also actively solicits consumer reviews and offers a Q&A section where customers can ask questions about product and have them answered by their peers.

Robertson said Backcountry.com plans to roll out more community interaction points around products with the goal to become a “hub for gear online,” and could eventually add a dealer locator.

“It’s a symbiotic relationship between brick and mortar and online,” he said. “We can’t take customers from those guys. We can send customers to them, and we’re happy to do it.”

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