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Burley Tangles with Costco Over Trailer Sales

Published December 29, 2010

EUGENE, OR (BRAIN)—When Burley Design’s Mike Coughlin learned that that Costco.com was selling a limited quantity of Travoy trailers without authorization, he called Costco executives and told them to stop.

When the discounter declined, he repurchased them himself to take them off the market. “We are committed to independent bike shops and value them as partners,” said Coughlin, Burley’s CEO.

“Costco acquired these products outside of our normal channel because we wouldn’t sell directly to them. We don’t want to jeopardize our relationships with dealers, so we bought all of our trailers to quickly fix the problem,” he said.

Costco.com was selling them for $239.99, including shipping and handling. The Travoy regularly retails for $289. So how did approximately 100 of the trailers get to Costco’s e-commerce division?

Costco has met with Burley executives in the past, attempting to buy products for its outlets. But Burley has consistently rejected those overtures. Coughlin said he traced the purchase to Costco’s senior vice president of ecommerce and the company’s automotive and sporting goods buyer.

Burley originally had sold the trailers to Kevin Jacob of VIP Promotions, LLC, a Henderson, Nevada, company that was to distribute them to a resort chain as “promotional products in green initiatives,” Coughlin said.

Such promotional or reward programs are typical and a number of bicycle companies participate in them. For example, American Express members can use points to purchase Trek or Fuji bikes as part of its rewards membership.

Coughlin said he doesn’t know exactly how the trailers got to Costco after VIP Promotions bought them. Costco, he points out, doesn’t cover the trailers under any warranty and Costco notes on its website that it’s an “unauthorized dealer” for Burley products.

—Marc Sani
msani@bicycleretailer.com

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