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U.S. Weighs in on Chain Reaction Letter

Published February 1, 2011

LAGUNA HILLS, CA (BRAIN)—Two key U.S. industry retail organizations weighed in on a group of Spanish dealers banding together to stop suppliers from selling through large online sellers, specifically Ireland-based Chain Reaction Cycles.

While the National Bicycle Dealers Association has no official position in regards to discount Internet sellers such as Chain Reaction Cycles, its executive director Fred Clements did say that “cycling itself is best served when dollars pass through a local independent bicycle dealer.

“Without the service and safety advantages of the local bike shop, the public’s best interest is not served,” he said. “We do urge retailers to work with companies that share their values, including distribution policies.”

The Spanish dealer group led by Promobicis owner Christian Tidow have published an open letter to the industry at antichainreaction.com (click on above link), and have a Facebook page (www.facebook.com/antichainreaction). The group is asking for a “full commitment” from suppliers that their products will no longer be sold at Chainreaction.

“For the only reason that this big low-cost online shop is specialized in selling to other countries where there are already distributors with the only argument of offering the same product at a lower price, with free delivery and customer service in the customer’s language,” the letter stated.

“The local distributor can’t match the prices from this online shop as it has to pay the costs of stocking, distributing, promoting, advertising and has to leave commercial margin for the small shops,” the letter goes on to state. “In the same way that a brand doesn’t allow a shop to buy its products to a foreign distributor, the brand shouldn’t allow a shop from other country to enter into a territory where there is already an established distributor.”

The Bike Cooperative president Greg Brodsky doesn’t think the solution lies in trying to take down these online sellers such as Chain Reaction Cycles.

“It’s kind of like a Whac-A-Mole,” he said. “We can all spend our effort doing that but if Chain Reaction went away tomorrow, which they’re not going to, someone would spring up into it.

“I think where our effort is focused is working with our suppliers on IBD friendly solutions and do our own branded Web site where the money does go back to the stores,” he added.

Judging from consumer comments regarding these Spanish dealers’ stance, online sellers “clearly meet some of their needs, and that’s the tricky part,” according to Brodsky.

“People always want increased options, so to try and put it back in the box is almost impossible,” Brodsky said. “Even though we might all want to put it back in the box I don’t think that’s possible. I think what it comes down to is what’s the most proactive way you can deal with it.”

James Moore, owner of Mississippi's Moore's Bike Shop and NBDA board member, said that online sellers are an obvious threat to brick and mortar stores.

Almost two years ago, Moore said, a manufacturer he does business with decided to sell one of its brands consumer direct. “That caused me to reconsider my partnership with them at that time,” Moore said. “I still do some business with them, but it definitely changed my relationship in terms of the volume of business I’ve done with them since that time.

“As I look to make purchasing decisions in the future, the thing that we look at most carefully is what other avenues of distribution can this product be had through, and I look to partner up with vendors and suppliers that see great value in the IBD channel,” Moore added.

—Jason Norman
jnorman@bicycleretailer.com

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