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Dealers Play Dating Game with Early Ordering

Published September 6, 2011

By Marc Sani

As long as retailers effectively manage preseason orders tied to supplier dating programs, the current ordering structure for bikes—coupled with summer-season dealer events—appears to work.

Dealers say the current system can make retailing a challenge in regions where winter weather and wet springs dictate a shorter selling season. But stronger preseason orders—especially those placed in September and October—are now the status quo among most dealers.

And dating programs, linked to preseason orders, are a lucrative benefit dealers look for, despite some worry over getting stuck with unsold inven tory as the model year turns.

As for attending midseason dealer events, they have become essential for smoothing retail relationships with marquee brands, particularly for dealers who sell Trek, Specialized and Giant products.

Over the years, dealers had complained of being “forced” to place preseason orders. And a few still do. But, for the most part, dealers now work within a structure that appears to benefit them and their suppliers.

Still, no system is perfect. Dealers can run out of some models early in the season and can have a tough time getting an order refilled. And it’s impossible to control for weather, the economy or nearby competitors, all of which could play havoc with preseason planning.

But Jeff Latimer said the system seems to strike the right balance. Latimer, who owns Gus’ Bike Shop in North Hampton, New Hampshire, preseasons 90 percent or more of the Raleighs and Felts he plans to sell next season. “I tend to preseason in full. If all dealers did that, it would help with inventory all around,” he said.

Latimer, like others, said the key advantage to preseason orders is it forces him to sit down and review sales. His suppliers also send him up-to-date sales reports. It’s a strategy that takes much of the guesswork out of ordering. “I can also take advantage of dating. And if I pay on time, there’s shipping discounts I can take,” said Latimer, who finalizes his orders after Interbike.

Latimer went to Raleigh’s July event in Suncadia, Washington, and met face-to-face with company executives and with other dealers—a meeting both enjoyable and useful, he said.

South Florida’s Leo Cordery—a dealer for 32 years—also finds the system generally works well. “With dating you really have to be on your game,” said Cordery, who owns Bicycle Generation in Deerfield Beach, Florida. “It’s a two-edged sword. Dating works great if you manage your finances.”

But even Cordery, who enjoys a long selling season, said he over-ordered road and tri bikes and is running sales to clear some inventory. “It’s so hard to call sometimes. I’m seeing a lot of competition from websites, eBay and Craigslist where people are selling these bikes used,” he said.

Still, suppliers want to see a raft of preseason orders hit their desks by the end of September or October. And some dealers, particularly in the Snow Belt or the rainy Northwest, continue to hedge their bets and submit just enough orders to qualify for differing levels of dating, freight or sales incentive programs.

Data gleaned from a recent survey done for Interbike by Harvey Research tends to back up anecdotal comments made by dealers. It found that among the 1,110 respondents to its April survey, most dealers do some level of preseason ordering. According to the survey, 75.5 percent of respondents said at least 49 percent of the purchases they make are preseason.

Typically suppliers have a three- to four-month preseason window from July through October with differing levels of commitment and incentives. Many companies will let dealers adjust their preseason orders after the season opens, especially with their second and third bicycle shipments.

Fred Clements, the National Bicycle Dealers Association’s executive director, said the system, despite some flaws, appears to work. “In a perfect world, dealers would prefer models to be introduced when they have time to plan and review sales; when there’s less chaos than in the heart of the selling season,” he said. “But it’s not a perfect world.”

As for dating programs, Clements calls them a “huge advantage” for most dealers. “The ideal scenario is to commit to receive product and then sell it before having to pay for it,” he said. Most suppliers require payments in April, May and June, and some spill over into July.

In general, it gives retailers time for cash flow to ramp up before having to make payments. “The more you can operate on someone else’s money or extend out your payments, dating can work to your advantage. You have a smaller cash outlay and less of your money at risk,” Clements said.

As for the growing impact of dealer events, it’s tough for store owners who floor brands like Trek or Specialized to turn down an invitation. Specialized, Giant and Raleigh hosted their top dealers in July, while Cannondale and Scott brought dealers to DealerCamp. Trek held its event in early August.

But not all dealers will attend. For single-store owners or those with small shops, attending an event in July or August is almost impossible. For multi-store owners with backup management, it poses few problems. Besides, most suppliers either pick up all the costs or a significant portion.

Paul Johnson, who owns Classic Cycle on Bainbridge Island in Washington state, flat out says he can’t get away to attend dealer events for Trek and Scott, two key lines at his store. “We’re a small shop on this island, and with a $30,000 weekend that I could miss, there’s no way,” said Johnson, who was a national team mechanic during the Atlanta and Sydney Olympics.

As for preseason orders, Johnson said he feels very little pressure from Trek and others. “I’ll take what I can, but since I’m on an island there’s very little storage,” he added. Still, he acknowledges a dealer could jeopardize his business with aggressive preseason ordering if hit with a late spring or some other issue.

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