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Kona to launch online sales program this fall

Published July 29, 2016

SQUAMISH, British Columbia (BRAIN) — Kona Bicycles will roll out its online sales program in select U.S. states later this year. The company, which is holding its annual Kona Ride dealer event here this week, had already informed retailers of plans to launch Kona Ride Online via an email it sent to shops in early June.

In usual Kona fashion, the company is taking a metered approach by debuting the new program as a beta test through participating retailers in Washington, Oregon and California on September 1. It will launch throughout the rest of the U.S. and Canada on January 1, 2017.  

The program wasn't even the primary focus of its 2017 launch;  the company said dealers at the Squamish event have been receptive to the news.

"We wanted to launch it after we showed dealers the new 2017 model year because we didn't want it to be the focus of the event," said Kona co-founder Jake Heilbron. "All of our dealers had already gotten a newsletter outlining the program in early June, and maybe some of them didn't open the email so we definitely wanted to cover the program this week. And we were also not in a hurry to announce this to the industry, mainly because we wanted some time to work the bugs out."

But when it comes to Internet commerce, this isn't Kona's first rodeo. About 10 years ago it began selling bikes online, but after a year, the company abandoned the program.

"We only sold about one bike per month. We were maybe ahead of the curve," Heilbron said. "Dealers weren't into it because it was too early. I think it's easier to do it now that others are already doing it."

Helibron said that this time around it didn't take long for dealers to start opting into the program once they learned about it. So far about 100 retailers have signed up for Kona Ride Online, and the company anticipates more will opt in after the dealer event wraps up. Only stocking dealers in the U.S. and Canada--about 400 total--are eligible to participate.

The Kona Ride Online program will work in tandem with the company's bike finder tool on its website, which receives about 1 million visitors per month.

"The great thing is we already have a website that's pretty powerful for the size of our company," Heilbron said. "And the most popular page every year is the dealer locator, getting hits from people who want to know where they can buy a Kona. Now they will just be able to click a buy button and they'll be sent to the nearest participating Kona dealer to pick it up."

Kona will post a detailed how-to guide for buying a bike online, covering everything from how customers should measure themselves to find the best fit, to how, when and where to pick up the bike. Kona will not ship direct to consumer.

Once a transaction is complete, Kona will call and email the nearest partcipating retailer, and communicate with the customer as well. Two full-time employees based at Kona USA in Bellingham, Wash., will be responsible for executing the KRO sales process.

"We really wanted to make sure it's the same premium customer service experience, both from our side and through the Kona retailer," Heilbron said. "So there's going to be a lot of handholding."

The Kona dealer will get the usual margin as long as they have stocked any model in the same category in the past 12 months, and 80 percent if it's a bike in a category they don't stock.

The dealer will also pay Kona's usual subsidized single bike shipping rate of $40. If the dealer already has the bike in stock, they can use it to fulfill the online order. Dealers will receive the order by email and a phone call from Kona, and will also have the option to place a larger order to get freight discounts.

Kona will charge state sales tax, and if the bike is under $1,000, the customer will pay an additional $50 to cover shipping.

"If you look at a $400 bike and you're subsidizing $40 freight, there's not much left," said Heilbron. "That will probably discourage people from buying a bike under $1,000 unless they're just really determined to buy it online. But it's also an encouragement to do this right and keep it fair for the dealer because we really want them to opt-in."

Through the program, dealers will be required to build bikes ordered online and have them available within 48 hours. Kona will accept returns of unridden bikes in perfect condition but will charge a 20 percent restocking fee. The dealer will have the option of keeping the bike or returning it to Kona, which will cover shipping.

Heilbron said that while it may be boastful to say that an online sales program will create new customers and help grow the pie, he is optimistic that it will enhance dealer sales.

"I don't really think it will generate more sales or revenue for Kona. The intention is to help that customer who is already getting most of their information online to complete the circle and be able to buy a Kona when it comes time to buy a bike, whether it's online or in the shop," he said. "What we really want is to better meet consumer demands and connect our dealers with more customers."


Topics associated with this article: Omnichannel

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