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Used Bike Sales Could See Upsurge

Published August 17, 2011

By Chris Lesser

Roger Charly’s retail business sprawls like an auto mall down Regent Street in Madison, Wisconsin. Two storefronts handle new bike sales, one is dedicated solely to parts and service, and the final 8,000-square-foot former auto-body shop holds some 2,000 used bikes of every make and model, tuned, fitted with reflectors and ready for a second life.

“We’ve got everything from titanium Litespeed road bikes someone traded in at one of our stores, all the way down to a beach cruiser that’s maybe $119,” said Charly, owner of the four-store Budget Bicycle Center. “People buy used bikes for all sorts of reasons, whether for commuting or collecting or for recycling concerns.”

Charly got his start in retail in 1979 buying and reconditioning used bikes for sale. The segment has always been strong for him. On top of selling around 3,500 new bikes every year, Charly has carved out a healthy profit center selling 1,400 used bikes at an average price of $250.

While most retailers don’t capitalize on the used bike market nearly as well as Budget Bicycle Center, a couple of recent surveys on Americans’ bike-buying habits indicate the category is fertile ground.

In a recent poll by Leisure Trends, for example, 24 percent of Americans said they had purchased a used road bike. In another survey by Gluskin Townley Group, 29 percent said at least one bicycle that they currently owned was purchased used.

Drilling down into demographic data from that study showed that those identifying themselves as enthusiasts were more likely to buy used, and to spend more per purchase, than those who consider themselves casual or infrequent cyclists.

“More dealers are adapting to the marketplace and trying to take advantage of the used-bike phenomenon,” said industry analyst Jay Townley. “But you have to understand what’s involved, and how you take trade-ins.”

Seattle’s Recycled Cycles has been selling used bikes since it opened in 1994, but before it started it had to obtain the equivalent of a pawn-broker’s license from the city to buy and sell used goods. The store also runs all serial numbers on used bikes it acquires through the local police department.

Store manager Ted Davis said the ratio of used-to-new has flopped in the last decade from 70 to 30 to 30 to 70. As the shop grew, new bike sales picked up naturally. Plus, the advent of Craigslist has contributed to an overall reduction in used bike supply. Still, the shop sells about 1,000 refurbished bikes a year as a steady complement to its new-bike business.

Overall, used bikes remain a niche that smaller retailers have had better success with. Larger shops, concept stores and multi-store operations shy away, citing barriers like busy mechanics who can’t take on the additional repair work or they simply say it’s too much trouble.

“It costs so much per square foot and we have a big enough challenge to just present all the [new bike] models we carry at any given time,” said Chris Kegel, owner of five Wheel and Sprocket stores in Wisconsin.

Only under very limited circumstances, such as making a customer service adjustment and accepting a return outside of a 30-day window, will Kegel stock a used bike. But, Kegel admitted, “there is no question that there is more positive response from customers for used bikes than there has been in the past. And when we do have a used bike, we sell it extremely quickly.”

For smaller operations, the benefits outweigh the hassles.

“Without used bikes, I’d have to turn away anyone who doesn’t have $350 in their pocket,” said James Moore, owner of Moore’s Bike Shop in Hattiesburg, Mississippi.

About 30 percent of the bikes Moore sold last year were used. Most of them he acquired as trade-ins for new bikes. He uses a simple formula that he said consistently yields much higher margins than new bike sales.

Moore offers the example of a Giant Sedona DX, which sold for $550 new and that fetches $350, sold used with a six-month warranty. Moore works up a complete repair ticket for what it would take to get the bike in shape for resale, plus a $20 labor fee for cosmetic detailing.

“Let’s say the ticket comes to $200. I subtract that value from the $350 and present the $150 difference to the customer in writing and say, ‘This is what I can sell it for; this is what it needs. I’ll split that $150 with you and give you $75 in trade,’” he said. And more often than not, the offer is accepted.

“With used bikes, I’m able to say yes to a much larger demographic,” Moore said.

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