Last week I bought my first bike in a very, very long time (basically since I was 7). I was prompted after all these years by an increased desire to support a healthier lifestyle. I am fortunate enough to be one of the lucky few (at least from my group of friends) who gets to live and work in the same town. While everything here is definitely close-by, it’s not necessarily walking distance and that is where a bike comes in handy. Instead of using the car to get around town, I hope to transition to a bike, as long days behind a desk can really be a drag.
My bike? A 2015 Trek 7.4 FX, a real beauty.
The purpose for writing about my experience is not really to discuss specs of the bike or my new found appreciation for exercise, but rather what I learned about the dynamics the bike manufacturers use to promote monopolistic behavior intended to keep competition at a minimum. To clarify, I am not claiming that anyone is partaking in any illegal activity here, just that their actions discourage competition, and smell of a hint of collusion.
The findings that I have come across were through several candid conversations with bike shop professionals. In these discussions, I learned:
- The big players in the space (include brands like Trek and Cannondale) restrict sales of their bikes only to high end bicycle shops (which is understandable) but more importantly, control supply and competition by limiting relationships to one shop per X number of square miles (approx. 5 to 10 miles). This ensures less competition between local shops keeping prices at or very near suggested retail prices.
- No reselling on the web is permitted by bike shops – only pick up in store. Therefore, these shops cannot act as a reseller on places like Amazon or eBay.
- No delivery of bikes via mail permitted, meaning, customers cannot call a shop a few towns away and ask them to ship an order. Customers have to pick up in store each and every time.
- Sale price limited to 20% of retail – Bike resellers are restricted by manufacturers in terms of sales price which they issue off the ticket price.
- New bikes (in upcoming year) are not allowed to be sold at a discount. So for instance, although we are in August 2014, I purchased a 2015 version of the Trek 7.4 FX. The 2015 version is not allowed to be sold at a discount at any point likely during the next 6 months or more. This restriction is imposed by the manufacturer.
Again, I’m not suggesting any activity here is illegal, but highly creative to say the least.