Annual Tour Sale—New Deals Added Daily, See the Latest »
  • Free Shipping on orders over $50*
  • 100% Guaranteed Returns

2008 Year End Awards -- Part Two, The Industry & Miscellany

Welcome to part 2 of the Competitive Cyclist Year End awards. Part 1 went over rides and gear. Part 2 focuses on the bike industry itself, plus some miscellany not so easily classified.

BIKE INDUSTRY AWARDS

Business of the Year: Quality Bicycle Products (QBP) is our first nominee. As we’ve explained in the past, QBP is the most influential company in the bicycle industry. And they’re doubly important because many of you have never heard of them. They are, as that old ad said, The Quiet Company. While Trek vs. Specialized, and Shimano vs. SRAM each fight their very public battles royale for apparent bike industry dominance, the truly dominant company, QBP, continues to fine-tune their mastery of logistics and operations to deepen their reach everywhere. No matter what brands your local shop pushes, QBP is most likely the company they spend the most money with.

And QBP doesn’t just have massive relevance to the bike shops of North America. They also set the agenda for the manufacturers themselves. Without QBP many of the big players -- Shimano, Yakima, Michelin, Rock Shox, FSA, SRAM, and countless others -- would lose their one-and-only truly effective outlet for wholesale distribution. For every one consequential manufacturer that doesn’t rely on QBP for distribution, there are a hundred that do. Without QBP, the bike industry as we know it would tremble to the brink of collapse.

What’s amazing about QBP is that they make no pre-season buy-in demands at all on their dealers. Instead, they earn business by keeping an unbelievable range and depth of inventory on hand; by offering courteous, proactive customer service; and by providing the best on-line ordering interface in all of bike wholesale.

Our next nominee is World Cycling Productions. No doubt you get their catalog. In comparison to the Colorado Cyclist catalog, their models seem bargain-priced, and their Photoshop work is rough. Flaws aside, though, they’re a nominee for one important reason: They own the rights & distribute the DVD La Course en Tete, a movie we watched for the 1,500th time in 2008. Have you seen in 20 times yet? 10? Once? It’s transcendent. The feelings I get when I watch it -- it must be why people go to church. Like knowing I won’t crash when I step onto a Boeing plane, it’s a feeling of contentment-through-certainty. Isn’t that what religion is? When I see Eddy destroying the peloton or greeting the King of Belgium or looking thoughtful while eating breakfast in bed it’s an experience of seeing something absolute. His destructive power, his spectre of intimidation, his beauty while doing so -- it’s an anchor for me in life as a whole. In Jurgen Leth’s lens Eddy defines the redemptive power of suffering, of a will to dominate, of narrow focus on a worthy goal. And that haunting medieval music -- it should be the only thing ever allowed on TV. It isn’t a movie. It’s a religious text. It’s the only true religion. I want to watch it another 1,500 times. Tomorrow.

Another nominee is Seven Cycles of Boston, MA. The painstaking quality of their framesets is well-known. But that’s not why we give them props here. Rather, it’s how they manage their business as it pertains to dealer requirements, as CEO Rob Vandermark explains here. Sadly, in comparison to the standard industry sales programs for retailers, Vandermark is a lone wolf. The notorious ‘pre-season’ purchasing requirements demanded by the bulk of manufacturers and importers are frightful. In order to ‘earn’ your right to be a Specialized or Trek or Sidi dealer (to name 3 of countless dozens of examples), these companies demand that you commit to your biggest purchases of the year in August and September -- right when the retail seasonal sales cycle begins its 5 month trough. Sure, manufacturers offer extended financing on pre-season buys. But from the standpoint of the retailer’s balance sheet it bloats inventory and launches accounts payable into the stratosphere. And when is payment due? At best it’s March, right when the sales season starts to perk up. Basically, retailers are forced at gunpoint to take on absurd amounts of unneeded inventory, and they need to pay for it all before they have a real chance to sell it. It’s one thing to play this game when it’s Dow 14,000. But in 2009 it’s a credit bomb waiting to go off. Rob Vandermark and Seven Cycles are not part of the problem, and kudos to them for that.

But the winner of the 2008 Business of the Year are the guys over at chainlove.com. While our industry struggles to simultaneously walk & chew gum, chainlove rolled out a business model that’s nothing short of genius. First, some background: Who is Chainlove? They’re owned by the on-line retail superpower of outdoor goods Backcountry.com. Backcountry does an estimated $100 million/year in sales, and they were recently purchased by the behemoth Liberty Media for 9 figures (they’re the same folks who own QVC). That in itself gives the company backing like nothing else in the bike biz.

Chainlove’s M.O.is brilliant: They take old stock off the hands of wholesalers (something wholesalers are desperate to do), and they sell it on their website only one item at a time. Each time they put up a new item for sale (which is done every hour or so), an RSS feed or an email gets sent to their subscribers. Their prices are low, low, low, oftentimes little more (or even less) than what they paid. Why such little margin? Our interpretation is a simple one: Their goal is to not make money through chainlove sales, but rather with their endless torrent of killer deals they tantalize everyone in Kingdom Come to sign up for their email list. They then market directly to this list to sell them non-discounted bike stuff on Backcountry.com later on. In other words, chainlove is just a means by which they grow what’s probably the biggest & best email list in all of the bike industry, and it’s done specifically on behalf of Backcountry. The inventory and presentation of bike stuff on Backcountry is solid, and they have a reputation for great service.

Innovators are R A R E in the bike industry, but Backcountry/Chainlove is an exception to the rule. We welcome them to the online bike retail fray, since for every new innovator, we’ll see 2 or 3 dipshit online retailers perish. And that’s great news indeed. If we only have first-class competition, our day to day battles will feel more worth fighting. Chainlove, chapeau.

Best New Product Unveiling: The release of Campy 11-speed was proof of the power of understatement. Hype? There was virtually no pre-delivery hype. They leaked out some ‘spy’ info to the press about electronic shifting in Spring 08, which got Campy fans sidetracked on the debate of whether electronic Record would be available in 2009 or 2010. Then they released a small run of those Record 10-speed ‘Pro’ levers with red decals. But the actuality of 11-speed got virtually no ink before summertime. By the time Alessandro Ballan won the World Championship Road Race in Varese on Super Record 11 in October, it was just weeks after the first rumors about the availability of 11-speed gained steam, and just weeks prior to its availability at retailers worldwide. It was a masterful example of the power of under-promising and over-delivering. The bike industry should take note: Over-early hype for new products intros is a recipe for disaster. First it titillates, but soon it frustrates. And God forbid if any product delays occur, it infuriates. Campy’s quietness about 11-speed allowed dealers to maximize the profitable lifespan of their 10-speed inventory, and it prevented ‘paralysis by analysis’ for consumers who would’ve otherwise agonized about whether to buy 10-speed now or wait for 11-speed in the future.

Most Imperfect New Product Unveiling: We have nominees galore here. Behind door #1 is Lightweight. For 2+ years they’ve promised to deliver on a clincher version of their mouthwatering Standard G3 tubular wheelset. And for 2 years we’ve been on the sharp end of consumer expectations -- When, when, when is all we heard, which is amazing for a product that costs nearly $6,000. No one voiced a reservation about price. But frustration about Lightweight’s inability to deliver ‘in a few weeks’ as promised time and time again for the last 2 years created umpteen cancelled orders for a product whose sparkle would’ve been no less brilliant if it’d been given its first exposure at the right time. Like, in 2010.

Apparently development of the clincher was more difficult than Lightweight ever expected. The tubular version is true 1-piece construction, vs. the clincher whose braking track/clincher rim section is laminated to the carbon fairing. It’s a 2-piece construction. To use a cliché, they found themselves having to re-invent the wheel. And while we don’t doubt it’ll be a wheelset worth waiting for, it’s not a question of price or value or technology, but rather of marketing. What benefit comes from hyping an undeliverable product so far in advance? For rival-less companies like Lightweight, marketing should be an easy part of business. Doing very little marketing, in their case, is just fine. But mis-managing high-profile exposure has destructive consequences.

Behind door #2 hides Assos. Like Lightweight, Assos is a powerhouse high-end brand we’re dizzyingly in love with. Where it’s different from Lightweight, though, is in the caliber of its marketing. Assos is the closest thing we have to haute couture in cycling, as evidenced both by its over-the-top DB video allegedly shot at Armani’s in-house runway, and by the stellar execution of its print ad campaigns. So, unlike Lightweight, it’s reasonable to expect Assos to be masterful at all aspects of marketing. Alas, only if it were so. They first promoted their S5 series bib shorts at the end of 2007. Delivery seemed imminent way back then due to the fact that the US Assos importer sold us their entire on-hand inventory of pre-S5 bibs, several thousand pair, at a not-insubstantial discount. But then all hell broke loose: Assos decided to dump its importer and start its own distribution in the US. In addition, they decided to ‘install SAP’ which is business-speak for ‘We don’t know when your stuff will be ready to ship; and just because you submitted an order to us, it doesn’t mean it exists to us.’ (And this is hardly a dis of Assos alone -- Zipp went through an SAP install once they were acquired by SRAM, and delivering product & managing PO’s with them was no less of an ordeal.) And, lastly, Assos had one pain-in-the-ass manufacturing issue pertaining to the stitching holes where the S5 chamois mates to the short. These issues were all internal, and there was no need for them to become Competitive Cyclist’s problem or our customers’ problem. Except that Assos decided to broadcast via megaphone the wonders of the S5 a full year before they could deliver. Evil. And dangerous.

Why dangerous? You might’ve noticed in part I of our year-end awards that nearly every award for apparel was won by Giordana, not Assos. And if you go for a ride with almost anyone in the Competitive Cyclist crew you’ll see little clothing other than Giordana. In the last two years Giordana has become more assertive with its Italian roots by being, in that typical Italian way, increasingly fashion-forward. As a result their clothes are every bit as beautiful as Assos. But their delivery is significantly more reliable; their pricing is less forbidding; procuring it is easier for our purchasing staff; and their marketing -- while not Assos-like -- is beginning to befit the quality of the lovely stuff they make. If there’s a threat on the horizon for Assos it’s Giordana. You can only abuse your customers so much.

But the mother of all mismanaged product unveilings was provided courtesy of Shimano with their release of Dura Ace 7900. Not only did they unleash their global hype machine for 7900 over 8 months before it hit our shelves -- shredding the value of our 7800 inventory through the heart of the selling season and confusing customers on what Shimano they should buy -- but they chose to deliver it in November. Whither November? It’s our 2nd worst month for sales (a statistic common in bike retail.) Why is it our 2nd worst month? It’s because nobody rides in November. And it was no ordinary November, but it was November 2008, presented by Lehman Brothers and AIG.

If Dura Ace 7900 was intoxicating stuff, then the sting wouldn’t have been so bad. But the conventional wisdom is that other than the comfy shifter ergonomics and some added oomph to the brake calipers, the improvement of 7900 over 7800 is probably the least impressive of any Dura Ace upgrade (and we were there for 7400, 7700, and 7800.)

NipperThroughout the 8 month wait, we called Shimano again and again asking for technical information, for updates to our PO’s, and for a clearer understanding on pricing and allocation upon arrival. And did you know that I have a 9 year old Australian Shepherd Mix named Nipper who loves to sleep, to run, and to nip at human feet? Talking to Shimano about our issues was like talking to my beloved Nipper. I expected communication. In return I got a frenetic, hairy beast purposely trying to trip me while I walked. Simple things. Impossible. Verbal communication, i.e. I ask question, you give answer…Shimano = Nipper. In fact, there was only one instance when Shimano showed an interest in us in 2008: It was when we did our initial video review of 7900 back in April. There were only 3 sample 7900 groups circulating in North America, we were told, and they were being passed around exclusively amongst OE’s (bike companies), certainly not déclassé ilk like retailers. Shimano was dying to figure out how we scored the group we featured in our video, since they had assurances from the folks in possession of them that they didn’t share. We didn’t rat out our source, no worries. We’ll send you more than one statuette for winning this award, Shimano, but we won’t tell you how many or when we’ll ship. Touché!

If Wishes Were Horses, Beggars Would Ride Award The retailer frustration with Shimano America I describe above is not uncommon. The root cause is easy to diagnose: Even though Shimano America ostensibly operates a dealer-direct wholesale business to retailers, i.e. they sell components and shoes and small repair parts to them, the lion’s share of Shimano America revenue isn’t generated by this business. Rather, it comes from OE sales. What is ‘OE sales’? By that, we mean their sales to bike manufacturers like Trek, Specialized, Fuji, Scott, etc, etc. for the bikes brought in (pre-configured, half-assembled in a box) by the dealers for these bike companies. Take, for example, key price points like a $1,500 road bike or a $2,000 full suspension mountain bike: Bloody battles are fought by Shimano and SRAM to gain component spec on those bikes. Who do they negotiate those deals with? Not with individual dealers, of course, but instead they beg and cajole said bike companies. A Trek product manager’s decision to spec a Shimano SLX crankset vs. a Truvativ crankset is so consequential because that one decision represents thousands of units of crankset sales. These OE sales move the needle for Shimano America. Dealer direct sales of a few sets of pedals or a file box of derailleur cables -- they leave the needle untouched.

A fun exercise for you next time you visit your local bike shop: Do a back-of-the-napkin inventory of the value of their Shimano goods in stock, then segment that inventory into 2 groups: (1) Shimano components equipped on price-point bikes, (2) Shimano product available for sale as aftermarket goods (i.e. standalone wheelsets, shoes, cleats, cables, pedals, components, etc). In 99% of the bike shops of America, (1) will vastly out-value (2), illustrating the immense power of OE product managers since they -- more than the buyers at the dealers themselves -- are responsible for putting Shimano product on the bike shop floor. And therein, I believe, is the explanation behind Shimano America’s lackluster treatment of its retailers: Dealer-direct sales don’t drive their bottom line. In a sense, we can’t blame them. If shortchanging customers must occur, it makes no sense to inflict it upon the OE’s. But, likewise, since shortchanging does occur, why not fix it?

Our solution is a good one, and we give it our ‘If Wishes Were Horses’ award: In recognition of the priority Shimano America puts on OE sales, why don’t they spin off their dealer-direct business to QBP, a company legendary for stupendous customer service, advanced online interfaces, and amazing inventory depth & range? Shimano America’s biggest headache -- those pesky dealers -- is QBP’s passion. Shimano wheels, Shimano shoes, Shimano small parts, wouldn’t it be great if these wonderful products were the exclusive concern of QBP? Shimano could then focus in both word and deed to OE sales. It’s a win, win, win.

The Snatching Defeat From the Jaws of Victory Award goes to our friends at Ridley. To their credit, no company took greater leaps in elevating their brand equity in 2008 than Ridley. They hired a superb firm out of Seattle to do their global marketing -- and what a spectacular job they did. They swept away their seemingly-translated-in-Taiwan tagline of 2007,’Ride Your Instinct,’ and replaced it with some of the best collateral we’ve seen in the bike biz. Their ‘We Are Belgium’ message went for the jugular: To paraphrase JD Salinger, anyone who doesn’t value the Tour of Flanders more than the Tour de France is a goddam spy. By producing a catalog and ads and a website that looked straight outta Rouleur Magazine, they exploited this vulnerability to the hilt. And it wasn’t just an issue of preying on emotion: With the new-for-2009 Dean and Noah, they’ve bridged across to the first echelon of technological innovators. Their bikes, while maybe not truly thefastestbikesintheworld, look stunning and astonish with their ride.

For all of this good, there were some growing pains, too. To date they haven’t figured out their US distribution plan. In order of least-to-most probable, the near future will bring the following: for them Stick with their current distributor; create a Ridley USA and distribute the bikes themselves; or hand over the reins to QBP and let them figure out how to get it done. Each option presents upsides and drawbacks, but what pained us this year was their indecision. The cast of characters involved all knew that change was a’comin, so there was unwillingness by all parties to get over-committed to anything. The net result was delay after delay in delivery, shoddy inventory depth, plus spotty information when we needed certainty. Did you know, for example, that a Noah in green costs $500 more than the other colors? Did you know we weren’t told this information until we’d sold 3 greens for the regular cost? (Apparently Taiwan is out of green paint, so it’s painted in Belgium. The red and blue are painted in Taiwan. Seriously.) Consumer desire for Ridley was fervent in 2008. But Ridley’s ability to feed this desire was inconsistent.

My hope for Ridley is that what 2008 was for their technology and marketing, 2009 will be for their operations. And they certainly softened us up for 2009 by inviting us to the official unveiling of Team Katusha in Moscow in late December, which, in my occasionally-lunatic mind, seemed like the very peak of intrigue. With sponsors like ITERA and Gazprom, I had fantasies of excess achievable only when underwritten by slim shady oligarchies. I’ve never been to Russia, and I had no idea of what to expect. Would it be a country in a state of perma-hangover from the 20th century -- world war, famine, and purges so culturally callousing them that charm and courtesy would prove impossible? Or would it be, as I’ve read in places, the new Roman Empire? Excess and hyper-materialism writ large? The 21st century Russia, the one of London, Courchevel, and Aspen? Would I be welcomed at the airport with a greeting of a five-star, six-foot prix fixe Belorussian prostitute easily delighted by counterfeit western luxuries and layover hashish from Amsterdam? Would it be worth 35 hours round trip in a plane to find out?

MISCELLANEOUS AWARDS

Quote of the year: Yeah, it’s from 2006. But I heard it for the first time in 2008. A runaway winner. Dave Z, how do I love thee? Sometime I’ll count the ways…

Please upgrade to the latest version of Flash Player.

Click here if you already have Flash Player installed.

Promise We’re Least Likely To Keep: I do solemnly swear to leave unvoiced the hypocrisy at the core of Team Garmin.

Religious Phenomenon of the Year: Team Garmin as John 3:16. Armed with a doping protocol no different from CSC, Astana or High Road, but cloaked in holy argyle and tirelessly reinforced by Manhattan’s ‘fastest growing’ PR firm, in 2008 Team Garmin came as redeemers of our sport. Have you submitted your thanks? And shan’t we agree to overlook the distasteful fact that star rider and partial owner of the enterprise is David Millar -- guilty of the 2nd most scandalous doping fraud in the history of professional cycling, a time trial World Championship won under the influence of EPO? But at least he comes to us as a humble prodigal son, yes? Scan back to page 46 of Issue 8 of Rouleur Magazine --

Rouleur: Do you think you’re in a situation where you might eventually move into the management of the whole sport?

Millar: I’m at the point where it could go anywhere. It could go on the anti-doping route, it could go on a team, and it could go into races and it could into the management of the whole sport. [emphasis added]

Prodigal son? Hardly. We see Jesus Christ Himself here, in all of his magnificent purity and power. ‘…into the management of the whole sport.‘ The way, the truth, the light. Clean professional cycling can only come through him. It’s spectacular comedy. Can you imagine if Ricardo ‘The Cobra’ Ricco said the same? HOW WOULD IT BE DIFFERENT? Haters are freaking out because Lance is making a comeback. Haters are freaking out because Ivan Basso is racing again. Haters are freaking out because NESP-abusing, Ricco-enabling Mauro Gianetti is DS of the new Fuji ProTour team. Why does Millar get the moral equivalent of a ‘Get Out Of Jail Free’ card? Did he pass some sort of sincerity test that in my world -- one with the moral certitude of a Russian play, not a Julia Roberts movie -- simply doesn’t exist? Mine is a world where you can fuck things up so badly that they’ll never be fixable, no matter how bad you feel about it. If I hire a pricey enough PR firm, will my moral calculus change?

As I recall, the origin of the word ‘Hashem’ is because the ancient Jews so feared the holy wrath of God that they couldn’t utter the word ‘God.’ Instead they said ‘Hashem’, meaning ‘The Name.’ In the same spirit of cognizance of something so blisteringly holy, we will never again type the word ‘Garmin.’ From hereforth it will be ‘Garm*n.’ I’ve spent the night changing the auto-correct settings on the 42 computers here at Competitive Cyclist. The Name. Garm*n.

The New Steel: A long time ago in a galaxy far, far away steel was considered to be a high-tech frame material. Then it went out of fashion as aluminum, then titanium, then carbon fought for prominence. Somewhere along the way a sentimentalist craze for steel bikes arose, and that was a good thing. To a smaller extent, the same happened for titanium -- for reasons specific to ride quality and longevity, it re-gained relevance despite the widely recognized weight savings & cost savings of carbon. This, too, was a good thing. And in the footsteps of the re-discovery of steel and ti, we’d like to offer up a suggestion: Magnesium. Have you ever ridden a Pinarello Dogma? It’s what Petacchi preferred when he rode for Fassa Bortolo. It’s what Pererio still rides on Caisse d’Epargne. We rode one again recently, and we forgot what it’s like to ride a metal bike. There’s smoothness to the Dogma absent in anything carbon. There’s a sense of ‘road feel’ -- like what you get out of a really nice car. By comparison, carbon mutes the road altogether. It was a reawakening. This wouldn’t be the first time we told someone it was the best riding frame we’d ever owned. We said it when we rode one for a year back in ’04, and the ride hasn’t changed one bit. Awesome, and totally ready for a comeback.