The biggest news in the bike industry last week was how Specialized, the second-largest bike company in the world, announced that they would be launching a direct-to-consumer option for people wishing to buy their bikes. The decision is one that is both easily understand and a total head-scratcher. Let me explain.
On one hand, Specialized hates losing sales to Canyon, the German company that brought D2C (direct-to-consumer) to the U.S. Losing a sale simply because of consumer convenience isn’t something a company bent on dominating the market is going to tolerate, obvs. So, yeah, they were bound to launch a D2C program sooner, not later.
But why launch it mid-winter during a pandemic when most dealers are utterly starved for bikes and have unfulfilled orders going back months? I mean, if I were prone to inappropriate meme creation I’d take a photo of soldiers who suffered the Bataan Death March and I’d title it, “Specialized dealers listening to the company’s announcement of their new direct-to-consumer program.” But I’m not that guy, except that I did just suggest it.
I’ve talked to friends in retail and they’ve told me stories of how Specialized will pressure them into ever-higher dealer tiers, committing to ever-increasing numbers of bikes and into an ever-growing pile of debt. Dealers who don’t cave to the pressure find themselves at the back of the line in allocation, receiving bikes only on every eighth blood moon during even-numbered years. In the vernacular: never.
What I see, what makes me scratch my head in wonder is how this makes their relationship with their dealers even more dysfunctional than it was. Why does anyone open a new sales channel when they can’t fulfill their existing orders? This isn’t a Jesus-with-the-loaves-and-fishes-miracle opportunity. You can’t divide bikes into pieces and satisfy dealers with just a portion of a bicycle. That is not a thing.
I’ve reached out to some friends in the industry to get their perspective (wisdom) and will follow up with a piece once I get some responses.
Here’s what I’ll say for now: There’s nothing about this that strikes me as healthy. It’s not healthy for consumers because it will increase demand while doing nothing to meet said demand on a more appropriate timeline, so their population of underserved customers will grow. Dealers will lose sales, putting them in a more precarious position than they were in, and that increase in risk will grow through no fault of their own. To be clear: I think this will be the final nail in some number of bike shop coffins. To what end?
I love the bike industry. I believe in bikes as a force for good in the world. From what they do for us mentally and physically to what they do for cities in terms of reduced road congestion to what they do for the world in cutting pollution and other factors contributing to climate change, bicycles have very few downsides (smelting aluminum is PR-campaign-proof, though). And Specialized has done enormous good; from their Outride program to increasing the quality and professionality of bicycle fitting, I have a number of reasons to laud them, but when I see a company acting in such a seemingly dysfunctional way … honestly, it hurts my heart.
It’s a complicated world.