I do not know the answer to this question, but I can offer the following observations: the Internet is changing the way the consumer makes purchases; consumers want the price and selection of the Internet, but the service and community of an independent bike store (IBS); the consumer is facing an extended period of slow economic growth and is more focussed on obtaining value; and, the bicycle industry is ripe for a new business model.
The timing of this venture is right, but if anything it is too early: consumers buy their bicycles when they want them, and rarely do they buy them like they would buy a car. This is certainly true for the low and middle part of the market because the sums of money are much lower and the consumer does not really care too much about fit, components and wheels; they “want it now” because the weather is nice, their old bike is falling apart and they are satisfied with what the bike store has on the floor. However, it is even true for the high end segment of the market: the consumer is pressed for time and has a race or a triathlon coming up and they want to start training right away; they sacrifice choice and selection for immediate delivery (which is rarely very immediate).
The result is that the consumer buys what the IBS has on the floor which might be good enough, but not exactly what they are looking for or they order something on line, which is closer to what they want, but not necessarily right or good value. The "want it now" buyer can suffer buyer’s remorse because he spends thousands of dollars on something that is not exactly what he wants and he believes that he could have obtained a better price if he had bought it on line or at the end of the year. The "want it now" buyer can also suffer feelings of guilt and awkwardness if he buys a bicycle for thousands of dollars on line and then asks his local IBS to service it for him. The "want it now" buyer perpetuates the risky and high cost of business for the IBS: large pre-season orders of bikes that may or may not be sold; high inventory costs, high overhead costs for large spaces, etc. This model is inefficient, risky and in neither the interests of the IBS or the consumer.
Thus the challenge is educating the consumer to plan their purchase in advance and change their mind set from “want it now” to “want it right”. It is going to take some time: the sole respondent to the poll on the blog about ordering a bicycle six months in advance was “Maybe”. Nevertheless, the Internet is moving the consumer in this direction: the consumer is bipolar and wants the best of the Internet and the local IBS. The cannot have it all, but they can have a little bit of both. Frames and Wheels believes that the high end of the market is likely to be the easier market to convince given that these consumers are more informed about what they want for components and fit.
The fact is that few if any bicycle companies sell just a frame to an IBS: they sell built up bikes because most consumers “want it now”, they have the infrastructure and the relationships to do so profitably and most IBS perhaps do not want to spend that much time building up bikes from scratch (even though they spend a lot of time preparing them once they come out of the box). Additionally, bicycle manufacturers want to be perceived as “adding value” to their frames by building them up with components of their choice (these choices are how the manufacturers segment their market into high end and middle end and low end) . They also have insights about which components will work well and safely with their frames.
Bicycle manufacturers are not going to change their existing model in the immediate future because they have already invested so much in huge operations that generate large economies of scale and low costs per unit. In this context, the timing of the venture is again too early, but that is a good thing: existing manufacturers are beholden to the existing model and are too big to try something new.
