Wednesday, October 20, 2010

The business plan: what is the product

Frame and Wheels imports carbon fiber road frames from China and distributes them under the Austro-Daimler trademark in the United States and internationally. The company distributes the frames to independent bicycle stores using an agency model and uses the Internet to sell frames directly to consumers. Frame and Wheel is positioning the brand as a premium, heritage brand that independent bicycle stores can use to complement their Big Three selection without having to take additional financial or inventory risk.
The molds used to produce the frames are designed and owned by More Choice Inc. They are produced in six sizes (47 cm, 50 cm, 53 cm, 56 cm, 59 cm and 62 cm) and include front fork, integrated headset and seat post. Options include integrated seat post, BB30, internal cabling for brakes and shifters and braze on front derailleur. The company also produces cyclocross frames. The founder of More Choice is a former employee of Kinesis Industry Co. and has many years of experience producing carbon fiber frames. The company produces frames for other brands including BH, Champion Sytems, Ritte Racing and Kyklos. 
The frame is made of unidirectional carbon fiber. The front triangle is monocoque and the rear triangle is tube to tube. Drop outs are full carbon, the derailleur hanger is replaceable and the weight of the frame is between 800 to 1000 grams depending on the size of the frame. The down tube and chain stays are oversized: the down tube is 5.4 cm in diameter. The head tube is tapered (1 1/8 to 1 1/4 inch) and the headset is integrated and FSA components. The front fork steer tube is carbon and the weight of the fork is about 350 grams. See more about the frame on earlier posts.
Some of the risks in this adventure include the following: Frame and Wheel may not be successful in obtaining the rights to the Austro-Daimler trademark. Although the trademark has lapsed and is "dead" to the United States Patent and Trademark Office, and is unused anywhere in the world to make racing bicycles, a third party with deeper pockets and the willingness to litigate Frame and Wheel's application could cause significant disruption and expense, causing Frame and Wheel to abandon the application ( another name needs to be in reserve).
Other risks include problems with the supplier: More Choice may suddenly find itself too busy to work with a small customer like Frame and Wheel, or they may accidentally produce and deliver a flawed batch of frames, resulting in product launch delays, recall headaches, etc. Perhaps a trade war with China breaks out, resulting in import tarriffs on Chinese made goods and or a stronger Yuan. More obvious is that consumer confidence in the United States could remain stagnant for many years such that demand for a premium carbon road frame remains weak. Larger bicycle companies could also change their business model to make their offering more attractive to Internet literate consumers and independent bicycle stores, such that a new brand never gets noticed.

No comments:

Post a Comment