Sales Peddaling Away from the Shop

I had a conversation with a shop owner near my home the other day who was complaining that he is starting to lose more shoppers to the internet over bike pricing. He was telling me that margins are so thin that he can't match the pricing information that customers often have when they come in.

I wondered about this. Is there really an epidemic of shoppers who visit shops then buy bikes online instead of at their local shop? This owner was actually complaining about a specific shopper who was looking at a very expensive tandem, used a lot of their sales time doing test rides, getting price quotes on various options, then just disappeared. The shop owner happened to run into the guy at a charity ride with his wife on their brand new tandem they purchased online.

I wanted to find out if this is a true epidemic or just a few (really annoying) instances. In my search, I found a consultant to bike industry, Jay Townley, who is very well respected and does a lot of speaking engagements with various bike business expos (including Interbike this year). He's been in the business for years, and has some very interesting market research and well thought out retail strategies that he shares with shop owners and bike industry execs.

I ran across a webpage of his that appears old (2006, I think) that discusses the challenge facing bike shops of "Over Educated Shoppers (OES)". I couldn't believe what I was reading. The basic premise is that:

"An overly educated shopper profoundly reduces close rates and diminishes the effectiveness of an under-educated sales staff.

The OES (overly educated shopper) walks into your store knowing more about your products than your staff does! Because of internet search engines like Google and Yahoo, your average shopper has spent over 10 hours educating himself on your products."

He also mentions that:

"The predominately brick and mortar bicycle shop is now challenged by the new information age where anybody can be a retailer because of the power of the Internet. At a recent conference, a representative from eBay presented research showing that the Internet will influence nearly one-half of total U.S. retail sales by 2010!"

Of course, as I mentioned this is old, it's a sales page, and perhaps he would choose to rephrase this now. But the idea that the problem with retail bike shops is that their potential customers are "over educated" makes my skin crawl!

The problem is exactly the opposite. If you have customers walking into your shop that are spending more time getting educated on bikes than the staff that you have on the sales floor, you are doing something wrong. Will your sales staff have all answers to all the questions? No, most likely not, but the answer is out there and a good sales staff will find it for the customer (preferably while the customer is there).

There are two shops that I know that both started as online shops only and then as sales grew, they got a bricks and mortar space. They have customers (as most businesses do) that do a lot of their information gathering online, then visit the shop when they've narrowed their choices. Both use their website as a funnel to bring in more qualified shoppers. Neither have ever complained to me that their customers are "too educated."

But getting back to the case of the shopper who buys online....

I guess the answer to my question, is basically, yes, there probably are a lot of folks who buy are shopping brick and mortar then buying online. And, yes, this is probably something that's growing. But it is all going to come back to service. Shops will never get all the sales (for example: the one sale described above, its obvious that shopper was planning to buy on price. period. He just wanted some test rides first. Annoying, but part of the business).

The best bet is to offer service and a sales experience that will make folks want to spend their money with you. Arm your sales staff with the tools to answer questions (or find answers) and provide value add recommendations that can't be done via a webpage (such as custom fit, custom build-up, after sale service, etc.). It will also help for sales staff to stay on top of Internet pricing and be prepared to defend your pricing to the customer that may (or may not) challenge it.

Personally, I can't imagine buying a bike online, but then I love the shop experience. (When its good.)