Price cartel for bike gear?

qgwp

Is there a cycling price cartel in operation for bike stuff?

I’m new to this rigmarole, but it already seems to me akin to “The Emperors new clothes” syndrome that I‘m being sucked into.
The price of product mostly just doesn’t seem to logically equate with value, & cost of materials?

I presume the volume sales market to make a decent profit on high-end cycling stuff is relatively low (not many sane cyclists wishing to spend £20 or so on grips, etc…), so it seems current producers all seem to “tow the line” to inflate price to probably make 60 or 70% come what may?

I don’t swallow the R&D bull’ mantra. I reckon much is spent on attempting to make things as difficult as possible for “Joe“ to service his own bike...

Briggo

Dont buy it then

cooldad

Welcome to the 21st century.

bikecellar

yea there is, they have their offices just over yonder grassy knoll
niche market = low volume = high prices

sniper68

qgwp wrote:

(not many sane cyclists wishing to spend £20 or so on grips, etc…),

I'm perfectly sane and think £20 for grips is reasonable(lock-ons) it's only money
It's when you get to the £200 for a seatpost that you start to worry

supersonic

But you get options across the board from budget, high value brands like Boardman, Focus, Cube and Mongoose to more boutique stuff. With parts Superstar and Exotic, to Thomson and Hope. And beyond that.

TowerRider

In my opinion and obviously not everyone's, there is certainly price fixing based on rrp. Just need to look specialised prices online and how only certain retailers or location allowed to sell them. Go store and you may be able to get a deal or sale items. No competition on pricing for many items but to be honest supermarkets were caught doing it and today they are still at it with various scams.

cooldad

TowerRider wrote:

In my opinion and obviously not everyone's, there is certainly price fixing based on rrp. Just need to look specialised prices online and how only certain retailers or location allowed to sell them. Go store and you may be able to get a deal or sale items. No competition on pricing for many items but to be honest supermarkets were caught doing it and today they are still at it with various scams.

Yet Specialized still manage to sell millions of bikes. Perhaps they restrict retailers to maintain after sales service = reputation.
RRP is what it says - recommended. What someone actually sells it for is up to them.
As SS said - parts range from cheap and cheerful to crazy boutique, with cheap and nasty in there somewhere.
Most of the cheaper stuff works fine for everyday riders. Alivio will change gears, but your friends won't ooh and aah.

cee

cooldad wrote:

TowerRider wrote:

In my opinion and obviously not everyone's, there is certainly price fixing based on rrp. Just need to look specialised prices online and how only certain retailers or location allowed to sell them. Go store and you may be able to get a deal or sale items. No competition on pricing for many items but to be honest supermarkets were caught doing it and today they are still at it with various scams.

Yet Specialized still manage to sell millions of bikes. Perhaps they restrict retailers to maintain after sales service = reputation.
RRP is what it says - recommended. What someone actually sells it for is up to them.
As SS said - parts range from cheap and cheerful to crazy boutique, with cheap and nasty in there somewhere.
Most of the cheaper stuff works fine for everyday riders. Alivio will change gears, but your friends won't ooh and aah.

RRP is indeed recommended...but I know for a fact that some bike manufacturers will contact a bike shop who is undercutting all the other bike shops and tell them to put their prices up. The penalty for not doing so....no more bikes from that company.

cooldad

cee wrote:

cooldad wrote:

TowerRider wrote:

In my opinion and obviously not everyone's, there is certainly price fixing based on rrp. Just need to look specialised prices online and how only certain retailers or location allowed to sell them. Go store and you may be able to get a deal or sale items. No competition on pricing for many items but to be honest supermarkets were caught doing it and today they are still at it with various scams.

Yet Specialized still manage to sell millions of bikes. Perhaps they restrict retailers to maintain after sales service = reputation.
RRP is what it says - recommended. What someone actually sells it for is up to them.
As SS said - parts range from cheap and cheerful to crazy boutique, with cheap and nasty in there somewhere.
Most of the cheaper stuff works fine for everyday riders. Alivio will change gears, but your friends won't ooh and aah.

RRP is indeed recommended...but I know for a fact that some bike manufacturers will contact a bike shop who is undercutting all the other bike shops and tell them to put their prices up. The penalty for not doing so....no more bikes from that company.

And your fact is from?
Anyway if bike companies want to set minimum prices, so what?
Buy something else.

bluechair84

I ordered a spare part once and checked with the distributor how much they charged. My LBS sold it to me 'at cost' which turned out to be higher than the distributor had quoted me. He wasn't very happy when I said he was being ripped off by the same distributor I spoke to the day before.
I think that odd pricing may very well be down to the distributor forcing up what the shop sells at. Obviously, Superstar are cheap because they don't have the middle man taking a cut.

cooldad

Or the bike shop wasn't really selling to you at cost.

cee

cooldad wrote:

cee wrote:

cooldad wrote:

TowerRider wrote:

In my opinion and obviously not everyone's, there is certainly price fixing based on rrp. Just need to look specialised prices online and how only certain retailers or location allowed to sell them. Go store and you may be able to get a deal or sale items. No competition on pricing for many items but to be honest supermarkets were caught doing it and today they are still at it with various scams.

Yet Specialized still manage to sell millions of bikes. Perhaps they restrict retailers to maintain after sales service = reputation.
RRP is what it says - recommended. What someone actually sells it for is up to them.
As SS said - parts range from cheap and cheerful to crazy boutique, with cheap and nasty in there somewhere.
Most of the cheaper stuff works fine for everyday riders. Alivio will change gears, but your friends won't ooh and aah.

RRP is indeed recommended...but I know for a fact that some bike manufacturers will contact a bike shop who is undercutting all the other bike shops and tell them to put their prices up. The penalty for not doing so....no more bikes from that company.

And your fact is from?
Anyway if bike companies want to set minimum prices, so what?
Buy something else.

Honestly...I'd rather not say.

Needless to say, that I was party to a conversation involving a bike manufacturer on this very matter. I will not even say what the brand was.

What's wrong with it? It's price fixing and is anti competitive....

If bike companies want to set minimum prices....then they can do so.....sell the bikes direct.

After they have sold the bikes to shops....why should they be allowed to determine how much profit each shop is willing to accept?

if you want to sell coconuts to me and supersonic for £1 each....it is of no business of yours that he sells his on for 1.05, while I sell mine for 1.50.

bluechair84

cooldad wrote:

Or the bike shop wasn't really selling to you at cost.

Well, it occured to me but... something about his reaction. He was kinda pissed off at me, I think he thought I was suggesting he was trying to rip me off.

Cee - seriously, your coconuts are overpriced. I'll give you a packet of rolos for one?

P-Jay

If you try to compare RRP to cost of manufacturing / materials you're just going to end up with a sore head. It's usually a really small %.

This R&D bull you mention is actually not that much bull at all, unlike lots of things, lots of MTB stuff is actually evolving at an incredible speed. Plus there's marketing to pay for, all those sponsored riders riding WC's, The Rampage and in MTB movies need paying for.

If you think it's not worth paying for the latest kit, then don't last years stuff is usually way cheaper, occasionally you find frames and bit from 3-4 years ago floating about on the internet and it's virtually being given away (relative to it's cost when new).

If you really want to upset yourself, consider this.

Coca-Cola, if you take marketing costs out of it, costs about 2p a litre to make, most of the energy drinks are about the same.

Medium sized, mainstream cars like Mondeos, if you take out the R&D and marketing about £2000 in materials and manufacturing, but worse than that much higher-end stuff like Range Rovers aren’t much more maybe £4k. £4k to build, £80k to buy.

Anonymous

cee wrote:

After they have sold the bikes to shops....why should they be allowed to determine how much profit each shop is willing to accept?

Why not. the shop can either agree with them, or not do business.

It's been said for a long time that car companies do the same in the UK - German brands are priced up to give them a more "prestige" appearance.

alfablue

cooldad wrote:

Anyway if bike companies want to set minimum prices, so what?
Buy something else.

It is highly illegal, there have been some celebrated cases, such as tobacco companies, Siemens, Tesco's, BA and others, fines have been up to £225 million, so whilst you may think it is okay, competition legislation, and your average consumer who is defrauded by such practices, does not.

Anonymous

alfablue wrote:

cooldad wrote:

Anyway if bike companies want to set minimum prices, so what?
Buy something else.

It is highly illegal, there have been some celebrated cases, such as tobacco companies, Siemens, Tesco's, BA and others, fines have been up to £225 million, so whilst you may think it is okay, competition legislation, and your average consumer who is defrauded by such practices, does not.

Pardon my ignorance, but how would Tesco, or British Airway be able to set minimum prices?

P-Jay

alfablue wrote:

cooldad wrote:

Anyway if bike companies want to set minimum prices, so what?
Buy something else.

It is highly illegal, there have been some celebrated cases, such as tobacco companies, Siemens, Tesco's, BA and others, fines have been up to £225 million, so whilst you may think it is okay, competition legislation, and your average consumer who is defrauded by such practices, does not.

it's illegal to price fix with your competitors. But there's nothing wrong with telling your dealers they have to sell your product at a fixed price.

It's just their business model, if they sold cheaper, they'd increase volume sales but make less on each bike, if they sold more they'd lose volume but increase the margin on each bike.

All companies spend a lot of time doing this to make the maximum profits, but there's wrong with this. There's plently of competition.

Anonymous

P-Jay wrote:

It's just their business model, if they sold cheaper, they'd increase volume sales but make less on each bike, if they sold more they'd lose volume but increase the margin on each bike.

All companies spend a lot of time doing this to make the maximum profits, but there's wrong with this. There's plently of competition.

I don't think that's what they mean though. The bike companies still seel at the same price to the shop, but specify a minimum price the shop can charge THEIR customers - legally obliging the shop to not offer discounts on current models, in effect.

P-Jay

yeehaamcgee wrote:

alfablue wrote:

cooldad wrote:

Anyway if bike companies want to set minimum prices, so what?
Buy something else.

It is highly illegal, there have been some celebrated cases, such as tobacco companies, Siemens, Tesco's, BA and others, fines have been up to £225 million, so whilst you may think it is okay, competition legislation, and your average consumer who is defrauded by such practices, does not.

Pardon my ignorance, but how would Tesco, or British Airway be able to set minimum prices?

He means they fixed prcies between competitors. BA tried to set prices with Vrigin for example so they wouldn't undercut each other.

In short - if Spesh, Kona, Trek et al sat down together and said, "in the UK market no 5" bike with this spec level should cost less than £x" and they all agreed - that's illegal.

But Spesh telling it's dealer they can't discount until the new ones come out, is fine.

Anonymous

Legally, it's fine yes, but it's morally dubious nonetheless. It seems to exist only to place them in a certain level of market perception.

P-Jay

yeehaamcgee wrote:

Legally, it's fine yes, but it's morally dubious nonetheless. It seems to exist only to place them in a certain level of market perception.

I don't have a problem with it personal. It's like you say all about perception.

I'd rather have than, than what happens on the Car world. Ford and Vauxhall for example post pretty high RRP's for their Cars, but give dealers HUGE margins to play with. Most dealers have sticker prices for new cars at 90% of RRP before you even start to knock them down - that's most dishonest IMHO as they let punters this they got a really good deal when in reality they got the same as everyone else.

alfablue

P-Jay wrote:

alfablue wrote:

cooldad wrote:

Anyway if bike companies want to set minimum prices, so what?
Buy something else.

It is highly illegal, there have been some celebrated cases, such as tobacco companies, Siemens, Tesco's, BA and others, fines have been up to £225 million, so whilst you may think it is okay, competition legislation, and your average consumer who is defrauded by such practices, does not.

it's illegal to price fix with your competitors. But there's nothing wrong with telling your dealers they have to sell your product at a fixed price.

It is both illegal to fix prices between competitors (a cartel - Tesco did this with milk, Sainsbury's blew the whistle, BA and Virgin with fuel surcharges) or fix prices for dealears and retailers (Volvo did this, also a bike shop has told me that the minimum prices are set by a major brand they sell, under threat of supplies drying up).

Price fixing and the law

Competition law prohibits almost any attempt to fix prices - for example, you cannot:

* agree prices with your competitors, eg you can't agree to work from a shared minimum price list
* share markets or limit production to raise prices, eg if two contracts are put out to tender you can't agree that you'll bid for one and let your competitor bid for the other
* impose minimum prices on different distributors such as shops
* agree with your competitors what purchase price you will offer your suppliers
* cut prices below cost in order to force a smaller or weaker competitor out of the market

The law doesn't just cover formal agreements. It also includes other activities with a price-fixing effect. For example, you shouldn't discuss your pricing plans with your competitors. If you then all 'happen' to raise your prices, you are fixing prices.

from www.businesslink.gov.uk

So, it is illegal to set minimum prices for retailers; it is illegal to agree prices between competitors.

Anonymous

alfablue wrote:

* impose minimum prices on different distributors such as shops

Does that not mean that if you sell something yourself, directly that you cannot force shops to use a minimum? (ie, DIFFERENT distributors)
That would be like M-audio selling things from it's website direct, cheaper than any other retailer, because they'd forced those retailers to use a minimum price.
(i use the M-audio example because I noticed a few years ago that almost everything is WAY more expensive from them, compared to shops)

alfablue

yeehaamcgee wrote:

Legally, it's fine yes, but it's morally dubious nonetheless. It seems to exist only to place them in a certain level of market perception.

No, it isn't legally fine, Spesh would be breaking the law if they told dealers they couldn't sell at below a certain price. Morally dubious too!

alfablue

yeehaamcgee wrote:

alfablue wrote:

* impose minimum prices on different distributors such as shops

Does that not mean that if you sell something yourself, directly that you cannot force shops to use a minimum? (ie, DIFFERENT distributors)
That would be like M-audio selling things from it's website direct, cheaper than any other retailer, because they'd forced those retailers to use a minimum price.
(i use the M-audio example because I noticed a few years ago that almost everything is WAY more expensive from them, compared to shops)

You can't impose a minimum price on different distributors such as shops; see for example, Hasbro's £4.95m fine for enforcing minimum prices for toys with 13 distributors: http://www.oft.gov.uk/news-and-updates/ ... 2/pn_83-02

or the (closed) case into Oakley allegedly fixing prices with House of Fraser http://www.oft.gov.uk/OFTwork/cartels-a ... ure/Oakley

You just cannot set prices for shops.

Anonymous

oooh. Fair enough. That IS interesting.

MountainMonster

Any regulations from companies that are any form an attempt to regulate or fix prices is highly illegal.

Also Yehaa, in concern with Tesco fixing prices, it did come out a few months ago about the milk option. They do have one way that is basically legal to "fix" their prices in an essence, and this is because of their monstrously huge buying power. Because they buy millions of pounds worth of each type of products, it allows them to sell cheaper, in a way forcing competitors to lower their prices to try to compete, but that one is completely legal.

cooldad

Knickers in a twist time. Shop around, there's always a deal somewhere.

Anonymous

MountainMonster wrote:

Because they buy millions of pounds worth of each type of products, it allows them to sell cheaper, in a way forcing competitors to lower their prices to try to compete, but that one is completely legal.

Gotcha, but that Tescos one doesn't sound wrong, legally or morally though. Just sounds like the economies of scale.