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Aqua Blue

dish_dashdish_dash Posts: 5,254
edited January 2017 in Pro race
Someone explain what their sustainable business model is? I've watched this several times now and am still at a loss... though those of you loving the kit will enjoy the shots.

https://www.youtube.com/watch?v=0zaGxXAfS64

Posts

  • Honestly, it just seems to be funding through flogging bikes online on a yet-to-be-established commercial site

    Shaky.
  • joelsimjoelsim Posts: 7,552
    Honestly, it just seems to be funding through flogging bikes online on a yet-to-be-established commercial site

    Shaky.

    That's exactly the model.

    Aqua Blue means Aqua Blue.
  • bobmcstuffbobmcstuff Posts: 10,220
    Aqua Blue sounds like a home pregnancy test.
  • m.r.m.m.r.m. Posts: 2,419
    *Hat*
    PTP Champion 2019
  • yorkshirerawyorkshireraw Posts: 1,561
    bobmcstuff wrote:
    Aqua Blue sounds like a home pregnancy test.

    more like something you bung in the cistern to keep the loo fresh.

    It's a genius model though, I mean there's no current on-line bike retail sites........
  • It's odd that Wiggle/Chain Reaction don't sponsor a men's pro team? The money 'must' be there for it, right? ;)
    2020 Metric Century Challenge Winner
  • yorkshirerawyorkshireraw Posts: 1,561
    from https://www.retail-week.com/sectors/spo ... 56.article

    Operating profits at Wiggle slid from £5.4m in the prior year to £0.7m as it was hampered by currency movements. On a constant currency basis profits were £2.9m.

    You're not going to fund a major men's team out of that.
  • from https://www.retail-week.com/sectors/spo ... 56.article

    Operating profits at Wiggle slid from £5.4m in the prior year to £0.7m as it was hampered by currency movements. On a constant currency basis profits were £2.9m.

    You're not going to fund a major men's team out of that.


    Boom! (or not, in this case)
  • yorkshirerawyorkshireraw Posts: 1,561
    Even if they were making mega profits (and retailers never do really - it's all about volume), there'd be likely little value in Wiggle sponsoring a major mens team - most of their customer base is well aware of them already, or will find them as soon as they stick a search into Google for a product. Newbies taking up cycling will probably not be watching much pro-racing (apart from the TDF) anyway. They'd be better served sponsoring ITVs tour coverage (which they may have done previously???)
  • rick_chaseyrick_chasey Posts: 57,293 Lives Here
    You need firms for whom £20m is change found down the back of the sofa.
  • rick_chaseyrick_chasey Posts: 57,293 Lives Here
    Let's face it, it's not great corporate sponsorship.

    Sure, you get a lot of TV airtime, but you can't flog your free tickets (what tickets?) to your clients.

    At best you have a few seats in the team car and you do some rides with the team, but that requires a much bigger comittment and fandom from your clients than tickets to the footy or ruggers.
  • yorkshirerawyorkshireraw Posts: 1,561
    Agreed Rick - better off sponsoring the event itself rather then the teams - no reliance on riders actually getting on the telly or being spotted in a sea of moving logos.

    Someone like Skoda seems to have got the right idea - being the official cars implies reliability and capability of completing the course in the same way as the winner of the event.
  • yorkshirerawyorkshireraw Posts: 1,561
    Agreed Rick - better off sponsoring the event itself rather then the teams - no reliance on riders actually getting on the telly or being spotted in a sea of moving logos.

    Someone like Skoda seems to have got the right idea - being the official cars implies reliability and capability of completing the course in the same way as the winner of the event.

    EDIT - and guys watching the TDF are more likely to think 'I'll buy a Skoda instead of a BMW, as I can then spend the savings on a better bike' ;-)
  • bobmcstuffbobmcstuff Posts: 10,220
    I think that bike retailers are already sponsoring pro teams at the right level considering the size of their businesses.

    CRC sponsor AnPost - Chain Reaction (or did, do they still?) and a downhill mountain biking team. That's probably about the right level.

    Wiggle sponsors Wiggle High5.

    Bike Exchange co-sponsored with Orica but that didn't really last very long... Not sure on the specifics, whether Scott wanted it more and had more cash to put up or whether Bike Exchange bailed.
    from https://www.retail-week.com/sectors/spo ... 56.article

    Operating profits at Wiggle slid from £5.4m in the prior year to £0.7m as it was hampered by currency movements. On a constant currency basis profits were £2.9m.

    You're not going to fund a major men's team out of that.

    Not that it makes a blind bit of difference (they still clearly don't have the free cash to be headline sponsor on a men's WT team) but I assume that the team sponsorship for Wiggle High5 comes out in their marketing budget and is included in their costs, which would be already accounted for in operating profit (basically the team's not funded out of headline profit).

    If they keep having low profit, that might not be so good for the team...
  • rick_chaseyrick_chasey Posts: 57,293 Lives Here
    Who knew, Brexit's bad for UK cycling teams.
  • yorkshirerawyorkshireraw Posts: 1,561
    bobmcstuff wrote:
    I think that bike retailers are already sponsoring pro teams at the right level considering the size of their businesses.

    CRC sponsor AnPost - Chain Reaction (or did, do they still?) and a downhill mountain biking team. That's probably about the right level.

    Wiggle sponsors Wiggle High5.

    Bike Exchange co-sponsored with Orica but that didn't really last very long... Not sure on the specifics, whether Scott wanted it more and had more cash to put up or whether Bike Exchange bailed.
    from https://www.retail-week.com/sectors/spo ... 56.article

    Operating profits at Wiggle slid from £5.4m in the prior year to £0.7m as it was hampered by currency movements. On a constant currency basis profits were £2.9m.

    You're not going to fund a major men's team out of that.

    Not that it makes a blind bit of difference (they still clearly don't have the free cash to be headline sponsor on a men's WT team) but I assume that the team sponsorship for Wiggle High5 comes out in their marketing budget and is included in their costs, which would be already accounted for in operating profit (basically the team's not funded out of headline profit).

    If they keep having low profit, that might not be so good for the team...

    Yes it would be. But clearly the profit margin isn't there to spend another £5m or so on a men's WT team.
    You'd also imagine a lot of the sponsorship for the women's team might be in terms of kit / equipment as much as straight £££. The cost to Wiggle of providing say 20 Dura-ace groupsets and 20 sets of wheels or whatever is a lot less than if the team had to buy them themselves.
  • bobmcstuffbobmcstuff Posts: 10,220
    bobmcstuff wrote:

    Not that it makes a blind bit of difference (they still clearly don't have the free cash to be headline sponsor on a men's WT team) but I assume that the team sponsorship for Wiggle High5 comes out in their marketing budget and is included in their costs, which would be already accounted for in operating profit (basically the team's not funded out of headline profit).

    If they keep having low profit, that might not be so good for the team...

    Yes it would be. But clearly the profit margin isn't there to spend another £5m or so on a men's WT team.
    You'd also imagine a lot of the sponsorship for the women's team might be in terms of kit / equipment as much as straight £££. The cost to Wiggle of providing say 20 Dura-ace groupsets and 20 sets of wheels or whatever is a lot less than if the team had to buy them themselves.

    No, for sure.

    I think they've made quite a shrewd choice with the women's team as it's one of the highest profile teams and the salaries are very low in women's cycling, so the upfront cash is a lot lower than probably even a conti men's team (total guess!), certainly less than pro conti - and like you say they can just provide all the kit.
  • Who knew, Brexit's bad for UK cycling teams.


    Aye, no arguing with that
  • rick_chaseyrick_chasey Posts: 57,293 Lives Here
    Alright for UK resident riders though, at least those on Euro or US teams.
  • yorkshirerawyorkshireraw Posts: 1,561
    Or UK riders based in Monaco with contracts paid in €€€. Geraint should be getting the rounds in left, right and centre when he pops back to Wales.
  • CrozzaCrozza Posts: 991
    from https://www.retail-week.com/sectors/spo ... 56.article

    Operating profits at Wiggle slid from £5.4m in the prior year to £0.7m as it was hampered by currency movements. On a constant currency basis profits were £2.9m.

    You're not going to fund a major men's team out of that.

    Wiggle is owned by a private equity fund, who will have structured their investment so as to minimise the corporation tax that Wiggle pays in the UK. I would not rely on their accounts as a measure of the true profitability of the business.
  • yorkshirerawyorkshireraw Posts: 1,561
    Crozza wrote:
    from https://www.retail-week.com/sectors/spo ... 56.article

    Operating profits at Wiggle slid from £5.4m in the prior year to £0.7m as it was hampered by currency movements. On a constant currency basis profits were £2.9m.

    You're not going to fund a major men's team out of that.

    Wiggle is owned by a private equity fund, who will have structured their investment so as to minimise the corporation tax that Wiggle pays in the UK. I would not rely on their accounts as a measure of the true profitability of the business.

    Fair point. Either way they don't appear to need to be sponsoring a men's team to grow the business.

    Wonder what the exit is for the PE fund - float Wiggle or sell it off to someone like Amazon?
  • I'm so dyed-in-the-wool I've still got a jacket from the Butler's Cycles shop in Portsmouth where Wiggle started out from. I even asked a passing policeman the way to the shop. How quaint!
  • bobmcstuffbobmcstuff Posts: 10,220

    Wonder what the exit is for the PE fund - float Wiggle or sell it off to someone like Amazon?

    Or likely sell it to another PE fund.

    My previous company was majority PE owned and the PE funds sold out every 3-5 years to another PE fund. They take the business, grow it x% then cash in by selling it on to another fund who do the same thing - rinse and repeat.

    If they're doing a good job of growing it the problem comes where it gets too big to sell to a PE firm - the last one before I left (after 4-5 cycles) they got bought out by CALPERS and OTPP jointly which are two of the largest institutional investors going - have to wonder where the next buyout will come from at a certain point. Then you're looking at listing or being bought by Amazon etc. (for us the rumour was always one of the big engineering firms). Company I worked for was over $1billion yearly turnover at the last buyout though so Wiggle has a while to run yet!

    We were always told that if they were going to float you would know a while before it happened as there's a lot of structural things that need to be in place to be listed.
  • yorkshirerawyorkshireraw Posts: 1,561
    bobmcstuff wrote:

    Wonder what the exit is for the PE fund - float Wiggle or sell it off to someone like Amazon?

    Or likely sell it to another PE fund.

    My previous company was majority PE owned and the PE funds sold out every 3-5 years to another PE fund. They take the business, grow it x% then cash in by selling it on to another fund who do the same thing - rinse and repeat.

    If they're doing a good job of growing it the problem comes where it gets too big to sell to a PE firm - the last one before I left (after 4-5 cycles) they got bought out by CALPERS and OTPP jointly which are two of the largest institutional investors going - have to wonder where the next buyout will come from at a certain point. Then you're looking at listing or being bought by Amazon etc. (for us the rumour was always one of the big engineering firms). Company I worked for was over $1billion yearly turnover at the last buyout though so Wiggle has a while to run yet!

    We were always told that if they were going to float you would know a while before it happened as there's a lot of structural things that need to be in place to be listed.

    Very different sector though - Wiggle (having bought CRC) must be the biggest game in town now in their area? There's a limit to the possible scale of consumption for new kit so at some point they'd be looking at economies of scale within the model I'd guess - hence the Amazon question. No idea if Amazon have bought up other on-line retailers previously though - would be easier to just get the suppliers on board on undercut the incumbent market leader I'd guess? Easy enough for Music / Books (as I'd assume there was a few large dominant publishing companies), less so with the amount of brands Wiggle carry.
    Also Amazon are currently trying to crack grocery, which is a rather larger market than inner tubes and chamois cream....
  • bobmcstuffbobmcstuff Posts: 10,220
    Amazon have bought stacks of companies but they've mainly been software rather than retail.

    You can already get most cycling equipment through Amazon - as they use a lot of independent sellers.
  • joelsimjoelsim Posts: 7,552
    bobmcstuff wrote:
    Amazon have bought stacks of companies but they've mainly been software rather than retail.

    You can already get most cycling equipment through Amazon - as they use a lot of independent sellers.

    They don't use the independent sellers as such. The independent sellers sell through Amazon Marketplace in order to increase their reach and take advantage of Amazon's footfall, and pay a % of the sale price to Amazon. This % is between 5% and 20% depending on the category of goods, plus the VAT. It's not a healthy state of affairs for small businesses that many feel they have to do it.
  • NeXXusNeXXus Posts: 854
    Dunno but they were an Amateur outfit for a long time before going Pro-conti... One of two powerhouse teams in the domestic Ireland scene, Asea being the other.
    And the people bowed and prayed, to the neon god they made.
  • markwb79markwb79 Posts: 932
    Crozza wrote:
    from https://www.retail-week.com/sectors/spo ... 56.article

    Operating profits at Wiggle slid from £5.4m in the prior year to £0.7m as it was hampered by currency movements. On a constant currency basis profits were £2.9m.

    You're not going to fund a major men's team out of that.

    Wiggle is owned by a private equity fund, who will have structured their investment so as to minimise the corporation tax that Wiggle pays in the UK. I would not rely on their accounts as a measure of the true profitability of the business.

    Exactly this, you don't really want to be making a profit. Re-invest it like buying the competition!

    I always thought a team needs to look for a company that is trying to expand into a different market. A few years ago HEMA announced they wanted to expand into the UK market. No one in the UK knows who they are, but sponsoring a sports team would get them noticed a lot quicker and the costs of the sponsoring are classed as 'expansion costs' (All assuming they could afford it) - I thought they would be a perfect company to replace Belkin at the time, especially with the cycling growth within the UK.

    Two other companies, JD and Footlocker are both expanding lots into the continent.

    Its never going to be a long term sustainable sponsorship, but I think its a start.
    Scott Addict 2011
    Giant TCR 2012
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