How Does B'Twin/Decathlon Do It?

ayank

So I've now bought two B'Twin Bikes: A Triban 100 for E$269 and a Riverside 120 for E$130.

My review for the former is here viewtopic.php?t=13088608
I was amazed by the how well put together the bike was. Recall I ride "proper" bikes in the US where I have bars/shoes/stems etc. that cost more than that bike! In this case, I don't know how they got the bike so nicely put together for so cheap (it takes times to put together a bike properly). The build quality is amazing and not done by kids.

But the Riverside 120 has just blown me away. I only bought it a few days ago and will post a proper review soon. But I can't understand how they can even buy the bike parts for so little. The spec list is here https://www.btwin.com/en/hybrid-bikes/v ... -bike.html

I've gone through the main parts of the bikes where prices are available. Where its not obvious I've provided links.

$15: Microshift RD https://www.amazon.com/MicroShift-Long- ... B00FSRXF0M
$10: Microshift Shifter half of https://www.amazon.com/MicroShift-Thumb ... microSHIFT
$12 Saddle https://www.decathlon.co.uk/100-sport-c ... 51027.html
$10 KMZ Chain https://www.amazon.com/KMC-Bicycle-Chai ... B000AOA3PS
$11 Microshift Cassette
$15 Wellgo M239 Pedals
$25 Crankset
$20 Tires

So just these parts add up to $118 but I've left off the big ticket items on a bike (wheels and frame) which I could imagine easily costing $40 each. I have also no way of pricing the inhouse B'Twin no-name stuff like brakes, levers, bars etc (all which are quite good) but lets say it cost roughly $40 .

So now we are at $240 for a bike that sells for $130. How on earth are they making money of this thing! Their stores are huge, in nice places and well staffed.

Clearly buy the parts far less than this value, but my point is that it cost nearly twice as much for you and I to buy the bike as what they sell it at. Selling a bike is not just buying the parts, you need to put it together, put it in a store, man the store etc.

imposter2.0

High volume, low margins. The component prices you are quoting are retail prices, which are not relevant here..

daniel_b

Could also be that they believe if they can get someone in early with a base level bike, that perhaps they will revisit for subsequently more expensive bikes as the years go on - as in if you have a good experience, you will want to repeat it.

Perhaps the bike is sold at a small loss, or at a break even state.

Matthewfalle

basic economies of scale. Economics 101.

ayank

Imposter wrote:

High volume, low margins. The component prices you are quoting are retail prices, which are not relevant here..

Of course they are not. My point is listing them was that if you or I were to buy the parts separately it would cost twice what they sell it for. That's amazing given I've left out of the cost their cost to operate their stores.

How much do they make a bike I wonder $10? $5?

cougie

But obviously they don't pay the prices you quoted......

It's the same as a car. A 15 grand car would cost about 95k if you bought all the parts separately.

jempi

I'm a decathlon shopper to and this question occured also every time i shop there.
Whats most striking I find is that all the cheap housebrand stuff is real good quality.
I had a rainvest for 36€, a fleece shirt for 7€ !!, bike stand for 60€, a helmet for 20€, gloves for 10€, ....
and all off that stuff is realy, realy good. I'm a commuter so i use this stuff daily.
The only thing i bought that was crap was a rear light.

I heard their bikes and bike parts are from Giant. They sell sometimes shimano outlet stuff so i can imagine they have some kind of a shimano deal to.

I just hope that this bikes and stuff are not assembled by 9 year old childslaves or other capitalistic abuse...

ayank

Imposter wrote:

High volume, low margins. The component prices you are quoting are retail prices, which are not relevant here..

But these aren't widgets. I can't image they sold more than say 10,000 of say the Triban 100 road bike I bought. If they make $26 on each sale (10% of the cost) then they made just $260,000. But its a well designed bike which probably cost quite a bit of money to design. In fact the head B'Twin designer rode it in a famous race.

imposter2.0

AYank wrote:

My point is listing them was that if you or I were to buy the parts separately it would cost twice what they sell it for.

The same is true for pretty much any assembled, mass produced item.

imposter2.0

AYank wrote:

But its a well designed bike which probably cost quite a bit of money to design. In fact the head B'Twin designer rode it in a famous race.

Not sure why you think that. It's just a fairly standard welded aluminium frame with a basic paint job. Factories in Taiwan and China are turning out these kinds of thing in their millions..

Also, I don't know which race you are referring to, but all I would say to that is 'so what'.

As pointed out earlier - there's no secret to any of this, it's just basic economics.

ayank

Imposter wrote:

AYank wrote:

Also, I don't know which race you are referring to, but all I would say to that is 'so what'.
As pointed out earlier - there's no secret to any of this, it's just basic economics.

"Nicolas Pierron, the road bike product manager for B'Twin, ride the Roc d'Azur". Living in France I looked at riding the Roc d'Azur and its bloody expensive. In total it cost close to $1000 (see http://www.rocazur.com/en/registration/ ... and-prices) just to enter and its a four day supported event so they would have spent $10K just on that.

I don't buy this "its just basic economics". We aren't talking about consumable widgets like sticky tape. B'Twin make nearly a dozen road bikes and I can't believe any one model sells more than 10,000 and a bike can last for years and years.

imposter2.0

AYank wrote:

I don't buy this "its just basic economics". We aren't talking about consumable widgets like sticky tape. B'Twin make nearly a dozen road bikes and I can't believe any one model sells more than 10,000 and a bike can last for years and years.

Decathlon has over 1,000 stores worldwide. All any store would have to do to prove you wrong there is sell 10 or more of each model in a given year. Think about it, they probably do that in a week. I don't know what the company's sales volume actually is, but I can't help thinking you are massively under-estimating it...

jempi

So all the other brands have super high profits then?
The question is not how to make a cheap bike.
For me the question is how to make a bike with the quality off a taiwan company like Giant at half the price off a Giant...
The same for the clothing and accessories.

cougie

Decathlon turnover is ten billion euros. That's selling a lot of everything.

imposter2.0

Jempi wrote:

For me the question is how to make a bike with the quality off a taiwan company like Giant at half the price off a Giant...
The same for the clothing and accessories.

It's not about factory gate costs - I would imagine they're all pretty similar at the lower end of the market. It's about distribution, volume and margin.

thistle_

https://www.bikeradar.com/gear/article/ ... ous-45845/

ayank

Imposter wrote:

AYank wrote:

I don't buy this "its just basic economics". We aren't talking about consumable widgets like sticky tape. B'Twin make nearly a dozen road bikes and I can't believe any one model sells more than 10,000 and a bike can last for years and years.

Decathlon has over 1,000 stores worldwide. All any store would have to do to prove you wrong there is sell 10 or more of each model in a given year. Think about it, they probably do that in a week. I don't know what the company's sales volume actually is, but I can't help thinking you are massively under-estimating it...

Your saying that each of the 1000 stores sell 10 bikes of the same model per week? That means they would sell 520,000 Triban 100s per year, 520,000 Triban 500s per week etc. The bike market for one brand is just not that big.

I worked in a very large LBS for a while in a major US city. Bigger than all Decathlon bike areas I've seen. We stocked Giant, Cannondale and Trek. Most weeks would go by and they wouldn't sell 10 bikes. An LBS makes most of its money on service, clothes and other auxillary items.

Maybe Decathlon are running an LBS within a store model. That would make more sense. Just before the summer riding season the wait time on bike tune-ups was a week and we employed extra wrenches then as well. It's amazing how many people don't know how to service their bikes! We had one guy who would alternate between riding hills one weekend and flats the other. He would literally bring his bike in every week and ask us to change the cassette! His ration was he had nice wheels so it was cheaper to pay us to change the cassette than it was to buy an extra set of the nice wheels.

imposter2.0

AYank wrote:

Your saying that each of the 1000 stores sell 10 bikes of the same model per week?

I have no idea whether they are selling 10 per week or not. I'm sure in many stores they are. But all they have to do is sell 10 per year in order to beat your own estimate. The real answer is probably somewhere in the middle.

w00dster

I would say it is probably a strategic process, inline with what most people are saying

1. Strong buying power with centralised logistics.
2. Cheap components used, I imagine these would be purchased in very large numbers.
3. Small profit margins on the bikes.
4. Newbies are likely a key demographic, they will need helmets, lights, gloves, shorts, tubes, pump etc. So the £150 spend on a bike ends with people leaving the shop having spent £250.
5. Newbies happy with bikes, ride more, recommend well built bikes to their friends.
6. Newbies want new tyres, gels, new clothing and go back to where they got cheaper products.
7. Decathlon tend to be located away from the high street and could well have stronger negotiations on operating costs (deals with local councils etc - pure conjecture just throwing it out there). Be interesting to know if they have any tax breaks as well.
8. They may be able to pay a lower wage to their staff than a comparable LBS who will want to retain good staff. I have no idea if this is true, I'm just basing this on the contracts of Sports Direct staff.

I've had similar discussions with my LBS about this, and I'm a big believer in buying local. All bar one of my bikes was purchased in the LBS. But the overheads on a LBS are high so this impacts the cost, for me it is what you consider value. I get a great service from my LBS, they go out of their way to help and the value for me is this service. The conversations we have about bikes, my options for upgrades, possible issues etc are with someone who knows what they are talking about and not someone who has been assigned to the "Cycling" section.

I do use Decathlon a fair bit though, I always go in there to spend £20 on something for one of the kids and tend to come out £100 lighter.

jempi

Did the same thing.
Buyed my bike at the LBS for the service and all of my clothing, tools and accessories comes from decathlon.
Except pedals and shoes, wich i got as a reduction at the LBS, and my backpack and bikepants are Vaude (buyed online).
So at the LBS my bike costed 2000€ but i did get a voucher for 300€, position adjustments and a free maintenance after the first 250km.

lakesluddite

Don't forget that you're missing a link in the normal retail chain - B'Twin is the house brand of Decathlon, so it's essentially the manufacturer selling directly to the customer. But yes, even then they are very good value.

Where I live we are about 80 miles from the nearest Decathlon, so I never pass up the opportunity to pop in when I'm near one - last time was Eastlands in Manchester as I'd been at the Velodrome. In London at the end of Feb, so Surrey Quays might be on the agenda.

Moonbiker

Just show how some other stuff probably has a huge mark up.

Dura Ace group proabably costs the same as claris to manufacture etc. The profit margin of low end stuff is alot less.

lesfirth

Moonbiker wrote:

Just show how some other stuff probably has a huge mark up.

Dura Ace group proabably costs the same as claris to manufacture etc. The profit margin of low end stuff is alot less.

I agree there is probably a huge mark up on some stuff but" Dura Ace group probably costs the same as claris to manufacture etc." I can not agree with that.

milemuncher1

Economies of scale. They buy huge volumes of parts, so they can sell them for keener prices. They have their own bike manufacturing concern, so that helps with frame costs and development costs. I bought a 720 AF for £1050. I couldn’t have built it myself, with new parts, for less than £1300 quid, when all the nicer bits ( the saddle and wheels, let alone the 6800 Ultegra groupset) were sourced as cheaply as I could find them. That didn’t include the cost of a frame either.

Matthewfalle

AYank wrote:

But these aren't widgets. I can't image they sold more than say 10,000 of say the Triban 100 road bike I bought..

They probably sold 10,000 in France alone last year.

It’s quite a big market.


https://www.statista.com/statistics/561 ... es-france/

ayank

Matthewfalle wrote:

AYank wrote:

But these aren't widgets. I can't image they sold more than say 10,000 of say the Triban 100 road bike I bought..

They probably sold 10,000 in France alone last year.

It’s quite a big market.


https://www.statista.com/statistics/561 ... es-france/

Thanks for the pointer. But I'm not sure they are really selling 10,000 of a single model. The chart says $1B of sales. That's going to include a lot of crappy kids bikes and BSO. But lets be generous and say there is $500M sales of proper road bikes. Lets further say each bike cost $1000. that's 0.5M road bikes sold. I doubt the Triban 100 is going to be 2% of the market? Remember the Decathlon have I think 6+ models of the Triban.

I went back to Decathlon to get some parts and asked the bike manager and he confirmed what I thought. Their major business is not from sales: but service and parts. Essentially like an LBS but in a huge store.

Matthewfalle

Mate

They have over a thousand stores, not including their internet sales. That means each store has to sell 10 of those bikes.

They are part of the LeClerq group of hypermarkets who will undoubtedly sell the same bikes. So reduce the above number.

They have a turn over of €10 billion a year. That €10 billion. That's more than the GDP of some countries.

Yeah, they will punt out 10,000 of these bikes a year easy peasy squeeze the lemon.

The more I look at them the more I like them. I use the one in L'Aquila and find it to be well cool and the staff really friendly.

milemuncher1

Matthewfalle wrote:

Mate

They have over a thousand stores, not including their internet sales. That means each store has to sell 10 of those bikes.

They are part of the LeClerq group of hypermarkets who will undoubtedly sell the same bikes. So reduce the above number.

They have a turn over of €10 billion a year. That €10 billion. That's more than the GDP of some countries.

Yeah, they will punt out 10,000 of these bikes a year easy peasy squeeze the lemon.

The more I look at them the more I like them. I use the one in L'Aquila and find it to be well cool and the staff really friendly.

They are to bikes and sports equipment, what Lidl and Aldi are to groceries. People ( who don’t know what they’re missing ) go “ohhhhhhhhh B’Twin, good componentry on crap bikes” and “ohhhhhhhhhh, B’Twin Bikes, load of crap BSO” etc. etc. etc. All I can say is.

https://www.decathlon.co.uk/ultra-940-c ... 90340.html

nievbla

Hi, AYank.

I know that you have both, Triban 100 and Riverside 120, and need to know wich of them you think is better for urban use.
Due the prize, I'm thinking in Triban 100 or Riverside 500, the old model with V-brake.
Thanks!

AYank wrote:

So I've now bought two B'Twin Bikes: A Triban 100 for E$269 and a Riverside 120 for E$130.

My review for the former is here viewtopic.php?t=13088608
I was amazed by the how well put together the bike was. Recall I ride "proper" bikes in the US where I have bars/shoes/stems etc. that cost more than that bike! In this case, I don't know how they got the bike so nicely put together for so cheap (it takes times to put together a bike properly). The build quality is amazing and not done by kids.

But the Riverside 120 has just blown me away. I only bought it a few days ago and will post a proper review soon. But I can't understand how they can even buy the bike parts for so little. The spec list is here https://www.btwin.com/en/hybrid-bikes/v ... -bike.html

I've gone through the main parts of the bikes where prices are available. Where its not obvious I've provided links.

$15: Microshift RD https://www.amazon.com/MicroShift-Long- ... B00FSRXF0M
$10: Microshift Shifter half of https://www.amazon.com/MicroShift-Thumb ... microSHIFT
$12 Saddle https://www.decathlon.co.uk/100-sport-c ... 51027.html
$10 KMZ Chain https://www.amazon.com/KMC-Bicycle-Chai ... B000AOA3PS
$11 Microshift Cassette
$15 Wellgo M239 Pedals
$25 Crankset
$20 Tires

So just these parts add up to $118 but I've left off the big ticket items on a bike (wheels and frame) which I could imagine easily costing $40 each. I have also no way of pricing the inhouse B'Twin no-name stuff like brakes, levers, bars etc (all which are quite good) but lets say it cost roughly $40 .

So now we are at $240 for a bike that sells for $130. How on earth are they making money of this thing! Their stores are huge, in nice places and well staffed.

Clearly buy the parts far less than this value, but my point is that it cost nearly twice as much for you and I to buy the bike as what they sell it at. Selling a bike is not just buying the parts, you need to put it together, put it in a store, man the store etc.

meursault

PCWorld had a similar strategy in the past.

Break even on PC's, massive margin on consumables, cables etc.

mamil314

Difficult to believe that bikes are expensive or rare
https://www.theatlantic.com/photo/2018/ ... es/556268/