stolen goat is nearly 2 years old now, so it’s fair to say that we’ve done our fair share of buying and selling cycle clothing and accessories. Before I got into this, as a regular cyclist who had to buy everything the typical way, I always wondered why this stuff costs so much. Sure – the top end stuff is mostly very good quality but these days – surely the big companies must have some serious cost saving measures in place.
Well, they do. And to be fair, a lot of the bigger cycle clothing brands now have a range of clothing that caters for the entry level cyclist all the way up to the amateur & even pro racers amongst us. But, why shouldn’t an entry level cyclist ride in the best kit? Is it all just marketing smoke and mirrors, or are there other factors at play? Well the truth is, it’s a bit of both…
The difference in production cost of a “high end” vs a “low end” garment is a matter of a few pounds or dollars. For the major brands, they have mega high volume on their side but for the majority of emerging brands, it’s more about how the product gets to you…
Route to Market
The cycling industry is quite unique. Most people still like to try their bike out before they commit to buy it – and rightly so. This means that physical brick and mortar shops will always be present. Perhaps this may adapt slightly in the future – I suspect shops will turn into showrooms with servicing in the future. Either way – there are currently between 2000-3000 physical bike shops in the UK. These retailers make up the majority of the way customers access and purchase cycle clothing, accessories and obviously bikes. That’s cool; even as the owner of an online only brand I am all for the local bike shop and regularly visit a couple in my area.
But, for the most part at least, these brick ‘n’ mortar stores are run by a small number of people. They are time poor and have to work incredibly hard to survive. The easiest way for them to stock clothing and kit is through a distributor. And so this is what they all mostly do. Pick one or two distributors and stock their shop.
The benefits of buying from a distributor are that they can quickly re-stock supplies, typically within 1-3 days. This means they can carry less physical stock which reduces their risk in numerous ways and means they can have more breadth in their range. Also their accounting is much simpler – they have one bill to pay, probably with good credit terms each month or quarter.
Because of this tradition, most cycling brands seek out distributors. It makes absolute sense for them as the distributor has a network of retailers at their disposal ready and willing to start selling. But the brand needs to be able to supply a certain amount of volume, at a certain price point. And this is where it gets a bit tricky.
Think about it – a new brand pops up who makes awesome cycling gloves. It costs them £5 to manufacture each pair, they then sell to the distributor for say £9 who then sells to the retailer for around £14 who then sells to the customer for £28 including the VAT (I’m making these prices up but you get the principal).
Yikes, how did we get from £5 start price to £28 retail price!? The crazy thing is, nobody is winning here. The brand who came up with the awesome gloves concept and who has spent ages developing the product and finding ways to reduce the cost but maintain the quality is making £4 a pop. Not too bad if they sell a million, but in reality there is so much competition out there that this is pretty unlikely. And the customer is forking out a massively increased price. The retailer is making very little once you take out VAT and factor in their overheads and cost of a sale.
So why doesn’t the brand sell direct?
Well that’s expensive too. They need as many eyeballs on their product as possible and they need to somehow gain people’s trust. A retailer can vouch for a product and has the traffic to their site or footfall to their store to at least give it a chance. A small brand would have to do a lot of advertising, marketing and PR to reach that stage on their own. It is possible but it takes some serious funding and drive.
In reality, most new brands try and sell direct to retailers. This takes out the distributors cost but limits their exposure. Although these days there are online retailers such as us, VeloVixen, Always Riding and obviously Wiggle and CRC who will actively seek out these new brands and give them a platform.
Even so… the £5 gloves are now sold for £10 to the retailer who sells them for £20 including VAT. Still not great, but better for the brand and somewhat better for the customer.
Well it has to be said that with today’s technology brands can more easily be discovered via social media and search if they are willing to invest some time and money. Micro niches are forming everywhere, not just in cycling, but it certainly is present in cycling. Look at the new gravel road bikes starting to become “popular”, they are certainly cool, but talk about a niche product – especially in this country. People are seeking out interesting pockets of their chosen hobby or pastime. So brands can be found, so long as people are willing to look.
The other option is for cycling retailers to take note from other industries where it’s a lot more common to mix own brand merchandise with 3rd party products. This is a path that we are very much trying to take. At stolen goat we want to show you as much cool stuff from emerging brands as possible, and at the same time we can use our relationships in the industry and knowledge of products and quality to manufacture our own clothing and sell them direct to you. If the awesome £5 gloves were sold in this route to market, they might cost the customer just £15. Same quality, but nearly half price for the customer and a more satisfying margin for the brand which they can use to develop more products.
Our new Bodyline jerseys use this exact concept. If a third party brand made these beautiful garments they would cost the customer somewhere in the region of £90-£120. Since we sell direct and we have partnered with a first class factory who is accustomed to making low quantities we have the ability to reduce our costs whilst increasing the range and maintaining the quality. We want everyone to wear these, so we pass the savings on rather than keep the mega margin.
Planet X use a similar principal. They started long before us and whilst their products are not my personal cup of tea I admire their business model and the value they are bringing to cyclists.
A customer recently told us that although he loves the Endurance Conspiracy t-shirt he bought from us he thinks the quality of our own t-shirts is slightly better and yet less expensive. That’s just his opinion of course but the reality is we ship EC t-shirts all the way from America, pay import duty on top of a wholesale price and simply can’t sell them any cheaper. Whereas our own t-shirts… well we make them and sell them so we have a much shorter route to market and absolute control on the production.
The important thing is that we can give you the choice. And this is what we will always do.