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Triathlon's Ecosystem

Written by: Dan Empfield
Date: Mon Apr 22 2013

When we speak about the triathlon community itís not an abstraction, or figure of speech. It is a finite ecosystem, regardless of whether all its inhabitants recognize it. Without race directors, a rules organization, insurance providers, triathlon media, product manufacturers and points along the distribution channel that bring goods, services and expertise to you, consumers would have a rough go trying to participate.

Remove one vertical in this ecosystem, itís hard to imagine how the slack is taken up. It is also nevertheless true that ecosystems stay strong through competition. When we ďsave the whales,Ē or the yellow toad or the snail darter, for that matter, it ought not to be because we love the snail darter, but because what threatens the snail darter is an unnatural upheaval of the ecosystem through the introduction of an outside agent. In my lifetime, the insecticide DDT was an unnatural element introduced into finite ecosystems that posed a threat. One question is whether ďoutsideĒ forces such as Amazon are healthy ó even necessary ó agents playing their parts in this ecosystem of ours, or whether theyíre DDT.

I think itís somewhere in the middle, but what I think is immaterial. Itís not about what ought to be, rather what is, and what will be.
Changes in Tax Law
I would be shocked if, in 3 years, youíre not paying sales tax on internet purchases in most states, that is, if Amazon sells into a state that does not charge a sales tax, I donít imagine that Amazon will have to remit sales tax to that or any other state. That established, smart money says invest in the company that provides the software enabling internet sellers to parse and remit taxes to several dozen taxing authorities.

But as we see, Amazon can remit taxes to states with the largest populations and not skip a beat. I donít know what the future holds for the UK sites that arenít so closely affected by U.S. tax laws, like Chain Reaction Cycling, Pro Bike Kit and Wiggle. They may remain exempt from any state sales tax collection. But as weíve seen, for all the hand wringing about the British Invasion, Slowtwitchers rely less on these sites, in the aggregate, than they did 2 years ago (24 months ago 27 percent of Slowtwitchers chose 1 of these 3 sites as their go-to mail order option for bike parts and accessories; last month it was 23 percent). Itís the portal Amazon represents (whether or not itís Amazon or an Amazon partner store) whoís winning the online wars.
Retailersí Obligations
Every stakeholder in this ecosystem faces pressure, and thatís good. The question is how to survive. Were I a retailer, I would find myself both very fearful, considering the strength and prominence of those invading my space, yet very eager because of the ordnance I can uniquely bring to this battle and point at my competition.

Amazon has not yet built the scratch-and-sniff plug-in. Yes, you can buy saddles from Amazon, Competitive Cyclist or, for that matter, Pro Bike Kit, and return those you donít like. This isnít just a theoretical case, because youíve told me that ...

... 32 percent of you are happy with your tri bike comfort. Do you think a Cobb saddle is in your future? Profile Design TriStryke? ISM Adamo? The new Sitero from Specialized? Hereís the landscape: You canít buy a Sitero mail order. From anybody. But letís say you could. Do you know how far fore and aft an ISM or Sitero is placed, versus a Cobb V Flow Max, in order to experience the same relative hip placement? In other words, do you know how to change saddles so as to provide a true test of these saddles?

Maybe your LBS has no better way of helping you test saddles. What we know is that 85 percent of you Slowtwitchers have bought and will buy some of your tri stuff online, but that 77 percent of you, if given the option, would prefer to buy these items from your LBS, assuming your LBS is adequately equipped for battle (see the chart below). So, I have this for you the consumer: If you keep asking your LBS for a date, and your LBS always has plans on Friday night, how long is it going to take you to get the message? Maybe you need to start asking another LBS out for a date.

If you are the LBS, and you donít have Cobb saddles in stock, or ISM saddles, or Profile TriStrykes, youíre not yet in the triathlon business (or youíre out of that business and you just donít know it yet). Further, if you have these saddles, but no way to easily, quickly, expertly change these saddles on adjustable fit bikes for the purpose of saddle testing, youíre only barely in the tri business.
Look at it this way. Netflix can send you a 3D movie in the mail, and you can watch it on your TV, but you canít watch it in 3D. If you are a local bike shop owner, you have to ask yourself, when somebody walks into my shop, what services can I offer in 3D? Fitting? Good. Do you have a conforming fit bike? Do you have trained fitters? Have you, bike shop owner, ever actually gotten a fit from your trained fitters in your employ? Itíd be an interesting exercise for you, to find out what the complete bike options are that emanate from that fit. Do you have a SwitchIt? Do you have your road and aerobars mounted on a try-it-out display? If you have no idea what I'm talking about in this paragraph yet you are in the tri business, post questions about these tools and concepts on our Fitterís Forum.)

I hope you and I grasp the same take-away from the chart above: 60 percent of Slowtwitchers intend to do something to improve their riding comfort this year, and thatís before anybody shows the 32 percent who think theyíre adequately comfortable what comfort really feels like. As a retailer, do you have a strategy for demonstrating what comfort feels like? Because if you donít, then, what do you know, or offer, that Amazon, Wiggle, or Competitive Cyclist canít replicate?
Besides offering your customers an experience Amazon canít offer ó and that your brick and mortar competitors wonít or donít or canít offer ó itís clear that Slowtwitchers are eager for education and clinics; and for cultural opportunities; that only can be offered at the local level, and that local bike shops are in the position to provide (see Be the Culture).

As weíve seen, there are robust technologies that exist right now ó and Iím most excited by what I see from Buy Local Now and At My Local Bike Shop (see A Bike Sellerís Options) ó that can rope a local bike shop into a national solution, in a way not (ironically) unlike how Amazon does business. Right now, these two entities are like the Borg, becoming stronger shop by shop, vendor by vendor. My most ardent single admonition for you as a retailer is to sit the software both these entities offer on your POS installs. Donít worry about what it gets you now. Itís going to reap benefits to you in the future. Itís like when you agree to take a new form of payment: It costs you nothing to participate, maybe it means something for the future, maybe it doesnít, but until thereís a network of sufficient size you arenít going to see benefits. It is my prediction that at least one of these two outreaches is going to impact your business heavily, and perhaps both will. No reason for you not to do this.
Vendorís Response
If I was a retailer, and was offered a product line from a vendor, I would ask two questions. The first is whether the product is going to be there when I want to sell it, that is, if I take an opening order and sell through it, am I limited to that one inventory turn? Especially if this is a consumable, and I consider a running shoe in that category. But right up there with it is my second question: How are you going to control your price? A cousin to that question is: What is your online strategy?

For Slowtwitchers who donít know, I used inhabit a different niche in this ecosystem. Prior to publishing Slowtwitch I was a manufacturer. Back then, the idea of a manufacturer selling consumer direct was anathema, to retailers. Now, I find that retailers are fine with manufacturers offering products consumer direct, via their websites.

The problem is not brick and mortar versus online. The problem is not manufacturer or retailer making the sale. The problem is the establishment of a floor price at which the ecosystem can support and survive. Now, maybe that floor price is lower than what is now often advertised as MSRP. I donít know. Depends on the product. However, I don't think finding the lowest sustainable price is possible when a brand experiences routinely wide deltas between MSRP and street price. A low floor price is solved through other manufacturers introducing competitive pressure. What keeps the price of your Chrysler 300 low is not a lot of Chrysler dealers fighting each other. Itís what Ford and Chevy offer.
I know of one bike component company that has simply lost control if its price. As a result, its sales inside the U.S. are largely relegated to OEM sales. If that companyís product ships into the U.S. hung on a bike frame, then, the sale is consummated. But aftermarket? Its U.S. distributors only stock a fraction of what they used to stock, and retailers only carry a bare minimum. Rather, the aftermarket is now heavily weighted toward competing brands, because these other component brands are the only brands specialty stores can sell profitably.

And this really is the point Iíd like to make: If youíre a brand, and you like the idea of Sports Authority, Dicks, Chain Reaction, Wiggle, Zappos, RoadRunner Sports, Costco, Walmart, Nordstroms or Amazon buying from you, why would any of these mass merchants buy a thing if there are no specialty stores making your brand hot? Do you not understand that these front-line specialty stores pay you for the privilege of field testing and marketing your product? Even if they only represent 40, 25, or even 15 percent of your total revenue? If you donít provide a way for these stores ó yes, some of whom donít promptly pay their bills; some of whom cause you endless headaches ó to profit through the sale of your brand, then, what will be your brandís eventual end? Do you think someone at Zappos is out there testing all the running shoes, footplant by footplant, selecting through the mass of products what it is theyíll show on their digital slatwalls? Or do they just wait for a specialty store to invigorate a product and then pounce on it?

If you, as a brand, have no say-so at all in the pricing of your product ó and it seems to me selling directly to companies that routinely, congenitally, habitually, institutionally deeply discount is a great way to lose that control ó you have only yourself to blame when you are left only with those resellers, which will in the end stop buying from you because they are not brand builders!
Iím not arguing for inflated prices. And I'm not arguing against the sale of triathlon products to mass merchants. Iím arguing for the lowest sustainable price for the products you sell, where the fight is waged over availability, product knowledge, warranty, returns, and convenience, versus those products made by other manufacturers in your competitive set. In other words, may the best retailer win, whomever that might be, but when any consumer can buy a product for the same price retailers can buy it at, you as a manufacturer can count the days toward your own corporate Armageddon.

Consider how your specialty retailers might be the proper setting for a ďlaunch.Ē Iíd flesh this out here, however this is such a new, and important, sales paradigm that Iíll be writing separately about the concept of The Launch.

Finally, there has been a SKU explosion. I canít imagine how the LBS can service every need. The number of iterations of wetsuits, derailleurs, saddles, triathlon cycling shoes, is just off the hook. Therefore, you have to have a come-to-jeebus about drop shipping. Hereís how we used to handle it when I was a manufacturer. We delineated between core items that really should be in stock versus what we could not in good conscience require a retailer to stock. We also parsed between in-season and end- our out-of-season. To be a part of our drop-ship program, you had to be a stocking dealer, carrying current inventory. If it was an in-season core item that was the subject of a drop ship request, that retailer bought 2 when he bought 1. We would drop ship to the consumer, and we immediately, contemporaneously, sent that item to the retailer (because he needed that item in stock in order to represent us, and did not have it or we would not be drop shipping it). If itís an end-season item we did not invoke the ďbuy 2 to sell 1Ē rule.

Manufacturers, you need to think hard about your drop-ship policy; you should consider where youíre going to house these inventories for instant shipping; and many of you need to be less tight-fisted and more up-to-date in calculating your own internal sales projections for at-once shipping. The alternative to this is the Shopatron model, but better executed, I suspect, by the two endemic companies mentioned above (At My Local Bike Shop and Buy Local Now). Still, it's going to take some time before your specialty retailers begin to act as a mega warehouse, drop-shipping for each other.
Stakeholder Power
Amazon does not know who triathletes are, nor what they want, and neither does Google. And they never will. A Peetís-drinking code writer in Seattle or Cupertino isnít going to write the aha snippet for Amazon. Heís not going to write the code that cracks my code. Heíll never know you and me.

But this does not mean that we canít leverage technology toward solutions that help consumers. Amazon does not know who triathletes are nor what they want, but I do. At least in part. And your local bike shop does, at least in part. As do your local race directors, and his contractors. And local coaches. And manufacturers. The trick is for us inside our ecosystem to not be disparate parts of the community, but to aggregate our shared knowledge, providing results to the consumers we know. Iím writing about my responsibility. How can I leverage technology; combined with investment, and hard work; and partnership with strategic stakeholders in adjacent verticals; to provide solutions that no one outside our ecosystem can match? I have a pretty good idea how to do that, and if thatís not evidenced here, in these pages, by the end of the year, I will have considered this year at least a partial personal and professional failure.

Consumerís responsibility
I do not believe that it is your duty to pay more than you should have to pay. Itís like taxes. Why pay more than what the ďsystemĒ provides for you? That said, I think itís important that you consider the end game. For you. What your future looks like. Maybe itís fine for Walmart to be the one and only local place you buy what it is you want, but, if you were a part of the Walmart-building paradigm in your local town, who is to blame when youíre buying furniture made in Bangladesh with technical documents guiding you to ďinsert tab B into orifice M.Ē

With that in mind, I wonder whether we might all ó including those of us here at Slowtwitch ó do to help your local bike shop equip itself for battle? To that end, we have a discussion on our reader forum asking that very question: What canít you find at your LBS that youíd buy at your LBS should they have and stock it? Of course, then the burden falls on you, once they do stock it.
But the burden isnít to inconvenience yourself. Itís to be a part of this ecosystem and suggest to your LBS ways in which it might better service you. Would you be a candidate for a local courier delivery? For in-store pick up of an ecommerce transaction? Look, I understand that you may well not want to spend 30 minutes at a retail store on your way home. So, can you make your selections via ecommerce, and then pick them up in a bag on your way home from work? If your retailer doesnít offer this, donít just order these items mail order. Ask your retailer whether he might consider implementing this. Heís got a mailing list. Suggest he send out to his mailing list, asking whether this service would be of benefit. If he gets next to no response, then he knows itís not important enough yet to implement it. But what if thatís not the case? Then you helped move him to a new sales paradigm.

If youíre involved with a race or a tri club, youíre part of the ecosystem. I wonder whether a race director, offering packet pick-up at a local shop, might help move along a ďlockersĒ style will-call. You go in to pick up your packet and in your packet is race bib, bike number, timing chip, along with latex tubes, bike wash, a box of gels, new floor pump, half a dozen CO2 cartridges, a new inflator, and so on, that you bought online prior to driving to packet pick-up.

I am going to stop here, because I could write for hours and hours on this. Not that it would all be worth reading, but, the opportunities are legion for all stakeholders. I would simply say that Iím connected by some affinity to those in the ecosystem. If you as a consumer buy from opportunistic resellers outside the ecosystem, I understand that. Heck, sometimes I am that consumer. But I think the onus is on us to lean toward those in the ecosystem when we can, not because of some ethical imperative, rather because, someday, your seat post is going to get stuck, and you'll need someone to unstick it until Amazon is prepared to send somebody out to take care of that for you.

Until that day, maybe Amazon can get to work on a tech bulletin on how to un-insert tab B (your seat post) out from orifice M.

  

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