As we start to wind down this year I want to go back and cover an important topic that I touched on in a previous column some time ago as well as at my Indy sessions. Not enough is changing as fast as it needs to so I’m bringing it up again. I’m directing this column to parts, accessory, and apparel OEM’s in the hopes that it will eventually help us dealers and retailers when it comes to selling more of your products.
First and foremost if you want us (your retail partners) to sell for you, stop fighting against us! I can’t get over how hard it is to get the idea through to so many of you that we, the dealers and retailers, are on the same side. Our goal is typically to sell as many of your vehicles, vehicle related widgets, or vehicle riding apparel as possible to our willing and eager customers. We’re investing an insane amount of time and treasure to get the world to beat a path to our virtual doors. So why do you do so many counter-productive things that make us not want to (or not be able to) help you?!
First, what’s up with your MSRP models? I’m not talking about setting some insane MSRP that no one in their right mind is going to end up paying anywhere close. I’m saying that it would be lovely if you would give some consideration for your retailer’s need to make money when rationally setting your MSRP’s. Especially if you’re going through distribution. Every single link in the supply chain is going to expect their cut (whether they actually do anything of value to deserve it or not).
Get rid of every single link in your distribution chain that is not legitimately adding some type of significant value. In most cases that’s going to mean that you should stop using a distributor that doesn’t do anything more than basic warehouse and transport. Are they providing e-commerce and multi-channel merchandising support? Are they providing both forward as well as reverse logistics and handling customer service issues? Are they providing comprehensive aggregated demand forecasts that are farther out than your lead-times? Are they providing market and customer research data? Or better yet, are they selling their own lines that compete with yours? If you’re not shaking or nodding your head in the appropriate directions in response to those questions, you need to re-tool your distribution strategy.
So while based on your costs and your required profit margin an MSRP of $99.95 might look quite nice, by the time it gets to my website it’s just not going to be worth carrying that snazzy new doohicky if my gross margin is only 13%.
I mean sure, we can price it for more than MSRP to make a margin that justifies us carrying your product and providing the necessary level of customer service and support, but do you really think that’s a good idea? Especially if the customer can just go to your site and buy it for less? Which leads me to my next major issue…
Why are you selling direct? Seriously. Fish or cut bait. You’re either a direct sales model or you’re a channel sales model. Pick one! First you set an MSRP that’s unrealistically low, and then you go and sell on your own site at a price that only you can realistically afford to live on! I’ve got no rational reason to be selling your stuff on my site in those circumstances. It’s not worth the headache for a 3% net to compete with you! Why are you making me compete with you?! You’re supposed to be my supplier, my partner, my friend! Why are you stealing my customers?!
I’ve run into insane cases like where my site ranked much higher on a Google search for a popular, expensive, highly sought-after line of niche products than the OEM’s own site did! I could have sold the crap out of their products for them. So could the other 5 or 6 retailers that were also in the top 10. But instead the business geniuses at this company decided that they prefer to keep their MSRP at a level that could only realistically support selling off their own site. I tried to work with them. I laid out the business case. They even agreed that if they did things the way I was proposing they would probably sell more if they more fully supported their retail partners (especially the ones with vibrant e-commerce businesses). But they had their model and they weren’t going to change it. Whatever…
Now they get to spend all that extra money handling things like direct to consumer marketing and advertising, retail issues like customer service, shipping, returns, etc. etc. Instead of supporting and leveraging their retail sales channel (in this case e-commerce) they get to spend their money doing all the things that the retail partners they should have been working with are already doing! It’s insane!
I’m not saying that their aren’t brilliant business reasons why a direct to consumer model in this era of e-commerce, 3rd party logistics providers, and world-wide overnight shipping can work very very well. In fact I’ve got some fairly radical ideas that that very business model may be the predominant model for the future of our industry. I’m just saying that from what I’ve seen, most of you guys that are selling direct and selling through the channel have not really thought it all the way through.
I might not necessarily care if it was only yourself it was hurting, but I want to sell your stuff because my customers want it! Help me help you make more money for all of us!
Visit my site (www.radicalpowersports.com) where you’re going to see more written about these and other topics that have to do with radically overhauling how the motorcycle and powersports industry’s business models currently operate. How would you like your sacred cow burger cooked?
Tags:bad-business-practices, Column, DealerNews, dealerships, E-Commerce, ecommerce, internet, motorcycle, powersports, rant, selling-online
Some pretty interesting news came out today about the Motorcycle Industry Council setting up it’s own United States Super Bike Championship (USSB).Now ever since it was announced that the AMA had lost control over street-bike oriented racing in the USA to the Daytona Motorsports Group (DMG) (although still keeping the AMA brand via AMA Pro Racing) the OEM’s have (understandably) been the loudest critic of the change. Afterall- if the OEM’s are upset then it’s the MIC’s job to represent that.
It does seem to have happened pretty quickly considering it was only back at the end of July that the MIC said it was evaluating if it should issue a request for proposal for a new sanctioning body. In only two months the MIC was able to complete their evaluation AND issue the request for proposals, AND get the proposals back, AND evaluate those proposals, AND then organize, set up, and announce this new organization. Maybe if they can do all that so quickly they can actually pull this off. Amazing example of organizational dynamics it would seem.
I just wish it was someone’s job to tell the OEM’s to think about the larger picture as it relates to expanding the motorcycle market in the USA and not just whine about losing their own little patches. Get out of the box a little and try to think a little more creatively and strategically.
DMG/AMA Pro Racing (apparently) has the goal of making motorcycle racing more exciting and interesting to a wider audience. Think NASCAR for motorcycles.
That might be part of the problem I guess. The motorcycle community (at least the people I talk to) all seem to think that NASCAR=BAD. It’s insane. They all are like, “DMG is going to turn motorcycle racing in the US into NASCAR.” They apparently think this is a BAD thing?!
The MIC and ostensibly this new USSB organization seems content to have one of the largest countries in the world with one of the worst street bike racing series as measured by things like mass-market, non-motorcycle specific sponsor involvement, media viewership, race attendance, etc.
Seriously… has anyone from the MIC been to an AMA race lately? The stands are empty. It’s TV coverage is totally limited to SpeedTV (not that there’s anything wrong with SpeedTV.. I watch it constantly. But for the industry as a whole to grow it needs to be on the majors like Speed’s parent FOX). It’s the same old tired crop of motorcycle/powersports centric sponsors that are there race after race.
There’s no appeal to the old AMA superbike formula outside of hard-core motorcycle enthusiasts and of course the OEM’s (especially Suzuki who essentially dominates the Superbike class).
It seems that the motorcycle and powersports industry prefer to keep their blinders on and fight over pieces of a tiny little pie instead of making a REALLY, REALLY big pie instead!
The argument goes that the new DMG formula is going to have limited/formula spec bikes that have little in common with their street-going siblings other than some decals. The poor manufacturers are going to be left without the “test bed” to develop new bikes if they can’t put their best foot forward. Right.
Hmmm… It seems to me that there is a racing series that involves vehicles with four tires that follows a very similar strategy and they seem to do pretty well.
Has the MIC or the motorcycle industry as a whole never heard of NASCAR? Have they not looked at the amazing success that has been possible with the NASCAR formula?
Win on Sunday sell on Monday still works pretty darn well for the OEM’s that play in NASCAR’s game and those cars have absolutely, positivly nothing in common with the street going variations. Especially now that NASCAR has the Car Of Tomorrow (COT).
This is just stupid, short-sited thinking on the parts of the OEM’s and the MIC as far as I’m concerned.
What does the MIC know about creating a racing series from scratch. Promoting it. Getting killer media deals put together? Do they know more than the folks at DMG? I’m going to guess… No.
How are they going to model it? What are they going to base it on? What should they base it on. The AMA model that was so uniformly hated by pretty much every single racing fan I’ve ever talked to? Or NASCAR, that EVERYONE knows about even if they never have watched or wish to watch cars go ’round and ’round.
I’m willing to be that these guys are getting a bunch of traffic that they have no idea where it came from.
Here’s why this is such a big deal to me. I want more, more, more people to watch motorcycle racing on TV and in person. I want to see motorcycle racing on FOX. I want soccer moms driving around in their giant killer cages to have a #69 Repsol Honda sticker on their bumper right next to their #88 Jr. NASCAR sticker.
Why? Because now those same soccer moms that were once content to run down motorcycles left and right in their mini-vans now like motorcycles! They know what they look like! They might even end up SEEING them when they try to turn left.
In fact, the same day I get this announcement I get the print version of PowerSports Business that has an article about how the Motorcycle Safety Foundation (MSF) wants the Feds to start looking into motorcycle crash data more because fatalities were up in the US in 2007 by 6%!
Now explain to me again how maintaining a failed, fringe racing series like the USSB is bound to become (vs. a larger, more well funded, and popular series that the DMG was trying to put together) the catalyst to expand motorcycle’s visibility in the USA?
You can read this article that has some comments from Roger Edmondson (head of DMG) that indicate that he’s probably not a real happy camper right about now.
Mark my words that this may be a death knell for street motorcycle racing in the USA in the same way that the IRL/CART split killed off open-wheel racing here. Of course, maybe I’m totally wrong and the MIC will be able to create the kind of series that the motorcycle industry in the US needs.
[edit: i just came across this news that even though KTM is on the board of the MIC, it will NOT be racing in the MIC/USSB and will stick to the AMA Pro Racing/DMG gig]
Tags:AMA, daytona-motorsports-group, DMG, MIC, motorcycle-industry-council, motorcycle-racing, rant, soapbox
