Austin, I’d find a parts and supplies co-op useful. You’d probably need a membership fee to cover overhead and a certain amount of margin above cost to cover your materials handling expenses. How soon could you have a business plan together?
Doug Franz
Coatesville community bike works
From: thethinktank-bounces@bikecollectives.org [mailto:thethinktank-bounces@bikecollectives.org] On Behalf Of Austin Amos
Sent: Thursday, August 06, 2009 2:36 PM
To: The Think Tank
Subject: Re: [TheThinkTank] Distributors and interacting with the profit model
I myself am interested in "running the thing". I have been researching the collectives for some time now. The issue with my state of residence (West Virginia) is the population distance. Our major cities are still car-centric; and the mountains between cities prohibit extensive bicycle travel.
The concept I have been kicking around since meeting Jonathan Morrison of SLBC at Interbike last year has been a bicycle consumables / parts co-op for bicycle collectives. Since everybody is likely buying (or needs to buy) the same items (tools, tubes...) the co-op will allow the buying power to benefit the co-op members.
I have experience in distribution / warehousing and freight / shipping as well as purchasing, sales, management and marketing.
Please reply to this message if you would like to discuss the co-op further.
Thanks again, Austin Amos.
On Thu, Aug 6, 2009 at 11:44 AM, <veganboyjosh@gmail.com> wrote:
Hi Rigel,
The question of DIY/Community shops banding together to enact greater discounts and easier account getting from major distributors has come up before.
Some folks spoke a little about it at Bikebike! last year, and the conclusion a lot of folks came to was that creating such a national account for community bike shops would in effect shift the burden of inventory and the overhead of shipping and staffing and administering such a thing onto the local shops.
Basically, "someone's gotta run the thing."
I would very much be interested in working with anyone who's interested to try and get a coalition of shops or similar to approach distributors or manufacturers even, about getting discounts, bulk rates, etc.
On Wed, Aug 5, 2009 at 7:47 PM, Rigel Christian <rigelc@gmail.com> wrote:
Hi,
I had an interesting discussion with someone who worked at a smaller
distributor today. I had called in order to try and cultivate a
business relationship for our local co-op, which is in desperate need
of tools and consumable parts like bearings and cables. He mentioned
that a lot more co-ops were inquiring about accounts.
He also told me the reasons why co-op/DIY shops were problematic from
his end, and it's a reasonable criticism from that perspective.
Individually, we simply dont do the volume of business necessary to be
attractive to a business interest. The time necessary to administer
and verify an account that does maybe a couple hundred dollars worth
of business a month for the higher traffic shops kind of burns your
profit margins, which are not large at that level. distributors count
on reliable, volume business to stay afloat, and take a smaller cut of
profit on the assumption that that's the type of business theyll be
doing.
I've know that some of the longer running co-ops and collectives have
relationships with distributors, but clearly many of the newer ones do
not.
I'm curious about a couple of things.
1) Does your collective have a relationship with a parts distributor?
2) Regardless of the answer to #1, roughly how much does your shop
spend on tools/consumables/things-that-one-would-get-from-a-distributor?
It seems to me that in the first few years of a
co-op/nonprofit/collective situation, lots or most of these
organizations leverage either existing ties to, or the goodwill of
LBSes.
My suspicion is that in some edge cases, where the bike or DIY culture
isnt all that strong, this can be a fairly significant issue for a
fledgling operation, in terms of both finances and social capital.
The idea that i'm trying to push here is that of a sort of buyers
club. Disregarding for the moment the perfectly valid criticisms of
the legal structure of 501(c)3s, if there was a nonprofit that could
act as a go-between for a parts distributor and a number of regional
shops, that would serve the needs of both the for-profit distributors
AND the co-op shops. distributors wouldnt have to deal with as much
volatility from taking on co-ops as charity cases, and co-ops banding
together could drive the price of a lot of the most necessary
consumables and parts down even further than their current distributor
relationships can offer. in the ideal case, of course.
I would appreciate any input people have. I dont know if this has been
suggested before (I suspect it has), but i didnt see anything in my
archive of the last year or so. If I'm totally off base in my
assumptions I'd like to know that too, where i went wrong, and what
the real deal is.
cheers.
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