On Wed, Aug 5, 2009 at 9:47 PM, Rigel Christian <rigelc@gmail.com> wrote:

Hi,

I had an interesting discussion with someone who worked at a smaller
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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