I started writing about the various “eras” of the U.S.-based specialty retail bike business — which I’ve chosen to label “Bike 1.0,” “Bike 2.0,” and so forth — almost exactly six years ago, in January of 2019. Thanks to BRAIN’s archival service, you can read Part One and Part Two of the original piece here if you’re interested.
There was also a two-part follow-up later that year, which can be found here and here, respectively. In those pieces, I fleshed out the “eras” concept in more detail, with particular focus on the successes and failures of the Bike 3.0 model.
In 2022, I floated the notion that we were entering a new era, Bike 4.0. This was followed up with a piece warning about some of the dangers to the industry I saw in the 4.0 model.
Paralleling all of this, back in 2021 I hypothesized that the core industry challenge since the 2.0 era was for one or more of the largest bike brands to escape from the industry cycle of Perfect Competition and establish itself as both more successful and considerably more profitable than its competitors. As I said at the time, perfect competition is “a type of market in which there are many companies that sell identical or near-identical products or services and where none of them has enough market power to set higher prices on their products or services without losing business.”
Sound familiar? I thought it might.
(Note: a planned sequel to that piece never got written.)
To date, no major bike brand — with the very important exception of Schwinn and possibly a few other marquee names in the 1.0 era — has succeeded in beating the Perfect Competition trap. Even now, as an industry in the 4.0 era, we’re still collectively engaged in the same frantic race to the bottom that has been underway since the Bike Boom ended in 1975 and ushered in the 2.0 era.
That was 50 years ago. And yet here we still are.
What lies ahead
The trend of supplier-owned bike shops may be waning as brands discover what dealers have been telling them all along: it’s a lot tougher to run a profitable retail business than it may appear from the outside.
So now there’s a new season ahead of us and the essential mechanisms of Bike 4.0 are very much part of the picture.
First and second, the traditional retail sales channel has been replaced by an omnichannel sales "ecosystem" where buyers can purchase bikes through any channel they choose.
These options include traditional bike shops, consumer-direct sales by the enormous majority of brands, or Click & Collect services where the consumer buys (and pays for ) a bike through the supplier’s website and the product is delivered through a participating retailer. In any case, the bottom line of these two points is that virtually all major brands are now competing directly against their own dealer bases.
Third, in addition to this dilution of the specialty retail channel by traditional brands, we’ve seen the rise of new direct-to-consumer brands like Canyon and a host of e-bike labels including RAD Power, Aventon, and others. Interestingly, many of these consumer-direct brands (although not, as far as we can tell, Canyon) are now working to create networks of brick-and-mortar dealers of their own.
Finally, the vertical integration of suppliers and retailers (bike brands buying up bike shops) continues by at least some of the largest industry players, as we’ve seen with Trek, Specialized and the Pon group. However, this trend may be waning as brands discover what dealers have told them all along: It’s a lot tougher to run a profitable retail business than it appears from the outside.
Will brand-owned retailers prove a successful strategy in the long run? Only time will tell.
Nevertheless, as I said back in 2023, “Taken together, company-owned stores now represent more than a tenth of all retail businesses selling the Trek and Specialized brands … a very significant number, especially considering those shops tend to be located in the country’s largest and most strategically important markets.”
Suppliers across the country are still — still! —overstocked with excess inventory in some product classes. These bikes and equipment were originally ordered in a disproportionate response to the sudden surge of consumer interest in cycling during the COVID pandemic of 2020–2022.
My colleague Jay Townley was the first in the industry to identify this as the Bullwhip Effect, and the consequences are still being felt today — and, in fact, will continue to be felt well into the 2025 selling season. At the same time, consumer demand remains low despite massive discounts in affected product classes, and this will continue to be the case for the foreseeable future.
Meanwhile, between the supplier-driven discounts on overstocked inventory on the one hand and the tsunami of cheap (and in many cases, shoddy and even dangerous) products from overseas brands on the other, dealers are staring down the barrel of some of the lowest bike and equipment margins not just in recent history but ever, at least in my experience. (Perhaps some industry old-timers can set me straight if I’m mistaken, but that’s the way it looks to me.)
The only ray of sunshine on the dealer horizon is the elimination of the de minimis exception (the elimination last four days before President Donald Trump put it on hold, temporarily, last Friday).
As a longtime industry friend put it in a DM exchange recently, “This is the great equalizer. It now means [D2C] marketplace sellers will be on equal footing with brick-and-mortar sellers. My belief is B&M will be even more competitive as marketplace sellers will now have to pay freight, forwarders, tariffs, Section 301 tariffs, new 10%, etc. On small parcels this will easily double their cost.
“Retailers should be celebrating,” they continued. “This is one of the biggest wins for dealers in decades.”
They concluded by saying, “With e-commerce now neutral, it is the retailers’ opportunity to win back customers with selection, quality products, an inviting experiential selling environment, competitive price, immediate availability, exceptional customer care and great service.”
To which I can only add a heartfelt “Amen.” And good luck moving forward.
