dojo pre-order sales are moving along at a pace I'd call predictable. We saw a spike when we launched and it has been pretty steady since. My prediction is that this week will be steady on the slow side, but we will see a rapid acceleration next week, particularly if we get past 50 out of our target of 100 pre-orders. Then the sideline perspective will shift from, "I wonder if this thing is really going to happen," to "Oh crap, what if they hit 100 before I get my order in?" Note however that my confidence level on any predictions is pretty low. We have zero visibility into how many people will pre-order a dojo, which is exactly why we are doing a pre-order instead of buying 100 frames and hoping they sell. We'd have no visibility in that scenario either, but would be sitting on a lot of very expensive inventory. When your inventory is high and your cash is low, you have an incentive to discount heavily to keep cash flow going. We'd rather discount heavily up front so that the people who buy early get the best deals, instead of discount heavily in a year so the people who wait on the sidelines score. Also, inventory gluts have ruined other industries (just as Dave to talk about wind surfing). It's happening to cycling too and we don't want to be a part of it.
We're getting a lot of questions about the dojo pre-order. I'll share the most common ones here.
1. How many frames have been pre-ordered so far?
The answer to that one of course varies by day. We've taken to publishing the running tally on our Facebook page. Our dojo daily yesterday was 39 pre-orders out of our target of 100. We're collecting some interesting factoids in the process as well, which we also share there.
2. What happens if you don't hit 100 pre-ordered frames?
We really have zero interest in being in the year-round on-demand frame business. It's costly, risky, resource intensive and disruptive. So if the heart of that question is what will we do if the pre-order stalls out right now and we're not even halfway to our goal, the answer is that we're not going to finance the rest of the order ourselves and we will refund everyone's money. There is a grey area in there, for sure. If we get to 99, we'll bring the order up to 100 instead of refunding 99 customers' money. Same thing goes for 98. But not 49. So the mendoza line for where we would step in and finance the rest of the order is somewhere between 50% and 100%. That amount will depend on the total cash and profit we generate from the pre-orders that do come in. If someone pre-orders a frame, we don't generate a lot of additional cash to buy more frames. If someone buys a complete bike with a set of Rails, we have more cash to invest into the order. 70 complete bikes could finance the full order; 70 frames could not.
The other reason people are asking this question though is that they don't want to pre-order and still want to buy a bike from us. If we do end up financing part of the order, it means we will have frames in inventory. But the purchase flexibility around these frame will be orders of magnitude less than what you see in the pre-order. If we have to take on frame inventory, we will order only the sizes and color we think will sell fastest. And because of the risk, one of the options we are considering is not to offer framesets by themselves, but only sell inventory frames as complete bikes where we can add more value and still recover our investment more quickly. The pre-order is organized to give our customers the greatest range of options and value; when we sell out of inventory we have to put the business' needs in front of some customer flexibility. It's the only way the economics work. And with another direct selling bike company announcing last week that they had shut their doors, we're more closely attuned to risk management than ever.
3. Can I pre-order a frame now and add a gruppo and/or build kit later?
Absolutely, though you give up $200 in value if you wait on the gruppo and/or kit. Frames alone are $1045. When you tack on a gruppo or kit, the frame price drops by $200 (which is why our gruppo prices look so low - they're being subsidized by your frame purchase). If you add the gruppo later you will have paid $1045 for the frame not $845. So if the frame with gruppo and kit you're looking at is $2750 now and you only buy the frame, your total cost for the whole nut at delivery will be $2950. For complete bikes with Rails you will pay a little more more than the configurator indicates as Rails carry a pre-order discount if you buy them as part of a bike now. If you add wheels on later it will be at their current in-stock price. Even if you wait on the gruppo though, it's a pretty remarkable value.
Interestingly, we have received very few questions about the bike itself. If you have some or have additional questions about the pre-order process, use the comments here or drop us a note.