As Mad Men has largely taught the people who didn't already know it, the commerce of advertising traditionally existed by the agency's media function buying space and then reselling it to clients. The creative side of everything got done to win the business, but the shameless commerce was actually all in the media. That's a strong enough analogy to what we do here.
Let's take a two second look at what we percieve to be our strengths and weaknesses. We are good at wheel building, we are good at customer service and relations, we give well-informed and "as objective as we can be" advice, we're trustworthy, our prices are good to excellent, our selection is broad, and we do a good job connecting with people through the blog. We are bad at having a high margin product that either is percieved to be or is exclusive to us (carbon), our web site's shopping functionality is challenging, scaling our operations is a huge challenge, and the greater industry hates us.
All of the advice and wind tunnels and measuring this and observing that exists in service to selling wheels. We do all of that so we can do "our job," which is to monetize the situation by selling well made wheels. If there was a business in doing the other stuff without selling well made wheels, it would perhaps obviously be of great interest to us. There is not, but since scaling our business is very hard (compensating people to develop and execute the skill of building wheels to our standard isn't easy), we continually bat around ways of alternate monetization (now THERE'S a tortured B-School phrase for ya!) of the "foreplay" stuff we do. And selling stuff packaged with our knowledge but without our execution is likely the best route for that.
What do I mean there? Well, we're pretty sure that we build a set of (as an example) HED Belgium+ with T11s as well as anyone out there. We know how to vary the inputs (spoke type and number) to suit basically anyone. We have the spoke lengths to within like a quarter of a turn of optimal every time. We know how different tires are going to affect the build, and we know how the build is going to affect different tires. We just don't know if packaging that in an "everything but the build" way will work.
As stated, there's no business in spending however much time delivering this info to people without getting paid in any way for it. Part of that is just being in business, as every person who "walks into your store" doesn't buy. And it could easily be that for a lot of people, the thing that we more or less require you to buy in order to be a customer - the build - isn't the compelling way for us to provide transactional value. A lot of people want to build their own wheels, a lot of people have a buddy who'll do it for a six pack. Having owned that "buddy for a six pack" set of wheels, and having had that be a significant precursor to my position in the world right now, well... But in any case we've developed a body of knowledge that can provide transactional value without us actually building the wheels. And that's a far easier thing for us to scale.
Of course our conundrum (and I have a long-planned post about the harrowing conundra that face the industry at large) is the our pricing for built wheels is such that there's no across the board "$X discount" for getting an unbuilt set. We just plainly don't do pricing such that the cost of the build is factored as a standalone thing, and we know that that would be the first hurdle in this.
I guess this is something of a trial balloon. Is a "Blue Apron" approach, rather than us requiring you to dine in at our restuarant, a valuable option?
13 comments
Well Dave, one thing that I would ask myself if I were in your position is: “Are we making enough money?” Sure, you may be able to make more money in additional ventures or directions. But do you need to? Is the current business paying well or is it too close to the edge? There is something to be said for doing one thing very well. I realize that Wall Street convention is a constant need for expansion. But that approach is not always in the long-term interest of the company. You’re a smaht guy and must have thought about this already.Regarding the value or price of your actually building the wheels… I gave some thought to trying my hand at a wheel build. Knowing full well that my first set might not turn out too well. (They would probably be square, with my talents.) I priced out the parts and also looked at your builds. The price was pretty much the same for DIY versus November. Probably because you buy the parts in higher quantities and get a discount versus me buying one offs.Life is too busy to allow time for everything that I would like to do, such as learn to build wheels. I’d rather spend that time riding. Or sleeping. And I like the idea of getting the best possible parts in a wheel set built by people who really know and love the topic. I called you one day to ask some questions. You spent a crazy amount of time on the phone with me. That kind of enthusiasm and care helps sales. Although I do not know if it’s enough to sustain a business. Factoring in your advice, you had a wheel set that was exactly what I was looking for. So the stars were aligned and I ordered that recent feature build with the PowerTap. All is great. Along with buying my bike from the local shop, I can’t think of anything else I’ve purchased in several years that went so well from beginning to end. What I’m trying to say is that you do something very, very well. Expansion can be great. Just make sure that it really is in your interest to do so. Don’t expand just because you can.
You state in this article in the last sentence of the 2nd paragraph…"We are bad at having a high margin product that either is percieved to be or is exclusive to us (carbon), our web site's shopping functionality is challenging, scaling our operations is a huge challenge, and the greater industry hates us."The author's incorrectly spells the word perceived ☹ [refer to a basic mnemonic rule of thumb for English spelling].But who cares right as we are cyclists not pedantic grammarians.More importantly I note the following:● Carbon is not exclusive to anyone (poor example) and sooner or later you will be selling wheels which contain carbon in the rim structure in some form or another.● Your website shopping functionality is challenging to say the least. Something which is ridiculously simple to remedy.● If additional revenue requires relatively smaller and smaller additions to operating costs, then congratulations…your business scales!● the greater industry (the operative word being greater) does not know you. You can't hate what you don't know. Such attempt at propaganda will not distract the informed!I admire your courage.
Scott, Joe, Dr_LHA, Dave, and Chris – Thanks very much. What you've said is confirmation that what we're doing now is working reasonably well, and there's no way we're going away from doing that. So it's not either/or. We'll always build wheels.Jon W – A great question, and one I've generally carefully considered in my life. The job I most enjoyed prior to this was at a company that eventually sought growth which its market wasn't readily able to accommodate and did so at the expense of doing other, more critical functions, as well. That caused me to leave, shortly thereafter the company was sold, and it is absolutely no hyperbole to say that the company's market has suffered badly for the situation. But yes, overall, we do want to, and probably need to grow. Roy T – I blame "achieve" which breaks your mnemonic (as do many others – "weigh," "neighborhood," "sleigh" – but those are covered by another mnemonic). There's also no spell check in our site's blog function. So long as we aren't being pedantic, though, spelling errors are spelling errors and grammar errors are grammar errors. The sentence in which you call out my spelling error contains a significant grammar error, but no spelling errors, for example. This blog is about a 250 page book per year, there are tons of editing (or lack thereof) mistakes. There may even be some in this reply. On to your bullet points:- Nearly every carbon rim out there is either proprietary to a brand (as Rails were) or there is obfuscation by the brand as to where non-proprietary rims come from, or even that they are non-proprietary. As well, lots of wheel brands know who they've bought from, but have no clue who the actual manufacturer is. When we sold open mold carbons, we knew both, but our customers were told point blank that they were open molds. The vendor didn't sell at retail, and required us not to disclose them, so it wasn't relevant or allowed to say who the vendor was, but we were up front that it was not a proprietary shape. Of course this situation exists in alloy rims too. We've often joked that the Kinlin XR31T should have been called the "Our New Proprietary Alloy Rim" rather than XR31T, since that is what it's called by so many brands that sell it. But carbon is generally much higher margin than alloy, often in both $ and %, but basically always in $ terms. And when the work you do to transform a unit of product input into a unit of finished goods is the bottleneck, rather than carrying cost or access to available product, then margin $ becomes significantly more important than margin %. So yes, in fact, due to provenance exclusivity or arbitrage, carbon becomes exclusive and high margin. Additionally, you have precisely no idea whether we will sell any rims with carbon in the future. We certainly can right now, as we have dealer access to many carbon rim and wheel products. None of which are exclusive to us, but all of which are to the brands which would supply them to us. – I find your assertion that this is "ridiculously easy" to fix quite droll, as you've no idea the parameters and restraints we're working against on this. For starters, any clue how many different wheel variants it's possible to buy from us? But if you have an easy fix, we are so all ears you can't believe.- That isn't the case at present, so our business doesn't scale, hence the thoughts behind this post.- Some of the greater industry knows about us in specific, more of it doesn't. Some of the greater industry loves us in specific. Generally, the greater industry is ill disposed toward businesses like ours, which provide either execution or price efficiency which the typical bike shop struggles to match (a few examples of which are elucidated in the comments above), and are outside of the typical bike shop supply stream. Of course that is a situation for which the greater industry gets most of the credit, as wheel building as an in-house shop competency was largely done in by the industry's choice to transition to selling higher margin "wheel systems." Though we do have an incidental, bizarre, and quite unintentional relationship to Sean Spicer, I don't see us as making any attempt at propaganda. I see us (perhaps quixotically) trying to inform our audience about propaganda, but more often hyperbole, propagated by the greater industry, but there are two sides to every coin. Thanks
Ok, vocabulary duel over… dave wins! Back to bikes and language I can easily understand and follow!
Dave,I am not a customer of November because I like to build my own wheels. This does not save me money even if I value my time at zero dollars. I have found, through trial and error, that a spoke calculator is only so good. If I use an unfamiliar rim my method is now to send the rim to PWB and have them correctly size spokes. So yes I pay for their service and freight both ways. Works for me because I like learning but it makes no sense. So yes I would purchase a "kit" from you. I doubt that there are many like me who would dedicate so much time to building wheels instead of riding…….Good luck.Andy