Trying to understand the industry

[cfrone1]

Well those distributors are providing services.

1) They are a central point for placing orders. Imagine ordering all your components from individual manufacturers, both large and small with all their different ordering systems.
2) Same with the manufacturer side. They deal with the distributors and maybe some online sales, as opposed to trying to deal with a thousand bike shops.
3) Storage/warehousing is done at the distributor, not at the manufacturer. This is huge.
4) Shipping costs can be a killer if everything is individual, as opposed to multiple manufactures shipping tons of individual orders.

Maybe I missed it, but no one also mentioned that the manufacturers do not want to deal with 10,000 consumers daily calling them for bro deals/stickers/warranty issues/"will this fit my bike" questions/sponsor me/returns/etc. By using distributors and bike shops, it eliminates 95% of those headaches and lets them concentrate on manufacturing. When I repped for a major bike company in the early 90's, I saw the numbers that Jim V. referenced....it was astounding! But the extra layers of distribution costs was far more reasonable vs. the cost of building the infrastructure for each small company to do it all themselves. I remember when QBP was just another small, piss ant distributer with a tiny catalog. It took them a long time to become the behemoth they are now, (along with some really good management and some luck as well).

 

[sundaydoug]

Maybe I missed it, but no one also mentioned that the manufacturers do not want to deal with 10,000 consumers daily calling them for bro deals/stickers/warranty issues/"will this fit my bike" questions/sponsor me/returns/etc.

The funny thing about this is that manufacturers still need to deal with the daily deluge of bro-deals/stickers/warranty issues/"will this fit my bike" questions/sponsor me/returns/etc.

It just comes from the retailers instead of the consumers.