Balance is key.

Specialized is going consumer-direct for complete bikes

New “Rider Direct” program offers the option of boxed bikes showing up right on your doorstep.

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“We will never sell bikes over the internet.” 

Those were the fateful words Specialized founder Mike Sinyard supposedly said on stage roughly 10 years ago at a dealer event where — despite the way the retail landscape was already changing at the time — he swore the company would continue in perpetuity to support its brick-and-mortar retailers and the traditional business model it’s long championed. 

Well, the times are a-changin’.

People have already been able to purchase Specialized parts and accessories from the company website and have those items delivered directly to their homes. But today, Specialized has announced to its dealers a new “Rider Direct” program that now includes the option to have complete bikes delivered consumer-direct for a nominal added fee. 

Yep, you read that correctly. You can now buy a Specialized bike online and have it show up in a box on your doorstep. The new programs will go live in select markets beginning February 1.

Multi-channel fulfillment options, but with tiered margins

Specialized says Ship to Home bikes will first be fully assembled and tuned, and then re-packed into a specific oversized box that will require very minimal re-assembly once it arrives at the buyer’s location. In essence, it’s not all that dissimilar to what wholly direct-to-consumer brands like Canyon, YT, State Bicycles, and countless others do already.

“With our Ship to Home option, we’ll help you choose the right bike and ship it right where you want it — pre-built and professionally test ridden,” reads Specialized’s official press release. “With just a few parts removed for shipping, your new Specialized will be ready to roll in a matter of minutes. No heart-wrenching wrench work necessary. Need help? A Rider Care Specialist is a phone call away. We can also connect you to a local retailer who knows, like, a lot about bikes.”

It’s important to point out here that while the Ship to Home, direct-to-your-doorstep fulfillment channel is new, the other options are still alive and well — mostly. Also, neither of the new fulfillment options apply to any of the company’s e-bikes.

Buyers can still go into a Specialized retailer and buy a bike the old-fashioned way. That person walks in, chooses a bike, pays for said bike, walks out with it, and the dealer gets their full margin.

Alternatively, that buyer can purchase their new bike off of the Specialized website and opt for “Specialized Delivery”, where a participating local dealer delivers it to their home, presumably with some level of initial support. In that setup, the dealer will receive 75% of their usual margin. The buyer will pay the same nominal added fee as Ship to Home (roughly US$50).

“We’ll bring your new bike directly to your home,” reads the Specialized spiel. “There, a professional technician will ensure it fits so well you can’t even tell where you end and the bike begins. Then, we’ll get your bike registered, go over basic maintenance, and have you take it for a spin.”

And finally, people can buy a bike online and pick it up in-store. However, in this setup, the dealer only gets half of their usual margin.

“Ship to Home and Specialized Delivery are two new ways for riders to receive product, how, when and where they want,” said Specialized performance public relations manager Kelly Henningsen. “Our retailer partners and network will always be a cornerstone of our business. This is a step we’re taking, hand in hand with our aligned retail partners. We’re excited to roll out more options to better serve riders!”

Tiered inventory, too

But how will Specialized handle inventory, you wonder?

As with just about every bicycle brand, Specialized divides its retailers into different tiers based on their level of financial commitment. But now, Specialized will not only consider itself to be a top-end Tier 1 dealer, but it will also be withholding 15% of its bike stock for its own direct-to-consumer inventory. In other words, Specialized will now not only be a direct competitor with its own top dealers, but even bigger dealers will essentially be bumped down a rung on the ladder in terms of how bikes will be allocated.

On the surface, all of this seems like a major degradation of retailer relations and financial support in terms of how they make their money. And indeed, there seem to be plenty of retailers who feel this way. That sentiment isn’t universal, though, at least based on comments from the owner of one multi-store chain who preferred to remain anonymous.

“They need to reach every rider they can in a way that every rider wants to buy,” they acknowledged. “They just want every rider to buy a Specialized however that person wants. If you live in the middle of nowhere, this is great. I’m a fan of direct-to-consumer when the bike shop is involved, even if it’s less margin because there’s so much work taken out of it for the dealer. But this new one … yeah, we may lose a few sales. It’s hard to know.”

The retailer I spoke to also brought up the issue of timing. At this stage in the calendar year, dealers have already placed their orders and made their commitments for the upcoming season — well before this wrench got tossed into the works. So even if a dealer is upset about this latest development, it doesn’t sound like there’s much they can do about it in the short term.

“Specialized isn’t stupid,” they said. “The timing is interesting. Pretty much every dealer has made their bets now for 2022 inventory, who they’re going to carry, and what they’re going to stock. Other than high-end bikes, we’re fully stocked. So really, everyone is kind of forced into seeing how this works out for them.”

The crystal ball is cloudy on this one

Without question, this is a big deal in terms of the bicycle retail landscape. And while opinions will definitely be mixed on this, Specialized likely had few options but to adapt with the times. Trek undoubtedly has its own direct-to-consumer system at the ready, and, along with similar competitor Pon, has been very busy buying up physical dealers over the years, whereas Specialized has not. Giant has a built-in advantage in that it manufactures its own bikes. And the direct-to-consumer business models of rapidly growing brands like Canyon and others are inherently more financially beneficial than the old way of doing things.

Given Specialized’s recent moves, no one should really have been totally surprised to see this. That said, how well Ship to Home and Specialized Delivery work in the coming months and years will certainly be interesting to watch — and we have lots of questions that can only be answered with time.

“We’re going to see how this plays out,” the anonymous retailer said. “But we’re going to wonder what it’s like to do business without Specialized. Specialized is running a business and they’ve got to do what they’ve got to do. But if it doesn’t work for us, we’re going to move on. I will feel betrayed if this betrays us.”

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