4 ms·

But what is causing the prices in US and EU to vary so much? Im a cyclist, and even with a race team discount, the EU prices are often 10% lower than through m

But what is causing the prices in US and EU to vary so much? Im a cyclist, and even with a race team discount, the EU prices are often 10% lower than through my LBS. Are Shimano and others just gouging in the US market because they can (and damn the impact on local retailers)?

ohmaigad 6y ago
Maybe the fact that EU has VAT? The final consumer price might be the same in US and EU but manufacturer can charge US retailers more because the sales tax is small compared to VAT.
- TheOtherHobbes 6y ago
  I'm curious about relative tariffs. If I buy an expensive custom modular synthesizer from the US, I'm going to get hit with import duties as well as VAT. As a business owner I can claim back the VAT, but the import duties are a non-trivial and non-recoverable extra. If buy a synthesizer from Thomann in the EU, I can also claim back the VAT. And there are no import duties - at least until January 2021 in the UK. So the final cost for a UK business buyer is 20% less than the nominal price. Does the US charge import tariffs on these items? I have no idea. But if it does, that would explain some of the differences. And it usually works the other way. The standard price in pounds for US tech sold in the UK is 1:1 with the US dollar price. The base iPhone 12 Pro Max is $1099 in the US. In the UK it's £1099, which is more than $1400. Even without VAT it's more than $1200. In Spain it's €1259, which is closer to $1500.
  - rahimnathwani 6y ago
    Don't forget state+city sales tax. In San Francisco that adds 8.5%.
  - Scoundreller 6y ago
    That US$1099 in the US is usually increased by 5-8% for sales tax. https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat... Duties are another funny thing. At least in Canada, bike stuff from China has variable duties: > Importing a complete, assembled bicycle will cost you 13 per cent in duty. If you're just bringing the frame in, that's a five per cent tariff, and if you're importing complete wheels, there's a 6.5 per cent tariff. So, if you import tires and rims separately (even in the same package), there's no tariff! Frame + other parts, and you only pay on the frame. https://www.cbc.ca/news/canada/british-columbia/what-you-need-to-know-about-bicycle-tariffs-1.5071380 https://www.cbc.ca/news/canada/british-columbia/what-you-nee...
trentnix 6y ago
It's a number of different things that contribute: - It's common for global manufacturers to sell products at different prices depending on regional market conditions. So EU distributers may get better pricing than US distributers. - Some retailers may be able to purchase products cheaper because of volume or preferential relationship. - Most commonly, the products beings old are actually OEM products originally sold at a significant discount to a bike brand (who have massive minimums, arbitrary product mix requirements - think a mountain bike brand buying road parts because that's the "package" Shimano sells to get favorable pricing, and big incentives to prevent them from purchasing from SRAM or some other parts manufacturer). The bike brand takes its excess parts and sells them "under the table" to a retail outlet (that they may have actually discretely partnered with at the outset). My opinion is that yes, Shimano, specifically, doesn't care about brick and mortar retailers. Shimano considers it a relic of the past and are partially unaware (or apathetic) of the reality that their actions and distribution model is accelerating the death of the brick and mortar shops. That said, Shimano USA might care about US brick-and-mortar retailers, but they don't have enough influence to prevent Shimano Global (Japan) to affect any real change. Shimano has seen steady growth, so they have no incentive to change. But that growth has been at the expense of the very partners that played a significant role in helping them gain market dominance. I'm generally of the opinion that, at least in the bike industry, the shops and online outlets selling massive volume at discount aren't really in any better financial shape than their mom and pop competitors. When I first got into the industry I was regaled with stories of success of competitors like The Clymb and how they were 'killing it'. Turns out, the only thing they were killing was themselves. The Clymb, despite assurances of their brilliance, sold back in 2015 for $100,000 despite millions and millions in sales (the buyer assumed 18.5MM in debt) - https://www.oregonlive.com/silicon-forest/2016/01/the_clymb_emerging_portland_ou.html https://www.oregonlive.com/silicon-forest/2016/01/the_clymb_...
- lumost 6y ago
  Reading this, I do wonder how long any middlemen will last in the age of the internet. Manufacturers don’t sell direct for a variety of reasons that steadily become less compelling as the costs and complexity of shipping, advertising, and retail management fall. How long before non tech firms follow the path of tech firms and sell direct?
michaelt 6y ago
> But what is causing the prices in US and EU to vary so much? In the UK (and perhaps other parts of Europe) manufacturers aren't allowed to force retailers to sell at a particular price. The manufacturer can 'recommend' a price (or indeed print a price on the package) but the retailer can sell for whatever price they want [1] Any binding 'minimum advertised price' or 'resale price maintenance' agreement would be price fixing, violating competition law. [1] https://www.gov.uk/government/publications/resale-price-maintenance-advice-for-retailers/resale-price-maintenance-advice-for-retailers https://www.gov.uk/government/publications/resale-price-main...
- lotsofpulp 6y ago
  As far as I know, it’s the same in the US. But a manufacturer can make a deal with a seller to not advertise lower than a certain price. Hence if you go to a retailer’s website, they might say you have to add the item to the cart to see the price.
  - michaelt 6y ago
    An agreement not to advertise an item lower than a certain price would be illegal in the UK, as indirect price fixing.
    - deleted 6y ago
      [deleted]
notatoad 6y ago
ChainReaction owns the bike brands Vitus and Nukeproof, so they're able to purchase whole groupsets from shimano at OEM pricing which is a massive discount over retail price. It's not the US market that is getting shafted by shimano, it's the entire retail components market. I've even seen groupsets in boxes on the shelf at bike shops, priced higher than bikes on the showroom floor with that same groupset installed. And somehow the bike retailers get furious at their own customers for seeking out the lower-priced options, instead of being furious with shimano for ripping them off.
- trentnix 6y ago
  I assure you, there is plenty of outrage directed at Shimano, over many years. And little has changed. Any retailer that is furious at their customers is misdirecting their anger, for sure. The customer would be a fool not to seek the lower-priced option.
- skeeter2020 6y ago
  >> able to purchase whole groupsets from shimano at OEM pricing which is a massive discount over retail price. This is false (unfortunately); while CR/Wiggle does sell their own bikes with Shimano builds this is no different than any other bike manufacturer, yet the trek or specialized at your LBS is still significantly more. You cannot purchase any Shimano parts at Chain Reaction.
  - notatoad 6y ago
    >You cannot purchase any Shimano parts at Chain Reaction. this is a relatively recent development, you could last year. i'm not sure if they've clamped down globally or just stopped shipping to north america. >this is no different than any other bike manufacturer it's different in that CR is a retailer as well as a manufacturer. I assure you that even if the situation has changed recently, they definitely were selling off their OEM parts. it wasn't some sneaky thing, they were literally advertising what they were doing.

ohmaigad 6y ago

Maybe the fact that EU has VAT? The final consumer price might be the same in US and EU but manufacturer can charge US retailers more because the sales tax is small compared to VAT.

TheOtherHobbes 6y ago
I'm curious about relative tariffs. If I buy an expensive custom modular synthesizer from the US, I'm going to get hit with import duties as well as VAT. As a business owner I can claim back the VAT, but the import duties are a non-trivial and non-recoverable extra. If buy a synthesizer from Thomann in the EU, I can also claim back the VAT. And there are no import duties - at least until January 2021 in the UK. So the final cost for a UK business buyer is 20% less than the nominal price. Does the US charge import tariffs on these items? I have no idea. But if it does, that would explain some of the differences. And it usually works the other way. The standard price in pounds for US tech sold in the UK is 1:1 with the US dollar price. The base iPhone 12 Pro Max is $1099 in the US. In the UK it's £1099, which is more than $1400. Even without VAT it's more than $1200. In Spain it's €1259, which is closer to $1500.
- rahimnathwani 6y ago
  Don't forget state+city sales tax. In San Francisco that adds 8.5%.
- Scoundreller 6y ago
  That US$1099 in the US is usually increased by 5-8% for sales tax. https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat... Duties are another funny thing. At least in Canada, bike stuff from China has variable duties: > Importing a complete, assembled bicycle will cost you 13 per cent in duty. If you're just bringing the frame in, that's a five per cent tariff, and if you're importing complete wheels, there's a 6.5 per cent tariff. So, if you import tires and rims separately (even in the same package), there's no tariff! Frame + other parts, and you only pay on the frame. https://www.cbc.ca/news/canada/british-columbia/what-you-need-to-know-about-bicycle-tariffs-1.5071380 https://www.cbc.ca/news/canada/british-columbia/what-you-nee...

trentnix 6y ago

It's a number of different things that contribute: - It's common for global manufacturers to sell products at different prices depending on regional market conditions. So EU distributers may get better pricing than US distributers. - Some retailers may be able to purchase products cheaper because of volume or preferential relationship. - Most commonly, the products beings old are actually OEM products originally sold at a significant discount to a bike brand (who have massive minimums, arbitrary product mix requirements - think a mountain bike brand buying road parts because that's the "package" Shimano sells to get favorable pricing, and big incentives to prevent them from purchasing from SRAM or some other parts manufacturer). The bike brand takes its excess parts and sells them "under the table" to a retail outlet (that they may have actually discretely partnered with at the outset). My opinion is that yes, Shimano, specifically, doesn't care about brick and mortar retailers. Shimano considers it a relic of the past and are partially unaware (or apathetic) of the reality that their actions and distribution model is accelerating the death of the brick and mortar shops. That said, Shimano USA might care about US brick-and-mortar retailers, but they don't have enough influence to prevent Shimano Global (Japan) to affect any real change. Shimano has seen steady growth, so they have no incentive to change. But that growth has been at the expense of the very partners that played a significant role in helping them gain market dominance. I'm generally of the opinion that, at least in the bike industry, the shops and online outlets selling massive volume at discount aren't really in any better financial shape than their mom and pop competitors. When I first got into the industry I was regaled with stories of success of competitors like The Clymb and how they were 'killing it'. Turns out, the only thing they were killing was themselves. The Clymb, despite assurances of their brilliance, sold back in 2015 for $100,000 despite millions and millions in sales (the buyer assumed 18.5MM in debt) - https://www.oregonlive.com/silicon-forest/2016/01/the_clymb_emerging_portland_ou.html https://www.oregonlive.com/silicon-forest/2016/01/the_clymb_...

lumost 6y ago
Reading this, I do wonder how long any middlemen will last in the age of the internet. Manufacturers don’t sell direct for a variety of reasons that steadily become less compelling as the costs and complexity of shipping, advertising, and retail management fall. How long before non tech firms follow the path of tech firms and sell direct?

michaelt 6y ago

> But what is causing the prices in US and EU to vary so much? In the UK (and perhaps other parts of Europe) manufacturers aren't allowed to force retailers to sell at a particular price. The manufacturer can 'recommend' a price (or indeed print a price on the package) but the retailer can sell for whatever price they want [1] Any binding 'minimum advertised price' or 'resale price maintenance' agreement would be price fixing, violating competition law. [1] https://www.gov.uk/government/publications/resale-price-maintenance-advice-for-retailers/resale-price-maintenance-advice-for-retailers https://www.gov.uk/government/publications/resale-price-main...

lotsofpulp 6y ago
As far as I know, it’s the same in the US. But a manufacturer can make a deal with a seller to not advertise lower than a certain price. Hence if you go to a retailer’s website, they might say you have to add the item to the cart to see the price.
- michaelt 6y ago
  An agreement not to advertise an item lower than a certain price would be illegal in the UK, as indirect price fixing.
  - deleted 6y ago
    [deleted]

notatoad 6y ago

ChainReaction owns the bike brands Vitus and Nukeproof, so they're able to purchase whole groupsets from shimano at OEM pricing which is a massive discount over retail price. It's not the US market that is getting shafted by shimano, it's the entire retail components market. I've even seen groupsets in boxes on the shelf at bike shops, priced higher than bikes on the showroom floor with that same groupset installed. And somehow the bike retailers get furious at their own customers for seeking out the lower-priced options, instead of being furious with shimano for ripping them off.

trentnix 6y ago
I assure you, there is plenty of outrage directed at Shimano, over many years. And little has changed. Any retailer that is furious at their customers is misdirecting their anger, for sure. The customer would be a fool not to seek the lower-priced option.
skeeter2020 6y ago
>> able to purchase whole groupsets from shimano at OEM pricing which is a massive discount over retail price. This is false (unfortunately); while CR/Wiggle does sell their own bikes with Shimano builds this is no different than any other bike manufacturer, yet the trek or specialized at your LBS is still significantly more. You cannot purchase any Shimano parts at Chain Reaction.
- notatoad 6y ago
  >You cannot purchase any Shimano parts at Chain Reaction. this is a relatively recent development, you could last year. i'm not sure if they've clamped down globally or just stopped shipping to north america. >this is no different than any other bike manufacturer it's different in that CR is a retailer as well as a manufacturer. I assure you that even if the situation has changed recently, they definitely were selling off their OEM parts. it wasn't some sneaky thing, they were literally advertising what they were doing.