It's fair to say that most (if not all) of us have made some kind of on-line bike-related purchase. Whether it was Clif Bars, a cassette, or a complete bike, there's no denying the convenience - and sometimes cost savings - when you point, click, and purchase.
But what happens after you enter your credit card details? Who are the people on the other end of the information superhighway tasked with quickly getting you your goodies? Honestly, I'd never given it much thought. Yet I'm always impressed with how a few minutes of web surfing results in a UPS truck pulling into my driveway a couple days later. Like magic, Brown Santa delivers direct to your door.
But… it's not magic. There's some serious business logistics behind successful cyber retailers. So Mtbr decided it was time to take a closer look. And who better to learn from than Chain Reaction Cycles, which by their own estimation is the world's largest on-line bike store based on metrics such as brands in stock (over 500), total skus (around 75,000), orders filled a day (7000), and different countries shipped to (typically 125 a month).
They also employ over 650 people and the website receives about 6 million visits a month. The 82-person customer service team is conversant in seven languages (English, French, Italian, Spanish, German, Russian, and Portuguese). And when the marketing team blasts out an email, there are 18 different versions to account for the language and local currency of the 1.4 million people in their database. It's a massively massive operation that, as industry observers know, may soon grow even larger if the impending merger with fellow on-line bike biz giant Wiggle is approved by government regulators.
But numbers, impressive as they may be, only tell part of the story. To dig deeper into the Chain Reaction Cycles story, we boarded a plane at Denver International Airport, and after a spate of delays and re-routes (typical, United), landed in Dublin, Ireland. Ninety minutes of bus travel later we pulled into downtown Belfast in neighboring Northern Ireland, which for those a little behind on their geography, is actually part of the United Kingdom. There to greet us at the bus station was Damien Duggan, Chain Reaction Cycles' head of international marketing, and as we would find out a few days later, a seriously talented bike rider.
For most of the next three days, the soft-spoken Duggan served as our tour guide. After a night of jet-lagged sleep, aided by Guinness from the tap of course, stop No. 1 was Chain Reaction's flagship retail store, which opened in 2011 in suburban Belfast. Frankly, this wasn't what we came to see. Concept stores are a dime-a-dozen in the U.S. And while impressive, this one didn't differ all that much from the likes of Performance, Trek, etc.
But it did serve what was clearly one of Duggan's primary objectives of our visit: to reveal the human faces of an operation that's oft demonized by some in the cycling industry, who call it a ruthless under-cutter bent on putting all the world's mom-and-pop brick-and-mortar bike shops out of business. Ironically, it was just such a shop that spawned Chain Reaction Cycles back in 1984. The big difference between that operation and so many others, however, is that it's adapted to an ever-changing economic landscape.
In 1998, the company dove into the mail-order business. "They bought a container of helmets, took out some magazine ads, and made it happen," explains Duggan, referring to the company's founding family, which includes parents George and Janice Watson, plus daughters Lola, Sabrina, and Georgina, and son Chris, who today serves as CRC's managing director. "When they sold all those helmets, they reinvested and brought in more product. And that has continued to be the way to this day, always putting money back in to invest in new stock and improved service."
The Watson clan has also excelled in spotting trends, and in 2000, they decided to plow company resources into a burgeoning phenomena called the Internet. The rest, as the saying goes, is history. "It literally opened up the world," says Duggan.
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This 10,000-square foot retail store has helped CRC connect to the growing cycling community in Northern Ireland (click to enlarge).
But as Duggan later pointed out, often in the world of business "when you are small, you want to be bigger, and when you're bigger, you at least want to be perceived as being smaller." So here we are in the smaller arm of Chain Reaction Cycles, which unlike the original 1984 bike shop space that's now occupied by a barber shop, is a gleaming 10,000 square foot modular operation that this evening will host about 200 people during one of the many club nights it hosts.
"We currently sponsor 14 clubs," reveals store manager Neil McGuigan, as he shows us around on a gray and rainy Tuesday morning. "We'll do events for most of them, food, music, workshops, and a chance to speak directly with representatives of brands. It's great interaction and it makes the consumer feel special and gets them to buy in for the long term."
This, interjects Duggan, is an important point - and not just as it relates to Chain Reaction Cycles. Indeed, his message is directed more at those who point angry fingers, criticizing his company's impact on local bike shops. "We don't want shops to go away, we started as a shop," says Duggan. "Now we have a retail store and we try to embed in the cycling community as much as possible. And that's the key. No matter what your business is, if you just open your doors and expect people to walk in it's not going to work. You have to offer something unique and of value. You cant just stand on your name. Engagement is such a big factor."
In the case of Chain Reaction Cycles, though, low prices, fast shipping, and rock solid customer service are another big factor, which we get to see up close later that day at one of four other installments that make up this company's impressive footprint. Visit No. 2 is to the main warehouse/showroom/customer service center. The giant building is located 20 minutes north of Belfast, in a suburban industrial zone. The showroom is essentially a small bike shop with one large caveat. If you cant find what you're looking for on the show floor, there's a multi-football-field sized warehouse just on the other side of the door behind the counter. And that warehouse literally has almost everything.
Indeed, most visitors simply cant wait even a day for what they want, so they come here, write the sku of the product their looking for on a small slip of paper, then pace around for a few minutes while someone fetches it for them. The primary purpose of this facility is not to satiate the hurried, though. It's to ship all manner of products to all manner of places - and do it quickly and efficiently. The goal is out the back door within 24 hours of when you click "buy."
This maze of rollers and conveyors is actually a well-orchestrated shipping machine (click to enlarge).
Being that this was my first visit to such a place, I have no points of comparison. But it was no less impressive to watch a click from Colorado quickly turn into a package of parts bound for Boulder. Each order (7000 a day, remember) is loaded into a central computer system. Then workers on the warehouse floor load up a roller cart full of plastic bar-coded boxes and begin filling them.
With direction from above, order fillers efficiently put together product shipments (click to enlarge).
The system's genius is that instead checking off items on a printed sheet of paper listing purchased items, each of the order fillers wears a headset that's connected to the Chain Reaction Cycles' version of Siri. And this Siri knows where everything is and the fastest way to get there via an alpha numeric system of aisles and rows. Think of it as the difference between a bike courier who knows a city like he's lived there all his life, and one who needs Siri to tell him where to go at every turn. Except in this case Siri is actually steering the proverbial bike.
"Basically the guys are picking 24 orders [the roller cart's capacity] via the best road map," explains Duggan. "And if there's part of an order that's in a far off part of the warehouse, someone on that side will get that item and there will be a consolidation of boxes at the end."
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Once all an order's items are together, they begin a short journey through a maze of conveyer belts and rollers, transferring from plastic box into cardboard, which is then stamped with the proper shipping label before it's loaded onto a shipping truck. A quick scan of outgoing parcels is like looking at name plates at a United Nations summit. Cyclists in Japan, Australia, Brazil, Singapore, Belarus, Spain, Norway, Russia, the U.K., and America will all soon be receiving some new bike-related item. On average, Chain Reaction Cycles ships 100,000 items a week, much of it at prices that cant be matched.
"How do we do that is a question we hear all the time," says Duggan. "Part of the answer is that we invest heavily in speculative buying. So if you don't mind last season's color, it's likely we'll have it at an exceptional price. At the same time we buy big volume from a lot of brands and we buy direct. That allows us to get better prices, which means better prices for the consumer."
Components are by far CRC's biggest seller. Shimano is the No. 1 brand with SRAM a close second. "We have the widest range of Shimano products in the world," claims Duggan. "I have a hard time believing anyone sells more Shimano than we do."
The 82-person customer service team is conversant in seven languages (English, French, Italian, Spanish, German, Russian, and Portuguese).
Of course with all those components going to all those places, customers are bound to need some advice from time to time. Who really can keep track or all the cycling industry "standards" anyway? "We do our best," says Sandra Pryce from her desk on the building's upper floor, where she overseas the customer service department. "And if we don't know the answer straight away, we're good at finding it."
Pryce, officially senior manager of customer operations, then walks us into a long rectangular room that's buzzing with the sound of service. From 7 a.m. to 6 p.m. seven days a week there is someone here to answer questions, provide guidance, and even deal with warranty issues. Pick up the phone, send an email, post on social media, or instant chat. The choice is yours. And do it in one of those seven aforementioned languages.
"A lot of people may not think about it, but it's actually pretty unique to have an in-house call center like this," notes Pryce of an operation that on average receives 12,500 contacts per week. "I've worked in outsourced situations. It's not the same. The culture of the business just doesn't come across. But we are here, so if someone calls and asks how big is certain jersey, one of the guys on my team can go grab it from the warehouse, put in on, and say, well I'm pretty skinny and the small fits me great."
Little wonder Pryce's team won a Customer Service Team of the Year award for all of Europe a few years back. "The main reason we won is that we have a process to get things fixed and don't just sort things out in a vacuum," she explains. "All 14 of our departments talk to each other, so we can utilize customer feedback to truly fix problems, not just take care of one person's issue until another person has the same issue."
Among those departments is the 42-person staff at yet another CRC warehouse (called Whitepark) that if emptied I'm convinced would provide more than enough indoor parking space for a blimp. Instead, it's packed only with "large items," including complete bikes, frames, wheels, forks, wind trainers and bike bags. Each aisle, about a dozen total, stretches several hundred feet in length. But it's the height of the shelving that separates one row from the next that's truly impressive. You literally have to crane your neck to see the top.
On these shelves are bikes, frames, wheels, forks, trainers and bike travel bags (click to enlarge).
What's the total value of inventory here?
"I don't even want to think about that," answers facilities manager Kenny O'Mahony. "It's all just boxes to me. I just hope I have enough space when new product comes in."
Good thing that on average O'Mahony and his crew fill one 40-foot trailer a day with product headed out to customers. "We had 115 orders for complete bikes come in today," adds O'Mahony. "We'll get through at least 80 of them before this shift ends."
Depending on the bike, that process includes some level of assembly as well as a pre-delivery inspection. If you're ordering from the U.K. your bike ships in a large box, meaning when it arrives at your door, all you have to do is attach the handlebars and pump up the tires, and you're ready to ride. U.S. buyers of complete bikes, which ship in smaller boxes, have to do a little more work, putting on wheels and such. But each bike comes with all the tools you need, plus a water bottle and some sports hydration mix.
O'Mahony's crew also handles all custom wheel build orders, which includes hundreds (if not thousands) of options, with rims and hubs coming from the likes of Shimano, DT Swiss, Hope, Mavic, Nukeproof and others. Turn time is 48 hours or less thanks to a forever busy three-man wheel building team who can each crank out a dozen wheels a day.
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The buzz of activity is no less furious at Chain Reaction Cycles' commercial offices, which is about 20 minutes from Whitepark. Along the way we pass the original CRC bike shop turned hair salon. It's crazy to think that this tiny storefront was genesis of the "blimp garage" and the rest of this sprawling operation, and it all started with a 1500-pound loan (about $2100US in 1984 money).
Now Chain Reaction Cycles is one of (if not the) largest on-line bike shops in the world, plus the umbrella company for what will soon be 10 house brands, including three bike lines, Nukeproof, Vitus, and Ragley. And of course if the Wiggle merger goes through, that number will expand even further.
"I'm strictly speaking for myself, but I believe house brands is a key part of the merger," guesses David Patten, CRC's head of house brand development. "They have certain expertise, we have certain expertise. Add it together and you'll be able to appeal to a very wide audience."
Key to Chain Reaction Cycle's expertise is an in-house R&D department that's tasked with everything from tweaking mountain bike suspension linkages to concepting pedals. Much of the design process is done in the virtual space, but the 15-person team also has the benefit of a 3D printer.
"Depending on the product, our goal with house brands is not to displace one of the primary brands we sell," explains Patten, using Park Tools and CRC's X Tools as an example. "We're competing with the brands below Park that people are buying based on price. Yes we get better margins there, but I also truly believe that the customer is getting a better value."
Value and performance are the calling card of CRC's biggest house brand, too. After pulling Vitus from the ashes of a slew of bad business deals by the former owner's of the once famed French road bike maker, Chain Reaction has slowly grown it into an all-encompassing two-wheeled consumer-direct outfit. "In 2011, Vitus consisted of six road bikes, six mountain bikes, and one city bike," recalls brand manager Simon Cordner. "This year we have 47 models across basically every cycling disciple from cyclocross to city to downhill."
The top-of-the-line Vitus Vitesse EVO Team is the same frame ridden by the UCI Continental squad An Post Chain Reaction (click to enlarge).
Cordner also concedes that Vitus used to be nothing more than a name stickered onto bikes "bought off the shelf" in Asia. "Now we design in-house," he says. "We also sponsor a UCI continental team, An Post Chain Reaction, that's been huge in the development of our road line. And this year we'll have at least two athletes racing the Enduro World Series on Vitus mountain bikes. We have come a long way in a short time."
Nukeproof is a similar story. Once a U.S.-based gravity-focused component maker, Chain Reaction bought the brand off the scrap heap, then slowly built it back up, adding bikes to the product line, and even sponsoring a World Cup downhill team that includes multi-time world champion Sam Hill.
But while significant, those team sponsorships seem less consequential than the final stop of our tour, the fun-filled Castlewellan Ride Center, which is also supported by Chain Reaction Cycles. Located about 45 minutes south of Belfast in the Mourne Mountains near the Irish Sea, this spider web of purpose built mountain bike trails is arguably the best reason to care about this company. It's not just a mass of Internet bots set on selling you last year's close-out products at cutthroat prices. By backing places such as Castlewellan, two other ride centers in Northern Ireland, countless events, plus loads of amateur teams and clubs, Chain Reaction Cycles has helped grow the sport. And you can't knock them for that.
Our tour guides on the trail, marketing boss Damien Duggan (right) and former Red Bull Rampage rider (and CRC athlete) Glyn O'Brien (click to enlarge).
"We'll probably always be best known for our range of products and great prices and service, because that is the standard we have set," says Duggan at the end of a muddy, but smile-filled ride. "But what we also want your readers to understand is the people behind Chain Reaction Cycles are truly passionate about cycling and the products that make that experience great."