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BOOM goes the dynamite!
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There was one...when you couldn't get shimano shipped to the US from the UK sellers. It didn't give an exact date for the "rest" of the EU, but it was a great big warning that it was coming sooner rather than later.
It was mentioned in passing in the Memorial Day sale thread, but didn't get much attention and someone even said US prices are comparable (debatable, but whatev).
 

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There was one...when you couldn't get shimano shipped to the US from the UK sellers. It didn't give an exact date for the "rest" of the EU, but it was a great big warning that it was coming sooner rather than later.
there wasn't really a clear heads-up from https://www.bike-discount.de like there was from CRC and the other german vendor. But yes i guess this should have been assumed. I didn't assume it would shut down. I figured they would hold out longer.

I only had a few shimano parts in my basket from https://www.bike-discount.de, but a sad day indeed. Most of my bulk orders were already placed, this last order was remnants. Oh well, on to begging for deals from USA retailers.
 

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The bike industry sure has some shady practices to avoid competition and fix prices. I have no clue how they've gotten away with it for this long.
Funny you mention this, I was thinking about this just the other day after a convo with some friends and I was wondering the same thing.

A lot of them seem really oriented towards propping up bike shops (essentially limiting competition), which is unfortunate because it means consumers suffer and everyone loses, but also seems a bit sketchy. An already expensive sport becomes more expensive and out of reach. There is next to no competition when it comes to certain brands (primarily SRAM) due to their MAP policies and I expect you'll see the same for Shimano soon, both of which were intentional targeting certain retailers.

The ones that seem even shadier are the ones prohibiting sales of bikes and components outside of your immediate area, mainly bike manufacturers.

All of these policies seem targeted at limiting competition more than anything else, I suspect the only reason they've gotten by so far is that they are a lower profile industry and no one has bothered trying to take them to court over it. It is annoying, though, because it means we pay 30%+ over what other parts of the world do
 

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Funny you mention this, I was thinking about this just the other day after a convo with some friends and I was wondering the same thing.

A lot of them seem really oriented towards propping up bike shops (essentially limiting competition), which is unfortunate because it means consumers suffer and everyone loses, but also seems a bit sketchy. An already expensive sport becomes more expensive and out of reach. There is next to no competition when it comes to certain brands (primarily SRAM) due to their MAP policies and I expect you'll see the same for Shimano soon, both of which were intentional targeting certain retailers.

The ones that seem even shadier are the ones prohibiting sales of bikes and components outside of your immediate area, mainly bike manufacturers.

All of these policies seem targeted at limiting competition more than anything else, I suspect the only reason they've gotten by so far is that they are a lower profile industry and no one has bothered trying to take them to court over it. It is annoying, though, because it means we pay 30%+ over what other parts of the world do
I took a coworker to a bike shop yesterday on my lunch just to introduce him to what a real bicycle looks like. The one person who was working there talked about how it was "spring" and that their inventory was low. Then he rattled off about how they could order 5 or 6 different brands, many of which would be familiar to most people. If this is what the bike shop is becoming, perhaps the price fixing and anti-competitive behavior will keep them alive for a few more years, but if not, let them die.

I've tried to support bike shops for years, but I can only leave the house and walk into a brick and mortar so many times and be told "we don't have it, but we can order it" so many times before I stop even trying. I can order it too, thanks. I don't need them for that.
 

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I took a coworker to a bike shop yesterday on my lunch just to introduce him to what a real bicycle looks like. The one person who was working there talked about how it was "spring" and that their inventory was low. Then he rattled off about how they could order 5 or 6 different brands, many of which would be familiar to most people. If this is what the bike shop is becoming, perhaps the price fixing and anti-competitive behavior will keep them alive for a few more years, but if not, let them die.

I've tried to support bike shops for years, but I can only leave the house and walk into a brick and mortar so many times and be told "we don't have it, but we can order it" so many times before I stop even trying. I can order it too, thanks. I don't need them for that.
I like my LBS a lot, they are great folks and have good inventory. Most importantly, their mechanics aren't idiots and they've helped me out a lot, but I know I'm in the minority since we have such good shops here.

I've been in or interacted with many shops that just are awful. I don't think it should be up to manufacturers to prop these businesses up, especially at the cost of the consumer and the overall industry.

In any case, I was more interested in the legal side of it. It seems to me that these practices are exactly what antitrust laws were put in place to regulate.
 

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I like my LBS a lot, they are great folks and have good inventory. Most importantly, their mechanics aren't idiots and they've helped me out a lot, but I know I'm in the minority since we have such good shops here.

I've been in or interacted with many shops that just are awful. I don't think it should be up to manufacturers to prop these businesses up, especially at the cost of the consumer and the overall industry.

In any case, I was more interested in the legal side of it. It seems to me that these practices are exactly what antitrust laws were put in place to regulate.
I like my LBS a lot, too. The shop I went to yesterday was not a shop I've been to before. I am not impressed with their inventory, though. If I can't browse or see the product in person, I am sure I won't really need it. I do wonder if they realize how easy it is to make an irresponsible impulse purchase just because one can leave with the bike that very instant. 100% of those possible sales are lost on me, because they just don't have the inventory for that to ever happen.

I agree with you that the legal side is somewhat interesting. The bike componentry industry is basically a textbook oligopoly. Even bike companies themselves, large and small, engage in practices to bully their retailers into charging full MSRP for the product. I personally have a serious problem with that and so I don't buy things I would be happy to buy, for competitive market prices.
 

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It certainly is an interesting legal question, and at least here in the US, there are a lot of cases where other similar structures are allowed to persist. If you think about it, a lot of these structures that may be technically against the law, are allowed to persist because certain people lack the motivation to enforce the law.

Compare to the beer distribution structure in this country. In some ways, it's even more anticompetitive than the bike parts distribution system.

The automotive industry has some practices you could argue are problematic, too. They're pretty tied into a particular structure, and they don't like it when other companies show up and try to compete against that structure. Tesla's showroom/sale model, as a recent example. The traditional automakers have been behind lobbying efforts to get states to prohibit Tesla's showroom/sales model. But there are a number of examples of small automakers who have been "put under" by the major ones over the decades.

Dairy prices are actually regulated by the governments (California example: https://www.cdfa.ca.gov/dairy/Milk_Pricing_Works.html) and that's been occurring for quite awhile and is seemingly accepted. There's probably been legal challenges to the system, and precedent for permitting it to continue.

I simply don't see anything happening in the US that would change the structure of product sales in the bicycle industry anytime soon.
 

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There are (were?) two primary drivers of cheap bike parts via Europe:
1) MAP (minimum advertised price) agreements are generally illegal in Europe
2) retail taxes are generally higher in Europe than US

With Euro retailers not facing legal limits on lower price boundaries, and shipments to the US being exempt from VAT as high as 19%, the resulting prices to USA buyers from aggressive Euro retailers were often very attractive.

The belated response from Shimano has been to impose regional sales boundaries on the Euro retailers. Unlike MAP practices, this tactic is (apparently) legal in Europe. So Shimano still can't directly control the retail pricing of Euro dealers, but they can block the shipments out of Europe, which effectively shuts down the EU-to-US distribution channel.

Meanwhile, back in the USA, the bike part retailer generally does not have the freedom to price however they please. Rigidly enforced MAP policies are legal here, and have been influencing industry sales practices for literally 100 years (see US vs Colgate 1919). Shimano, or any manufacturer/brand, can generally dictate minimum retail pricing, so long as they (a) do it consistently across their dealers, and (b) present it as a take-it-or-leave-it choice. They don't force the dealer to sell Shimano (or not) and the pricing boundaries are same/similar for all the dealers. The FTC rationalizes this policy as being competitive / good for the consumer, because it (may) create more competition among manufacturers. This is debatable, but certainly in a bike component market that is arguably an oligopoly or even duopoly, that competition doesn't seem to be resulting in low prices.

This policy is disappointing to many of us, but it unfortunately has a long legal precedent, so I don't see it changing because of any legal action. No court is going to undo a century of precedent. Given the near-zero enforcement of anti-trust in this country for many decades (even against massive industries with blatant anti-consumer behavior), and the current political skew toward even more "free" market policies, I don't see the bike industry coming under any scrutiny.

But other forces may change things.

Legal or not, there is a valid question as to Shimano (or their peers) motivation. Wouldn't they sell more if the retail price on their parts were lower? Intuitively the answer seems yes -- basic supply/demand, lower price = higher volume. But presumably the Shimano's of the world have done more sophisticated analysis and come to different conclusions. They must believe that the value of an intact/diverse dealer network results in more sales/profit than a highly competitive, less diverse network that has no price boundaries. And/or they fear losing control and influence if a handful of giant retailers sold their parts at cutthroat margins. That calculus could change at any time.

Another element is the increasing leverage of large retailers (Amazon, Walmart). If enough Shimano or SRAM volume starts moving through those channels, then those retailers may gain leverage to influence things. Imagine Amazon telling Shimano "I'm happy to sell $200M of your product, but I won't sign your MAP agreement". And given the legal requirement for consistent application, once one retailer goes no-MAP, then it could soon be a free for all.

In the meantime, where's the cheapest M8100 12sp stuff? ;)
 

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Discussion Starter · #17 ·
Nice Analysis. Thank you. Its disappointing. XT Drivtraian for the main 4 pieces is only about $100 or so more expensive than than the EU. XTR pushes $300. The brakes are where the prices really differ. A set of 4POT XT brakes (prior gen) from bike24 are 1/2 the price of US Retailers. New XTR 4POT are $325 a brake at Jenson. They are about $350 a pair at Bike24. Again. Wish I'd pulled the trigger when I had the chance.

If you're going XT for just the main 4 pieces of the drivetrain, you won't save too much now until volume picks up and regular discounting sets in later in the next 12 months is my guess. Could be wrong.
 

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Meanwhile, back in the USA, the bike part retailer generally does not have the freedom to price however they please. Rigidly enforced MAP policies are legal here, and have been influencing industry sales practices for literally 100 years (see US vs Colgate 1919). Shimano, or any manufacturer/brand, can generally dictate minimum retail pricing, so long as they (a) do it consistently across their dealers, and (b) present it as a take-it-or-leave-it choice. They don't force the dealer to sell Shimano (or not) and the pricing boundaries are same/similar for all the dealers. The FTC rationalizes this policy as being competitive / good for the consumer, because it (may) create more competition among manufacturers. This is debatable, but certainly in a bike component market that is arguably an oligopoly or even duopoly, that competition doesn't seem to be resulting in low prices.

....

once one retailer goes no-MAP, then it could soon be a free for all.
None of this explains Jenson's Shimano prices.
 

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There are (were?) two primary drivers of cheap bike parts via Europe:
1) MAP (minimum advertised price) agreements are generally illegal in Europe
2) retail taxes are generally higher in Europe than US

With Euro retailers not facing legal limits on lower price boundaries, and shipments to the US being exempt from VAT as high as 19%, the resulting prices to USA buyers from aggressive Euro retailers were often very attractive.

The belated response from Shimano has been to impose regional sales boundaries on the Euro retailers. Unlike MAP practices, this tactic is (apparently) legal in Europe. So Shimano still can't directly control the retail pricing of Euro dealers, but they can block the shipments out of Europe, which effectively shuts down the EU-to-US distribution channel.

Meanwhile, back in the USA, the bike part retailer generally does not have the freedom to price however they please. Rigidly enforced MAP policies are legal here, and have been influencing industry sales practices for literally 100 years (see US vs Colgate 1919). Shimano, or any manufacturer/brand, can generally dictate minimum retail pricing, so long as they (a) do it consistently across their dealers, and (b) present it as a take-it-or-leave-it choice. They don't force the dealer to sell Shimano (or not) and the pricing boundaries are same/similar for all the dealers. The FTC rationalizes this policy as being competitive / good for the consumer, because it (may) create more competition among manufacturers. This is debatable, but certainly in a bike component market that is arguably an oligopoly or even duopoly, that competition doesn't seem to be resulting in low prices.

This policy is disappointing to many of us, but it unfortunately has a long legal precedent, so I don't see it changing because of any legal action. No court is going to undo a century of precedent. Given the near-zero enforcement of anti-trust in this country for many decades (even against massive industries with blatant anti-consumer behavior), and the current political skew toward even more "free" market policies, I don't see the bike industry coming under any scrutiny.

But other forces may change things.

Legal or not, there is a valid question as to Shimano (or their peers) motivation. Wouldn't they sell more if the retail price on their parts were lower? Intuitively the answer seems yes -- basic supply/demand, lower price = higher volume. But presumably the Shimano's of the world have done more sophisticated analysis and come to different conclusions. They must believe that the value of an intact/diverse dealer network results in more sales/profit than a highly competitive, less diverse network that has no price boundaries. And/or they fear losing control and influence if a handful of giant retailers sold their parts at cutthroat margins. That calculus could change at any time.

Another element is the increasing leverage of large retailers (Amazon, Walmart). If enough Shimano or SRAM volume starts moving through those channels, then those retailers may gain leverage to influence things. Imagine Amazon telling Shimano "I'm happy to sell $200M of your product, but I won't sign your MAP agreement". And given the legal requirement for consistent application, once one retailer goes no-MAP, then it could soon be a free for all.

In the meantime, where's the cheapest M8100 12sp stuff? ;)
Great info, thanks.

None of this explains Jenson's Shimano prices.
AFAIK Shimano hasn't implemented MAP yet, just regional boundaries.
 
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