Distributor vs. Dealer vs. Jobber on parts.

[seankanary]

Good morning fellas. I'm curious as to how you go about gathering components when you build up your frames. My day job is in the automotive world and I have several accounts with various vendors that give better rates to shops rather than full retail. I assume cycling components work the same way? For the gentlemen that build multiple customer bikes a year, how do you go about establishing these relationships with parts manufacturers?

[fortyfour]

The same applies in the cycling industry. I have several direct OE accounts with component manufacturers (Fox, Cane Creek, Stan's, Chris King, Industry Nine, Paul Components, Phil Wood, Shimano, Hayes, ENVE to name a few) and I have a few accounts with distributors (QBP, Security Bicycle Products and a few others). The M.O. is a simple phone call, introduction and kind request/inquiry regarding establishing an OEM account. Some don't require much of anything while others require everything including the kitchen sink with signatures and handshakes. All need some sort of proof that you are a business so web url, images of your shop inside and out, Federal ID No., references from other OE accounts, proof of liability insurance, state resale number (NH does not require one, so I have to state this each time with a link to the Secretary of the State's web address covering this), etc.

When I first started there were more questions and some I could not get because I was missing a requirement or 2. Now if I call, most already know my work (which feels good) and I have all the bases covered with any requirement they may have. But all of my future relationships started with establishing relationships with Paragon Machine Works, Henry James, Nova Cycles, Wicks Aircraft Supply (I used to use Dillsburg Aeroplane Works but they went out of business), McMaster Carr, Air Gas East, etc. I had built a history of on time cash sales through these trusted shops. I know that's small but it helped when I got my very first cycling industry specific OEM account because I had already established a list of references who could vouch for my trustworthiness if needed.

[Todd Mosley]

Even as a hobby builder, I've had some component makers set up an OEM account for me. Just call and ask like Kris said.

[Will Neide]

Kris is right. As a hobby builder you can get some decent small OEM accounts set-up, but if you are serious, insurance is a must. A lot of the major distributors, dealers, etc. require some proof of insurance.

[seankanary]

Thanks for the info gentlemen. I appreciate the time =)

[dgaddis]

QBP and BTI will not give me an account because I don't have a brick and mortar shop, and ENVE wanted an initial order of something like $12,000...so I don't have an ENVE account lol.

Hawley has been great to work with (and they're only an hours drive from me, so I get stuff next day with standard shipping and if I needed to I could just drive up there to pick up some parts), J&B was fairly easy as well, and most hub/rim manufacturers were easy to set up accounts with also.

[-HvA-]

ENVE wanted an initial order of something like $12,000...so I don't have an ENVE account lol.

Can anybody who has an enve account comment on this? Seems crazy and I don't see a lot of small (even full time) builders putting down this type of cash for an initial order...

[sam]

I dont remember the exact amount but enve does have a high pre-order for bike shops. Not sure if it applies to OEM, they are sold through qbp as well so makes it easy for the person who only needs a pair or two a year.

Dont mean to sidetrack the thread, or start a war. But just to say it I dont like the idea of a hobby builder getting an OEM account, what is the definition of hobby versus professional- well im not sure where to really draw the line- but I figure a minimum of legitmate business identity, tax id, insurance, etc.
I have seen many people get accounts only to get cheap prices for themselves, friends, garage mechanics, ebay sales, etc. and these all hurt the industry. Im not saying any of the good people on here would do any of that, but if you open the doors to everyone, you will get some who will, I feel the industry needs to be firmer on who gets an account. Anyway sorry for the rant, and please dont feel I was pointing the finger at anyone in this thread, it just got me thinking about it.

[fortyfour]

Can anybody who has an enve account comment on this? Seems crazy...

I have an ENVE account and recently (new for 2013 I believe) they created tiers for their pricing for framebuilder's based on annual sales as I understand it. The tiers are broken down into Standard OEM/Builder pricing and Premier OEM/Builder pricing. Minimum opening order for standard builder is $500 while Premier requires 20k annual sales with 10k up front orders and 10k in future forecast orders. I believe that is where the above is coming from? With premier account status from my understanding, you enjoy additional perks regarding margins, net terms and a few others including the online builder profile. So these account tiers are based on sales.

For a small builder, if a client can afford to spec an ENVE seat post, fork, bars and stem on their build, and you have all your "technicality requirement ducks" in-line, you're pretty much covered on that first order. Just a pair of their wheels will do it and some too.

[e-RICHIE]

Agreed 100 percent atmo -

<cut> I dont like the idea of a hobby builder getting an OEM account, what is the definition of hobby versus professional- well im not sure where to really draw the line- but I figure a minimum of legitmate business identity, tax id, insurance, etc.
I have seen many people get accounts only to get cheap prices for themselves, friends, garage mechanics, ebay sales, etc. and these all hurt the industry. Im not saying any of the good people on here would do any of that, but if you open the doors to everyone, you will get some who will, I feel the industry needs to be firmer on who gets an account. Anyway sorry for the rant, and please dont feel I was pointing the finger at anyone in this thread, it just got me thinking about it.

The professional community gives away a lot vis-à-vis (That's French...) advice, pic pages, and mentoring. I think discussing how to buy wholesale or set up OEM accounts, when framebuilding is not your means of income, can lead to a downward spiral and a bad use of these threads.

[fortyfour]

Don't mean to sidetrack the thread, or start a war. But just to say it I dont like the idea of a hobby builder getting an OEM account...

I don't agree with this either. However, it's up to the OEM's judgement who gets an account of which is completely out of my hands. For the builder who is working towards becoming a full time professional, I suppose every bit helps. Personally, I did not go after any of these OEM accounts until I was building for paying clients, had a shop and for those that required it, invested in liability insurance - there was no point to putting the cart before the horse and rushing into things. There were more important needs of the business than getting "OEM pricing". But what I did do early on was to contact the likes of QBP, BTI, Fox and other component OE's regarding what was required of me so I had some goals to work towards, which also helped me to set up some stepping stones on my path of business growth. And just simple legitimate business practice in this industry. So on that note, there is nothing wrong with anyone reaching out and inquiring but the real filters need to start at the OEM.

In addition, it's the responsibility of the OEM account holder to adhere to some standards too and not abuse the trust and leverage on pricing they have been granted by distributors and component manufacturers. That can't be stressed enough so as not to further foster an environment of 'bro-deals".

[Todd Mosley]

Dont mean to sidetrack the thread, or start a war. But just to say it I dont like the idea of a hobby builder getting an OEM account, what is the definition of hobby versus professional- well im not sure where to really draw the line- but I figure a minimum of legitmate business identity, tax id, insurance, etc.
I have seen many people get accounts only to get cheap prices for themselves, friends, garage mechanics, ebay sales, etc. and these all hurt the industry. Im not saying any of the good people on here would do any of that, but if you open the doors to everyone, you will get some who will.

Agreed 100 percent atmo -
The professional community gives away a lot vis-à-vis (That's French...) advice, pic pages, and mentoring. I think discussing how to buy wholesale or set up OEM accounts, when framebuilding is not your means of income, can lead to a downward spiral and a bad use of these threads.

Your points are valid and it's definitely a touchy subject. For the ones I've dealt with, I've been very up-front with what I'm doing. I had a lengthy discussion with one manufacturer and in their view, from an economic standpoint, the 100-50 frame a year builder vs. a hobbyist has a negligible impact to their bottom line when compared to orders from the Trek's and Specialized of the bike industry. The way they see it, they are bike geeks and they are glad to assist other bike geeks. I appreciate that gesture and I don't want to screw it up. So, I won't say which companies will extend OEM pricing, other than that some will if you do the asking.

[e-RICHIE]

Your points are valid and it's definitely a touchy subject. For the ones I've dealt with, I've been very up-front with what I'm doing. I had a lengthy discussion with one manufacturer and in their view, from an economic standpoint, the 100-50 frame a year builder vs. a hobbyist has a negligible impact to their bottom line when compared to orders from the Trek's and Specialized of the bike industry. The way they see it, they are bike geeks and they are glad to assist other bike geeks. I appreciate that gesture and I don't want to screw it up. So, I won't say which companies will extend OEM pricing, other than that some will if you do the asking.

Well I suppose if we don't charge for the information then we can't judge those who rearrange the distribution system because the economy sucks atmo.

[dgaddis]

Can anybody who has an enve account comment on this? Seems crazy and I don't see a lot of small (even full time) builders putting down this type of cash for an initial order...

I have a wheel building business, and am not a frame builder. They may have a different policy for frame builders.

[blasdelf]

My day job is in the automotive world and I have several accounts with various vendors that give better rates to shops rather than full retail. I assume cycling components work the same way?

Not entirely, distribution in this business is kinda fucked up, and in different ways depending on where you are in the world. Overall things are the least fucked from the perspective of the little guy in western europe and the UK, the importers play a much bigger (and undeserved in the 21st century atmo) role here in the US. It gets worse in Canada, and is nightmarishly fucked in Australia — you might pay the distributor a 50% premium over the street price and get less warranty support than if you'd just bought it retail from overseas!

Basically for a wide spread of high-end components not made in the US, any american consumer can get it cheaper online one bike at a time than a LBS can get it from their distributors even buying a dozen bikes worth.

For some stuff there's enough middlemen high up in the chain that the european street price is similar to what QBP is paying!

For the gentlemen that build multiple customer bikes a year, how do you go about establishing these relationships with parts manufacturers?

Direct manufacturer relationships are another story and a lot better, especially for small american companies.

A lot of them offer special OEM accounts to small bike companies and framebuilders are doing decent volume — the bike builder effectively gets to pay the prices that a distributor would, so they can offer competitive prices to their customers while still making healthy margin on the deal.

Once a framebuilder graduates to that level it makes so much more sense to sell complete bikes, everybody involved gets a better deal, especially on suspended mountain bikes.

[Jonathan]

Having gone through the process somewhat recently I only came across one vendor who didn't request my proof on insurance as well as other business info.

[seankanary]

I appreciate the info and insight. To Sam and e-Richie, I have no intention to undercut the gentlemen that do this for a living. The reason I asked wanted to ask is that I have purchased quite a bit of parts and components here recently, probably more than say a hobbyist, and I have to get more here soon. I'm all about supporting my LBS, but my thought is that if I need to by the same stuff...over and over, it would be nice to get a small discount on quantity. With my automotive job, they have different tiers. Some stuff we qualify for distributor status with a nice discount, some stuff just a jobber status with a small but noticeable discount.

[e-RICHIE]

I appreciate the info and insight. To Sam and e-Richie, I have no intention to undercut the gentlemen that do this for a living. The reason I asked wanted to ask is that I have purchased quite a bit of parts and components here recently, probably more than say a hobbyist, and I have to get more here soon. I'm all about supporting my LBS, but my thought is that if I need to by the same stuff...over and over, it would be nice to get a small discount on quantity. With my automotive job, they have different tiers. Some stuff we qualify for distributor status with a nice discount, some stuff just a jobber status with a small but noticeable discount.

No worries here atmo. It sounds like a good conversation to have with the LBS. After all, he's the one who's in business here.

[EnginCycles]

Agreed 100 percent atmo -



The professional community gives away a lot vis-à-vis (That's French...) advice, pic pages, and mentoring. I think discussing how to buy wholesale or set up OEM accounts, when framebuilding is not your means of income, can lead to a downward spiral and a bad use of these threads.

AMEN.


To contribute and not rant (I erased the rant) the only thing that matters for any business is your credit. Your word of mouth is worthless and all that speaks is getting credit (I do not mean a loan but an established rating of credit). The key to success is cash flow and having 90-120-150 days to pay for something is very important. This allows you to sell the goods before you own them. This is super helpful. If you have the money and want to spend it then get the 2% net 10 and save some money. Heck some even offer 5% net 7 which can really add up. All these savings are only available to people with open lines of credit.

I am very invested in Shimano. They take very good care of my business and in return I try 100% of the time to sell it. Options only make a mess of everything. Like what you like and sell what you like. If people agree they will knock on your door. Can't cater to everyone.

-Drew

[e-RICHIE]

Words for a framebuilder to live by atmo -

Options only make a mess of everything.
Like what you like and sell what you like.
If people agree they will knock on your door.
Can't cater to everyone.
-Drew