Let's talk about the biggest elephant in the room !
I see that nobody has the courage to speak publicly about Shimano.
I am not thinking to talk about the products. Shimano products are great, I have them on four of six bikes I own and I really like them. The components are always good, no matter the range, either it is entry level or high end you know the result.
If you are in production, then you will certainly know that this stability of quality is the most difficult thing to achieve and Shimano has done this. Kudos to them for this !
What nobody is talking about is their business practice and their way of working with the factories that produce bicycles !
Last week while visiting factories I had the pleasure to cross paths with Shimano's sales team. Actually I was going one day behind them. Thanks to this I could hear comments from the sourcing and product development teams about the way they are treated and what they have to do in order to be able to keep their production going.
What I have learned in short:
- There is constant lack of goods fear communicated to the factories. Things like you better place the order for 2025 or we can't guarantee you deliveries! Or we came out with new product lineup and you must cancel all and make completely new orders for 2023 and 2024 right away, everyone is doing it already and if you don't maybe you wont receive the goods on time! This is killing the people and making planning of production in the bike factories NOT possible at all.
- Delivery date confirmations are not given for up to one year after the order has been placed! This tends to be the situation even few months before the delivery is requested! How can a factory plan it's bike production or sales like this?
- There are no possible negotiations about any terms of sales. Zero ! So you get the Excel sheet and you place the order. You cant negotiate the price, payment terms, delivery date...absolutely nothing that you would usually negotiate about. This maybe thanks to the brands strength that they can dictate their own terms and that there are examples in other industries. But the big problem is that the ones I know are all in the consumer brands for end users and distributors, not in the component supply industries. This has happened in the automotive once to VW, when their one supplier gained monopoly on the market, so they had to stop their production because of this, which in return cost them tens of millions of euros. Never again happened afterwards.
- Payment terms are so difficult that most factories take out special loans from the banks just to accommodate these orders. I hear that factories must pay five months in advance so that their orders could be produced and delivered. I don't know about any other supplier in the bike industry working like this. In five months a factory can basically use your money to purchase the materials and to do the complete production. So huge business without any investment in materials or labor, you have all of the cost and profit on top from your customer to do the production. Perfect for you, but bike factories are dying in the meantime and some might go bankrupt because of this.
- You are always shown some graphs recently that are supposed to be market indicators and used by bike magazines, but which are damn fixed by the sales teams to sell you a story. One of the reasons why we have overstocks these days is that these graphs were trusted and fixed to accommodate the narrative.
- Not one factory of any component has been moved to Europe as a result of our industry increasing it's size. If we had some factories here it would mean much better service, resilience and delivery times for us. Even with close to 15 million units made here we don't have any component made in Europe. Does this mean we are not important and expected to become obsolete in the future?
- you can add you experience here....
So when writing all of this down I am not sure what to make of it, really like the brand but I am asking myself is this brand actually good for the bike industry and cycling in general ?
On top of that many questions comes to mind:
Is the European bike industry being used?
Do we have to finance our suppliers to be able to get the components to do the production on top of us financing our customers and dealers?
How can we expect to get serious investments in our industry with this much money being tied up in our productions ?
Do we have any other options in the sort term ?
Can we as a group negotiate with Shimano to change it's business practice?
I sincerely hope that our relationship becomes better and more fair very soon.
Otherwise I would certainly look for a solutions to all of the problems in my business really fast.
Worked at Trek selling Gary Fisher, LeMond, and Bontrager. Salesman of the Year, Parts Salesman of the Year,Retired CEO Abici Bicyle Company .US Navy Veteran-Defense Intelligence Agency. 2 time USA Cycling Champion.
2 年Shimano is killing itself and SRAM is loving it.
LEV/Cargo bike designer, Bicycle company owner, racer, engineer, inventor, designer
2 年Shimano has always been the elephant in the room. At least since the 90's. Forced component compatibility. Proprietary standards, etc. That is one big reason why Grip Shift (SRAM) came about. Not to mention newer players like Box Components. (free plug Toby)
Owner bicycle.engineering, co-founder of ARC8
2 年As a small customer of Shimano, we actually experience very good support from Shimano, probably the best of any of the big component brands out there.
Consultant for Bike Industry & Events
2 年I think it is a phenomenon of market monopoly with the patent control over wide-range of products. Shimano’s advantage lies in its scale and cost, they have a complete range of products from low-end to high-end with the patent protection, and it leads to the fact that there are not many producers in global bike industry.?
Bicycle Workshop Coordinator Europe
2 年Behaving as you might expect for a company that has had close to a monopoly in the bike industry (in the West at least) for well over a decade. They call the shots and know that no significant bike manufacturer, wholesaler or retailer can live without them! However their slow reaction post Covid (understandable given they don’t want to find themselves overstretched when the market stabilises) has given space to not only Campagnolo and SRAM, but also Microshift, Sensah and L-TWOO. I see this continuing given the high prices of the new groups (105 7100 for example)