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Thursday
Apr132017

Mad Wheel Men

As Mad Men has largely taught the people who didn't already know it, the commerce of advertising traditionally existed by the agency's media function buying space and then reselling it to clients. The creative side of everything got done to win the business, but the shameless commerce was actually all in the media. That's a strong enough analogy to what we do here. 

Let's take a two second look at what we percieve to be our strengths and weaknesses. We are good at wheel building, we are good at customer service and relations, we give well-informed and "as objective as we can be" advice, we're trustworthy, our prices are good to excellent, our selection is broad, and we do a good job connecting with people through the blog. We are bad at having a high margin product that either is percieved to be or is exclusive to us (carbon), our web site's shopping functionality is challenging, scaling our operations is a huge challenge, and the greater industry hates us.  

All of the advice and wind tunnels and measuring this and observing that exists in service to selling wheels. We do all of that so we can do "our job," which is to monetize the situation by selling well made wheels. If there was a business in doing the other stuff without selling well made wheels, it would perhaps obviously be of great interest to us. There is not, but since scaling our business is very hard (compensating people to develop and execute the skill of building wheels to our standard isn't easy), we continually bat around ways of alternate monetization (now THERE'S a tortured B-School phrase for ya!) of the "foreplay" stuff we do. And selling stuff packaged with our knowledge but without our execution is likely the best route for that. 

What do I mean there? Well, we're pretty sure that we build a set of (as an example) HED Belgium+ with T11s as well as anyone out there. We know how to vary the inputs (spoke type and number) to suit basically anyone. We have the spoke lengths to within like a quarter of a turn of optimal every time. We know how different tires are going to affect the build, and we know how the build is going to affect different tires. We just don't know if packaging that in an "everything but the build" way will work.

As stated, there's no business in spending however much time delivering this info to people without getting paid in any way for it. Part of that is just being in business, as every person who "walks into your store" doesn't buy. And it could easily be that for a lot of people, the thing that we more or less require you to buy in order to be a customer - the build - isn't the compelling way for us to provide transactional value. A lot of people want to build their own wheels, a lot of people have a buddy who'll do it for a six pack. Having owned that "buddy for a six pack" set of wheels, and having had that be a significant precursor to my position in the world right now, well... But in any case we've developed a body of knowledge that can provide transactional value without us actually building the wheels. And that's a far easier thing for us to scale. 

Of course our conundrum (and I have a long-planned post about the harrowing conundra that face the industry at large) is the our pricing for built wheels is such that there's no across the board "$X discount" for getting an unbuilt set. We just plainly don't do pricing such that the cost of the build is factored as a standalone thing, and we know that that would be the first hurdle in this.

I guess this is something of a trial balloon. Is a "Blue Apron" approach, rather than us requiring you to dine in at our restuarant, a valuable option?

 

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Reader Comments (13)

To answer your final question, take out is not a wise purchase for me... I have gotten reasonably good at performing my own bike maintenance, and love the idea of building my own set of wheels, but it seems just outside of what I'm willing to take a run at knowing that there is an aweful lot than can go wrong, and I'd rather not find myself stranded 30 miles from home or descending at 45 mph.

I'll just ride!! You guys do what you do!

April 13, 2017 | Unregistered CommenterScott

Going the other way, you don't seem to be charging all that much extra for a built set of wheels compared to identical or almost identical DIY build kit prices out there.

April 13, 2017 | Unregistered CommenterJoe Bond

My feeling is that there are already guys out there selling the parts for self builders (e.g. BHS, BDop, and/or any number of online shops). Although I harbor the desire one day to try building my own set of wheels, the value I got from your wheels is in the build quality, at I'll admit, a significantly lower price than my LBS could offer (who also don't have your rep for build quality).

I guess the big question you need to ask yourselves if you're going to start supplying build kits is: what's the cost of after-sales support?

April 13, 2017 | Unregistered CommenterDr_LHA

What Scott said. I'm happy to pay someone who builds regularly for the piece of mind that comes with wheels that are well built.

April 13, 2017 | Unregistered CommenterDave

I own 2 sets of your wheels but realistically, wheels are not a frequent purchase item. But I still come on your site to read what's going on and get better informed. It seems the scalable and repeatable part of your your business is in tires, tubes, and other such consumables.

The edge you have vs other online retailers is your advice and credibility. Maybe having more articles or tables on what tires, tubes, sizes, weights, etc. for different rims, purposes, etc. will make your site a reference for those items and lead to sales. or even link it to Amazon, etc. who can do all the fulfillment.

April 13, 2017 | Unregistered CommenterChris K

Well Dave, one thing that I would ask myself if I were in your position is: “Are we making enough money?” Sure, you may be able to make more money in additional ventures or directions. But do you need to? Is the current business paying well or is it too close to the edge? There is something to be said for doing one thing very well. I realize that Wall Street convention is a constant need for expansion. But that approach is not always in the long-term interest of the company. You’re a smaht guy and must have thought about this already.

Regarding the value or price of your actually building the wheels... I gave some thought to trying my hand at a wheel build. Knowing full well that my first set might not turn out too well. (They would probably be square, with my talents.) I priced out the parts and also looked at your builds. The price was pretty much the same for DIY versus November. Probably because you buy the parts in higher quantities and get a discount versus me buying one offs.

Life is too busy to allow time for everything that I would like to do, such as learn to build wheels. I’d rather spend that time riding. Or sleeping. And I like the idea of getting the best possible parts in a wheel set built by people who really know and love the topic. I called you one day to ask some questions. You spent a crazy amount of time on the phone with me. That kind of enthusiasm and care helps sales. Although I do not know if it’s enough to sustain a business. Factoring in your advice, you had a wheel set that was exactly what I was looking for. So the stars were aligned and I ordered that recent feature build with the PowerTap. All is great. Along with buying my bike from the local shop, I can’t think of anything else I’ve purchased in several years that went so well from beginning to end.

What I’m trying to say is that you do something very, very well. Expansion can be great. Just make sure that it really is in your interest to do so. Don’t expand just because you can.

April 13, 2017 | Unregistered CommenterJon W

You state in this article in the last sentence of the 2nd paragraph..."We are bad at having a high margin product that either is percieved to be or is exclusive to us (carbon), our web site's shopping functionality is challenging, scaling our operations is a huge challenge, and the greater industry hates us."
The author's incorrectly spells the word perceived ☹ [refer to a basic mnemonic rule of thumb for English spelling].
But who cares right as we are cyclists not pedantic grammarians.
More importantly I note the following:
● Carbon is not exclusive to anyone (poor example) and sooner or later you will be selling wheels which contain carbon in the rim structure in some form or another.
● Your website shopping functionality is challenging to say the least. Something which is ridiculously simple to remedy.
● If additional revenue requires relatively smaller and smaller additions to operating costs, then congratulations…your business scales!
● the greater industry (the operative word being greater) does not know you. You can't hate what you don't know. Such attempt at propaganda will not distract the informed!
I admire your courage.

April 14, 2017 | Unregistered CommenterRoy T

Scott, Joe, Dr_LHA, Dave, and Chris - Thanks very much. What you've said is confirmation that what we're doing now is working reasonably well, and there's no way we're going away from doing that. So it's not either/or. We'll always build wheels.

Jon W - A great question, and one I've generally carefully considered in my life. The job I most enjoyed prior to this was at a company that eventually sought growth which its market wasn't readily able to accommodate and did so at the expense of doing other, more critical functions, as well. That caused me to leave, shortly thereafter the company was sold, and it is absolutely no hyperbole to say that the company's market has suffered badly for the situation. But yes, overall, we do want to, and probably need to grow.

Roy T - I blame "achieve" which breaks your mnemonic (as do many others - "weigh," "neighborhood," "sleigh" - but those are covered by another mnemonic). There's also no spell check in our site's blog function. So long as we aren't being pedantic, though, spelling errors are spelling errors and grammar errors are grammar errors. The sentence in which you call out my spelling error contains a significant grammar error, but no spelling errors, for example. This blog is about a 250 page book per year, there are tons of editing (or lack thereof) mistakes. There may even be some in this reply. On to your bullet points:
- Nearly every carbon rim out there is either proprietary to a brand (as Rails were) or there is obfuscation by the brand as to where non-proprietary rims come from, or even that they are non-proprietary. As well, lots of wheel brands know who they've bought from, but have no clue who the actual manufacturer is. When we sold open mold carbons, we knew both, but our customers were told point blank that they were open molds. The vendor didn't sell at retail, and required us not to disclose them, so it wasn't relevant or allowed to say who the vendor was, but we were up front that it was not a proprietary shape. Of course this situation exists in alloy rims too. We've often joked that the Kinlin XR31T should have been called the "Our New Proprietary Alloy Rim" rather than XR31T, since that is what it's called by so many brands that sell it. But carbon is generally much higher margin than alloy, often in both $ and %, but basically always in $ terms. And when the work you do to transform a unit of product input into a unit of finished goods is the bottleneck, rather than carrying cost or access to available product, then margin $ becomes significantly more important than margin %. So yes, in fact, due to provenance exclusivity or arbitrage, carbon becomes exclusive and high margin. Additionally, you have precisely no idea whether we will sell any rims with carbon in the future. We certainly can right now, as we have dealer access to many carbon rim and wheel products. None of which are exclusive to us, but all of which are to the brands which would supply them to us.
- I find your assertion that this is "ridiculously easy" to fix quite droll, as you've no idea the parameters and restraints we're working against on this. For starters, any clue how many different wheel variants it's possible to buy from us? But if you have an easy fix, we are so all ears you can't believe.
- That isn't the case at present, so our business doesn't scale, hence the thoughts behind this post.
- Some of the greater industry knows about us in specific, more of it doesn't. Some of the greater industry loves us in specific. Generally, the greater industry is ill disposed toward businesses like ours, which provide either execution or price efficiency which the typical bike shop struggles to match (a few examples of which are elucidated in the comments above), and are outside of the typical bike shop supply stream. Of course that is a situation for which the greater industry gets most of the credit, as wheel building as an in-house shop competency was largely done in by the industry's choice to transition to selling higher margin "wheel systems." Though we do have an incidental, bizarre, and quite unintentional relationship to Sean Spicer, I don't see us as making any attempt at propaganda. I see us (perhaps quixotically) trying to inform our audience about propaganda, but more often hyperbole, propagated by the greater industry, but there are two sides to every coin.
Thanks

April 14, 2017 | Unregistered Commenterdave

Ok, vocabulary duel over... dave wins! Back to bikes and language I can easily understand and follow!

April 14, 2017 | Unregistered CommenterScott

Dave,
I am not a customer of November because I like to build my own wheels. This does not save me money even if I value my time at zero dollars. I have found, through trial and error, that a spoke calculator is only so good. If I use an unfamiliar rim my method is now to send the rim to PWB and have them correctly size spokes. So yes I pay for their service and freight both ways. Works for me because I like learning but it makes no sense. So yes I would purchase a "kit" from you. I doubt that there are many like me who would dedicate so much time to building wheels instead of riding.......Good luck.

Andy

April 14, 2017 | Unregistered CommenterAndy

All I know and care about as a rider is quality and ultimately value. The decision years ago to buy a set of open molds built by you guys was a great decision. The build quality is top notch and they are still as true as the day I bought them. I have since had other sets built by my LBS wheel builders that didn't hold a candle to the November build.

It has taken time, but I have come to appreciate the value of a well built wheelset by pros that do just that for a living, and would never consider buying a build kit so a buddy could build em for a six pack. The reality is I could source the November parts and build them up anywhere. However, to me the real value is in the quality of the build, research behind the component mix and knowing the November people take pride in their product that goes beyond raking in huge mounds of cash (although that is nice too!).

Looking forward to a wheelset for my new cx bike! Looks like you have put together some sweet options!

Cheers

April 14, 2017 | Unregistered CommenterShep

I have three unrelated thoughts on the questions you pose:

I know this is does not track precisely with your Blue Apron analogy, but didn't November have some experience as a wholesale supplier back in the days of the Rail? I seem to remember that you sold (or licensed) the Rails to a British wheel builder. Did that experience help make a financial dent?

As to your question on interest in selling a "DYI kit of parts" package, I would imagine the market for customers wanting to and have the expertise to build their own wheelsets is far smaller than those who purchase a ready to ride set. Where the Blue Apron analogy fall apart is that the DYI cooking business is predicated on the fact that most everyone already has a kitchen and nearly all of the cooking implements to successfully make the meal. Building you own set of wheels includes an additional investment in tooling that not many people have. I guess, however, those willing to build their own wheelsets may have already invested the time and materials to be able to do so.

Even if there is a very small market for the "Blue Apron" box of wheel parts, what is the cost to November to at least offer that package? Perhaps you only sell a few of those packages a year. Aren't they a few more packages than you would otherwise be selling?

April 19, 2017 | Unregistered CommenterJoe

Andy, Shep, Joe -

Thanks. Basically, this setup will provide value to those for whom it is applicable, detracts nothing from our regularly scheduled programming, and is easy to execute while adding value. While we wouldn't offer or be able to be an on-demand live chat "now how do you build a wheel now?" service, for anyone who knows how to build a wheel or is committed to learning and has basic tools, it becomes easier and less error-prone.

We do prep and check work that other component or kit suppliers simply don't - chamfering spoke holes the correct way, verifying brake track parallel, checking rim joints, etc. We shipped a set of rims today (we've had the rim sales page set up for a while) and the customer who's getting those will open up a pair of rims that are at exactly the same stage as they'd be when we'd start lacing them. I've also seen incorrect spoke lengths in kits, and our spoke lengths are more exact out of the gate - we size in .5mm increments instead of 2mm increments. That resolution maybe isn't 100% necessary as rim ERDs vary spoke to spoke by a little bit and the effective "good range" of a nipple/spoke thread interface is somewhat north of a mm anyway, but it's one of those shoot for absolute and you'll usually wind up pretty freaking close deals.

Barriers to entry on wheel building are basically non-existent. You don't need a commercial kitchen to build a set of wheels - if you believe the internet, a spoke key and a roll of duct tape put you into business with the big boys. The only things keeping us off the street are our knowledge, our experience, and our reputation. They've taken a long time to build and we guard them zealously, but that's about as high a barrier to entry as we can create.

Wholesaling wasn't a good fit for us, but that doesn't have strong crossover to this. If anything the biggest problem we had there was being intermediated in customer experience. That doesn't happen here.

Plus my wrists are getting wicked prone to tendonitis. Having quality work that's a little lower physical impact go out the door is just super.

April 19, 2017 | Unregistered Commenterdave

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