November's Economics

Not to make you nod off again like you did in Micro 1, but there are some simple economics behind the way we do things that set us apart.  

The basic problem at hand is that you want a bike in which you have complete confidence, that performs well, that appeals to you on some aesthetic level, and that doesn’t cost more than you sensibly wish to pay.  Bike brands wish to satisfy your needs while maximizing their economic reward for doing so.  This shouldn’t be some dirty secret, nor do we feel that it’s in any way evil.  People should be rewarded for their work in bringing products successfully to the market.  We’d sure like to be.  

The difference between November and most bike brands is in the path our bikes take to get to you.  The factories that actually produce most of the world's frames and other parts do so both under contract and on their own.  What this means is that they have customers (the brands you know), who bring them an engineered design, for which the factory builds the mold and then produces the bikes, to be sold only to the brand whose design that is.  The bigger companies have very strict relationships with their producers, and the production coming from those molds is tightly controlled and not sold to anyone else.  But many factories also design bikes in house, and produce them to be sold as "white label."  What this means is that any brand or entity that meets the minimum order requirements can buy these frames wholesale and label them as their own.  This is how November, as well as a scope of brands which would probably shock you to learn, sources our frame set and carbon rims.  The frames and rims we sell aren't "knock offs" or last year's model of anything.  They are products designed, engineered and built by companies that are entirely focused on carbon engineering and fabrication, specifically for bicycles. 

Taiwan, once an outpost for cheap contract manufacturing, has become a technology and quality leader for composites engineering and manufacture.  For most brands, sourcing in Taiwan offers unbeatable advantages in quality, cost, reliability and technology.  China, absolutely unsurprisingly, is making a steady push to become the world’s bike frame maker.  Many frames which are produced in one place are labeled and marketed as being sold in another place, if that's confusing enough.  For example, a frame built in Taiwan may be eligible to be labeled as "Made In Italy" as long as the frame is painted in Italy and the components are installed in Italy.  It's a complex situation that clouds the fact that the dominant majority of high quality carbon frames are built in Taiwan, as ours are.  There is obviously cache in marketing a frame as being made in Italy, or Spain, or the USA, but in reality the most skilled labor force and highest quality production facilites are in good old Taiwan.  After the frame is built, the frame and its components, at some level of completion, are shipped to the brand.   An excellent explanation of this is available here.

This explains how the same exact frame can be sold under multiple brands, which does in fact happen every day.  Oftentimes, a brand will buy enough of the production of a certain frame that it will gain territory exclusivity, which is why certain brands are sometimes unable to sell into certain markets.  For example, if a large brand in Europe is buying the same frame as our Wheelhouse frame in large quantities, the manufacturer would likely grant that brand exclusivity for the entire European market and we would not be able to sell our frame there.  We have arranged partial exclusivity, which guarantees our ability to sell what we think is the best engineered, best performing, best looking, and highest value frameset available, but it is actually possible that another brand would sell the same frame in the US.  If this were to happen, we still believe that our process and business structure make buying from November a less expensive and better experience. 

A lot of smaller, boutique-type brands take great pains to disguise the fact that their frames are catalogue items from a manufacturer in Taiwan.  They put a fancy graphics package on them, and tell wondrous stories about the engineering and technological advancements that their frames represent.  We agree that there is some fine technology and engineering in those frames, since we had a chance to buy the exact same frames and sell them as our own.  We've been very impressed by the quality of the products available, which is part of the reason why we're so comfortable talking about our sourcing process, but we're not going to invent some story about how we had top riders prototype bikes and incorporated their feedback into our design.  It would be just as much BS coming from us as it is from a lot of other boutique brands out there. 

There are significant differences between manufacturers.  Quality and consistent engineering and manufacturing practices distinguish some, while others are primarily distinguished by low costs.  Among both of these groups, reliability of delivery is a major point of differentiation.  So, as “easy” as it is to buy Taiwanese frames, getting what you want is a matter of making important decisions which will ultimately dictate the quality of your product and your ability to deliver it to your customers.  

While we source our frames and carbon rims just like many other companies do, November diverges from its competitors from that point forward.  Our focus is strictly to get the product in your hands, with the components you select, with as little added cost as possible.  To this end, there are places where we can’t save: engineering costs what it does (although, fortunately, it’s a buyer’s market for bicycle design engineering talent), the aforementioned molds cost plenty, carbon ain’t cheap, and the frame factories need to make money.  Shipping and import tariffs are a fact of life as well.  

Here are some ways in which we are able to bring you frames and wheels inexpensively enough to make you skeptical of them (why do you think we’re going this far to explain how we’re doing what we’re doing?):

1. Supply chain.  We have a partner in Taiwan.  He is our agent with the factory.  When you buy a frame or rims from us, the factory makes their money, our agent takes a commission, and we make money.  Once the product leaves the factory, there are essentially three people who put the bike in your hands.  That’s it.  Most other brands will ship to the bike company, and the bike company ships it either to a distributor or directly to a dealer.  The factory makes their money, the bike company makes money, the wholesaler makes money, and the retailer makes money.  Without going into what the exact numbers are in each step of the process, it adds up quickly.  As a bike racer, looking for a good bike to race on, none of these links in the chain really adds a lot of value to you, but you wind up paying for them just the same.  

2. Inventory.  Keeping all of those shiny bikes and wheels on the shop floor just in case some eager buyer walks in to buy one of them costs money.  Not only do you have the overhead cost of displaying the merchandise in an attractive, brightly lit store on a busy retail corner and the staff on hand to sell it to you (the costs of which are captured in the supply chain above), you have the cost of paying for something while it sticks around hoping to be sold.  Often, the bike companies pay these costs for the dealer through a floor plan program.  In order to beat the Sword of Damocles hanging over their heads if they don’t sell the bikes in time to pay the manufacturer, a shop might, in some rare instances, direct you to something that may be near enough to what you’re looking for – but what they really need to turn into cash, NOW!  Cost of capital varies with a million different factors, but it always costs money.  We keep inventory low.  Really low.  When we do have overhead, it’s bought and paid for, and stored as cheaply as we can do it.   And since we have such a focused product line, we’ve put all of our chips behind what we think is the best option for what you need.  

3. Sales and Marketing.  Pretty odd for two guys who’ve spent plenty of time in the marketing department to stone cold cut it out, right?  Our philosophy on that is pretty simple – we have lots of really low cost avenues available to get the word out to you.  This web site is a good example.  On the other hand, the big guys spend a lot of money to make sure that the staff on the floor of the local bike shop knows about all of their sales programs, and all of the attributes of their bikes and why they’re better than anyone else’s.  They spend time in meetings, parsing out the data of why they sold 2% more bikes in Tennessee than they did last year, and 3% less in Chicago.  The marketing department pays their couple of million each to RSNT and Saxo Bank, and hopes that Andy or Alberto rides away from everyone in July, and that that makes you all horny to run out and buy one of their bikes.  They buy ads to build up the moment, and should the moment arrive, they’ll buy plenty more ads to capitalize on it.  All of that’s well and good, but when you’re in the thick of it down at the office park, where it really matters to you, is knowing that you’re on the same frame that Basso rode to the Maglia Rosa going to give you the extra punch to ward off the thundering herd?  

4. Graphics.  It's easy to double the cost of a frameset with paint and fancy graphics, which must be why some companies are charging what they are for their bikes.  We think it's important for a bike to look good, and part of the experience of ownership is looking at your bike and thinking "wow, that's a great looking ride," but we've gone for a minimalist approach both for aesthetics and for cost savings.  If you want to impress your friends, don't do it with a fancy paint job.  Do it by saving a thousand bucks on your bike and then dropping them.

5. Administration.  We’re two dudes, sweating this one out by ourselves.  No one answers our phones, gets our coffee, or takes our dictation.  If something needs doing, we do it.  High speed, low drag.  

6. Margins. Whoever said you have to sell something for double what you pay for it? That's the retail standard: 50% margin, or 100% mockup, which is somewhere between 50% and 100% BS as far as we're concerned. We don't need to make that much profit. We're not independently wealthy or anything; we just take a longer view. We think if we make a little bit out of doing something innovative and valuable for racers, maybe enough of you will buy from us to let those little bits start to add up. But the concepts of doing right by racers and charging a fat markup are - to us - mutually exclusive. 

7. Focus.  All we want to be is the best solution for people like us; racers who know what they’re looking for, have gotten beyond all the hoopla and hype, and see a bike for what it is – a tool to get you across the line first.