GoCycle has this week informed its customers of a new approach to partnerships, introducing a ‘showrooming program’.
Revealing an omni-channel approach within which the consumer will have a variety of options to obtain their bike, the company’s founder Richard Thorpe spoke to CI.N yesterday, explaining that the changes are necessary in order to get ahead of economic challenges and shopping behaviours.
“We see a credit crunch coming and so some adjustment has been required to help consumers access electric bikes,” starts Thorpe, speaking on the day where a £500 price cut in the G4 model, now £3,299, significantly bucks a trend of price increases.
At the start of the year Thorpe was hopeful of an economic bounceback, but the reverse gear has instead been hit. “At the start of this year we felt Covid may be on way out and economic optimism would be better, but there has instead been Russia’s war in Ukraine, various lockdowns in China, extended chip shortage problems and a downward sentiment correction in the market as inflation goes up.”
All of this puts the consumer holding on to cash at odds with electric bike investments, with price known to be one of the leading barriers to adoption.
Thorpe says on accessibility to his brand: “We have done a lot with financing, for example, we cover the interest for the consumer, bringing payments to a sub £100 monthly cost. It’s tough out there with the rising cost of living, we need to get ahead of this curve as it continues.”
A rethink on how the brand serves the market has now been pushed out globally and while there are consumer direct options, Thorpe believes the dealer and indeed workshops and mobile mechanics are well placed to make more consistent returns and access to the right stock with his firm’s new strategy.
“Dealers will make the same comparable margin and the customer can get the same showroom experience without so much of a burden on the shop stock wise. A customer can order from GoCycle, then a code is generated. In future the customer can use this coupon for their 100 mile service at the local dealer. GoCycle will pay the dealer an “industry leading” rate for that.
“Also there are peaks and throughs of colours and models, so often we find customer doesn’t locate colour they need. The showroom model allows us to pool stock and offer any colour at any dealer.”
On the industry leading service margin, we’re told the basic rate is an £80 per hour payment to the dealer. There is a follow on reviews element that will help the brand decipher which partners are providing the best service.
“If after a period of time that partner has a one star rating we will move away from them, but for a four to five star rating they’ll get get a good pay rate. Over the longer term those ratings will appear on our dealer locator. Customers want service and they have anxiety on premium products in particular, so this is useful for both us, the shop and the consumer,” explains Thorpe.
For the bike shop a more detailed breakdown of the model adjustment, outlined by GoCycle, is as follows:
Benefits to Gocycle Customer
• Customers can shop on-line from anywhere – in store or at home.
• Customer maintains relationship with local dealer for pre/post sales and warranty/annual servicing.
• Customer can choose home delivery, or to their local Gocycle dealer.
Benefits to Gocycle Showroom Partners
• Payment for Gocycle, including shipping charges, is shifted to the customer, at full retail price.
• Dealer is not required to hold inventory – other than 3 demo/showroom models.
Gocycle’s warehouse becomes the dealers’ warehouse – all G4 stock is virtually available to every customer and dealer providing maximum stock / colour availability.
• Dealer is able to fully participate and benefit from all Gocycle promotions.
• Consistent consumer pricing places value and customer priority to dealers that offer an amazing in-store experience and after sales service.
Transactional Benefits for Dealer
• Credit card processing fees and fraud risk shifts to Gocycle.
• More sales captured with Gocycle’s “buy now, pay later” financing.
• Unique “Showrooming Code” is assigned to every dealer. The code is applied as a coupon on the order.
• Unique QR Code will be provided to each dealer for POS. Destination of the QR code is the Gocycle webstore with the dealer’s showroom code pre-filled in.
Extended Credit Benefit for Dealers
• Up to 150-day terms for up to three demo Gocycles for the showroom floor. This can include accessories ordered at the same time.
New Gocycle Connect App Feature: Initial Service Margin
• In the first 100 miles and not later than 6 months from customer registration, the dealer
is now able to record that an Initial Service has been completed.
• Dealers collect margin credits from Gocycle only when they perform initial service on customers that nominate them as their local dealer when purchasing.
Comparable Margins with traditional B2B
• GSPs earn margin at the point of sale when the customer enters the dealer’s showroom code.
• After the sale, the further margin is earned for re-engagement with the customer and providing the all-important 100 mile/160 km checkup.
• Additional margin is earned based on annual sales volumes comparable to traditional B2B.
Requirements for Dealer Participation
• Open only to Dealers in Mainland UK/EU/US
• Dealer must complete Gocycle On-Line Service Training Level 1
• Dealer must maintain 3 showroom demo units with accessories
Last year GoCycle opened its first European subsidiary to expand its footprint in the EU.