As some of you know, we have another company, called VO Imports (VOI). The purpose of this company is to sell to bike shops and distributors, rather than to retail customers. VOI has a warehouse and office next door to us, but it is a separate company. VOI sells some Velo Orange parts and it also starting to import and distribute components and accessories from other companies.
VOI's general manager is Tom Martin, who has many years experience in the bike distribution business. He is great at getting stuff made, keeping in almost constant touch with Taiwan. He is also known here for creating gigantic spreadsheets detailing an almost infinite number of cost and design variables for each of our products. In addition he maintains relations with all the shops that stock our products.
Tom probably doesn't have an easy time working with me. In Tom's world, which is the standard distribution model, a company designs a product and has a factory makes it. Then the agent who helped set it up us gets a small cut. Now the component company sells the part to a distributor and so makes its profit. The distributor sells the part to a bike shop and makes its profit. Finally the bike shop makes a profit selling the part to a customer. As you can see, there are a lot of folks taking a cut. And so the bike business world has always smoothly revolved.
But I am not from the bike or the distribution biz and I have a long history of building companies by breaking rules. I decide that some Velo Orange products, the stainless steel racks as an example, must be affordable and cut out all the middle men. The distributor and bike shop can't sell them and so don't get a cut. Velo Orange does not get those cuts either; the customer does. I've upset the apple cart and poor Tom has to hear the complaints.
Tom feels, and he is probably correct in this, that if we simply raise prices or concentrate only on items that can be sold through traditional distribution channels both VOI and Velo Orange will grow even faster. But I want to keep prices low. And so it goes.
Tom has started a VOI blog, as well as a Twitter and Face Book page. The blog is intended for shop owners and their employees, but many here may find it interesting too.
03 December, 2008
Posted by Velo Orange at 9:18:00 AM