Volume Up, Margin Gone

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Ridership is up and it has stayed up. The shops that sell and service those bikes are not sharing in it: the industry's own benchmark survey puts the typical shop's net operating profit at 4.7% before taxes, against operating expenses running 41% of revenue. When the pandemic inventory glut broke it was cleared by discounting, often below what the goods cost to land, and the margin went with the stock.

What the discounting exposed is a measurement problem. A shop prices off a cost figure that stopped moving months ago; the service bay earns the highest margin in the building and is the least measured; trade-ins walk out to private sale; and club, team and fleet orders get keyed in by hand. This white paper sets out where the margin actually leaks in a specialty bike business, and why the route that keeps Shopify as the storefront and leaves the existing system of record in place tends to hold up best.

In this white paper, you'll learn:

• Why the cost field is the cheapest leak to find and the easiest to fix: dead stock worth 2.5% of revenue costs a shop a month's profit
• How to measure the service bay against the 60% gross margin the NBDA recommends, once labor, deposits and consumed parts sit on the same record as the sale
• What The Pro's Closet got wrong about used bikes, and why a shop with a bench and an existing customer starts from a stronger position
• The three routes off a split stack, rip and replace, bolt it together, or change only the selling layer, and what each one costs