Shimano XT gets 4 pot brakes again & shorter separate crankarms

Jeff, let me give you an example of what’s going on with Shimano pricing and the associated idiocy. Perhaps once you can understand concrete, real-life numbers and examples, you’ll understand what North American bicycle shops are going on about when we tell the world how frustrating, annoying, and damaging Shimano’s business practices are. You’re also more likely to understand why it angers us so much.

Full disclosure: I’ve worked with numerous different Canadian bike shops over the years, in roles ranging from sales and service to buying and marketing. I understand this market, I’ve been in the game for years. The examples I’m giving you will vary in terms of exact numbers and prices in the US, all costs and figures are in Canadian Dollars.

I currently sell the Shimano Deore XT M8020 trail pedal (the one with the larger platform), in my shop, in Canada, for the suggested retail price of $149. It’s a totally legitimate price for a great pedal that with even just barely the most minor of maintenance (or without it, TBH) will last a consumer who rides a ton for years of heavy use. The pedal itself is an excellent value at $149. No consumer paying $149 plus applicable taxes for an M8020 pedal is getting ripped off. I forget what the suggested retail for the XT clipless pedal without the platform is, but it’s roughly $145.

From my back-of-shop perspective, I love XT pedals. They last forever, my clients are always happy with them, my return rate is close to zero, it appears to be a win/win. So how does Shimano screw this up? Easy: grey market distribution and likely shady practices as it concerns sales to bulk buyers (Bike brands, and I believe brand specifically)

The same pair of M8020 Deore XT Trail pedals, on Chain Reaction, right now, will cost a Canadian consumer $80.99. The smaller ones without the platform will cost a Canadian consumer $76.99. A great deal, to be sure. You might be tempted to think that the problem isn’t grey market distribution but rather an obscure and ridiculous pricing policy, a volume discount due to Chain Reaction specifically buying a huge number of pedals, or some other factor that is easily explainable. You might even be tempted to think that Canadian retailers are just charging their clients enormous margins on XT pedals and that we could simply lower our prices to help compete. And fair enough, I wouldn’t expect a basic consumer to think any differently.

The truth is that when I charge a client $149 for a pair of M8020 pedals, I’m making a margin that is barely sufficient. It’s not bad, it’s not great, it’s enough to keep the lights on and pay my staff a living wage. Barely. Truth be told, we don’t sell XT pedals because they’re easy to sell, or because we make a ton of money with them, or even because they’re particularly popular. We do it because it’s mostly worth the time and effort up front to not have to deal with any issues later on, and because we know our clients will be satisfied with their purchase.

Put another way: the prices you see on Chain Reaction, in Canadian Dollars, for a lot of Shimano’s SLX, XT, XTR, 105, Ultegra, and Dura Ace products are generally lower than our costs and close to employee/pro-form pricing. In some cases they’re sometimes lower than both of those costs.

In Canada, Shimano is available through two distributors. Lambert and Shimano Canada. Prices with Shimano Canada are a few dollars lower for most things and on a few things a lot of dollars lower, but buying from Lambert is typically more convenient, easier, and faster. Pedals, shoes, and other such items are ONLY available from Shimano Canada. So yes, there’s a bit of a choice in terms of where we get it from, but not always and not on everything. And no, we can’t even just get away with selling product under the SLX/105 level because even that stuff is popping up online at prices at or below our costs.

Somewhat recently, Shimano Canada announced that the Canadian MSRP for some items would be dropping a bit. Good news for your average consumer, bad news for your average shop. In short, they dropped the MSRP without a corresponding drop in cost price. So if the MSRP used to include a 40% margin, it was now being sold at a 25% margin. Hint: as a shop you’re not just not making money at that point, you’re actually losing money on every sale. And that’s before you have to decide whether or not you’re willing to discount to come close to matching Chain Reaction’s pricing. Except that you can’t do that, because you’d then be selling that product at BELOW COST with no way to make it up anywhere else. So what, exactly, do you suggest we do?

We can’t buy all of our Shimano stuff at pro-form pricing. They long ago instituted limits on how much they’ll sell at that pricing, to whom, and how, and yes I’ve tried. You can’t not sell Shimano product because your average consumer has come to expect it and sees it as the gold standard in cycling components, and because you need to stock replacement parts for all the bikes that come specced with Shimano components. And while many shops will actually occasionally use Chain Reaction as a third distributor and order stuff from them when both Canadian distributors show no availability (something that happens way too often), it’s far from ideal and you get hit with duties. Besides, we shouldn’t have to.

Long story short, Shimano screws their retailers with an awful worldwide distribution network and an obscene and deliberately opaque pricing structure. Chain Reaction is a particularly frustrating example in large part because we now believe that part of the reason they can sell Shimano product at prices as low as they do is their ownership of bike brands like Nukeproof and Vitus. The excuse used to be their physical location (EU/Ireland) and consumer protection laws there, but that’s not enough to make up for the huge differential. I now believe that they’re abusing their component ordering through their bike brands to stock their store, something that no one can compete with unless they also own a bike brand and are willing to break their agreements with Shimano. Only doing that in North America would result in Shimano pulling product almost immediately.

So whatever is happening with online pricing as it concerns Shimano product, they’re not only aware of it but if not actively encouraging it, at least not doing what they could to solve the problem.

Meanwhile, try getting SRAM stuff through Chain Reaction. Good luck…