Personally, I’m fascinated by anyone that can create a new business model for an existing industry and change the way it operates, improving or creating opportunities for others to succeed while making a living for themselves. In business and running for two years, Rumbleship has been steadily building an alternate supply chain and ensuring that their back end system would run smoothly as they grew. Now, they’re starting the outreach to build awareness among retailers. That growth, and a chance encounter at Sea Otter, led to this story.
Rumbleship’s raison d’etre is “to serve the independent bike dealer,” said Alex Lugosch, co-founder. “We’re a marketplace for brands and dealers, and we make money on interest from the loans to retailers. The twist is that the dealers aren’t paying the interest, the brand is by offering a small discount off their invoice to Rumbleship. So, it’s not a sales commission because Rumbleship pays the brand immediately after the order is placed and then floats the money until the retailer pays the invoice. Rumbleship takes all the risk and covers all credit card fees.
So, what’s the benefit to independent bike shop? To the brands? Lots of things…
“We cost a lot less than a distributor,” Lugosch says. “We don’t have a warehouse. We don’t buy and sell products, we just provide an avenue for brands to sell their products directly into a retailer.”
“But more importantly, we’re a software company that provides retailers the tools to do business the way that makes sense for them,” adds fellow co-founder Isaac Sparling. “And we give a dealer credit to buy from the brands on our system. We can do this because we have significant investment backing that guarantees our terms, and we have insurance on the loans to retailers.”
The benefit to retailers is that they have access to more brands or SKUs that may not be carried by the big distributors and better terms than a brand could offer on their own. Occasionally, the prices might even be lower if a brand lists the product at distributor pricing rather than wholesale pricing, though Lugosch says they recommend most brands split the difference between distributor and wholesale pricing. The other benefit is a single credit check, and a single invoice for orders from multiple brands showing what’s due and when, which saves shop management a lot of time doing the things no one likes doing…time spent away from sales and marketing activities that actually boost business.
The brands gain access to more retailers without having to add a huge sales force, and if they’re listing at somewhere between distributor and wholesale pricing, the retailer gets to make a little more margin. Or offer a more competitive retail price to battle online resellers. Or both. It may also be that the brand is just too small to get the attention of a major distributor, which was the case with Dog Ears GPS and JET Roll. Bigger brands like KTM Bikes and Light & Motion are on board, too.
The discount off invoice from the brand varies (but is always less than 8%) depending on how quickly the brand wants to get paid, the credit history of the retailer and the volume of sales.
Once an order is placed, the brand can approve the order and update or change it as needed by communicating directly with the retailer. It’s then drop shipped directly from the brand. Shipping rates are up to the brand, but are all configured and shown on the Rumbleship order screen so everyone knows what’s being charged ahead of time.
They have about 50 active brands now and about 25 in the pipeline. At the moment they have about 2,600 retail accounts, but they’ve been largely growing with boutique and niche shops from the start. Now, they’re getting into more of the mid-sized shops and regional 2-3 shop chains.
Brooke Summers, marketing manager, says “as avid cyclists, we really believe in (the brands we list) and their products and how they can really bring value to what a shop carries. We enjoy the stories that each of the brands carries with them, and I really enjoy telling that story. So, rather than dealers just logging in a browsing a catalog, we reach out to dealers with a weekly newsletter to tell the stories of new brands or products we put online.”
Rumbleship was acquired six months ago by OrderWithMe, but they still operate as an independent group that’s focused on cycling for now. They plan on expanding into the general outdoors category shortly.
