This is bad, however I think we will be seeing and hearing about this in other industries as well. Demand in some areas spiked so much, and inventory was low which leads to over-ordering and channels ‘hoarding’ inventory. Target and Walmart are both in the news for having way too much of certain types of stuff that was in high demand, but no longer is. They can dump this stuff a lot less publicly, and they will have a bad quarter or two instead of going bankrupt.
Saris is small enough that getting this wrong for one (or maybe a few) products can doom the business.
I think we will see some of this in semiconductors (the industry I work in), but on longer timescales. Lead times for many chips are 12+ months. This is absolutely leading to purchasers ordering more than ‘normal’ in some cases. When this all unwinds and lead times get back to a few months, and inventory will be a weight on a lot of balance sheets. Some industries (I’m looking at you, auto industry) will likely keep larger inventories of essential chips for a longer time, so the whiplash may not be as dramatic.
Maybe Zwift can buy them to get their own smart trainer! Complete with great stocking levels for immediate delivery!
Ha, seemingly unlikely. Unless all the cash they saved from layoffs and such is available to reinvest (funny, not funny).
Crazy times ahead with the CV drop, and the general direction of the economy. I have been seeing “sales” in a number of areas including cycling stuff… and it seems this might be the sign of things to come, unfortunately.
The bubble had to pop at some point in the cycling world. I’ve been sitting around waiting for the time when people got back to some semblance of normal and the used bike stuff market would normalize (or even correct in the opposite direction). Simple fact is, COVID likely got us a few new enthusiasts, but I doubt it’s an industry-changing stick in the US market at least. I, for one, would love to see bike manufacturers inventory skyrocket so they’re forced to back off their COVID pricing spike.
18 months ago I was thinking, “A year from now will be a great time to get a deal on a used smart trainer and a dog.” My timing was off and I was half-wrong. The discount market for used trainers and 1-year old dogs didn’t pan out, but the liquidation deal on an H3 was an unexpected surprise.
That certainly seems like a common thing that happens. People want to get while the gettins good. Reminds me of a neighbor who was a plumber then started flipping houses before the housing crash. He bought up a ton of houses then the market collapsed and he was stuck with mortgages he could pay so straight to bankruptcy
I’m sure there was just some general ‘irrational exuberance’ going on here. I do think that the longer the supply chain is the harder it is to determine what the true demand is. Peleton had it ‘easy’ here, as they are direct to consumer.
For places like Saris that sell mostly through other retailers and distributors, those can further obscure what the true demand is.
Say a large retailer sees large demand of smart trainers, and is out of stock and has trouble getting them. It may think demand for the year is X, but then place orders for X from each of 4 Mfgs for smart trainers, as it has little confidence that any of them can actually supply what they claim. The manufactures now see 4x what what the retailer estimates the demand to be. In many cases orders can be cancelled, so the retailer can limit its risk here. (I’ve heard that some suppliers were requiring deposits up front for orders many months out, which helps protect against this.) Add multiple layers of this, with a distributor in between, and the distortion gets worse. It can be very hard to quantify what the ‘real’ demand is. It’s one thing to say there is a bubble, it’s another to reasonably accurately determine how big it is and when it will pop. If you are off by a factor of 2 or 3 on how big the bubble is, you could well be accounting for the bubble, as well as demand distortions, and still be left in a bad place.
My guess is that Saris has been in marginal shape for a while, but they had less margin for error than Wahoo for instance.
Interesting. Throw Kinetic into the mix with what appears to be them switching exclusively to rebranded Magene equipment… and things aren’t good.
That’s a weird headline to write while (still) selling one of the best fluid trainers ever.
Unless they’re not… or not making them any more.
That would be a damn shame.
I’ve got one that’s well over a decade old with 10,000’s of “miles” on it. I wore out the locking mech (which they supplied replacement parts for free) and I’ve worn a groove in the steel roller where it meets the the tire, but it still rocks along. That sealed/magnetic coupling for the fluid housing is genius.
The downside of making designs that live forever is that you never get to sell a replacement…
Some general thoughts and follow-up form posts yesterday…
I think most people in the industry knew this and acted accordingly…that was one of the reason why it was so hard to meet demand. Outside of adding shifts at factories, no one really invested in additional capacity, as that would have meant huge investments for something most felt was temporary. The boom lasted longer than most expected, but eventually popped (or is currently popping).
I doubt this will happen…again, no one really invested in capacity, so any incoming inventory won’t significantly exceed demand, even with the current market correction.
SO much this…same thing happened in my industry (consumer medical devices), especially thermometers. Demand spiked, everyone rushed to make stuff, failed to understand that these devices were durables, not consumables and now everyone and their mother is stuck with excess inventory. The biggest mistake I made was undersestimating how long the surge would last and we missed some sales opportunities. I originally thought the virus would burn out by the summer of 2020 and the boom would be over by the time we got new product, so we waited. The flip side, however, is that I don’t have near the excess inventory that most of my competitors have (but we do have some).
Definitely a factor, but if you are paying attention to your business, it should be manageable. To have 4x the amount if inventory now that you had a year ago, when sales were booming, is just irresponsible. Flat out. Again, these are durables, not consumables. Once you make a purchase, you are out of the market for 2-5 years, minimum. The market for trainers is finite…add in the supply coming from other competitors and having that much excess inventory is just unconscionable.
TL:DR - Saris completely screwed up here. They misread / misunderstood the market situation and grossly mismanaged their supply chain. You will never get these situations 100% right (and lord knows the bike industry sucks at forecasting supply), but a miss this big is on them.
A man can dream! But I think it will “correct” the second hand market eventually.
Definitely more likely there…you will probably see people dumping their lightly used bikes, looking to get what they can.
Yep, if you are in the market for a lightly used top tier groupset DuraAce / Red / Super Record, etc. equipped bike, they should be showing up in the next 6-12 months.
Have you updated the firmware current in the app?
We’re already seeing this in the mtb community where I live. Every day 2 or 3 Trek hardtails or mail-order low end FS bikes hit our local Facebook page. Our trails went from an incredibly well kept secret to so packed that it ruined the experience almost over night. I think the majority of those new riders are headed back to the gym now, and to be honest, it makes me happy. We had broken limbs at least weekly. Frequent posts about how to carry guns on the trail. Traffic jams at all the big jumps so people could pose for pictures. Our XC trails turned into “wannabe dirt bike jumper go-pro-ville” and I’m ready to get back to people who just want to ride. The LBSs sold TONS of full face helmets, full battle gear, and crazy heavy bikes though, so good for them.