CaBi bike helmet sales probably won't hurt local bike shops

Neil Sandler, editor and publisher of Spokes magazine is concerned that Capital Bikeshare's decision to sell helmets for $16 will be taking business away from legitimate bike shops, according to TBD. 

While it's true that having the government subsidize a product can hurt the commercial businesses that sell it, there are several reasons why this is probably not a concern.

For starters, Capital Bikeshare is limiting who it will sell to. It will only sell then to new or renewing members. Most cyclists/potential customers in the DC area probably aren't even members, and being able to buy one day a year is a real inconvenience. Most cyclists will continue to buy their helmets from stores. 

In addition, CaBi will limit the kind of helmets it sells to one kind. And that kind is unsuitable for racing or children. And it is one style - the red helmet with yellow lettering - so if you want something with a little more style, you won't find the CaBi helmet appealing. 

The buyers of these helmets will probably be people who don't ever ride a bike other than CaBi and who probably wouldn't drop $50 on a nice one anyway. 

Bike shops might lose a few sales. But they've probably gained a few sales from CaBi members wanting a nice nutcase helmet or a stylish riding helmet. And once people have owned a helmet, maybe they'll be encouraged to buy their next one or even upgrade.

I haven't heard from bike shops, but I'd be surprised if they're worried. If I wrote a magazin instead of a blog, I'd probably call a few and find out what they thought.

As long as Sandler is going after this, perhaps he should also go after helmet give aways, like the one run by the brain injury law center or countless police departments. They can't even claim that they're encouraging cycling. Why do they hate bike shops?

Comments

[MM]

I remember having a conversation with an LBS worker maybe a year ago about CaBi...he was concerned that it would cut into their bike rental business. Judging by the number of non-CaBi rental bikes I see (a lot) and the number of people buying bikes BECAUSE of CaBi, I'd say those fears were unfounded. I think the helmet situation is similar. People who are experimenting with CaBi and buying the CaBi helmets are likely to upgrade if they end up buying their own bikes.

[Kathy]

CaBi convinced me to buy my own bike (I wanted to go for all day rides) which then led to buying another bike and more bike shop accessories. The local shops have made $$$ off of me because I rediscovered the joy of biking due to CaBi. From speaking with other cyclists, I'm not the only one who has gone down this slippery slope.

[Jacques]

I'm another CaBi-to-bike-owner convert, Kathy, and at this point I'm spending easily $300 a year at various local bikeshops on service, accessories, and upgrades. (And that's not even counting what I'll pay when I buy my next bike, sometime within the year).

[darren]

I'm not a fan of the helmet subsidy, and not for stupid Tea Party reasons. Here we go:

-helmets are (were) one of the highest margin items in a shop. CaBi just reset the reference price by selling at a loss.

-however, the lost sale, and possible resetting of the market price, are small potatoes. the much bigger issue is the lost opportunity for a customer like Kathy or Jacques to walk in the door and make the acquaintance of a shop, in order to buy a helmet. I love to hear about CaBi riders 'graduating,' and getting their own bike, and perhaps establish a relationship with a local shop. I wish CaBi would do something to encourage it, rather than taking away an obvious opportunity.

-The helmets won't fit lots of people, and won't be their style, and they may not even know how to wear it properly (seen a backward CaBI helmet yet? a saw two today). Those attracted by the bargain price won't care enough to wander into a shop instead.

-CaBi is to DC cycling as Strasburg is to the Nats. If you were a shop, would you want a quote attributed to you griping about how it's affecting your sales? I suspect most shops don't have data collection, sales analysis tools, or market research sufficient to tell w any certainty anyway.

-Flipside - if CaBi was graduating significant numbers onto their own bikes, and charging up bike/accsy sales, wouldn't every bike shop be glomming onto that message, and shouting their love for CaBi from the rooftops after 20 months of operations?

-Helmet giveaways (w/o regard to need) are simplistic safety interventions by orgs w no interest in encouraging more bicycling, and yeah, i think they're just as stupid. But I expect more from CaBi (not just because they're publicly funded). They should care more about the impact of their actions of other stakeholders in encouraging all bicycling in DC, because isn't that the whole point of CaBi?

There are ways they could have done this better. But they're in the helmet biz now. And there are many ways CaBi could refocus from growing it's own revenues and ridership, and instead help promote bicycling in general.

[Jacques]

@darren -- I think you're right in general. I wonder what the priorities are for CaBi in offering the helmets, and I wonder if they might be willing to offer their branded helmets to LBS's at $10 (with the MSRP of $16, or even for the LBS to sell at whatever price they'd like)?

I do think you're hearing the CaBi love from some LBS (BicycleSpace in particular), but I think that bikeshare likely has less of an impact on the shops that cater mostly to sport riders. I also think it's difficult to tell the impact on LBS business, as several other factors are at play, in terms of increased fuel prices and increasing car-free options in DC.

[Westnorth]

Private bike usage in Paris doubled in the year after Velib' was introduced, with a corresponding increase in shops' sales. The effect of CaBi would be difficult to tease out from any number of other factors that have led to growing bike sales for the past few years, but I am certain that CaBi has not hurt bike shops.

Helmet provision is the natural next step from the initial response of "you can buy a helmet at these locations," and given the limited audience I don't see that it would make a big difference. I actually renewed early to buy a CaBi helmet as a backup to have for houseguests, etc. It's about as universal fit as any you'll find on the market, with a nice cam adjuster. Besides, most <$50 helmets are one-size anyways.

Then again, I'm the kind of person who usually wears a >$100 helmet, so I wouldn't really be the target market for a $16 helmet in the first place.

[darren]

"The effect of CaBi would be difficult to tease out from any number of other factors that have led to growing bike sales for the past few years" - quantitatively, the internal data is there for shops to tease out patterns in the current gas price spike that weren't present in '08 to determine if CaBi is driving more biz. qualitatively, shops keep close eye on salesperson feedback on why customers are coming in for bikes.

"but I am certain that CaBi has not hurt bike shops." CaBi needs a better answer than that. That suffices for private systems like NY or LA, but a publicly funded system needs to distinguish itself in a variety of ways. HELPING grow bicycling and the local bike industry should be one of them. "Not hurting" is not sustainable.

"Helmet provision is the natural next step from the initial response of 'you can buy a helmet at these locations,'" I disagree. As @Jacques suggests above, fulfillment at shops is an option, selling at market prices, subsidizing sales to members of helmets in stock at shops. Or even, god forbid, pushing back on the notion that subsidizing optional preventive safety behavior is the responsibility of a muni bikeshare system.

"I don't see that it would make a big difference." I do. Bikeshops depend on traffic, and decent margins on accessories. CaBi Helmet Store undercuts both of those.

"I actually renewed early to buy a CaBi helmet as a backup to have for houseguests, etc." I don't see how that's a good thing. You're a first-rate guy, but I have no interest in chipping in a few micropennies for you to get a cheap loaner helmet for your friends.

[washcycle]

darren, How about the free light giveaways that WABA, DDOT, BikeArlington and others do? Doesn't that undermine bike shops? What about free bike giveaways? Bicycling magazine has given away hundreds of bikes as part of Biking Town. What about toys for tots? More free bikes. Etc...

BTW it's not clear they're selling them at a loss. I found a new, adult bike helmet on Amazon for $7.59 (+$5 s+h).

[darren]

"Free light giveaways that WABA, DDOT, BikeArlington and others do? Doesn't that undermine bike shops?" All (i think) have rightly shifted to targeting those who may not have the means or access to buy such equipment, which I think we agree is far more helpful in improving safety outcomes than helmets.

Free bike giveaways, such as at BTWD, are normally by the local shops themselves, in an attempt to catch our attention, and the widely held belief in the shops that they're helping 'grow the pie'. I personally think that yeah, they're probably cheapening the value of their own wares, but that's their call.

BikeTown was primarily a bike manufacturer initiative, and local bike dealers played a huge role in building those bikes, getting involved with the selected riders, etc.

Toys for Tots? Again, demonstrated need. Those 'tots' deserve charity/subsidy, you and I don't.

In all these cases, let's distinguish giveaways, which are typically one-off promotional opportunities, from subsidized standing offers of sale at a widely advertised price. Different impact on consumer perceptions of value.

I've heard the words 'subsidized helmets' directly from Chris Holben's lips. Even if they are selling directly at material cost, the marketing, distribution, etc is effectively a subsidy. Would love to hear exactly what the numbers are.

A price on Amazon is hardly indicative of a price marked up above inventory cost. However, who cares. If they take a loss, we should be angry as locavores, but at least the loss comes out of their pockets, not mine.

[Liz P.]

CaBi=More cyclists=MORE business for local bike shops. See: the two new bike shops that have opened on Capitol Hill since CaBi began. In a terrible economy.

The Spokes article makes no sense whatsoever. I owned (and still own) a bike prior to becoming a founding member of Capital Bikeshare. Let me tell you how much I spent buying accessories for that bike prior to my membership: $0. Since the convenience of CaBi got me riding more often, I've bought a basket, riding shorts, and light accessories, among others.

When I upgrade my bike, guess where I'm going to buy it? HINT: Not at any LBS that agrees with this drivel, but I have a feeling that my two favorite stores (The Daily Rider & Bicycle Space) aren't upset by CaBi helmet sales at all.

Also: props to Bike and Roll for speaking out against the article.

[darren]

"Drivel"? Nice.

"CaBi=More cyclists=MORE business for local bike shops". Yes, i agree in theory, and probably every shop agrees. But it's a passive effect, and it's accepted on faith.

What did CaBi do to ACTIVELY encourage you to visit Daily Rider or BicycleSpace, besides getting you back into bicycling?

Getting riders (back) onto their own bikes is an absolute necessity if bikeshare is going to have a multiplier effect on ridership. CaBi punted on an opportunity to encourage that 'graduation' process by getting into the helmet business.

"When I upgrade my bike, guess where I'm going to buy it? HINT: Not at any LBS that agrees with this drivel, but I have a feeling that my two favorite stores (The Daily Rider & Bicycle Space) aren't upset by CaBi helmet sales at all." Thus proving my point - CaBi is exempt from criticism and complaint by supporters, especially bike shops. Why offer even a tepid "hey, wait a minute, i could help you do that better..." when the slightest note of dissension about CaBi gets slammed as 'drivel' and becomes a buying demotivator?

$16 bet, any takers? Portland's bikeshare system will approach this helmet problem differently, because of the strong relationship and mutual admiration among shops, advocacy, and gov.

[oboe]

I'm trying to imagine a LBS that doesn't suck getting upset about this. Really, it's only the bottom-feeder shops that have such a overgrown sense of entitlement.

[darren]

@oboe, bottom feeder shops get upset over the lost sale. Top-notch shops rue the loss of an early opportunity to make the acquaintance of somebody interested in bicycling.

[Crickey7]

I think catalogue shopping bothers LBS' a whole lot more.

That, and the claim that someone's expensive new piece of bicycle equipment inexplicably broke while they were "just riding along."

[oboe]

@darren,

"Top-notch shops rue the loss of an early opportunity to make the acquaintance of somebody interested in bicycling."

But that relationship is just as likely going to be formed regardless of whether CaBi gives away free $10 helmets.

At some point that person becomes a "cyclist" and needs a bicycle, shorts, gloves, tools, etc... CaBi's not giving those away.

[oboe]

It's a bit like the Nationals having a "Souvenir Ball Night" and Modell's getting upset.

After all, sporting goods stores should be selling balls, not sports franchises.

[michael]

@Darren
"helmets are (were) one of the highest margin items in a shop. CaBi just reset the reference price by selling at a loss."

In other words, bike shops make some of their highest margins on safety devices all cyclists should be wearing. Some cyclists don't buy the safety devices because they are too expensive.

I don't think there will be much impact on the price of these safety devices from this program, but if LBSs lose a few sales at big markups I'm not shedding any tears.

We need bike shops to support biking, we don't need biking to support bike shops.

[darren]

@crickey7, "I think catalogue shopping bothers LBS' a whole lot more." Yes, it probably does. I don't know that this CaBi helmet thing bothers any of them at all. It bothers me, though. DC's shops have historically not been stellar about catering to everyday cyclists. Now that we have some shops raising their games, our government passes on an opportunity to make them a direct part of one of the most successful bicycle encouragement programs in the US.

@oboe, "But that relationship is just as likely going to be formed regardless of whether CaBi gives away free $10 helmets. At some point..." Again, an article of faith. The top-notch shops who want to get non-bicyclists bicycling, and get occasional bicyclists biking more, are establishing relationships based on frequent friendly contact, exposing them to bicycles in a non-sales context, such as rides or events.

For the kind of shops that we want to support transportation bicycling in DC, somebody who doesn't currently bicycle, but is interested in dipping a toe in the water with CaBi is their lifeblood, because of the 'at some point' stuff. The earlier an introduction is made, the sooner a relationship begins (rides, events, tuning up the old ride, buying a new bike, etc). Getting a helmet would be a great starting point in that relationship.

Or, perhaps all those new excited CaBi graduates will turn to the catalog/internet sellers that crickey7 and WC mention. CaBi's muni overlords miss out on sales tax revenue from that new bicyclist they spent all that money to create.

[darren]

"In other words, bike shops make some of their highest margins on safety devices all cyclists should be wearing."

I'll agree, but rephrase to say that, "We are taught that we must wear a helmet to ride a bicycle despite the lack of a legal mandate, so our free market supports a price that allows retailers to charge a price that covers the expenses of cross-subsidizing other necessary goods and services where the market price doesn't cover the full contribution.

"Some cyclists don't buy the safety devices because they are too expensive."

Data on this? And if there's a socioeconomic need, i'm wholly in favor of subsidizing the reduction of barriers to riding.

"I don't think there will be much impact on the price of these safety devices from this program, but if LBSs lose a few sales at big markups I'm not shedding any tears."

Well, they've given away 500 or so helmets, just got in 1200 to sell, and have a boatload of LivingSocial members coming up for renewal right now. I personally don't care as much about the sales and pricing impact, but we wouldn't have to wonder if the government hadn't gotten into the business.

"We need bike shops to support biking, we don't need biking to support bike shops."

Yep. And they have. And we don't owe them a thing. But we can't expect them to become really active contributors to a DC bicycling rennaissance when encourage CaBi to treat shops as competitors rather than collaborators.

[MLD]

Cabi could have partnered with a few shops to offer a coupon good for $X off of a helmet purchase when you renew/sign up (X being however much CaBi is subsidizing each helmet.) Then shops turn in the coupons to CaBi and get reimbursed.

Shops get a sale/face time, CaBi gets to offer helmets. Win-Win.

[darren]

@MLD, exactly. Plus, newbie-biker customer gets a short tutorial on proper helmet fitting by a live person. Win-win-win

I'd go a step further, let shops fulfill online CaBi helmet orders on consignment basis, give them a small cut for housing the inventory. If the helmet doesn't fit (because one-size-fits-all in helmets is "corn-sugar" distortion with potentially bad outcomes), or customer sees a Nutcase or something they like, fulfillment voucher good for $X off that purchase.

[Crickey7]

Not that I care all that much, but CaBi was getting criticism because people weren't wearing helmets. So LBS' weren't, for whatever reason, being used for acquiring helemts for CaBi use. And the new helmets serve double duty as advertisements for CaBi.

What, exactly, is wrong with a business (and CaBi is a business) taking steps that help it?

[darren]

@Crickey7 - "CaBi is a business" - it absolutely is not. CitiBikeNYC, Decobike in Miami, the forthcoming LA system, those are businesses. CaBi is operated under a government contract, marketed under two other contracts, with all revenues going to the government. Capital equipment is funded mostly by the government. There's no requirement to make a profit, either operating or overall.

CaBi is a bicycle transportation encouragement program. They could have structured a helmet safety program that brought in the broader bicycle community as partners, and solved their PR problem at the same time. Instead, they went for expediency to try to make the problem go away.

[Crickey7]

Of course it's a business. It may not have a strict requirement to turn a profit, but there are strong incentives to doing so, along with disincentives to increasing any operating deficit. They are entitled to take steps that increase revenues and decrease costs even if that impacts other businesses.

Some of your points may, and I say many, be valid, but that is surely not one of them.

[Crickey7]

"may", not "many"

[oboe]

Or, perhaps all those new excited CaBi graduates will turn to the catalog/internet sellers that crickey7 and WC mention. CaBi's muni overlords miss out on sales tax revenue from that new bicyclist they spent all that money to create.

I (mostly) stopped supporting LBS' in the area because every one I've been to has failed comprehensively in mechanical service, customer service, and in expertise.

As someone pointed out upthread, there seems to be a very, very strong sentiment among most area LBS' that cyclists are there to serve the shop, not the other way around.

(Maybe one of the newer shops is not like that, but the difference between service & expertise in a bike shop in a place like, say, Davis, WV versus the ones in DC is like night and day.)

[darren]

@crickey7, almost every entity (biz or not) has incentives to act with financial responsibility. My Gov agency does. And CaBi is making lots of goodwill by flirting with operational breakeven.

But there are a variety of ways that CaBi acts that go against for-profit business practice, both positive (placing stations in underperforming areas, investing in capital back in '09/'10 without any idea what the revenue would be) and negative (where's the system sponsorship?).

A positive aspect of CaBi NOT being a commercial enterprise is that it can eagerly embrace partners without turning them into competitors. Take that same leap of faith that the LBS community has nationwide in supporting bikeshare. Further the goal of the whole program, which is to increase bicycling (not just increase CaBi ridership solely, or increase CaBi revenue), by working together.

[darren]

@oboe, totally agree. But yeah, there are shops that are trying really hard to talk the talk/ walk the walk about serving the new entrants to bicycling. And yeah, you'll see testimonies to that effect in re the new entrants.

We get the shops we deserve. If CaBi takes that huge mass of casual and/or new cyclist members, and takes some basic steps to help them make their way into our area shops, the cream will rise to the top, and the bottom-feeders will adapt, shift away, or die.

[Crickey7]

If LBS' had been effective at getting CaBi riders lidded, CaBi wouldn't have done this. That's not a knock on LBS', it's that many CaBi riders don't see ANY need to go into an LBS, at least for their CaBi needs. I seriously doubt a coupon program would have changed that, an in any event you can get a discount at many LBS' by presenting your CaBi thingie.

This is a synergy thing for CaBi, where they can make it a natural decision for a rider to get a CaBi helmet for their CaBi ride. It may cause a few less helmet sales, but, as I said, CaBi can take a step that helps its bottom line even if it has some impact on a local business. They simply cannot operate if every decision they make is barred if it might have an impact on another business (like, oh, say, cab drivers). That's not feasible.

[Jonathan Krall]

"CaBi is a bicycle transportation encouragement program"

WTF?!? That sounds to me like a stunningly dismissive description of CaBi. CaBi moves 4000+ people per day (average). That's comparable to the DASH or ART bus systems.

"Wouldn't every bike shop be glomming onto that message, and shouting their love for CaBi from the rooftops after 20 months of operations?"

Whenever I attend a public meeting where CaBi is discussed and where local shop owners are present, that's pretty much what they do. It doesn't make the news, of course, because there is no conflict or controversy involved.

Seriously, CaBi is growing the bicycling community bigtime. Infighting does exactly the opposite. Allow me to demonstrate: Could someone please tell me which shop "darren" works for so I can avoid shopping there?

[darren]

@Jonathan Krall, not meant to be dismissive. The closest thing possible to a bicycle-based public transportation system, if you'd prefer. Simply trying to get away from the assumption that we should expect CaBi to always act like a for-profit enterprise when they're not.

Re shops shouting praises of CaBi, good to hear. The polite thing to do might be for CaBi to return the favor.

This is not infighting -- this is constructive criticism about how CaBi could do something better. See my comment at 11:16 for one suggestion.

I used to work years ago for a shop that would likely be considered one of the bad apples, maintain active friendships with principals in two local shops considered good-to-great, and done a bunch of work with most of the CaBi folks, both through grad school and my day job.

Not that ANYTHING i say represents any of their views, cuz i've discussed this with none of them. And not that's it's really any of your business.

"CaBi is growing the bicycling community bigtime". And we could rest on those laurels, or we could examine ways they could do it even better.

[washcycle]

MLD, CaBi was already offering discounted helmets at LBSs for CaBi members. Perhaps they still are.

[darren]

@WC, incorrect. Two shops offered their own in-stock helmets at a discount to CaBi members, and still do, with CaBi picking up none of that bill. How often did CaBi tell members, and how prominently is that featured on their website?

[washcycle]

"Capital Bikeshare strongly encourages the use of a helmet while cycling. You have the option to purchase a Capital Bikeshare branded helmet at the time of initial membership purchase, or when changing or renewing an existing membership. Additionally, you may stop in at one of many local and participating stores and show your membership key or daily receipt to receive a 10% discount on a helmet."

[washcycle]

That's from the CaBi website...

https://capitalbikeshare.com/safety

[darren]

"many" = 2. And again, out of their own pockets.
http://capitalbikeshare.com/bike-rental-and-helmet-shops

[washcycle]

where's the system sponsorship?

Technically DC pre-sold this in 2005. So we already reaped the revenue from this, even if it doesn't show up on the books. Arlington has other issues.

"many" = 2

Which two?

[washcycle]

Never mind, I see which two. But there is another thing CaBi does to support LBS's. They give them free advertising on their website.

[darren]

"Which two?" Scroll through the list. I dare not name them, lest i be labeled a shill again.

Why not match the 10% discount? Why not a bit of cheerleading to their 4.5K Facebook followers, their 10K+ newsletter recipients, that these businesses offer a discount to their members?

[michael]

@Darren,

So let me get this straight, local government should stop things that might interfere with local businesses.
For example:
1. Close public pools because they compete with private pools.
2. Stop offering free compost bins because citizens can buy them from Home Depot

This makes no sense.

[darren]

No Michael, that would be rather narrow-minded of me to suggest. In your examples, the government pools and composting mills (and the constituents they serve) reap no benefit by ceasing to compete.

In my strawman bike dc world, the government program, the best private LBSs, and the customer ALL benefit by working together.

[Crickey7]

The proper analogy is to services that could be provided by the market, but for not in adequate quantity or not at a price that makes it available to the number of people that we as a society deem proper.

It's like flood insurance, for example, or research into cures for certain diseases. In each case, government interention may take money away from the portion of the market that had been (inadequately) serving those markets. But because the provision of desireable services is greatly expanded, we consider that tradeoff acceptable.

[darren]

@crickey7, "...not in adequate quantity or not at a price ..." Washcycle cited a helmet from Amazon at $13 shipped. CaBi selling subsidized helmets isn't an essential intervention, as they're providing basically the identical service.

Desirable services -- I think it's fairly debatable that providing subsidized helmets to CaBi annual members without regard to income, and in the absence of a mandate to use a helmet, is an acceptable tradeoff to other safety interventions that might have a greater impact on actual rider safety.

But since they're doing it, they could have done so in a number of ways that would enhance the program for everyone.

I once worked for a government agency that took contracts from businesses, and gave them to nonprofit agencies, to serve a desirable socioeconomic end that the market didn't provide. Before taking any action, however, we talked to that business and assessed the potential impact on their viability, sought ways to include the incumbent in the continued performance.

And occasionally, we hit a home run by nurturing and then fully integrating the socioeconomic good back into that business [sorry for the vagueness here, i'm trying to keep prior employers anon]. I think there are a couplefew shops that are ready to hit that homerun, and embrace and excel at the role of converting CaBi experimenters to everyday bicyclists. CaBi oughta seek out those opportunities, not forestall them.

[Nahomi]

I love sonic papercrafts I alywas made the sonic adventure 2 papercrafts but these are not even consitered papercrafts! 3 folds and your done, plus they look stupid who would even wear a silver hat you cant even make out what it is! anyways I think I might try the contest