Elorie  0:00  
In the history of what sport in the universe has the sport retained. Someone who tries the sport for the first time at 80%. No sport ever,

Tae - QBP  0:10  
all these retailers that had been talking about how confident they are about next year, rapidly losing confidence,

Josh Poertner  0:18  
we just received a container of this group that we've had on backorder. For months, when we called our customers, none of the business was there, because the other distributor had gotten their container a couple days earlier,

rob gitelis  0:32  
all of these bikes that were waiting on something now that something has now finally started to arrive, you need to take these you ordered that here they are

Jake Dudek  0:41  
trying to do it in a conservative way, so that you don't get caught holding the bag eventually, the more

tyler jordan  0:48  
understanding as an industry that we have and where we stand, the more we're gonna deal do a better job to work through this together.

wade wallace  0:58  
We heard in episode one, the feast about the unexpected windfall that the cycling industry saw during the start of the pandemic and how it reacted. Of course, that didn't last forever. And in this episode, we talked about the early signs of this new demand that was coming to an abrupt halt, and the types of behaviour that was happening, and the causes of that behaviour that led to the catastrophe that the bike industry would later see. To start off with, here's Ellery Slater again, from sports garage, independent bike shop.

Elorie  1:28  
I am going to share this because I heard it, like I actually heard it said, We attended a product reveal during the pandemic. And, of course, the conversation came around to like, how do we keep getting bikes? What do you need us to do? Like, what should we do about 2022? Are you going to have bikes? What how much should I order? Like, we were starting to ask our manufacturers questions about 2022. Like, we had to turn in a preseason order, but we had nothing remotely normal against which to gauge what was going to happen. And we've just been through this intense experience of like not getting bikes. And so we're thinking well, okay, here's our forecast, how many units? Do we need to meet our own sales goal? Where are we going to get those units? That was told to us that, you know, because we're top 10 buyer, and I was curious about how the buyers rank higher than us we're doing. And we were told, Well, just you know, we're getting about, you know, however much percent of what we order, so we just kind of inflate, you know, we're going to inflate the order. And so that we can give as much as we can, and like we're going to, you know, we're delivering at about X percent right now. And they were like, just roll deep, order more, and get in frontline, getting the frontline. You can always cancel later if you don't need it, but like, put your units in so that you've got all these units in there. Because in case we get Model A you've got orders in the system for model a shipping to you. And maybe if we happen to get Model B, then you're gonna get Ship Model B, right. So we did we increased what we ordered dramatically, and so did other like minded dealers like Alright, we gotta roll deep, we got to get the bikes. So if if you are getting, we were instructed by our vendor partner to just order more, get in front of line, cancel it later. You don't need it. So if you multiply that over hundreds of dealers, yeah, then dealers started cancelling orders. But you know, I was told manufacturers, someone said to me, manufacturers are in the situation they're in because dealers cancelled orders. And I'm like dealers cancelled orders, because we were told to roll deep, and then trim if we needed to. So I don't know what was happening in planning and purchasing departments. But at the moment in time that a manufacturer saw that they had already grown by 3040 50 60%. I don't know how much they grew like manufacturers grew tremendously, right? And then they see a backorder for even that much more, Didn't someone throw a red flag and go, Hey, are these backorders real? Right? Are our dealers really going to take all this product? And I mean, I don't know, I've never been in the purchasing department at a manufacturer. But to me, the numbers got so big. And and even if you scale it on in our business, and we looked at the numbers, like on a percentage basis, they were insane. And we cancelled a lot orders.

wade wallace  4:20  
At this point in time when when when this was the mindset and deals are being told this. We're already starting to flow as supply starting to be less constrained or was still supply really hard to get your hands on. I imagine it would have been by your message. Yeah,

Elorie  4:36  
it was still pretty hard to get your hands on. Right? I would say things, things really, you know, they broke things really started to break loose. Later in 2022. But you know, you and I started the conversation with uncertainty and cautious optimism in March of 2020. And if you think about the intensity of delivering that product, for let's call it 20 months You're like, what? Next? Right? You know? Yeah, we were asked in 2021 by Rocky Mountain to turn in. It was about it was about April of 2021. We were asked to turn in our order for all of 2022. Okay. It's usually we would have placed that order late summer lately typically like, you know, your your order window, you know, usually it's like July, August, you're ordering for the next year. So they're getting ahead of it was didn't seem unreasonable. They were back in June. And in June, they asked us to place our order for all of 2023. Wow. Right. So what we've written our order for 2022 Total guess they're back two months later, to order for 2023. Even though we don't know how much 22 product we're actually going to get. Nor do we have any idea of whether we're going to sell it. In

wade wallace  5:55  
your, in your mind, are you feeling a bit of pressure, we have to get in here. Otherwise, we've missed the boat, and we're gonna have nothing.

Elorie  6:01  
Absolutely. If you are a dealer and you put yourself emotionally back in that situation of like, I if you can't deliver the bike, the reason that I said send me the bike, even without the wheels, you may have made the sale. Yeah, maybe you took a small deposit, right? You got to pay your payroll? Yeah, you don't actually get paid on that bike. So you put it in the consumers hands unless your take and all these things were discussed, or we have to take full payment upfront, we have to take a 50% deposit. Like we talked about all the different things we thought we would have to do. But the real issue and then this was an issue for manufacturers as well. You cannot convert bikes to cash without a bike. Yeah. Yeah. So if you were really like, let's say in like small t trauma daily, about getting bikes, you definitely got the sense of like, I Okay, I'll get mine, I'll get mine.

At one point in time, I remember this because we were like, Okay, we have taken vacation. So we decided to go to Hawaii, like everyone else in America, right? Because we could get to Hawaii. Yeah. And I remember that it we were looking at like, we were still logging in from our vacation and looking at like work orders in the system. And we had said, Okay, finally, we've whittled this down. But I remember in April of 2021, we had 81, carbon full suspension bikes, that we had received deposits. And that were technically in the queue, meaning we were waiting to receive the bike and then build the bike and deliver the bike 81 full suspension carbon mountain bikes. And

wade wallace  7:59  
for reference, what would that typically be in a normal year?

Elorie  8:04  
I think before that the highest we'd ever had where it was like, Oh, we don't have the bike yet, or we can't fit it in the stand. Like it's just really busy. Like we got to bring we bring in some some contracted labour to build bikes when things would get busy. I think the longest that list had ever been in the history of our shop was like 18. Like we're 18 sold bikes deep. It's out, right? Oh, my gosh, we've got 18 bikes in the queue, like we better make sure the service department is super tight for the next week and a half. But at one,

wade wallace  8:28  
and how long did this crazy behaviour and mode of operating last before things just started not to feel right in terms of demand starting to slide.

Elorie  8:43  
I think it's interesting that you asked the question things not to feel right about demand sliding, let's be really honest, that it should have felt like we need to be careful. This isn't quite right. How we're doing business right now.

tyler jordan  8:55  
Yeah. Right.

Elorie  8:57  
Like, I think the reason I'm saying that is because I think everyone knows today that that the amount of inventory in the cycling industry on hand inventory, whether it's at a dealer, or a manufacturer is an unprecedentedly high number right now. Right. So I think the real question that we're trying to get to as we work through time. The reason this is a relevant conversation today is because how did we get here? We're talking about demand sliding, sliding from what a high that we thought was sustainable. A number we thought we were going to keep doing relative to a 135 year forecast that we would have done back in 2018. Sliding from what and has demand really dropped off that much relative to the number of bikes that we sold me We're kind of asking the wrong questions. Did new people stop joining the sport? Right? Because we remember the 1500 to $3,500 bikes? No, no, guess what Wade, Johnny and Susie started playing soccer again. And Mommy can go back to her yoga class. What did manufacturers think was going to happen with those people? Did they think everyone was going to keep coming into the sport at that same rate was

wade wallace  10:22  
the rhetoric around that gateway of people moving more into the sport? There was I

Elorie  10:28  
actually had, I had a national sales manager I visited with once say, the sport is going to retain 80% of those riders, and they're all gonna want to upgrade because they're gonna love it, they're gonna fall in love, and they're gonna upgrade right in the history of what sport in the universe has the sport retained. Someone who tries the sport for the first time at 80% says no sport ever, we kept thinking, No, like a realistic number, research backed number. Based on the adoption of outdoor sports based on behaviour based on context, Brad and I kept going, I think it's more like 10% or less. I think we even at one point in time said 3% of the people that bought a bike under $3,500 will upgrade sometime in the next two years. 10% will stay in the sport, maybe 3% will become enthusiastic and upgrade someday. And manufacturers were like, No, we're going to retain like, like 80% of these people are gonna stay in the sport. And I'm like you were to come up with that number. I'm like, you are reading your own press or maybe just like wanting to believe that story. Because you somehow need to validate the order you just placed with your Pacific Rim manufacturing vendor, right? Yeah. It didn't make sense to say that we would stay on this continual upward trajectory. I mean, if people just slow down and think about their own experience, slow down and think about what was happening in the lives of the people that chose to buy bikes for their family when they couldn't go to the gym. But what behaviours did you have during COVID that were COVID specific behaviours that you don't have anymore.

wade wallace  12:10  
You mentioned the the the IBDs in the middle, the ones that would have had to make those tough choices. They were the ones getting into a lot of trouble, I imagine by by responding to the demand and needing to be opportunistic. I imagine from what you've described you the market as you were fortunate in that, okay, you weren't just going to you didn't feel like you were going to take that 80%. So you could maybe take comfort in that you didn't have all this inventory or stock or demand that wasn't going to continue. But you were still swept up in the better place your orders better. Yes. Otherwise, you would have nothing, potentially,

Elorie  12:50  
totally. And we were I will say, I'm not going to say we did everything perfectly. Of course, we got a little swept up. And of course, we were a little nervous. And we started 2023 with twice as much inventory as we normally would have. And we did not like it. We did not feel comfortable. Right. And and our level of inventory was lower than many of our colleagues. But when we looked at our balance sheet, and we were like, is this a healthy balance sheet? We were like this. This is not comfortable. We have heard horrifying stories of how much inventory people got. Right? Because remember, when we had in the conversation, either getting swept up in didn't line is the message right? Yeah. Well, what if you got swept up in any you got in line and you forgot which line you got in. And then one day 900 bikes showed up. And that happened, Wade that happened with that have we have a colleague out of state four states away that has a storage unit, with 900 bikes in it.

wade wallace  13:54  
Now that we've heard from Ellery who is on the ground, seeing what's actually happening, and with pressure coming from the brands down to the bike shops. Here's another perspective. This is Tae Huang again from quality bicycle products, or QB P, the largest distributor in the US, where he was a forecasting analyst during the pandemic. Now, for those of you familiar with the supply chain in the bike industry, the distributor sits in the middle between the brands and the dealer network. But many brands who are already established in the market often don't use distributors so it's not completely clear cut. But for your own reference, QB P distributes the likes of SRAM Shimano and over 250 other brands in the US as well as owning some of their own house brands.

Tae - QBP  14:38  
Internally I don't think I ever heard anyone said say this is the new normal. The sense of the building was was pretty uniformly, we need to take advantage of this while we can increase our POS call it all the favours get the product in but keep your hand on the stock button, right, just just hover, right? Yeah. So we were watching sales, we were looking at different sales trends to see how things were shifting. And then like I said, we had those surveys that were going out on a monthly cadence from I want to say mid 2021 through early 2022. Is the shop serve as Yeah, watching and seeing if there was a shift that would tell us a stop

wade wallace  15:26  
the forecast demand planning. Was this a huge increase that you were committed to during this time for you know, the next year and do when were you forced even in order beyond next year, too.

Tae - QBP  15:45  
Late 2022, you may have seen a bunch of scram axis sales kicking off, at least stateside, those were the result of scram, agreeing to go on some pricing holidays for the entire US dealer base. Because they they did what we call a blind ship, which is when you ship a pre order without any approval or confirmation. And pretty much what happened is, all those orders, those retailers were submitting through 2020 2021 2022 that scram couldn't facil, when all that products finally became available in late 2022. They pushed it out the door. I get that the retailer placed the order is the retailer's responsibility to track those orders and make sure those POS are should still be open. But some of those POS were dang near two years old. Right? You should have at least up some courtesy calls. And they just kicked out millions of dollars of product and in a matter of weeks,

wade wallace  16:56  
dipping them directly to fruit to the shops. Exactly,

Tae - QBP  17:00  
yeah, directly to the shop stores. And normally those shops would never be ordering direct from scram, because their quantities would never be high enough to necessitate it. Right. Right. Like thread does do big orders. But it's not their business to handle weekly orders from retailers. They're trying to get into it. But I mean, that's a big expense to set up something like that. And so these retailers were desperate, they couldn't get that product from Q they couldn't get it from JM B, they couldn't get it from Holly. So they place these orders with scram with just kind of the attitude. And we'll get it when we get it and then promptly forgot about them. Right. Right. So like, talk about our horizon, that that's what we're talking about here, right? Like, yeah, that's showing up 18 months, 24 months after you asked for it. And that is frankly, what I'm assuming what most most, at least distributors and manufacturers are sitting on now. It's the stuff that they place orders for over a year ago, that they just did not have the ability to cancel. I recall us slowing down our purchase orders again. Well before 2022 started, but just the tail on those orders was so long, right? That we were still getting product into 2023. Well, after our sales no longer supported having this new product come in.

wade wallace  18:29  
Someone was telling me what will retailers or would often do as well is they might if there's two SRAM distributors, they might order one from an order from one and an order from another. And then they both would show up. Yeah, basically 50% over ordering just to hedge their bets. Right, right. Our

Tae - QBP  18:50  
sales reps because they were primarily tasked with selling PNa. And what they were tasked with selling was product we didn't have a lot of stock in. They were mostly spending their time just helping retailers find inventory. But I directly like compare that to some of our competitors, other distributors that definitely did hire contractors. So folks who are paid based off of what they sell, whereas our reps were all salaried. And so those those groups would employ, we call it count and fill. So the rep would show up and then literally do an inventory check on the wall or inventory count for their whatever brands that they carry. Then would pop up on their laptop log into that customer's account. Put all the Fill inventory into a cart and just turn it around say hey, press go. Right. I guarantee you those guys were putting in like 80 hour weeks doing as many counted fills as they could during that time period. Right just like filling up those retailers stocks. Right when a survey is late 20 and 21. Were already coming back to me and retailers saying no, I'm going slim into 2023.

wade wallace  20:12  
You were sending out these surveys and what was what was the purpose of them?

Tae - QBP  20:15  
Yeah, the purpose was really just to see if we could figure out what the stopping point would be.

wade wallace  20:21  
Right? You guys were anticipating an end at some point. So you thought, Let's do consent, continuous surveys, to feel to get a feel when to put the your hand on the stop button. So how are those surveys going? Initially, when you first started the?

Tae - QBP  20:37  
Yeah, I mean, free freight is always a great way to get retail responses. And there was a lot of retailers, late summer 2021, I think is when we started. Best year I've ever had each month is better than the last, I don't expect the foot traffic to slow down. I'm excited about next month. And then you know, we we asked about different categories, how's your road traffic compared to last year? How's your mountain business? How's your kids business? And so we we got as granular as we thought we could. And it was it was a group of analysts and then purchasing side folks that kind of put our heads together to come up with the broadest picture that we possibly could of things, but with the anticipation that it would tell us what's happening maybe in one category or not in another. And we definitely saw that, you know, really, the stopping point was not necessarily that the results were telling us that the COVID boom was over. It was just retailers were no longer willing to fill out surveys anymore. I think the last survey we had less than a dozen retailers respond.

wade wallace  21:49  
And what was the time of this approximately? Ah,

Tae - QBP  21:52  
I'd say spring of 2022. So

wade wallace  21:55  
no one got back to you. And you know, and that was a bit of a defining moment where you thought that something was turning around.

Tae - QBP  22:02  
Yeah, right. Yeah, it was it, you know, partially, they responded to a dozen of these things. Partially, it was, you know, it started the season. So this probably ramping up. But hindsight being 2020, it was probably also because it was pretty depressing, right? All these retailers that had been talking about how confident they are about next year, rapidly losing confidence.

wade wallace  22:32  
This podcast is fully funded by our members at escape collective. In fact, all of our content on our website, and our podcast network is 100% supported by our members who believe that cycling media should be independent from the sport and industry recover. And that we should exist to serve you rather than live or die by our ability to be a platform for the sole purpose of selling you more stuff. If you enjoy this podcast or any of our other work, and believe in our mission of independence, please go to escape collective.com/join and become a member today. Thank you for your support. Now remember the count and sell agents that tape mentioned a couple minutes ago who were hired on contract, because Ellery Slater will talk about them in a later episode and the incentives at play that created some of the unintended consequences that led the industry to where it is now. Now, you've probably heard about the bankruptcy of wiggle chain reaction that shook the cycling industry. They were once the world's largest direct to consumer online cycling retailer, and seemingly overnight in November 2023. They collapsed. I spoke to Jake Dudek, who was VP of commercial operations at Cigna sports, the public holding company behind Wiegel CRC. We'll get to the reasons behind the downfall of Cigna in later episodes. But here's Jake's perspective on the leading signals during the pandemic while he was at Wagle chain reaction.

Jake Dudek  24:02  
You know, I was thinking about the bike space at that time, because the job that I had been in before that was I was with backcountry and competitive cyclist and yeah, had exposure to bike space there. Two thoughts crossed my mind like the first was for sure one, there's going to be a ramp and participation. And there was you know, it was like maybe 10% growth in the year 2020, something like that. The second was, this is going to be a massive demand pull forward. So like rather than having, say you have this like this cohort of people and say they're new participants. We'll just make it simple. So say you have this huge cohort of new participants. And normally they would be staggering their purchases like maybe over a five year period. It's just going to align like everything like all against this phenomenon, because everyone's stuck at home. And I think my head immediately went to like, people are definitely gonna screw up the procurement on this, like they are going to think that this is somehow a recurring thing. And they are going to over ramp procurement production, and they're going to bury themselves. And I was thinking that because I was trying to avoid that at all costs, like in my current role, you know, like I was, I was trying to balance like being conservative with procurement and balancing that against, I guess we'd call it almost like, artificial, almost an artificial demand, you know, yes, it's demand and yes, you're trying to fulfil against it. But you're trying to do it in a conservative way so that you don't get caught holding the bag eventually.

wade wallace  25:43  
Here's Roger tell us from factor again, speaking from Taiwan, where much of the bicycle industry is hard goods are manufactured?

rob gitelis  25:49  
Well, I think that everybody's starting to see that demand was was already starting to slack in 2022. And I'm speaking from the industry standpoint, not necessarily factor at that point, factor was still quite strong through 22, also in 23. But I think from the industry standpoint, I started to hear that, okay, that demand is definitely starting to decrease. But all of these bikes that were waiting on something now that something has now finally started to arrive. And so those factories now we're finally able to complete those orders and tell the brands, okay, you need to take these you ordered them, here they are. But probably the most important thing was brands like SRAM and Shimano came back to us and said, Okay, can you kind of clean up your orders, can you look and see what you have in the system, what you really want, that will give you the opportunity to cancel anything you don't need, up until like a certain date, and then anything in our anything up into that date, you need to be responsible for it. And so you knew when they came with that policy, that obviously everybody was coming to their senses, they didn't want to continue to produce things that they couldn't sell. But they obviously had already produced quite a bit. So they can only cancel those orders that were out into the future, they couldn't cancel the ones that were already in the production.

wade wallace  27:19  
Now coming up, pay close attention to the term phantom orders that Josh Portner from silica later refers to this is a term that I've heard again and again in my conversations, and it refers to orders that were placed by either bike shops or others up the supply chain that led to the exaggeration of demand.

Josh Poertner  27:40  
We're the largest 3d printer of titanium product and cycling, like, by far, we print for around 40 customers worldwide. And we really started to notice it from them and hear it from them. And then the other thing we started to notice a little bit from those guys, but from our couple of our big distributors were like Shimano SRAM type distributors. Also, I had a conversation with someone I've known for 20 years at one of these big distributors and kind of off the cuff. He said, Oh, God, you know, we just, we just received a container, 40 foot container of this group, oh, that we've had on backorder for months. And when we called our customers, none of the business was there, because the other distributor had gotten their container a couple days earlier. And all of it was phantom business, because all the shops had ordered from both. I kind of got off that and grabbed to my sales team here and said, Hey, guys, I start calling people and just talk them up in chat him up. What do you feel? And what do you see? What are you hearing? If that's happening in that market that's happening in all the markets. And if that's happening in all the markets, then this whole thing is gonna get ugly real quick, because all the demand is at least 50% of the demand is phantom demand at that point, and all we have to do to uncover it is just fulfil one of the halves and, and the other half goes away. And it turned out, yeah, for probably six to nine months. Following that. I bet I heard some version of that story. 100 times.

wade wallace  29:28  
We heard from Tyler Jordan, the CEO of apparel brands seven mesh in the last episode, and here he is again.

tyler jordan  29:35  
So I can't wait to listen to the podcast to find out what other people's experiences because for us reflecting on it. I think I realised that the slowdown was happening late, I think. I think it did impact us later than other people. We were we were in q4 of 2022. Right and we'd reduced our forecast for 2022 At that point, but we reduced our forecasts from a really great number to a pretty good number. And keep in mind that Get, like I said, we were really small brand. And we're still a small brand. But we still grew really well during 2022. And didn't really feel the decline until halfway through q4 is when we start to say, wait a minute, here, this term is starting to get interesting. So again, we'd still, we'd sold in our orders for dealers for spring, and they sold him pretty strongly, we hadn't experienced a lot of cancellations, we started to feel like things were a little slower in that time period. And then it was only in q1 of 2023 that we realised like, okay, so this is actually really slowing down hard on us now. And again, because we do, you know, a bulk of our business has been wholesale, we were maybe late to get the warning signs, because they were coming from our dealers, rather than coming from higher up the supply chain. And that's when you know, dealers say like, oh, okay, I might need to tune back my, my spring order a little bit things are, are slow or what have you. So, you know, we were doing great percentage growth numbers through 2022, and didn't really feel any pain until 2023.

wade wallace  30:57  
In q4 2022, as you say, when you started seeing the signals of demand, decreasing, what was in the pipeline of orders at that point?

tyler jordan  31:08  
To answer that question properly, I just first want to say, as a small apparel brand, that is, you know, wants to work with great factories, great materials and needs to hit certain minimums to do that. We are always exposed on inventory. So you know, and in most small liberal brands, depending on the business model do face that challenge. So we carry a high level of inventory relative for our sales. And we turn it slowly. And so we are already in a situation where compared to some brands that can run more cleanly or efficiently. That way, we're kind of exposed. And that's an artefact of the fact we'll, that's what we choose to do. And that's a consequence of that we live with, as we saw in q4 of 2022. As the business we're starting to sense that slowdown. What that meant was if you think November, December of 2022, we are slowing down a little bit from our 22 goal. So we had a bit of extra inventory compared to where we wanted finish the end of the year. But that's pretty minimal compared to the fact that humans were a little is already high, if you will, we had all of our inventory for Spring, Summer 2023, on a boat or a boat to get on a plane and land in Vancouver and come to Squamish. And those those have been committed the prior July. And so the ability to adjust to that point is non existent, we're actually in place our orders for full delivery, usually around January. So we had about 30 days to decide how much you want to build for fall. Right. And at that point, when we sell on our fall season, we haven't gotten a request for dealers yet, so we're flying slightly blind. So we are committed, we're big time committed from a exposure point of view. And we have limited visibility on information. And so it's, it's difficult. And again, that's that's just the nature of a small business that we don't have all that, you know, we don't have everybody sell through data, live inventory levels, we don't have all these things, you get a bigger and more advanced companies, it's a little bit more seat of the pants, and we have to be comfortable with that is

wade wallace  32:59  
the the wholesale model of in your part of the industry with, you know, bike shops, and that who don't carry good first party data quite often would that have made a difference to your business, if they had or if this was a 100% DTC business fail,

tyler jordan  33:15  
I think that I should have done a better job of making sure I was sensitive to key indicators that could have given me clues. at an earlier time, you know, there's information out there that I could have been paying more attention to, or I could have gotten access to here and there. We're small enough that we don't need super detailed data, because we're not going to dive into it and parse it out and figure out sales by region. And you know, identifying smaller opportunities, like we're in a mode where we're building products, because we think we want the world these, the world these great products. And we think we can do worthy stuff. And we want to we want to smash a ball to the park every time and make something awesome and wonderful and innovative. You don't hit that every time. But that's what motivates us every day to go to work. And so we design and build products sometimes aren't that commercial because we think it's the right thing to do. And then there's this mindset afterwards, like Oh, I better figure out whether I can sell these or how many and we get ourselves into trouble a little bit. We're not naturally plugged into a lot of data because we're not trying to figure out what to build next from you know, point of sale data. We're more on the leap of faith early stage where it's like I can build a better mousetrap and oh boy button world's gonna want one of my mousetraps. So if Walmart's I don't Germany won't most Walmart is selling today because when we give them a better one holy smokes, they're going to sell a lot more. That's a that's a mindset where that data is only so useful to us. But the early indicator aspects of that would have been super helpful. And right now, I would love to have more access to data, but what's actually happening out there, how much inventory people have when some of these phones will correct itself? Because they'll help us make smart decisions as a business and for our partners, you know, for our retail partners and for raw material suppliers. We only back each other with the decisions we make. And the more understanding as an industry that we have of where we stand, the more we're gonna deal do a better job to work through this together.

wade wallace  35:13  
Tyler touches on something very important that we'll get into later. And that is the absence of first party data in the bicycle industry. first party data refers to the data collected on the end consumer, or even the amount of inventory a bike shop has and what's sold through. This is where the bike industry is still not very mature. And there's all sorts of data sitting in different systems, which doesn't give a good single view of the end customer. There are many different sales channels and different databases, and none of these layers talk to each other in most cases. As you heard from teh from Q, BP talk about, they're relying on surveys to retailers in order to get this information, and they certainly were not real time views. For many parts of the industry. They were totally flying blind. One high ranking person from specialised told me that they saw signs of the demand beginning to wane. But they didn't have the first party data to back that up. Meanwhile, upper management was pressuring them to increase the forecasts, and that this was the new golden age for cycling. The combination of this bullishness within the company's leadership, along with the over indexing of supply due to retailers, fearing they would miss out on their orders lead to a catastrophe. In the next episode, we'll talk about the abrupt slowdown of demand and the disaster that ensued.

Elorie  36:33  
Think that it is a call, I think that all of this experience and where we're at today, I think that the real conversation we're having is is the bike industry going to see this moment for what it could be, which is an opportunity to get more sophisticated.

tyler jordan  36:46  
We have buyers that want to bring in our stuff, but can't right now until we move some other inventory. And so we're in a pretty tough spot, playing a bit of a waiting game. And sitting and waiting is not what we're good at. And it's not very comfortable. Someone

Josh Poertner  36:57  
with one of the major brands told me they were they were spending a million dollars a month to store their inventory on bikes. And so I don't know how many bikes you have to have in a warehouse that it costs you a million dollars in storage fees, but it's a lot.

Tae - QBP  37:09  
The consensus within the building was pretty unanimous that what the COVID period had done was just accelerate the bike industry through almost inevitable change that we would have gotten to any way

Transcribed by https://otter.ai