Having spent a good deal of the past two decades in the bike biz has resulted in a twitch in my knee, which is activated when the prevailing winds in this industry start to shift. My knee started complaining earlier this week, when I heard about the purchase of Supergo by Performance Bicycle. This was the third of three actions taken by big players in the bike business.

The first bomb was dropped by Shimano earlier this Summer. Shimano decided to crack down on how its parts are sold mail order, and has limited its authorized mail order customers to six, five of which are: Performance Bicycle, Bike Nashbar, Supergo, Colorado Cyclist, and Excel. These resellers are supposed to adhere to a variety of requirements. Sticking to Shimano's MSRP is not one of them (Shimano doesn't want to fight a price-fixing battle). But Shimano has had a lot of trouble with its retailers, because so much of its product is gray-marketed. Shimano had to do something to protect its market share, and this depends on whether your LBS will sell the product. This is determined by its ability to make money selling Shimano. Therefore, in a roundabout way, and in my view, Shimano has done its best to make sure its product product being sold at full retail or close to it.

One of the new rules is that Shimano's parts are not supposed to be sold mail order unless they are in their aftermarket packaging. Why would Shimano be a stickler about the packaging? Because this sort of packaging is not supplied to bike manufacturers when the parts are sold as original equipment. They are sold "bulk pack," and one way Shimano and other parts makers save money when they sell their parts "O.E." is to omit the aftermarket packaging. Buying the parts bulk pack also saves freight for the customer, and makes it easier to assemble the parts onto bike frames.

When you get your parts without such packaging, you've probably bought parts that were destined to be assembled onto bikes as original equipment. The reason the parts never made it onto these bikes is because the manufacture didn't sell as much of a certain model as he had planned, and larger retailers like Supergo serve as a great safety valve for such bike makers. One phone call to Supergo and you just relieved yourself of $50k or $100k of excess parts inventory.

Shimano has now attempted to clamp down on this, by making sure its OEMs don't overorder parts and resell them to the Supergos of the world. In so doing Shimano is trying to protect its distributors, and to keep America's retailers from giving up on Shimano because Supergo and a few others are passing the savings onto the end user.

Interestingly, Shimano decided to keep Supergo on as one of the lucky six. This is probably because Supergo has found a way to provide the service and customer support that the "full value" mail order companies provide while at the same time passing their savings onto the end user.

Incidentally, Shimano American did a lot of other things this Summer, such as making sure its parent company in Japan stopped allowing its trading companies to sell parts to any warm body, but that's another story.

The second interesting occurance was American Bicycle Group's decision to sell its Litespeed, Merlin and Quintana Roo models only as complete bikes. Among other things, it is my guess that this is designed to keep Colorado Cyclist from pairing a Litespeed frame with a cut-rate bike kit, and in so doing offering a Litespeed complete bike for a price your LBS couldn't hope to match. In other words, Litespeed was facing the same problem that Shimano was facing: LBS's who've had it up to here ("here" being way up there).

Finally, there is the Supergo deal itself. Years ago Performance weaned itself off selling parts inexpensively, and with its acquisition of Bike Nashbar two years ago it probably owned over half of the bicycle mail order market. But then that pesky Supergo got itself onto the radar and was taking bigger and bigger chunks out of Performance/Nashbar's market share. This was double-trouble for the large conglomerate, as it not only meant lost market share, but an embarrassing admittal that Supergo could outbuy and undersell its larger competitor while offering similar customer service. The antidote was to buy Supergo, and while Performance says it won't make changes, I'll wager than the days of huge savings on Look pedals and Shimano derailleurs are numbered.

Put these three deals together and you see a trend that is good for the industry but tough on the end-user. The garden variety civilian triathlete or road rider (or MTB rider for that matter) is going to find it hard to get a cut-rate deal on parts and bikes, and is going to have to do a lot more looking around for those deep discounts. On the other hand, your LBS owner is less likely to have to eat Kraft Macaroni & Cheese for dinner every night, and he won't have to hide when the paperboy comes collecting.