October 3, 2011
Filed under Features
Dealership bucks trend with customer satisfaction
By Dave McMahon
Simply Sport Bikes in Eden Prairie, Minn., leaves no questions unanswered with its direct and to-the-point moniker. The dealership’s showroom floor features up to 65 sport bikes at once — all of the pre-owned variety.
Any talk of a down economy brings no ill feelings at Simply Sport Bikes, which stocks only the Big 4. At times, the floor is home to 120 bikes.
“The shift in 2008 went away from new. People still wanted bikes, but they shifted to the used market. For us, it was good — we’ve grown in a bad economy,” general manager Brian Cox said. “We’ve grown every year since we started selling bikes in 2006. So 2008 really didn’t hurt us. It wasn’t great for accessories, but that wasn’t our core focus.”
The dealership, which has 10 employees, shares its location with sister business Simply Luxury Imports, an auto dealership. The average age of the bikes sold by the dealer is five to seven years old. In unit sales alone, the dealership has grown 65 percent on average per year.
Cox took us beyond the front doors to get a closer look at his pre-owned sport bike dealership.
PSB: How did you decide a) used only and b) sport bike only?
BC: Sport bike only because that was what I knew and that was my passion. I didn’t go out and get educated on the cruiser stuff. And that was who I rode with. I would buy a bike from a friend I knew and sell it to another guy. That was what I knew.
‘Used only? That’s because we were selling only used cars and we had a used dealer license. It’s a lot less red tape to get into the used market. Granted, there’s a large cost to get in and start buying bikes and getting a facility and what not, but it was a lot easier than trying to sell them brand new.
PSB: How did you get into riding?
BC: I started riding 11 years ago. Two friends bought bikes and said it was the coolest thing ever and I swore I would never do it. They rode for a month or two before I gave it a shot. I was totally hooked. I had 1993 Yamaha FZR600.
PSB: The sport bike new sales numbers are declining nationally and have been for some time. Does that play into your business model?
BC: I don’t know. For a long time I’ve been trying to make some sense out of the correlation between new sales and used sales as well as what our growth pattern has been. We’re probably too new to see any pattern that way. I do see statistics that say over the last couple of years, the number of used bikes that sell has been around three times the number of new bikes. But more recently, in the last year or two, they say that number gone up to four times, so that would sound like an increase in used, but there’s also been a decrease in new. I think the market for used will be strong for a long time.
PSB: Is your growth coming from riders who have bought from you before, and now they’re trading in their bike for something different?
BC: We have growth from all over. We’re the baby, the up-and-comer. People come to us to be different. We’re the alternative to the big dealership. The other side of our growth is in the continued demand for used bikes. We continue to supply that. And yes, we do have customers who will buy then come back and trade or resell to us. As we continue to grow, we’re trying to find new avenues for purchase: auctions, private parties, trades, other dealers. Every year I try to look for one more avenue for us to buy from.
PSB: When you look back at some of those avenues you’ve tried so far, what’s worked?
BC: A few years ago I started buying at auctions and that really worked for a while. The wholesale prices have been too strong lately for us to buy at auction. Three years ago I thought that was the longest shot and that it would never work. It worked well into the market changed. The market shifts, so you have to change how you buy and sell.
PSB: How easy or hard is it for you to detect that market shift?
BC: That’s a good question. I try to stay involved in the buying and selling to keep the pulse on it. About a year-and-a-half ago, we noticed that as the new sales declined, that the demand for used was increasing on the wholesale level, but the prices weren’t increasing on the retail level. So we were pinched. We were buying stuff at auction and trying to sell it and making very little money. Now that the retail market has reacted, we’ve seen some of the book values increase to reflect the real market value, as opposed to the straight-line depreciation that a lot of books use.
I also talk to my customers. If they tell me they were down the street at Big Dealer X, Y and Z, and I’m overpriced compared to them, I’ll look it up and figure out if I am. For a while we had customers coming in and telling us we’re overpriced. We’d shop it and find out we were and had to adjust. Similarly, as we started buying bikes and running into other dealers at auction, we could see that the trends were growing up.
PSB: Are there other dealerships out there similar to yours?
BC: Not that I’m aware of, either locally or in other markets. I think that we are the largest used sport bike dealer around, but that’s really niche. And really fun. I’ve got one guy that drag races, another guy that stunts. We’re all enthusiasts on sport bikes.
PSB: Do you have plans to expand into other
BC: We recently expanded into cruiser sport-type just because we have to continue to grow, because once you stop growing, you’re dead. I want to continue to look for growth opportunities. The money’s always made in the buy. If you overpay for it, you’re going to have to oversell it.
PSB: How much revenue do you drive from service?
BC: About 4.5 percent. On a dollar-for-dollar scale, that’s small, only because we started the business with a focus on sales. We’ll spend $100 or $500 getting a bike ready if it needs it. We can service most any make or model.
PSB: Why do your customers buy from you instead of the proverbial guy down the street?
BC: Selection. They’ll say the selection wasn’t big enough at the other dealerships. Here they have too many to pick from. And they want used because they don’t want to pay new prices.