Posted by Jonathan Maus (Publisher/Editor) on March 13th, 2012 at 10:02 am
"If a thousand-dollar bike purchase takes $30 off the retailer’s bottom line, the same purchase made via Dwolla only costs him 25¢."
— Rick Vosper, bike industry marketing consultant
Rick Vosper is a veteran of the bike industry who has worked for major brands and now — as founder of Rick Vosper Marketing Services — makes his living by being smart and thinking outside box. I've followed Rick for years and one of the things I appreciate most about him is that he is not afraid to challenge the conventional wisdom and status quo that often rules the bike industry.
Rick's latest idea is to help bike shops make more money while also funding U.S. bike advocacy efforts by adoption of Dwolla, a relatively new service that offers a lower cost way to process credit card transactions. The title of his blog post about it is what first caught my attention: "Let’s Put $15 Million Per Year Back into Retailer’s Pockets…And 7.5 Million Into Advocacy's."
In recent days, the post has gained traction and has even been picked up by the venerable Freakonomics blog.
In a nutshell, Rick estimates that America's 3,000 or so bike shops are throwing away about 3% of their profits — or $90 million a year — to major banks simply for card transactions. He wants them to put more of that money into their pockets, and ultimately into the pockets of national advocacy orgs. "If a thousand-dollar bike purchase takes $30 off the retailer’s bottom line," reasons Rick, "the same purchase made via Dwolla only costs him 25¢."
The catch with Dwolla is that both the merchant and the customer must have an account (which takes just two minutes to do online). Rick thinks bike lovers would be more than happy to sign up if retailers offered to donate 1% of the purchase to a bike advocacy campaign. Here's more from Rick:
"Let’s go back to our thousand-dollar bike example for a minute. Would, say, 1% (ten bucks) off the purchase price be enough to answer the “What’s in it for me?” question and incentivize the customer to open a Dwolla account and have the funds taken out of his bank immediately? Maybe not.
But what if the retailer offered to donate 1% of the consumer’s purchase price to World Bicycle Relief or People For Bikes in exchange for taking part in the two-minute online Dwolla registration process? Heck, if I know anything about cyclists, you’d have to hold them back from vaulting over the counter and commandeering the computer screen for themselves."
Why do I think this idea is worth bringing to your attention? Rick runs the numbers:
"... we’re talking about $14,985,000 distributed among 1500 retailers ($10,000 dollars of pure pre-tax net profit apiece) and $7,493,000 to advocacy."
Read Rick's post on his RVMS blog for more on his idea. Good luck Rick! I have personal experience trying to get the bike industry to innovate and try something new, and I know it can be an uphill battle.
I'd love to hear from bike shop employees about this. Is Rick on to something here? Can we make a push to try this locally? Are any Portland bike shops promoting Dwolla?