Discount prices at Umotors no more

[wheatonFJR]

I'm not as eager to throw UM under the bus as some of the posters above... they've always given me excellent service and support for parts I've bought, even going out of there way to make things right when stuff got screwed up that wasn't their fault. I may investigate other options for buying, but believe if their prices are in the ballpark, that they've earned my repeat business.

+1

 

[raclow]

from mike kolstad:------------------------------------------

"I'm sending this to everyone who's sent me an email recently.

I have bad news. Due to an unexpected and very recent policy change made by the top people of the store I can no longer offer you guys 15% over cost on stuff. They have told me I can only do 30% over cost now. Though I'd rather not insult you like this after years of having a wonderful business relationship (seeing that I know that you can get far better deals elsewhere), but I have no choice in the matter. The only thing I can still offer you is the great service that you guys have come to know and love. If you would inform the rest of your groups/friends to these changes that would be great. (As I'm not a member of any of the forums). For those who wish to continue doing business with me the only that will change is the pricing. Also, for those who have gotten prices from me recently, those are now no longer valid I'm afraid. For those of you that currently have orders placed with me, we will still honor the old pricing. Of course if you have any questions on the matter please let me know. If for some reason things change I will of course let you guys know. Again thanks for the years of allowing me to help you guys.

Mike Kolstad

U Motors Fergus Falls

218-998-2200"

------------------------------------------------

don't know if this has already been posted, or if you guys were even using him to begin with, but they _were_ giving great prices to the fj group, i can only assume the same here. no more...

dean

cincinnati

What concerns me, here, is the fact that U Motor has published what their markup is. Sure, competitors can spot check or price shop each other for pricing but now there is no secret. I've seen this before and before long, they all seem to be the same price.

That F*ing Blows!!!
I guess that means I can't crash anymore, cause now I can't afford to rebuild again....

I can't comprehend how the management doesn't understand that selling 100 dollars in parts at 15% over cost is better than selling 0 in parts at 30% over cost?

While I and many others do really appreciate Mike's helpfullness and the quality of service, the increased prices in combination with shipping will probably eliminate them as a viable economic option. :angry:

If the decision does bring in more money for the dealership, I don't blame them, it just sucks....

I agree totally!!!!! No business, No Profit.

(BTW - last time I checked they didn't have to worry about passing on the overhead from a new building cause they're building hasn't changed for the last 30 years).

I'm not sure a new building is the total reason for a price increase but it doesn't help the matter. Because fuel and energy costs have increased SO much, I can see a reasonable price increase. But doing business with a company that hasn't changed their business location for 30 years would make you believe their overhead should be less.

To say I'm disappoointed is an understatement. I normally never checked any where else for OEM and most aftermarket items. But, I understand they are in business to make money and probably feel this increase in prices is necessary.
However, I am in business to save money and, now, no longer feel loyalty to UMotors and will search other places for better pricing before purchasing from UMotors.

'tis a shame to lose a supplier w/ such good pricing and excellent customer service. I'm hoping the latter doesn't chage as well.

Time will tell the story here.

With UM's revised pricing philosophy, their pricing should (in theory) be at parity or slightly higher than these guys: Cycle Parts Nation I've ordered quite a few things from these guys and, apart from their webiste being somewhat slow, have been very happy with the service.

Sock:

This is my fear, all of the suppliers will become the same in pricing. Sounds like price fixing but who can prove it without inside information to factually back it??

 

[Fred W]

This is my fear, all of the suppliers will become the same in pricing. Sounds like price fixing but who can prove it without inside information to factually back it??

Well, price fixing will only work if every single bike shop observes the "fix". That would only be likely if the wholesaler makes demands of some kind.

Along comes one guy that knows the value of selling in volume, undercuts the schemers' prices and blows their whole charade by getting ALL of the business.

 

[raclow]

This is my fear, all of the suppliers will become the same in pricing. Sounds like price fixing but who can prove it without inside information to factually back it??

Well, price fixing will only work if every single bike shop observes the "fix". That would only be likely if the wholesaler makes demands of some kind.

Along comes one guy that knows the value of selling in volume, undercuts the schemers' prices and blows their whole charade by getting ALL of the business.

I agree that a lot of things have to come together before a fix could actually happen. What I mean is, many suppliers may see there is more margin left on the table and this is a good time to make some adjustments.

Blows my mind that in a day with one decision, a lot of your business may walk out the door. How do you think beer producers make money?? It isn't because they have 15% profit margin in a can of beer, it is because they sell in volume.

So your theory that one guy is going to come along and under cut the competition and sell in volume could be true. Now we are waiting on who that is going to be. It may not be anyone.

Research will tell this story soon enough.

 

[Murph]

So your theory that one guy is going to come along and under cut the competition and sell in volume could be true. Now we are waiting on who that is going to be. It may not be anyone.

There is usually a seller who "stirs the pot" and undercuts the competition. However, the issue usually ends up being if that seller has the capacity to fend off the "counterattacks" (eg. often lower prices and/or better deals) that tend to be the responses of the larger sellers to "hurt" the vendor not playing by the rules. Once vanquished, those with capacity (usually the larger players) then raise prices again.

 

[SockMonkey]

Along comes one guy that knows the value of selling in volume, undercuts the schemers' prices and blows their whole charade by getting ALL of the business.

But were they really selling in any volume, or was it 1 or 2 UM employees taking a dozen-odd phone orders a week from "people-in-the-know" on boards such as this to gain a bit of customer loyalty (which they obviously did)..? UM management wouldn't have killed off a cash cow if in fact it had been one. Not in this economy. I'm sure it wasn't a decision taken lightly, but management probably figured that the costs/reduced profit associated with servicing that loyalty outweighed the benefit. If you've got investors, bankers, shareholders, etc., that want/need to see solid margins, loss leaders like heavily discounted parts weigh on your books. Sure they'll lose a few customers (certainly not all), but now they only need to sell 1 of something instead of 2 to make the same profit but with the added benefit of reduced inventory expense and carrying costs. It's not personal, it's business.

 

[Murph]

[...] but now they only need to sell 1 of something instead of 2 to make the same profit but with the added benefit of reduced inventory expense and carrying costs.

Very well said. Keep in mind that, since Walmart is taking over the world, we tend to think that the "Walmart way" (ie. sell more at a lesser retail price per unit) must be the best way to do more business. But it is important to note, for example, that even though Target does not sell the same volume as Walmart, Target remains very profitable by using a different go-to-business strategy of maintaining tight inventory control measures.

I think Sock is on to the bigger picture here with University Motors as to why they are willing to trade higher unit volume for higher dollar per transaction. It might make perfect sense for them. Still sucks for us though. :glare:

 

[C&C]

The title of the thread is a little misleading; it's not that the discount prices are no more, it's more that the discount prices are not as much as they used to be. You can lament the loss, but no one needs to be indignent about the changes. It was nice while it lasted; all you have to do now is shop around a little (or remain faithfult to University if you like the way they do business). The reduction in discount seems to have leveled the playing (by the looks of the comparitive prices posted).

 

[raclow]

Along comes one guy that knows the value of selling in volume, undercuts the schemers' prices and blows their whole charade by getting ALL of the business.

But were they really selling in any volume, or was it 1 or 2 UM employees taking a dozen-odd phone orders a week from "people-in-the-know" on boards such as this to gain a bit of customer loyalty (which they obviously did)..? UM management wouldn't have killed off a cash cow if in fact it had been one. Not in this economy. I'm sure it wasn't a decision taken lightly, but management probably figured that the costs/reduced profit associated with servicing that loyalty outweighed the benefit. If you've got investors, bankers, shareholders, etc., that want/need to see solid margins, loss leaders like heavily discounted parts weigh on your books. Sure they'll lose a few customers (certainly not all), but now they only need to sell 1 of something instead of 2 to make the same profit but with the added benefit of reduced inventory expense and carrying costs. It's not personal, it's business.

+1

You are correct. We don't know what U Motor's total motivation is for this move other than profit margin on the sale of Yamaha parts wasn't fitting in with what they believed they needed to continue in business. There may not have been enough volume to matter in making this move.

What is has done, to the forum memebers here, is create a buzz about what to do in the future for parts. I know what I will do....I will shop price and service like I always have...so NO changes for me. It may turn out that U Motors is the best place to get the best deal. No matter where you buy, it should be the same OEM part, the difference will be the service.

Cheaper isn't always better, if you can't get the service.

 

[Fred W]

Along comes one guy that knows the value of selling in volume, undercuts the schemers' prices and blows their whole charade by getting ALL of the business.

But were they really selling in any volume, or was it 1 or 2 UM employees taking a dozen-odd phone orders a week from "people-in-the-know" on boards such as this to gain a bit of customer loyalty (which they obviously did)..? UM management wouldn't have killed off a cash cow if in fact it had been one. Not in this economy. I'm sure it wasn't a decision taken lightly, but management probably figured that the costs/reduced profit associated with servicing that loyalty outweighed the benefit. If you've got investors, bankers, shareholders, etc., that want/need to see solid margins, loss leaders like heavily discounted parts weigh on your books. Sure they'll lose a few customers (certainly not all), but now they only need to sell 1 of something instead of 2 to make the same profit but with the added benefit of reduced inventory expense and carrying costs. It's not personal, it's business.

Umm, yes. That will work if the can actually sell 1. But if they sell NONE then this won't be a very good move. If they were only selling a few things before over the phone guess how many phone orders they're gonna get now after doubling their profit margin? A 15% return on sales is better than 0% return on stagnant stock.

University is in FARGO NORTH DAKOTA. I'm just guessing here, but I bet they do not have a real big local customer base there. Which means they need to attract intarweb or mail order customers to sell even 1 of those thingees. They can do that the Dennis Kirk way (massive advertising and catalogs) or the other big players that have the slick web sites. Or they could do it their old way, which was to have a low price, decent service and allow the "word of mouth" to do the advertising for them for free.

We're talking about standard stock, commodity type items like parts and big name accessories, not custom stuff. "Service" filling standard stock orders just isn't that hard or rare. Without a low price, even if they have great service, they will not get the off site sales unless they spend (big) money on advertising.

 

[protondecay123]

Why don't one find first another place that would beat their price since they changed their policy? It may be that 30% is still cheaper than any other location.
In fact, as a datapoint I just bought rear wheel parts from them today and they still beat three different places I tried....including the second cheapest, flatoutmotorcycles.com, by about more than 15%.

+1 Dat

They have provided outstanding service in the past, which has turned into goodwill on my part. I'll give them the benefit of the doubt unless I can find cheaper prices and the same or better service.

 

[dean]

someone on the fj list did a cost comparison on some parts he purchased recently, just to put things in perspective:

--------------------------------------------

"Well, to put it all in perspective, I ran the math on a few random

parts I've ordered from Mike in the past months, and here's what I

learned.

Part #1 - Front fender, rear half

Dealer cost: $34.37

List price: $69.51 (102% profit!!!)

Zanotti price: $44.32 (29% profit)

UMotors price: $39.51 (15% profit)

Part #2 - Front fork seal

Dealer cost: $6.26

List price: $12.94 (107% profit!!!)

Zanotti price: $8.08 (29% profit)

UMotors price: $7.20 (15% profit)

Part #3 - Stock Yamaha rear brake pads

Dealer cost: $19.50

List price: $33.48 (72% profit)

Zanotti price: $25.16 (29% profit)

UMotors price: $22.43 (15% profit)

Part #4 - Stock footpeg rubber

Dealer cost: $7.48

List price: $15.41 (106% profit!!!)

Zanotti price: $10.13 (35% profit)

UMotors price: $8.60 (15% profit)

Interesting, huh? So, I completely agree with Frank, 30% over cost is

still darned reasonable, and essentially matches Zanotti's pricing. I

do appreciate, too, that Mike K. offers the same 30% over cost

pricing on *all* aftermarket items from the Parts Unlimited, Tucker

Rocky, and other catalogs. So for me at least, it means I just have

to do a bit more searching for the best price, but I'll always

continue to get a price from UMotors...and I suspect they'll still

get a bunch of my business."

----------------------------------------------

dean

cincinnati

 

[wheatonFJR]

Thanks for the info dean! :clapping:

 

[Murph]

[...] 30% over cost is still darned reasonable...

I agree. In the world of retail, 30-40% margin is commonplace. I even know of a large and growing sporting goods retailer that achieves 60-75% average margins as a corporate initiative across all its product segments.

But, regardless, we can continue reasoning this price increase but it still hurts to know that we'll be paying more than we did before. :glare:

 

[dbvolfan]

Major retailer I worked for ($15B business) shot for average 30% gross profit margin. Net Profit Margin was ~%5%. That was 7 years ago and when I left the gross profit margin had dropped to around 27% and I am sure since then it has fallen farther due to increased comp from WallyWorld.

 

[caryt]

Sounds like I got my new sheild just in time! :yahoo: Arrived 3 days ago!!

Thanks Mike for all your help to me and other FJR riders!

Cary

 

[scmagna]

My brother-in-law lives in Fergus Falls, is unemployed, and a royal pain in the ass. I'll give him a call and ask him to spend his idle time (all day, every day) harrassing the management at UM until they agree to rescind the change in policy. They will last one day max.

Kurt

 

[wheatonFJR]

My brother-in-law lives in Fergus Falls, is unemployed, and a royal pain in the ass. I'll give him a call and ask him to spend his idle time (all day, every day) harrassing the management at UM until they agree to rescind the change in policy. They will last one day max.
Kurt

Yeah...that will change the business conditions for Umotors. :blink:

Plus that will put the FJRForum in a good light as well -not- :glare:

 

[ShinyPartsUp]

My brother-in-law lives in Fergus Falls, is unemployed, and a royal pain in the ass. I'll give him a call and ask him to spend his idle time (all day, every day) harrassing the management at UM until they agree to rescind the change in policy. They will last one day max.
Kurt

Yeah...that will change the business conditions for Umotors. :blink:

Plus that will put the FJRForum in a good light as well -not- :glare:

I think he was joking. Wasn't he?

 

[scmagna]

Yeah...that will change the business conditions for Umotors. :blink:

Plus that will put the FJRForum in a good light as well -not- :glare:

I think he was joking. Wasn't he?

Brother-in-law stuff: True

Harassing UM: Just kidding!!!

I forgot you guys don't "know" me.