Although not all inventors can succeed in the bicycle products category, certain attributes make this market stand out from others in terms of accessibility. As mentioned earlier, consumers can see the unique advantages of a bicycling invention. Compare that with a product such as a drip coffee maker, where buyers can't actually see the unique innovation hidden inside, such as a new and improved brewing system. Bikes don't have any such hidden parts. In addition, most bike riders actually understand what each part does. This aspect of the bike business means that every bike shop employee, sport-savvy consumer, bike enthusiast, racer and bicycle magazine writer can immediately distinguish which products are new and different-helping inventors get their products noticed and evaluated.
Lai, Winefordner and Koski all agree that the easy accessibility and visibility of product features is a key reason so many inventors are able to get new bike products on the market. "I tell bike manufacturers that consumers will notice that their products are different if they buy my components," says Koski. "It's one way bike manufacturers can differentiate their products."
But in order for consumers to be able to purchase your product, you need to find a distributor who can take it to retailers worldwide. According to Winefordner, there are more than 100 bike distributors. "Bike distributors will pick your product up if you get good reviews in bike magazines and create product awareness at trade shows or through an advertising program," he says. Bike distributors typically carry around a big catalog of items, and they're always open to competitively priced and innovative products from inventors.
The catch? Distributors require an extra layer of markups, which usually means the manufacturer will only get 33 to 35 percent of the final suggested retail price. "The distributor typically takes a 28 to 35 percent margin, then the stores mark the product up 100 percent," says Winefordner. So if the store pays $10 on a $20 product, the distributor will make $2.80 to $3.50.
Once you find success with your bike product, expect manufacturers to come knocking on your door before long. Most of them are anxious to buy out potential competitors, and most bike inventors are more than happy to either sell their ideas or set up licensing agreements rather than try to run their own businesses.
The difficulty level of introducing a new product varies tremendously by industry and market. Inventors will have more success in those markets where favorable conditions exist-such as the bicycle product category. If you've created several different products, study the market conditions and choose the market best suited to inventors. You'll still need a great product to succeed, but if the choice exists between two markets-one easy and one hard-why not take the road of least resistance?
Back in 1985, Erik Koski's family owned Cove, a bike shop in Tiburon, California. In those days, shops put together mountain bikes out of whatever components they could pick up. Perhaps not surprisingly, that early exposure inspired Koski, now 48, to become a full-time inventor. His first invention was the DuraTrac, a rigid fork for front tires that he sold prior to the introduction of front suspension. Koski advertises in catalogs and sells the products through OEM (original equipment manufacturer) agreements, meaning manufacturers use his components on their new bikes.
Koski then worked for several bike manufacturers before deciding to form Koski Engineering, a Mill Valley, California-based mountain bike components designer, in 1994. His business strategy is still to provide bike manufacturers with components that differentiate their bikes from the competition. To date, he's developed products that improve handlebars, handlebar stems and saddle seats. His next two goals: first, to have his products look and act different from the components developed by other competitors, including Shimano, a Japanese company that supplies most of the components bike manufacturers use. And second, he'd like to create products with better durability.
Thanks in part to help from his own OEM sales force, Koski estimates his 2001 sales will exceed $3 million.
Being serial inventors has certainly paid off for these "brothers" in business: Sales last year neared $1 million. Winefordner credits that success in part to his strong team of distributors: "Distributors are an ideal solution for small companies that can't afford their own sales representatives."
- Bicycling, www.bicycling.com
- Crank Brothers, (949) 464-9916, www.crankbros.com
- Koski Engineering, (415) 389-6090, firstname.lastname@example.org