The Power Play That Is RevZilla & Cycle Gear Together

02/12/2016 @ 3:00 pm, by Jensen Beeler42 COMMENTS

checkers

It is Friday, and I am still not sure why there is dearth of publications covering the movements between RevZilla and Cycle Gear. The largest brick-and-mortar motorcycle retail chain, and the most influential online retailer in our industry have just come together under one roof. Boom goes the dynamite.

Intonations of this deal have been in the news space for almost a week now, and by my last count, outside of our coverage here on Asphalt & Rubber, there has only been Motorcyclist’s rehashing of RevZilla’s press release, this 64-word story by PowerSports Business, and RevZilla’s self-published letter on the topic, by CEO Anthony Bucci.

If that doesn’t say something about the current state of moto-journalism, then I don’t know what does. It is a topic worthy of its own story, but that will have to wait for another day. Instead, I am here to talk to you about business, millennials, and future of consumerism.

There has been a lot speculation about RevZilla and Cycle Gear coming together. Whether you want to get into the semantics of the deal being an acquisition, a merger, a strategic partnership, or something else, it doesn’t really matter – the effects will be the same regardless of the label.

The retail game is a competitive one, and it is constantly changing. If you do not keep ahead of the lightning-fast trends that come with selling goods to consumers, you are doomed to fall into irrelevancy.

There is a reason that revenue multiples for commerce-based business are razor thin, and it has something to do with the fleeting nature of success in this space. No better example of that can be given than RevZilla and Cycle Gear. One is Amazon, and the other is Sears.

RevZilla built its business around smart software, when online retailing in the motorcycle world was completely upside down because e-tailers also had to have a brick-and-mortar presences in just to purchase goods from the largest distributors – great example of who was beholden to whom, back then.

The space was ripe for disruption, and Auger, Bucci, and Kull were the right people for that job. The RevZilla story writes itself, and it is not worth rehashing beyond that fact that the nerds won.

Meanwhile, Cycle Gear clung to its brick-and-mortar business model, selling online only when the firm absolutely had to, in order to keep some sort of mirage that Cycle Gear was keeping up with the times.

I can only hazard a guess as to how much business CycleGear.com does each year, but I bet it pales in comparison to the $75 million a year that RevZilla reportedly pulls down (if true, consider RevZilla well-bought in the $150-200 million range).

This is not a unique story, and I am not interested in rehashing how savvy online entrepreneurs are running circles around their counterparts who are entrenched with outdated business models. I am living that story with Asphalt & Rubber after all.

What makes this business deal between RevZilla and Cycle Gear (through private equity firm J.W. Childs, just to be correct on the technical business aspects) so critical though is what it means for the two retailers going forward.

My previous comparison between RevZilla and Amazon was not made lightly. You see, RevZilla faces the same problem that Amazon currently faces. Growth through online sales can only go so far, as online retailers miss a critical component that brick-and-mortar stores have: immediacy.

Consider a scenario: you are working on your motorcycle in your garage and realize that you need an important tool or part; or maybe, you are heading out for a ride and realize you need to replace a piece of your gear before you can go. In this scenario, you have two options.

One, you can go online, find the best price possible, and wait three to five business days for your package to arrive. Or two, you make a trek down to your local brick-and-mortar establishment – likely a Cycle Gear or motorcycle dealership – and pay a little bit more, but have your item that day…when you need it.

Retail giant Amazon has figured out this problem already, and late last year the .com business created its first brick-and-mortar store in Seattle. That’s a very Business 1.0 solution to a Business 2.0 problem, but it works.

In the interest of being new, cool, and nerdy, it probably shouldn’t surprise us then to hear that Amazon wants modernize that stop-gap, and use drones to deliver our future packages, straight from local fulfillment centers who would measure delivery times being in hours instead of days.

It is in this light that an alliance between RevZilla and Cycle Gear begins to make a lot of sense, especially in the Business 3.0 state of the world: where everyone makes purchases from the ease of their voice-commanded smartphones, while their car drives them autonomously down the road, and drones carpet-bomb packages at our neighborhoods from 300 feet in the air.

In this brave new world, smart software, good technology, and expert customer service will generate the leads that local fulfillment centers will act upon in realtime. Consumers will see the happy marriage of online prices with brick-and-mortar immediacy.

The beautiful part, at least for the business people involved, is how defensible the position is to newcomers…at least for now.

Back to the matter at hand, I implore you to again remember that the largest brick-and-mortar chain just air high-fived the most savvy motorcycling e-tailer. These brands don’t need to merge in order to justify big-business investment dollars, the value resides in what their core business models can gain from each other.

Of the few publications actually awake at the switch to cover this story, their comments sections are filled with consumers bemoaning the inevitable death of RevZilla’s customer experience, a notion that is grounded in the perception of Cycle Gear being the albatross around Bucci & Co.’s neck.

The reality though is RevZilla will continue to do what RevZilla does best: unparalleled consumer-facing support, branding, and experience. Likewise, Cycle Gear will continue to do what it does best: keep the lights on seven days a week.

As cynical as that is to Cycle Gear, and the people who work there (I should plug the fact that I have only met truly passionate motorcyclists working at the Cycle Gear stores that I’ve been to), no other brand could bring to the table what RevZilla needs in order to grow.

The Philadelphia-based firm would have to invest hundreds of millions of dollars to build out its own network of retail stores – an act that I should might add, which is well outside the company’s core competency. Similarly, we have seen Cycle Gear already fail at competing in the online retail space.

From a technical perspective, this should be the easier business operation to fix, but there is nothing about Cycle Gear’s business history that suggests it is capable of such a change, and as we have seen in web comments, the brand’s image has been tarred and feathered with its past incompetence.

No doubt, we will see Cycle Gear looking to shore up the tenuous foothold it has on the motorcycling retail business, but going forth its business model will surely serve another objective: being the brick-and-mortar component to RevZilla’s online dominance, with a heavy slant on local order fulfillment.

I expect the rollout of such a plan will be slow at first. Best not to rock the boat when it comes to customer perception. But the change is inevitable. This is the future of retail for the generations to come, and if one chooses to ignore that fact, then they do so are their peril.

The question though is, who will be left to compete against this “RevGear” juggernaut once the switch is flipped? This is chess. It ain’t checkers. Check.

  • Been waiting for this, well done.

  • John McChesney Morgan

    I met Anthony Bucci just as he and friends were getting started. I was selling Mercedes Benz products and was starting to see how the Internet was influencing our business. It’s no surprise that Revzilla has done so well. I buy most of my gear from them and with their headquarters near the the Phl. Airport, I usually get my order the next day. Even if the fit is wrong, they have made it super easy to make a exchange. I recently ordered a riding jacket which was too small. I ordered the next size up, boxed up the return and dropped it at UPS. The next day the new jacket came and my credit was processed. At any other store that whole process would have taken weeks.
    I’ve been getting Cycle Gear catalogs for a couple of years now and have walked into a couple of their stores- one in Daytona and the other in New Castle. Other being full of their own CG products and a few name brand items, there was no one who knew much about the gear. I’ve spent a couple thousand dollars at RZ over the years- I bought a $24 pair of gloves at CG this year. What’s that tell you!

  • Cheers Sean. I tried to channel your GIFness on the title image.

  • LOVE the gif

  • :-)

  • MrDefo

    Perhaps a knowledge of their products is something that Cycle Gear can acquire from Revzilla. As long as Revzilla keeps telling it like it is in their reviews, I won’t be worried about their future.

  • Paul McM

    Hmmm… Just last week I went into a CycleGear brick and mortar outlet in Southern California. They did have a couple Arai models and a four Shoei model helmets. Other than that, very few name brands. The boots didn’t fit well (in any size), nor did the gloves, or jackets. Cycle Gear is mostly low-tier merchandise. I don’t see how this benefits Revzilla… but I guess I’d have to see if the retail stores are profitable. To me, a smart online business will stay out of the poh-boy retail space.

  • Everyone, look at Booch being all coy in the comments section. ;)

  • RobSado

    Like it!

  • RobSado

    Very good article Jensen. Even your jibes to the Moto-Journalism! :)

  • Thanks Roberto! Be sure to click the ads ;)

  • John Goddard

    Cyclegear is prefect for when you need moto tools/fluids on short notice and that’s about it. You nailed it.

  • Joe D

    Great story and spot on. Our local CG in Columbia SC is the best place to “get it now” with some of their branded gear actually being well made and useful. I do wish they had a better name on the products-BILT is cheesy, Frank Thomas was classy. The employees are friendly and mostly knowledgeable. Revzilla has also provided me with several items, fast shipping with great service. A marriage made in heaven.

  • Zeek Seseika

    Time will tell…it always does…Good Luck to the both…

  • chris

    they are both advertisers for all major print publications, no?

    i think the more likely scenario is, the one that corporate turds salivate over, is using the revzilla brand to sell the high profit garbage that cycle gear is known for… hope not though.

  • Mark_Gardiner

    One of the key differences between an online, vs. a traditional retailer is that the customer experience provided by an online retailer is subject to a more centralized control over quality and culture. In the bricks and mortar world, the culture actually has to be way, way stronger, because the CX is decentralized. That leads to problems like this: http://backmarker-bikewriter.blogspot.com/2013/06/hows-business-cycle-gear.html

  • Alclab

    Great article, and you really show the business reasoning for the merger. Indeed “RevGear” will be a giant.

  • A great piece. My first thoughts were: given the buying power of the new conglomerate, how will this affect the widespread MAP (minimum agreed pricing) agreements in the gear industry? It could be good news for consumers, if not gear makers.

    On the flip side, more than one gear maker in the past has privately expressed concern about Revzilla’s dominance of the industry, and the slowly decreasing influence of its competitors.

    It will be interesting to see how the Motorsport Aftermarket Group (Moto Superstore, J&P Cycles) responds to this. I have a feeling their advertising and SEO budgets are going to get bumped up real soon.

  • appliance5000

    “through private equity firm J.W. Childs, just to be correct on the technical business aspects” – This is the elephant in the room as It’s their money on the line.

    I guess i don’t see how this can be seen as a great benefit to revzilla. Brick and mortar – anyone really want to get involved in real estate?

    Obviously I don’t know nothin, but I’m thinking the boys got a very large check, their services will be retained for a set period of time, and life goes on.

    But, if there’s a party in Vegas with an open bar, please invite me.

  • Maximus

    Keep doing what you do, Jensen. It’s why we keep coming back. That and your new bromance with @seanmacdonald:disqus.

  • Chris Gagnon

    With the last issue of Motorcyclist being only 68 pages long, down from a 100 or so a year ago, and both them and Sport Rider reduced to publishing articles that are really just paid ads for a certain re-flashing company that won’t touch Honda or BMW, is it any surprise that they are not covering it? Maybe if the new company ponied up some dollars, they’d finally get some coverage.

    P.s. Great story, thanks for it!

  • Stephen Mears

    Revzilla already has the B’n’M store experience down, that’s for sure. Wife and I made the 4.5 hour round trip yesterday just to find her the right gear, and myself having already been there before I knew it would be worth it. When you combine absolutely superb staff with access to a massive warehouse of gear you know you are going to get the best of what’s out there. If you are reading this, Anthony, pass on a very satisfied customers compliments to Sokrady, Joanne, and Brian, and good luck moving forward!

  • msay

    When news of this first broke I was one of the people who were worried that this would somehow result in some terrible mash up of both companies. Between the ZLA founders’ letter and this, I understand why it makes sense for both of them. ZLA’s store in Philly is by far the best moto-gear store I’ve ever been to and if this leads to a few more of those popping up, I’d be very happy. Now if we could just get the Wheel of ZLA back, that would be even better. The people need to win some hams.

  • View from the ground level

    elephant in the room is an understatement.

  • appliance5000

    2 elephants?

  • Tom p

    The quickest and best use of their combined capabilities would be for the CG stores to be a return point for any Revzilla order. Think of the advantages to be able to order from the large stock of Revzilla gear, and to return it without shipping charges to your local CG store. The advantage for the CG store is foot traffic that would not normally step into their stores. More foot traffic invariably means more sales revenue. A win, win.

  • Flyingfox

    I’m in Australia and before the $A fell out of bed I bought my gear from Revzilla – absolutely fantastic reviews and a major source of information – my friend bought a jacket, pants and boots from Cyclegear online and he’s still wearing it although it is third rate crap IMHO.

  • John

    This comments thread is starting to sound a lot like this http://onion.com/1NbRlni

  • David Thomson

    Well written article. Nice to see an objective view without all the drama. I am one person happy for the Revzilla team. It is always good to see someone achieve success

  • Bob Krzeszkiewicz

    It’s the only place in Houston that sells Red Line fluids.

  • Bob Krzeszkiewicz

    I have no idea how ZLA will fare with adding brick and mortar stores. Unless the first step is merely to add more distribution centers with a small integrated boutique to all corners of the USA for the sake of delivery speed. But speed is something I never ever worried about when ordering online anyway. I’ve always known it would take up to a week to receive something from 1600 miles away.
    I’m in agreement with Mark Gardiner about ZLA’s customer service experience being as awesome as it is because it’s located in one spot and that spot is filled with enthusiasts who know their products and they know how to satisfy their customer’s needs. It’s easy to instill and control quality and enthusiasm in one location and from what I’ve seen, they have a pretty fun work culture. Several times, I’ve stopped in while visiting my family in Philly. All it took was a phone call to a gear geek explaining I’d be in town on a particular date and wasn’t sure if I needed a 56 or 58 in the Rukka gear I was wanting. They made sure they had both in stock for me to try on when I got there. And I walked out with it and a few other items and a much larger CC bill to pay.

  • Ayabe

    I just don’t find myself in the ‘gotta have it now’ category very often and if I did, I’d be screwed anyways as the closest CG to me is 2 hours away. I did make the trek once and was embarrassed by how bad it was, 90% was their own store brands, they had one Dianese one piece.

    They have Arai helmets that you can try on but otherwise a total waste of space.

    So due to my lack of options, I plan ahead. I’m sure people who live near larger cities might have more options but I don’t buy garbage gear so the only option for me is online.

  • 365 Rider

    Jensen, First I do want to say great article, I’ve always enjoyed your work, and A&R is my go to for all things motorcycle. I don’t disagree with most of what you have to say. However, take a trip to the Sacramento store of Cyclegear. It is where passion for the sport of riding goes to die. From what I can tell and from what their webpage says, the Sacramento store is the biggest Cyclegear, and should be bursting from the seems with two wheel fanaticism. If I am forced to go there on the odd chance I didn’t plan ahead, I am greeted as I walk in the door by what I would call “The Register Girls” who to be fair usually always do look up and say hello, but frankly I find it a bit sexist. Why not have the diverse staff at the registers and on the sales floor. Once I make it past the cash registers I usually find what I drove to the store to find is out of stock. I found if I really wanted to go into a brick and mortar store which is truly filled with the passion of motorcycles, I usually end up going all the way to SF Moto some two plus hours away.

    I would love if your optimism holds true and Anthony & Co. fixe all the wrongs of the Cyclegear business model. But like many many many others, who all love Revzilla, and fear the worst of what cyclegear will do to it. For us, Revzilla shares our passion for riding, In the end I would rather give my hard earned $ to the company that understands my passion and shares it, even if that means paying a few more or waiting a few days longer.

  • Christopher Ring

    My main beef with Cycle Gear is about 80% of their inventory was brands that could only be found in a Cycle Gear (like Bilt). Although in a pinch it was easier to get stuff there especially if I was concerned about fitment than it was to order it online. Revzilla had the easiest return policy but it was still a pain to wait to get it try it on, send it back and get a different size.

  • Matt Woolley

    MCSS just hired a new personality for their youtube channel to do (street) product reviews. They also recruited the Albertson bothers to replicate the successful reality series they perfected over at Motosport for their offroad segment.

  • Matt Woolley

    Also, this would not affect MAP polices, but could increase Rezvillan and China Gears GPM. The more you buy, the more you save.

  • Aaaannd … Motorsport Aftermarket Group shuts down its Motorcycle USA website.

  • Thanks Stephen. Will pass on to Sokrady. I read all the comments… everywhere. :-)

  • I love you.

  • Stephen Mears

    Hi5!

  • BanOstrichesNotBikers

    You remind me of the guy in the vampire movies who always says “take this cross, it’ll protect you from vampires” instead of just not going into the dark house in the first place.

    There’s something terribly wrong with the way that your mind works.

    We are here to read about motorcycles and motorcycling and discuss these topics. Not to be told what to think, how to act and what to wear, like a bunch of mindless drones. Especially not by someone who refuses to think.

    It seems that you have this all confused with one of your high-school English classes.

    So you want to pre-empt a discussion by saying ‘just wear gear”, but you can’t answer the question of whether the gentleman in question was “wearing gear” and what injuries he suffered as a result of this accident…and why we should NOT think about how to avoid the accident in the first place and just “wear gear” and “still ride” and hope that it wards off the Injury Vampire. Good logic, there, kid. Shakespeare would be proud.

    I really think the problem here is you.
    And the only way forward here is to give you enough rope to hang yourself. You know that you can’t block me effectively, you have no hope of doing so, but if we continue to do our dance then this becomes about me not about you. The best way to expose your incompetence as a motorcycle writer is to allow you to continue posting your bullshit on a forum that you totally control. When the posts that you let stand make you look like an idiotic control-freak, and eventually your own editor realizes that you are an idiotic control-freak, then you’ve done my work for me.

    if your readers suffer, if readers on the site suffer as a result? Well that will continue on for as long as they allow you to be an idiotic control-freak on their site.

  • Colonel Matumbo

    When ya use that Daisy it’s all bout the Stroke mate.
    A good foamy helps yee of tender skin.
    Thanks for the Giggles Pooki