The Cycling Industry And The Economy 2020-2021 Part 3
Earlier this year we wrote two blog articles explaining the stress that the cycling industry is under due to COVID and the supply chain constraints. Since that time things have only gotten worse for the entire industry. This article addresses the ongoing issues and regrettably, announces a price increase for all FLO wheels, though we still remain a more affordable option than our competitors.
Unfortunately, raw materials pricing and lead times have continued to increase. We have received price increases from our factories for the fist time since starting this business. There are a few factors causing the price increase.
Printing Of USD
The printing of the USD has weakend its strength relative to the currencies used by our factories to purchase goods. Since we pay in USD, they are not able to purchase the same amount of raw materials for the same amount of USD.
Supply And Demand
The laws of economics are at play here. Demand is continuing to rise and supply is struggling based on COVID restrictions. When demand is high and supply is low, prices goes up.
Over the last 10 years of running this business, our lead times for any parts were 60 days. Today, we are approaching 9 months for certain parts. Our order to door time used to be about 5 months when you added the combined lead times for components and shipping times from our factory to our fulfillment center, today, lead times are close to a year.
Ocean freight is currently in an extremely stressed state. Last week I read an article that discussed the record breaking 44 ships waiting in the ocean to dock at the Port of Los Angeles. The world has never seen a shipping issue like we currently have. We are seeing this in timing and pricing.
Normally, once ocean freight was arranged, we would receive wheels at our fulfillment center in Michigan in 5 weeks or less. Today, we are pushing 12-15 weeks.
Increased pricing from our freight team also plays a huge part in this decision. The shipping price to get our wheels to the US are 8 times higher than this time last year. This increase alone warrants a price increase.
This is a bit of an opinion I have regarding the world and the current supply chain issues, not just within the cycling industry but regardless of what we at FLO have tried to buy, we are finding delays everywhere. We recently had a fridge that needed to be replaced and the model we wanted had a 6 month lead time. And it’s a standard model. Bike parts, tools, vehicles, etc. are all backordered.
Another thing I’ve personally noticed is that it seems as if customer service is gone. If you can get someone, the response is we are backordered and I don’t know when you will get it. There doesn’t seem to be anything beyond those words. (However, this was not the case with Lowe’s- that was a good experience.)
I understand how difficult this time is. If you’ve read any of our email updates you probably understand that estimated arrival and shipping times are just that… estimated. We’ve always done our best at FLO to provide great customer service. Communicating with our customers has been key and extremely challenging during this time. We are doing our best to constantly update our site and provide email updates as we know things and sometimes we just don’t know. To give you a little insight, our factories provide a timeline for estimated lead times and then our freight company provides estimated lead time and then our fulfillment center. We do our best to buffer those lead times but this year has thrown us for a loop (see Ocean Freight above) and when it comes close to arrival time we’ve been getting different information by the hour. We thank you for your understanding and patience.
That being said, sometimes we have options like air shipping from our factory to cut lead times, If you have a need please reach out. We can explore the options and let you know the costs associated.
Again, at times, we simply do not know the answers. Lead times and updates can happen multiple times a day which makes keeping you in the loop tough. We will however do our best.
FLO Wheel Price Increases Effective 10/01/2021
Unfortunately, we have to increase the price of our wheels. This will take effect on 10/01/2021. We will hold our current prices for the next two weeks (depending on when you’re reading this) so you have the option to buy anything you like before we increase our prices. This means backordered items as well.
We appreciate all of your patience as we work through a business environment that is new every day. This is expected to change but the best estimates today are 2023 to 2025 which is something we are still trying to wrap our heads around. We will do our best to keep you up to date every step of the way.
Also, check out what our friends at GCN are saying. This video explains we are not the only ones.