Baja Opens Scooter Stores

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BAJA MOTORSPORTS. Does the name sound familiar? If you've ever walked through a Pep Boys store and looked at its lineup of kids quads and other small displacement machines, Baja probably will ring a bell.

Baja is the prime supplier of these Chinese-made machines for Pep Boys, as well as large displacement ATVs and other powersports gear to Canadian Tire for Canadian consumers. In fact, Baja is one of the largest importers of Chinese-made powersports equipment in North America. Last year, the company imported about 138,000 units, mostly ATVs and scooters, and sold them through chains such as Pep Boys, Dick's Sporting Goods, Costco, Fleet Farm, Tractor Supply Co., Toys R Us, and Joe's Sports and Outdoor, a big retailer in the Northwest.

Margins at Baja's retail customers average gross margins of 30 to 35 points, equal to or better than their margins on other hard goods. Last year Baja rang up sales of more than $67 million, and it is on track through June to match that number this year.

Rich Godfrey, Baja's founder and a long-time entrepreneur who has been working with Chinese products for more than a decade, now is taking dead-aim at the U.S. scooter market. He's considering launching at least 16 company-owned scooter stores near major Sunbelt university campuses under the name Baja Campus Scooter.

The first store is a 1,800 sq. ft. standalone unit located near Arizona State University in Tempe. Godfrey won't identify the other planned locations. The Arizona store is slated to open in October. While most of the products will be scooters, there may be a few 250cc motorcycles available as well.

Isn't that a big jump, moving from a supplier to big-box retailers to owning a chain of retail outlets? It's certainly a change, he says, but it's part of the company's growth plan and it plays to the company's strengths.

"Scooters are part of our expertise and we think a retail scooter operation will be easy for us to pull off. We just want to be more accepted," he says, "And we're trying to take advantage of the way people have changed.

"We're trying to change," he says. "Long term, we want to be a well-rounded company. We're changing the way this (Chinese-made) product is accepted."

$2M PARTS INVENTORY

Baja operates out of a 60,000 sq. ft. leased facility in Phoenix that has 45,000 sq. ft of warehouse space and 15,000 sq. ft. of office space. It has a big parts operation, unlike some other specialty powersports distributors. Small parts are bar-coded and wrapped in sealed plastic bags. The $2 million parts inventory includes about 16,000 SKUs for more than 30 different models.

Baja has about 100 employees in Phoenix, about 55 of whom are involved in its phone operation helping customers and consumers with product questions. The operation handles about 1,000 incoming calls each day. Orders before noon are shipped the same day; about 1,000 shipments each week go to retailers, consumers and service centers.

Realizing that dirtbikes and ATVs are going to need repair (fixes that are not available through the big box guys), Baja has set up a network of close to 1,500 independent service sites across the U.S. and Canada. Most are small engine repair shops that provide services to consumers of Baja's big-box customers. In the last three years, the company has shipped more than 350,000 parts. "The demand for parts just keeps going up. It's ballooning," Godfrey says.

Ryan Daugherty, Baja's vice president of sales and marketing, has produced owner's manuals, parts lists and service manuals for each of the company's products to make it easier and quicker for these independent operators to take care of Baja owners.

Many of Baja buyers are first time powersports buyers. According to a recent survey of consumers who phoned the Baja call center, about 73 percent were first-time powersports buyers.

Godfrey, an accountant by trade and training, has been importing Chinese machines and selling them in North America for the last decade under a variety of names and corporate organizations.

In 2005, a Hong Kong company acquired 30 percent of Baja and upped that stake to 75 percent in 2007 when it bought out a former shareholder. The transaction involved creating a new company, Baja Inc., which operates as Baja Motorsports.

Baja's controlling partner is Techtronic Industries Inc., (TTI) a $3.2 billion manufacturer whose stock is traded on the Hong Kong Exchange. TTI manufactures private label household goods; and it also owns several internationally known brands, including Hoover, Dirt Devil, Milwaukee, Homelite and Ryobi.

Baja sells several 250cc bikes, and its most expensive unit is a 250cc UTV that carries an MSRP of $4,999. It also sells a 400cc 4x4 ATV with an MSRP of $5,499 through Canadian Tire.

Joe Delmont can be reached at jdelmont@dealernews.com or 952-893-6876.