Is MotoClub Wholesale Subverting Traditional Powersports Retailing?

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When the owners of MotoClub Wholesale launched the membership-based online retail business, they knew there would be a backlash from brick-and-mortar dealers — they just didn't realize it would be so venomous.

After all, a business that offers to sell PG&A to consumers with no retail markup challenges the long-held business model. Shortly after Dealernews.com posted a release announcing the new business, the readers retaliated with online comments, one person calling MotoClub an "online pirate" and another saying, "The MotoClub is a terrible reflection of our industry."

Tyson Silva, who with Sage Wilkinson owns MotoClub, is unapologetic about the venture, saying he believes the industry knee-jerk-reacted to the business without knowing exactly what it is. The target audience for MotoClub's three-tiered membership program is a small sliver of the entire market, about 50,000 members, he asserts.

"These are customers who for the most part didn't belong to any one guy. These are customers who shop for the best price anyway and want the best service and want to get it all in one place," Silva says. "If you're a big-box OEM shop and somebody wants to have a full supersport prep done on their racebike ... they're not going to the dealer for that. That's not their customer. Their customer is the weekend guy who has a Shadow 750 or whatever and just needs some parts. That guy isn't our guy."

These are the type of customers, Silva adds, who already frequent SDS Performance, the retail performance shop he runs with Wilkinson in Oregon City, Ore. Silva also owns Cascade Tracktime Trackdays in Grass Valley. So far, he says, MotoClub members are spending just more than $3,000 on parts and apparel within five days of signing up.

The MotoClub model borrows directly from Direct Buy, the membership-only service catering to the home improvement and home furnishings industry. Silva says he had used Direct Buy when he built his home and saved about $60,000. He and his partners figured out a way to adopt the model for the powersports business.

There are three levels of membership: basic, gold and platinum. Each comes with the wholesale pricing perks, but each level has limits on how much a member can buy. There are also discounts at each level for such things as service work. For example, basic members get 10 percent off their track day fee, while gold members get 15 percent off and platinum members get a 20 percent discount.

The owners say on their website they are within close shipping distance of the big distributors and are simply "flipping" the parts without the normal retail markup. Instead, these charges are replaced with a flat handling fee and applicable shipping charges.

Silva says the money he makes on the membership model isn't equal to what can be made via traditional retail markup, but what he gets is a loyal customer for the length of the membership. "That doesn't mean they don't still go other places. Buying things as a MotoClub member is not as convenient as maybe going into the big-box motorcycle store down the street because they may have it in stock.

"If somebody wants a particular brand of jacket and they want to get it through the MotoClub and wait, then they can do that. If they need it today then we're not that source."

Because of the one-on-one relationship, Silva says he can be more customer-focused than traditional retailers. "Many dealers are ego-centric. They're only concerned with the day-to-day operations and their profit percentages and units sold," he explains. "Obviously you have to make money to stay in business, but we're far more customer-focused and driven by that force than anything else."

Silva aims his remarks at the big-box multilines, saying the mom-and-pop shops won't be hurt by his business because they are the type of stores that still attract customers who like the experience of going into a dealership.

As mentioned earlier, the story posted on Dealernews.com prompted comments from several online readers. Shari Aiello, of Tigard, Ore., posted, "The MotoClub is a terrible reflection of our industry. It makes the consumer feel the powersports stores are ripping them off. In reality, we are just trying to make a living and taking care of our customers. I hope distributors and manufacturers act on this immediately."

Another reader, "Kurt," of Saratoga, N.Y., wrote, "When there are no dealers left to purchase oil, batteries, spark plugs, tires and related services from, we'll all have this so-called MotoClub to thank for it. No dealers = no employees = higher unemployment = failing economy. It sounds like short-sighted selfishness to me."

Silva responds: "There's nothing to stop any motorcycle shop, OEM or otherwise from having an online arm. And certainly, the MotoClub isn't going to stop anybody from doing that," Silva says. "Somebody else could come up with a similar idea to ours, copy it altogether and decide that, 'We're doing to do it too.' Well, so be it. I can't stop them just as much as they can't stop me."

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MOTOCLUB WHOLESALE: DISTRIBUTORS RESPOND

Many of those concerned about MotoClub's business model have contacted their distributors. Greg Blackwell, VP of sales LeMans Corp., says the company has received threats from dealers who say they're not going to do business with the owner of Parts Unlimited because it sells to MotoClub.

"Parts Unlimited isn't going to cancel a dealer based on what prices they sell products at. We don't do that," Blackwell explains. "We don't try to tell dealers how much they can sell products for. That's their job in the world of commerce. Any retail outlet is allowed to sell anything. They can give it away if they want to give it away."

Parts dealers are required to abide by the company's Minimum Advertised Pricing (MAP) policy that applies to such brands as Thor, Moose and Icon.

Blackwell says LeMans enforces these guidelines the best it can, but adds that the best policing comes from the dealers who call in to report what other dealers are doing.

"In my tenure working here at LeMans Corp. I've seen brick-and-mortar dealers explain to customers who come into their store that if they pay a fee and join the club they will open up any distributor's catalog to them and they can pay dealer prices," Blackwell says. I haven't seen any of them work up to this point in time. American consumers aren't willing to pony up in advance. Not when there are many other areas of business where you can go and negotiate their deal."

Western Power Sports' VP of sales, Dan Lopez, confirms that WPS enforces its MAP policy across the board, and adds that the company reserves the right to "requalify dealer status at any time."

MotoClub's Tyson Silva, though, says that it's these very MAP guidelines that allow the business to exist. He explains that the company is not out to get around any guidelines and has very carefully maneuvered through the details of each of its suppliers' policies. "You have to have MAP for our model to exist and MAP has to be enforced for us to exist, because we don't advertise anything for less than retail price," he says. "MAP pricing is there to protect everybody, including us."