Sure. This is an Internet sale. If they ask me to call, I call, but otherwise we e-mail. What I want to do is give people as close to the same service as they can get in our shops. So if I had an order-taker who just wrote them down, we would not do it. We would not be selling bikes the correct way.

If someone needs a different bar or stem or saddle, are you set up to do that?

Yes. We try not to make a lot of changes, because when you buy a bike you buy a package. But we can; we've accommodated most people.

Are those requests frequent?

No, they're not. The bikes are pretty well equipped and pretty well priced, and most people are incredibly happy with them.

What are the most popular products?

We're selling a lot of helmets, and selling a fair amount of bikes, but we're not setting the world on fire yet. But no matter how ready I am, the consumer's not ready yet. The Internet is way under-used, and under-understood, I think. For instance, how do you find me? There's all this talk about how you can get your name high on the search engines. To do that, what you have to do is have all these different meta tags, because various search engines look for different things. The bottom line is that I get solicitation after solicitation from people who want to get me up on that list. So basically you have a bunch of people you have to pay extortionate rates to get you up there. Personally, I think it's impossible, and it's too costly. So the Internet is like advertising in the local newspaper. You have to have ads, and they have to be in places where people go.

So how will you promote?

Well, we'll buy billboard ads on various Web sites. We have one that is on a branch of USA Today that has worked very well. But these ads aren't inexpensive, so advertising budgets are a big part of it.

Can you tell me what they cost?

It's hard to get a handle on it. While there are set rates for advertising in newspapers and on radio, the Internet is not like that. Some may charge you by the month. Some may charge you by the hit, which is just how many times you see the billboard. Some may charge by how many times the billboard is hit. There's also all sorts of reciprocal things, "I'll put your ad on mine if you'll put my ad on yours," stuff like that. I personally think those trash up a site, and it's like having too many exits in your store. If you have one entrance and 20 exits, I think people are going to want to leave. The longer they stay on your site, the better the chance that they will buy something.

So you negotiate each banner, each billboard one at a time....

And also we are testing to see how many hits it takes to get a sale. We want to be where people are qualified, but do I want a banner on Bicycling's Web site, or would I want an ad on Wired, or Cosmo? I don't have an answer for that yet.

You said earlier that you are getting about 3500 hits a month. That's not bad for a site that isn't widely advertised.

No, and I don't know if it ever will be. If you look at who is looking at it, how many people are there on earth? That's the market, because the Internet is worldwide. But we only ship in the continental United States right now. We get e-mails from Europe, but we offer free shipping and we won't be able to do that outside the 48 States. I'm not sure where we'll go with overseas sales.

How much inventory do you have?

That's almost impossible to answer because I take the inventory out of my stores. Which gives me an incredible advantage. With Cycle Spectrum we have 35 stores, and we have a lot of inventory. I would bet that if someone wanted to start the same thing we have now, they'd have to carry 50 to 100 thousand dollars in inventory.

But you are not leveraging the established recognition you have with Cycle Spectrum. Why is that?

I don't know. I think Bikesdirect.com sounds better on the Internet. I see no purpose of advertising stores on the Internet. We have a site for Cycle Spectrum, but, really, why bother? If someone is in a city where we have a Cycle Spectrum, they can go into the store and have a much better experience than they will have with the Web site. And if someone in Iowa sees my Cycle Spectrum Web site, what good is it going to do? I'm not shipping them a bike there, we're not set up for mail order, there's no point in doing it. Unless you are set up for sales.

And providing information. There's a couple sites around here that have information on trails and things like that. The Internet is a giant library of information, and for reference points that's great. I think the reason I have a retail Web site for the stores is because some day down the road I think there may be a use for it and I want to have it. I don't want somebody else to own my Web-site address.

So it's important to lock it in?

I think so. That's why I did Cycle Spectrum originally, to own the name.

Do customers in your stores see the same prices as on Bikesdirect.com?

Not always. We're trying to keep the prices similar. Some of the bikes we sell on Bikesdirect are not spec'ed the same way we sell them in the stores. We have a comfort bike on there that is sold with a shock seatpost. In our stores, it doesn't have a shock seatpost and sells for less, but it is a different product. So the bikes we have in our stores are not always the same ones as we have on the Internet.

Will the prices on the Internet be so good that the shops can't compete? The prices on your site are amazing.

But the prices in my stores are amazing, too. Now, you can't buy the same bikes down the street, but that's because they don't run their stores the way we do. In our retail stores, we are not labor-intensive. I don't have managers who do paperwork. That's pretty much centralized.

The cost of me doing Bikesdirect is lower than paying rent on a store, but I'm not selling the bikes for more and making a huge profit.

Some customers won't want to give up the personal touch. They'll pay to have somebody fit them. They'll pay for the luxury of going back for a 30-day checkup. So Internet buyers expect lower prices.

What kind of margins do you get?

They're not too different than what someone's getting in a retail store.

The same margins that you are getting in your stores?

The margins on the Internet are a little higher because my costs are lower, but let's face it: There aren't great margins on any bikes. I don't have to pay a manager or an employee to sell these bikes, so I can make fair money from a good price. In my office, the desk hits three walls. I have enough room for a computer, a calculator, a fax machine, and it's in my house. It is every bit as professional as a storefront, though.

Do you have a sense of monthly costs for the site?

It's hard to say because of the reciprocal deals. But for a bike page, each bike will have a thumbnail, and then a page, and then maybe another page. And I have seen Web-page creation from $70 a page to $200 a page. So that can get costly.

I'd say I've probably spent 10 grand so far. The yearly charge for the host is only about $1000 a year. The shopping cart that I am using now has an upgraded version that is $2500 a year for that one piece of software, and as I add stuff I may have to use that. In all honesty, I might hit the 15 grand mark this year that I was quoted originally as an up-front cost, but I wouldn't have been as prepared to do it back then.

Do you recommend the business?

I don't think this is for everybody, and I think the Internet is 10 years to maturity. That doesn't mean you can't be successful in it, but I think computers have to change places in the household. When the computer is in the kitchen, or at least real cheap, real accessible, when you don't have to access the Internet because you are always on the Internet-when it's as simple as pulling down a book, it'll work. When I got my first computer, they said everyone would have a computer in 10 years, and that was well over 10 years ago.

Is the Internet the future of retailing?

I think it is in the future of retailing. It is going to be another facet of retailing. I think the Internet's going to be competition for retail stores, I think mail order is going to continue to be competition for retail stores; mail order is bigger now than ever, and the Internet is probably helping mail-order businesses. But it surely isn't going to be the only way people shop. People shop because they like to shop, and they're going to do it in person.

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