Semester 1, 2014
Assessment 1 - Case Study Analysis
DYLAN SPECIALTY BICYCLES CASE
Dylan Lee began buying and selling second-hand bicycles at outdoor markets in Melbourne, Victoria, when he was still in his teens. After considerable success with this venture he was able to lease his first store in a busy shopping strip in Doncaster, a suburb of Melbourne, Australia, where he began to buy and sell new bicycles and spare parts. He named his business Dylan Customised Bicycles (DCB).
Dylan’s business has traditionally not competed with large bicycle shops or department stores. Instead Dylan developed his niche in the bicycle market through the provision of customised, made-to-order bicycles, sold to the committed cycling enthusiast. Each bicycle is assembled to the customer’s specifications, with appropriate sizing and gears, etc.
The growth in bike paths around Melbourne in recent years, along with a strong environmental push to reduce the use of cars, has resulted in continued growth in the market for bicycles. Dylan has enjoyed the benefits of this increase in demand to such an extent that he has recently been able to open two new stores; one in Black Rock, another suburb of Melbourne, and one in Geelong, a city to the south-west of Melbourne. These stores are approximately a 1½ hour and 2½ hour drive respectively from his Doncaster store.
Dylan has always been the face behind his business, spending everyday at his Doncaster store, engaging directly with customers and keeping an eye on the four sales assistants as well as the store’s day-to-day operations. He has also taken on the responsibility of assembling the customised bicycles, working after hours if necessary. Only when demand increased substantially did he agree to hire another bicycle assembler. Dylan has traditionally undertaken all other roles at the Doncaster store, essentially running the business on his own. He orders all inventory, determines selling prices for each bike assembled, usually using guesswork to estimate an appropriate price, as he keeps no real cost data. He also undertakes all bookkeeping tasks.
When the two new stores opened, Dylan decided to appoint a store manager as well as two sales assistants for each store. However he still attempted to fulfil the same role at the new stores as he did at the Doncaster store, driving several hundred kilometres a day in an effort to spend time at each store. Eventually he realised that this was not a viable option. Apart from the fact that he was exhausted, he realised he was making the two new store managers stressed by his unscheduled visits.
The Three DCB Stores
All three stores assemble bicycles to customer specifications rather than purchase and sell pre-assembled bicycles and this has been the approach of DCB since the beginning. In order to be able to successfully and quickly assemble a customised bicycle, each store holds a large inventory of different bicycle parts, rather than complete bicycles.
In consultation with a member of staff each customer identifies his/her bicycle requirements. The bicycle is then assembled to these specifications. Dylan has a rule that all bicycles must be available for the customer to pick up within in two days of the initial consultation. A week after taking possession of the bicycle Dylan will call the customer to ensure they are satisfied. In addition, DCB also offers free lifetime after-sales service, with customers only paying for any parts required. This approach to customer service sets DCB apart from its competitors. DCB has been able to develop an excellent reputation based on its ability to provide high quality, customised bicycles, along with dedicated and personalised service, both during and post-sale. Dylan intends that this reputation is maintained in the two new stores.
Bicycle Demand at the Three Stores
DCB customers tend to be the