American Motorcycle Dealer AMD 230 September 2018 - Page 28

Following the merger with Tucker Rocky, one of the steps taken by MAG was to fold the remaining sales of Motorcycle Superstore into a J&P structure that is based on three primary channels - online sales through the J&P website which, at 70 percent of sales, is by far the largest channel; the 100 plus sales agents that J&P has at its Daytona call center, which delivers another 20 percent of sales, with the remaining 10 percent coming through its three year-round brick and mortar stores (Daytona, Sturgis and at the former headquarters at Anamosa, Iowa) and its burgeoning mobile retail presence at the major rallies and other events. Speaking about the impact that the filing process had on J&P, Zach Parham, company President and son of founders John and Jill Parham told AMD: “We managed to almost entirely maintain our fill rates throughout the filing process, so the impact to our customers was minimal. “The only real impacts for us were with some of our vendors. Most of the people we buy direct from realized that J&P was a sound and solvent business, but we did end up causing some of our vendors a cash flow issue and some of the smaller ones were inevitably hit quite hard by the filing - but mostly I think we were able to maintain goodwill and find a resolution. “By February or March, we were current with all our direct vendors. The U.S. Trustee had final decision in who was paid and how much. MAG as a whole was able to pay the majority of industry vendors in full and 100% of what was allowed by the U.S. Trustee. We ‘50% from the primary distributors’ are grateful to our partners that worked with us through that process and thank them for standing by us. “We saw some softness for a couple of months as the process played out, but that mostly on a regional basis, and largely weather based. “Regardless, the filing became a big topic and, under those circumstances, whether or not you are doing well gets clouded by the headline news. The inventory build-up delays we did experience were largely the result of perception - initially some vendors were cautious about continuing to ship, which was quite natural. But for the most part we were able to serve our customers throughout and really saw no effect, to be honest. “As it happens, we couldn’t have emerged from the process at a better time. We had said we hoped to be out by March or April, so being able to keep our word was huge. We are up on last year - in both volume and revenue. May was the biggest month J&P Cycles has ever had, we were up in June and July, and following a very strong Sturgis for us and the vendors who partner with us there, it looks like we’ll be up for August too. We are continuing to grow in a down market across all three of our channels.” J&P buys around 50 percent of its inventory from the primary three distributors in the market, including the product they need from Vance & Hines, Performance Machine and the other MAG brands. “We are a retailer, not a distributor. We retail to the consumer, so do not expect to buy at the same or better prices than distributors. J&P has always been very careful to maintain that line. Hopefully we buy well, our volume should mean that we can get the best pricing available in the market, but we do not leverage our buying power any further than that, and we do not abuse our MAG relationships. We are focussed on the other positive competitive advantages we have. Price is important, but service is everything.” One of those advantages, clearly, is scale. But it wasn’t always that way. When John and Jill Parham started their adventure in 1979, it was a very different world, a very different market. The focus was on parts for older bikes, buying, selling at and running swap meets and ‘old timer’ events around the Midwest and their home state of Iowa. The annual swap meet that they staged for many years at McCormick Place, Chicago, was a major event for many years, though gradually, as the market changed, John and Jill pulled back from events and used parts, successfully transitioning the business to retail, building up a huge national following for their annual mail order catalogs (indeed international following - 10 percent of sales are still overseas). Fast forward to now, and while J&P do still print catalogs, late model and vintage, the center of gravity has moved decisively online and to the website, with social media a major tool for communicating with ‘home wrenchers’. Altogether the business offers access to some 100,000 SKUs - from the market’s well known vendors, of course, but J&P still has a reputation for the more specialized and harder to source replacements, especially for older models. The core business remains Harley-Davidsons, but Indian Motorcycle accessories are growing, and the company has a strong presence in the metric cruiser market and especially with Honda Gold Wing enthusiasts. The company reports having had an excellent Sturgis rally this year Another competitive advantage that comes with scale is access to the Tucker Distribution Center network in the United States. “Efficient retailing on our scale is as much about touching a product as few times as possible as it is about anything else. We are able to use the five Tucker warehouses. They touch the product once, drop-shipping the inventory we buy from them direct to our customers. Tucker has improved its fill rates and reduced ship times this year to be better than ever, which has helped us improve our customer experience. “The inventory we buy direct from vendors and other distributors is more than 50 percent of what we sell, and we receive that direct at our own 250,000 sq ft Louisville, Kentucky warehouse and ship to consumers from there. “Overall more than 70 percent of our shipments are getting to customers in two days or less. As with everyone else, it is all about getting the product to the customer as quickly as possible.” Returning to the three angles of attack J&P has, its three channels, Zach is especially enthused about its store and event business “as that gives us the chance to be in front of our customers - to hear what they are saying about their riding, their bikes, their lifestyle. The Iowa store is open year round, and the annual rally we host is the largest motorcycle rally in the state of Iowa. “Our Tour Truck program consists of two 53 foot semis at 12 events a year - the three big ones and others that give us a good geographical spread. We have anywhere between five and 15 of our own mechanics and techs there with us. ‘service is everything’ “We are trying to give our customers a genuine retail experience on the fly, so we look at what we do as really being a mobile showroom. This year we acquired thousands of new customers from our Tour truck events. “At some of the events we set up with the Vance & Hines truck too, so then it is really a three-truck critical mass. We are fully committed to the Rallies for the long term - so long as our customers keep going, so will we. For the most part we are getting the traffic we need at the events to show record sales. “It is our long-term intention to have retail stores, and the year-round presence at Sturgis and Daytona is a big strategic advantage. Our call center is upstairs above our Daytona store and, as with the rallies, we get a huge amount of rider feedback with our team through there too. “Our people are not just “call handlers”, they are our eyes and ears. For our customers they are a genuine industry resource. They mostly ride - and we encourage that - and the training they get is as regular, comprehensive and intense as we can make it.” Asked about the future and the changes he is seeing, Zach said that “J&P has been 90 percent Harley most of its life. It grew as Harley grew. But in the last five years we have started to see that shift. First with Indian motorcycles, and that is growing for us, but also now with new customers looking for parts for different platforms, and with the growing number of parts we are carrying for metric brand street bikes. 28 AMERICAN MOTORCYCLE DEALER - SEPTEMBER 2018 www.AMDchampionship.com Following the merger with Tucker Rocky, one of the steps taken by MAG was to fold the remaining sales of Motorcycle Superstore into a J&P structure that is based on three primary channels - online sales through the J&P website which, at 70 percent of sales, is by far the largest channel; the 100 plus sales agents that J&P has at its Daytona call center, which delivers another 20 percent of sales, with the remaining 10 percent coming through its three year-round brick and mortar stores (Daytona, Sturgis and at the former headquarters at Anamosa, Iowa) and its burgeoning mobile retail presence at the major rallies and other events. Speaking about the impact that the filing process had on J&P, Zach Parham, company President and son of founders John and Jill Parham told AMD: “We managed to almost entirely maintain our fill rates throughout the filing process, so the impact to our customers was minimal. “The only real impacts for us were with some of our vendors. Most of the people we buy direct from realized that J&P was a sound and solvent business, but we did end up causing some of our vendors a cash flow issue and some of the smaller ones were inevitably hit quite hard by the filing - but mostly I think we were able to maintain goodwill and find a resolution. “By February or March, we were current with all our direct vendors. The U.S. Trustee had final decision in who was paid and how much. MAG as a whole was able to pay the majority of industry vendors in full and 100% of what was allowed by the U.S. Trustee. We ‘50% from the primary distributors’ are grateful to our partners that worked with us through that process and thank them for standing by us. “We saw some softness for a couple of months as the process played out, but that mostly on a regional basis, and largely weather based. “Regardless, the filing became a big topic and, under those circumstances, whether or not you are doing well gets clouded by the headline news. The inventory build-up delays we did experience were largely the result of perception - initially some vendors were cautious about continuing to ship, which was quite natural. But for the most part we were able to serve our customers throughout and really saw no effect, to be honest. “As it happens, we couldn’t have emerged from the process at a better time. We had said we hoped to be out by March or April, so being able to keep our word was huge. We are up on last year - in both volume and revenue. May was the biggest month J&P Cycles has ever had, we were up in June and July, and following a very strong Sturgis for us and the vendors who partner with us there, it looks like we’ll be up for August too. We are continuing to grow in a down market across all three of our channels.” J&P buys around 50 percent of its inventory from the primary three distributors in the market, including the product they need from Vance & Hines, Performance Machine and the other MAG brands. “We are a retailer, not a distributor. We retail to the consumer, so do not expect to buy at the same or 28 better prices than distributors. J&P has always been very careful to maintain that line. Hopefully we buy well, our volume should mean that we can get the best pricing available in the market, but we do not leverage our buying power any further than that, and we do not abuse our MAG relationships. We are focussed on the other positive competitive advantages we have. Price is important, but service is everything.” One of those advantages, clearly, is scale. But it wasn’t always that way. When John and Jill Parham started their adventure in 1979, it was a very different world, a very different market. The focus was on parts for older bikes, buying, selling at and running swap meets and ‘old timer’ events around the Midwest and their home state of Iowa. The annual swap meet that they staged for many years at McCormick Place, Chicago, was a major event for many years, though gradually, as the market changed, John and Jill pulled back from events and used parts, successfully transitioning the business to retail, building up a huge national following for their annual mail order catalogs (indeed international following - 10 percent of sales are still overseas). Fast forward to now, and while J&P do still print catalogs, late model and vintage, the center of gravity has moved decisively online and to the website, with social media a major tool for communicating with ‘home wrenchers’. Altogether the business offers access to some 100,000 SKUs - from the market’s well known vendors, of course, but J&P still has a reputation for the more specialized and harder to source replacements, especially for older models. The core business remains Harley-Davidsons, but Indian Motorcycle accessories are growing, and the company has a strong presence in the metric cruiser market and especially with Honda Gold Wing enthusiasts. AMERICAN MOTORCYCLE DEALER - SEPTEMBER 2018 The company reports having had an excellent Sturgis rally this year Another competitive advantage that comes with scale is access to the Tucker Distribution Center network in the United States. “Efficient retailing on our scale is as much about touching a product as few times as possible as it is about anything else. 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