Dutch Gazelle Puts Pressure on Partners

DIEREN, The Netherlands – Gazelle is putting pressure on both its dealers as well as it suppliers. At the ‘Suppliers Day’ which was held just before the start of this year’s Eurobike show, CEO Bert Piëst (photo) of the biggest bike maker in The Netherlands had an unpleasant surprise for his national and international component suppliers. Here he made a pressing appeal to them for lowering their prices.

Special focus during the Gazelle Suppliers Day was on ‘Design to Cost’ which zoomed in on the question how to concentrate on lower costs at the developing phase for new bikes. As Gazelle’s Piëst  stiputaled: “It’s an effort to get to a lower costs base in good partnership with our suppliers.”

His call for lowering costs was perceived by Gazelle’s component suppliers as more than pressing. At Eurobike several suppliers spoke of the meeting and the negative atmosphere it created. They said not to be able to further lower their prices and were considering to stop deliveries to Gazelle. The fact that the Dutch bike maker earlier extended its payment term from 30 to 60 days contributed to such considerations. 

Thank you e-mails

Asked for a reaction by the Dutch dealer magazine ‘Tweewieler’ which belongs to the same publisher as Bike Europe, Gazelle CEO Piëst said that those comments were totally unrecognizable for him. "The day has been anonymously evaluated and was seen as very positive. Even better than last year. We have even received thank you emails for ideas, they have gained that day. This interpretation of this small number of suppliers is totally inconsistent with the very positive responses we received from all the other suppliers have and does not reflect how this Suppliers Day was."

Gazelle-dealers have also recently received a letter in which they were informed on new commercial arrangements for the next season. Dealers who take delivery before the end of the year of 25, 30 or 35% of the ordered bicycles get reduced respectively 2, 3 or 4% winter discount, provided that 40% of the annual order is conducted before March 1, 2010. In return Gazelle no longer sets a credit limit. Furthermore, order size, order composition, time of delivery and payment terms are laid down in contracts. In a letter to its dealers Gazelle point to possible consequences of changing these arrangements.

In a reaction some of the Gazelle dealers in the Netherlands talked of a brutal letter and a wrong timing, especially in these economic times when it is difficult to obtain bank credit. "True, we have changed our payment terms. During our dealershow days, we hardly had any comments on it", Piëst said. "In general, the dealers can understand the changes, but some will surely regret it when they meet with the fact that they can not live on credit at Gazelle."