Halfords’ complains of bike shop partners covering its cycle to work commission costs

In a now widely circulated email sent to independent bike shop partners this week, Halfords has complained of negative customer feedback in relation to partners covering their costs with admin charges related to the 15% commission taken on cycle to work sales.

Over 300 bike shops were sent the email yesterday, within which the firm’s IBD Relationship Manager began by introducing themselves, addressing early on a widely discussed (in the trade) late payment of cycle to work scheme invoices to partner shops this year.

Halfords partners with stores in order to fulfill certain cycle to work scheme orders with stock from local bike shops, asking a 15% commission as part of the arrangement. This point has become a well-covered sticking point for independent stores, whose margins on bike sales are not known to generate enormous profits. As such, some bike shops have added on a service fee to such transactions in order to cover their costs and retain a margin to make the transaction worthwhile. It is this point that the national retailer has directed its ire this week, asking shops to refrain from mentioning its role in the transaction, if a fee is applied.

“In some cases the charge is being passed on as “Halfords charge too much commission”, “we don’t make any money on the sale”, “other schemes charge less”. We do not support this charge and will not actively advertise an IBD that does charge an “Admin Fee”,” wrote Halfords’ IBD Relationship Manager.

The email further states that such fees have caused negative feedback for the chain, concluding with an indication that stores who persist will be removed from the chain’s cycle to work portal.

“If a C2W customer visits your store and is happy to pay the charge then we will be happy to process and pay the invoice, providing the charge is explained as an admin fee and not negatively about Halfords Cycle2work,” concludes the mail.

Where the mail has been discussed in the public domain, such as on the Bike Shop Talk forum, retailers have asked for a justification of the 15% fee, which is at the present time the highest in the industry. A handful of others, such as the Green Commute Initiative and Cyclescheme operate at anywhere between 5% and 12.5%; the latter reducing its take following a bike shop campaign last year. During this time, despite being addressed directly by the campaign, Halfords did not publicly address the issue as others did.

“I’m sure many shops would agree this email shines a light on the internal arrogance of some cycle to work providers and their reluctance to collaborate with IBDs on creating a better solution for both bike shops and customers,” one retail partner told CI.N this morning.

CyclingIndustry.News has sought the feedback of bike shops on what is an acceptable level of commission for the referral of sales on the salary sacrifice scheme, which can be read here.

An admin fee passed on by bike shops is not necessarily a new, nor a Halfords-specific trend; some bike shops have operated such cost-covering since the early days of the scheme.

Halfords has enjoyed a bumper year on the back of last year’s spike in cycling activity, a trend that has seen it carry through a 54% increase in cycle sales year-to-year.