Once an untouchable American icon, Harley-Davidson is in trouble. Between March of 2017 and February of 2018, Harley’s stock fell 23 percent. The first quarter of 2018 saw a factory closure and the loss of 800 jobs. Things clearly aren’t going well, but there is hope.
Even with declining sales, Harley has an army of brand faithful buyers and a tenacious 50 percent hold on the American motorcycle market. They also have big plans for turning the ship around, including work on electric motorcycles, which increase in popularity as the younger, environmentally-conscious generation reaches ridership age. Ridership programs teach new enthusiasts how to ride safely and generate income. They also increase used bike sales. Amid these positive changes, however, Harley just made a wise but controversial move. Official Harley-Davidson merchandise is now available on Amazon.
In 2017, Harley-Davidson branded merchandise like jackets and hats brought $262 million in revenue to the company. Merchandise appeals to the brand loyal who want to show their devotion and to those who can’t afford a motorcycle but can enjoy authentic gear. Harley-Davidson merchandise was previously sold only on the company website and through authorized Harley dealers. Offering their popular merchandise on Amazon, however, gives the brand a larger online presence. This is a smart move, given that 70 percent of consumers now shop online.
The company is predicting that Amazon sales, along with other parts of Harley’s new More Roads to Harley-Davidson program, will increase their operating profits by $50 million dollars by 2022. Not everyone in the Harley family is excited about this increase, however. Harley dealers point out that it won’t help them at all and it may even hurt.
Harley-Davidson dealers make most of their money on Harley tchotchkes. Dealer profit margins on motorcycles are around 15 to 20 percent and the markup on parts about 38 percent. Branded merchandise and gifts, however, allow for profit margins of 40 percent or more. By selling on Amazon, Harley-Davidson is putting itself in direct competition with its own dealers. Overall corporate profits may rise, but dealers won’t get a bigger piece of the pie. Dealers also fear losing more money in the future. They’re concerned that if selling merchandise on Amazon proves successful, the company may start selling parts there too.
Harley-Davidson claims that dealers have nothing to fear, assuring them that the company plans to somehow integrate them into the online experience. No one knows how though. Only time will tell if Harley-Davidson can turn things around and whether or not they’ll take their dealers along for the ride.