Bicycle industry it seems is trying to find it’s way for a long time now. It is not a result of after Covid crisis but rather from the beginning of mass production of e-bikes. I would go so far as to say that e-bikes are responsible for the current crisis.
Bare with me for a moment to make comparison and my argument
Production:
Bicycles, need cheap and efficient production with good quality control. Worldwide, above 90% of bicycles produced are economical, below 700-800 euro retail. The workers can have entry level training, tools are mostly basic. The investment capital is quite small, warehouses and factory can be built cheaply. The industry is small and humble, very few investment funds mostly family owned demanding less return and long term strategies.
E-bikes, need high level production facilities, high level tooling, very well trained workers not only in mechanics but also electronics and software, so much higher labor costs. Cost of factories and warehousing is very high because of batteries and electrical components. Insurance is high as well. The capital for production is very high compared to traditional bicycles, up to 5 times more so investment funds come in with short term strategies and bigger demand for returns.
Distribution, sales aftercare
Bicycles already have a network of small shops and services mostly privately owned which are humble and not very well funded mostly. The spare parts and service is available and most of them are able to provide support for this simple tool for commute and sports.
E-bikes are too expensive for the existing bike shops so here unhealthy financial relationships were made just to put e-bikes on the shop floors. B2C model was also very popular through online sales. Most e-bike electronic brands were not ready with the support of the brands using their products. We are still trying to figure out how to do this and shops are not equipped to independently service electronics at all. Looks like we are selling washing machines in bike shops.
Possible solutions
If we continue down this path we will have on one hand e-bike factories which are not competitive in making bicycles and on the other side productions for making bicycles which will be making crappy e-bikes and never have any capital on hand. This will cause more mess and bankruptcies leaving us scratching heads for a few year more.
Shops will continue to struggle with finances and in debt. Their customers will be unhappy because the service will be bad and then turn to online for cheap stuff with the logic if it is crap at least it is cheap. And we all know what sells there. Some wise shops will manage to provide good service and thrive but most will not.
Solution for the factories is to specialize either in bicycle production or e-bikes. With this they will manage to compete in products which they are making and adjust the workforce and finances to their product portfolio. One owner can produce both bicycles and e-bikes to provide complete service to their customers but must treat the production locations as completely separate entities with different strategies.
Solution for the shops and for distribution is a bit more complex. My idea would be to look into consumer electronics strategies (washing machines, TV’s, kitchen appliances). How do they service their products? In my view shop should be responsible for mechanical “bicycle” parts while motor system providers should have their own service network. Their service network must be made up from mobile teams who are trained in their systems, with the right tools and spare parts. I think this would improve the perception and value chain greatly. End users would return to investing into purchase of high quality e-bikes which they will be confident to be able to ride and service for 10 years or more.
Conclusion
This is just a rough analysis and thoughts of solutions but I think we need to change our paradigm on the business we are in.
In 128.Bike sales agency we provide honestly made components for both bicycles and e-bike in East Europe. Our production partners are respectable European factories #Herrmans #Ursus #Thun #Eurofender
