D2C boom could be good news for non-bike shops
The recent Eurobike event, held live in July in Frankfurt Germany, all but confirmed things: e-bikes are still booming and remain an opportunity. “This year you’d have been forgiven for thinking Eurobike was an e-bike show,” reported Will Jones for Cyclingnews.
Indeed, after the initial burst of global e-bike sales during the past few years, projections for annual growth rates in the coming years range from around 9 percent to 12 percent, with the market expected to reach as much as $118 billion by the end of the decade. And according to data from eCycleElectric, which tracks imports of e-bikes, the direct-to-consumer (D2C) channel has been grabbing some serious market share and at a rather thick part of the sales pyramid. Look somewhere between the mass merchant/entry-level segment at the wide bottom of the pyramid (say $1,000 and below) and the specialty store price points at the much skinnier top (say $3,500 and above).
“D2C brands like Rad Power or Aventon are dominating at the $1,500 price point,” said Ed Benjamin, eCycleElectric founder, in an interview with Bicycle Retailer and Industry News. And those brands increasingly are creeping into price points that sit at the lower end of independent bike shops’ e-bike offerings.
Some of the success of D2C sales can be attributed to shoppers becoming more-savvy about buying direct, largely due to the pandemic. “The rise of sophisticated B2C brands selling at or near what has traditionally been bike shop price territory is a signal that more Americans are ready to make a quality e-bike purchase without benefit of a test ride, assembly or after-sale service from the supplier,” wrote Rick Vosper, a BRAIN columnist and head of Rick Vosper Marketing Services.
But Benjamin believes D2C e-bike brands also are getting better at taking care of their customers. “Their service is getting better, and so are the products they offer in terms of service and reliability,” he told Vosper.
That all could be good news for non-bicycle-oriented retailers, such as brick-and-mortar outdoor and sporting goods stores, that are interested in capitalizing on the e-bike explosion. After all, some the same pain points being addressed by D2C e-bike brands are shared by retailers that have tried to support bikes sales without a formal bike shop or the traditional bike shop experience.
Nothing can change the issues around the amount of floorspace needed to carry bikes, and a “showroom and ship it” model that allows customer to “try before they buy” and order for home delivery could work for certain types of physical retailers. But for stores built on service, expertise and community, the expectations around offering bikes have always included post-sale repair services and installation of replacement parts.
Likewise, the Achilles heel of the D2C model has always been the after-sale, in-person service and repairs, Benjamin pointed out. And what better way is there, asked Vosper, to minimize these service issue than to build bikes that require less service?
Popular European e-bike NCM (a Leon Cycle Brand) recently brought its Commuter E-bike line to the U.S. featuring new flat-bar city-style geared and single-speed models. SRPs start at $1,200.
Of course, that’s easier said than done, but the auto industry is already at this point, argued Benjamin. “Car warranties in the 1960s were 12,000 miles. Nowadays it’s 50,000 or 100,000,” he told BRAIN.
“The (bicycle) industry could, if it chose, ship a bicycle to the consumer that needs little or no service, just like today’s cars,” Benjamin continued. “It’s just a matter of engineering and industry mindset.”
Things are already moving in that direction, agreed Vosper. While bearings, brake shoes, spokes, tires, cables and other miscellaneous items all require service and replacement, “they all can become less service-intensive,” wrote Vosper. “Bearings will get longer lasting. Wire spoke wheels will become rare and cast wheels are already becoming cheap and very accurate. And we’re already seeing a move away from cables to hydraulics.”
“Quality batteries are now coming with a five-year warranty; there are e-bikes that have been ridden for the past ten years and the batteries are still going strong,” added Benjamin. “And long term, it doesn’t actually have to cost more.”
Aventon’s Sinch is a foldable, portable, storable and powerful e-bike that folds down to fit in a closet or even under a desk. Aventon’s e-bike SRPs range from $1,300 to $2,000.
Over time, the lower-maintenance bicycle will come down in cost as manufacturing scales to meet demand, continued Benjamin, just as it has with automobiles. In the meantime, D2C brands have the profit margins to absorb the higher initial cost of low-maintenance components without raising retail prices, he said.
The importance of repairs and maintenance also could be reduced by an ongoing trend in e-bike drive mechanisms. Currently, hub motors dominate the global e-bike market, with hub-motor-driven bikes representing 77 percent of sales in 2020, according to Precedence Research. Hub motors, which are located on the back wheel, are light in weight, simple in construction and inexpensive to the manufacturer.
Mid-drive motors, on the other hand, offer “a significant number of advantages” over hub motors, said analysts at Precedence Research, and are expected to show the fastest growth in the market in terms of drive mechanism.
The mid-drive motor, which is mounted on or near the bottom bracket of the e-bicycle, “offers a better weight distribution than hub motors, resulting in a lower center of gravity and a more balanced ride,” agreed analysts at Triton Market Research. They also offer higher torque and performance compared to traditional hub motors. In respect to maintenance specifically, “mid-drive motors are easier to be serviced and maintained compared to hub motors. They can be simply removed from the e-bike by replacing nut bolts,” said Precedence Research.
This is all in no way to suggest that service and repair will soon become obsolete. Benjamin’s Light Electric Vehicle Association already has seen about 1,600 applicants go through its e-bike repair program during the last few years, “and probably a thousand of them are bicycle mechanics,” he said. Benjamin told BRAIN he believes it will take 8,000 total trained professionals to establish a critical mass of available service people, “not just in bike shops but mobile mechanics and one-person repair services.”
Even so, the D2C channel is proving that customers – no doubt pushed along by pandemic effects – are willing to purchase e-bikes without the benefits of a test ride, assembly or after-sale service. “Bike shops have gotten a little better in the last 20 years, but the D2C people have become freaking awesome in terms of quality of the product, assembly, packaging and customer service,” said Benjamin.
That seems like encouraging news for a physical retailer considering the e-bike opportunity without the resources to offer all the amenities of a true bike shop. And while the initial high cost of manufacturing e-bikes, along with returns and problems related to distribution, continue to hamper the market’s growth, the increasing demand is more than encouraging.
Global E-Bike Market Size and Estimated Growth, $B
|Research Firm||Previous Values||Projected Values||Future CAGR|
|Triton Market Research||$25.2B in 2021||$49.7B by 2028||10.12% through 2028|
|Allied Market Research||$40.3B in 2019||$118.7B by 2030||10.5% through 2030|
|Precedence Research||$17.6B in 2021||$40.9B in 2030||9.6% through 2030|
|Mordor Intelligence||$27.2B in 2021||$54.5B by 2027||12.26 through 2027|
Source: Company reports
Make no mistake, consumers’ first experiences with e-biking have been mostly positive, very positive. A survey of Brits by Bosch eBike Systems, for instance, found that 81 percent of e-bike owners surveyed said that their electric bike purchase was a good investment. And all the while, consumers have gained a solid understanding of all the benefits and bonuses that come when a little electricity is hooked into a bicycle.
“Electric bikes are a flexible, versatile, eco-friendly, and a trendy mode of transport,” said analyst at Allied Market Research. “Consumers look up to them as an ideal substitute for scooters, smart cars and public transport.”
E-bikes allow families and groups of different abilities to bike together. They extend the distance and shorten the time of bike trips. For commuters, e-bikes reduce gas expense, emissions and traffic congestion. And for those who need some encouragement, they can pedal-assist or enable healthy behavior.
Fully aware of their ecological, health and cost benefits, governments around the world are offering incentives, promoting manufacturing and helping develop bicycle infrastructure, according to analysts at Triton Market Research. “The popularity of electric bicycles has significantly increased across every continent in response to design and performance gains as well as economic or environmental concerns,” they continued.
In other words, the e-bike may be beyond its peak of over-inflated hype, now moving up toward its plateau of productivity. After triple digit growth in 2020 and 2021, analysts see annual growth rates slowing significantly throughout the rest of the decade. But global revenues still are expected to double during that time period.
D2C’s apparent success so far, if nothing else, calls into question which channels and type of operations can come along for the ride.
Opening image courtesy of Aventon