You probably already know there are 5 distribution channels of bicycles across the country – independent bike dealers (IBDs), mass merchants, sporting goods stores, outdoor specialty stores and others. With reference to IBDs, their bike unit sales make up just 18% of the overall total but in revenue terms, they amount to 50% of the market’s total value.
Nevertheless, IBDs today have to contend with stiff competition from mass merchants and where they use to make money in terms of services, they have been squeezed as a result of today’s well-made and sturdy bicycles.
In general, a 4,000 sq ft IBD store which sells 650 regular bicycle units per year at an average $500 apiece can expect to make $649,000 in revenue — split between bike sales (47.4%); parts and accessories (35.5%); repairs (10.7%) and other miscellaneous.
Suppose this same store sells ebikes and conversion kits instead, priced around $400 – $7,000. If we multiply the 650 units they might sell at the lower end of say $1,000 per unit, they would have already made the total revenue of those who only sell regular bicycles, and still with the remaining over 50% revenue stream yet to be factored in. Does that get your undivided attention as it did ours?
The eBike is too sweet a deal to pass for consumers, retailers and suppliers alike
The federal legislation on ebikes includes, among others, that they are within the specified 750W power range and travel below 20 mph, whereby they are then considered bicycles. As such, it comes under the jurisdiction of the Consumer Products Safety Commission (CPSC) and has access to both roadways, bicycle lanes and certain trails. It’s users are also not required to apply for licenses, registration or insurance to use the vehicle.
They cost a lot less — to buy, run and maintain than cars — and have minimal impact on the roads and the environment. They have a low learning curve; are easy to operate; and give confidence to the ‘challenged but interested’ bicyclists who are less adept at riding with traffic and handling gradients, headwinds or carrying cargo.
While bicycles are well-known as utility contraptions in Asia, its empowered sibling, the ebike is even more befitting in that role. Its streamlined, more subtle, and varied options means there are lots of choices for the consumers, plus huge business potential for retailers and suppliers alike, which bodes well for our economy as it translates into jobs right down to the local level.
The ebike market performances thus far
You may well say that’s all well and nice but how has the industry really panned out so far. First of all, let’s take a look at the market nearest us, Europe, specifically: the Netherlands, in 2009, sold 153,000 units or about 1 in every 8 bicycles sold was a pedelec (a pedal assist ebike), which was priced at 3 times the standard versions; the ratio splits for Germany and Switzerland were also not far behind.
We have not been too big on following European trends in the past, and our bike commuting culture and infrastructure are still at the teething stages but yet, the impact of ebike sales in the States for 2009 was 200,000 a 1% market share of the on average 18 million units sold yearly.
Yet, as bicycling becomes more mainstream, it has to offer options beyond those that interest the mainly male, under 40 year olds, sports-inclined target audience. The average American is not into exercise and competing, they want economical, practical and convenient transport, something that gets the job done, be it to get to work, pick up the kids or groceries or for the weekend family outings. The average American are women, the less interested in owning cars Generation Y’s and their baby boomer parents who together make up a hefty segment of the potential biking population.
The current economic, cultural and social environments are ripe for change
Last but in no way least, our current economy, cultural and social environments are at a crossroads and are ready and in need of change. Every dollar counts, so does the quality of our lives and environment. As it turns out, it can be quite affordable if we focus on the transitions that benefit society as whole such as Bike Friendly cities and “Complete Streets” with walkable and bikable infrastructure which are welcomed and mushrooming all over the country.
It so happens ebikes, which fit right in, also makes dollars and sense. It is good for our pockets, health, community and economy. Think of it as our own stimulus package, one that can boost our micro- and macro- economies in its multi-tasking roles as transporter, exerciser, community-builder cum air-cleaner all rolled into this one modest tool. This is indeed a golden opportunity provided we get it done — right and right now.