ELECTRIC BIKE SALES BOOM, BUT BIKE DEALERS STILL WORRY


SILVERDALE, Wash—IBDs enter the e-bike market with distinct advantages over other channels: consumers instinctively expect to find e-bikes in bike shops, the shops have service departments already skilled with the bikes’ non-electric parts, they know how to fit riders to their bikes, and they have relationships with the major bike brands now offering e-bikes.

But the channel remains nervous.

An array of statistics show explosive e-bike sales growth in the IBD market. For example, wholesale sales of the bikes were up 79 percent last year in the U.S., and the bikes’ high average selling price helped bolster revenues in a year when the number of bikes sold declined 10 percent. But the still immature market segment could evolve in ways that don’t favor traditional bike shops.

Enormous companies from the automotive and motorcycle world are entering the market — in the U.S., GM and Harley Davidson are just the first — and are likely to sell through their existing dealerships.

Consumer-direct e-commerce brands promise lower prices and convenience favored by modern consumers. E-bike and e-scooter share programs threaten to overshadow retail sales. The industry took note, for example, when Uber’s Lime division began importing thousands of e-bikes this winter.

In the enthusiast market, some note with alarm that companies like Harley-Davidson and Cake are offering light electric offroad bikes that don’t bother with human power: will electric bikes with pegs, but not pedals, pull sales away from the e-MTB?

Some IBDs remember being burned by earlier generations of unreliable e-bikes, while others fear that traditional IBD suppliers are on the wrong track pushing e-bikes that sell for $3,000 and more, opening the door for other channels offering e-bikes for half that.

E-bikes, like other tech products, are becoming better values with each new generation and at least one analyst worries that if the growth rate softens, the industry and retailers could be stuck with showrooms full of the equivalent of last year’s laptops — lesser products at the same or higher price tag.

In a January report on retail bike sales, an NPD Group analyst noted that while e-bike sales were continuing to grow, the growth rate was softening, “indicating the early stages of market saturation.”

Finally, e-bike only retailers and suppliers appear to be outperforming IBDs and their traditional suppliers in the e-nbike market.

Ed Benjamin, CEO of the International Light Electric Vehicle Association, noted that two of the fastest growing brands in the U.S. e-bike world, Pedego and Seattle-area supplier Rad Power Bikes, have one thing in common: focus.

“What do we know about them,” asked Benjamin? “They’re focused on electric bikes. They’re focused on electric bikes. And by the way, they’re focused on electric bikes.”

“The bottom line is focus. You can do a little research and find out that where one IBD bike shop may sell four or five e-bikes in a year, an established e-bike shop is selling a couple hundred. It’s not rocket science. Focus is everything.”

But Benjamin remains bullish on e-bike sales through IBDs.

“It’s important to understand the shifting trends in the bike industry, like the mountain bike craze or the 10-speed boom in the 70s. During the peak of those trends we saw a wide range of retailers jumped on the train — department stores, drugstores, toy stores, and hardware stores. The same is happening right now. It’s a bit like the Oklahoma Land Rush—ebikes are now lining the sales floors of garden and tractor supply stores, Costco warehouses, sporting goods stores, even RV and boat dealerships. It will settle down, and in time only reliable, solid dealers will remain.”

“The truth about established IBDs is that they generally have an advantage over their new-to-the-scene ebike retail counterparts. They’ve got the bicycle tools, bicycle parts, they know how to fix bikes. A good 90% of electric bike problems are bike problems. Yet, it’s not uncommon to see an ebike mechanic who knows how to swap out a defective controller but has no clue how to true a wheel.

“The only thing that’s keeping IBD bike mechanics from servicing electric bikes is fear.”

Even Pedego, which sells through more than 100 licensed Pedego-only stores, is seeing growth potential in the traditional IBDs. The company launched a trial program this winter to explore opening Pedego “store-within-store” in bike shops.

Retailers like David Brumsickle, who opened Silverdale Cyclery in Washington in 1985, are finding their way into the e-bike market after years of watching the category develop.

Brumsickle sees e-bikes as a solution to slow growth in the enthusiast market his store has served for decades, but he’s been careful about taking the right approach.

“We started exploring e-bikes 10 years ago,” he said. “The first ones were either very expensive or very unreliable. But In the last couple of years e-bikes began to be standardized … motors, batteries and controllers. But the price points were still above peoples’ tolerance here locally.”

Brumsickle eventually settled on offering e-bikes in the $1,500- $2,500 range that fit his customers’ needs.

“It’s a bit early,” says Brumsickle, “but we’re ready for the selling season. It’s definitely our year to go electric with some great products I know our customers are going to buy. It’s time.”

This article written by Phil Herzog for Bicycle Retailer and Industry News Magazine.

Selling Electric Bikes –The Bicycle Industry’s New 800 Pound Gorilla

 

The term “old habits die hard” has never rung truer than with the bicycle business, be it for the manufacturers, independent bike dealers (IBDs) or the cycling purists who ride them—especially in the United States. This clear and present reality first slapped me in the face several years ago when I gave a presentation at the infamous Interbike Convention in Las Vegas, North America’s largest annual bicycle gathering.

Prior to the convention I’d been hired by the International Light Electric Vehicle Association as a marketing strategist, to refresh the value proposition and key messages for the LEVA website (www.levassociation.com) and other member marketing materials. Once completed, I was given a plum opportunity to create the first-ever global marketing campaign to drag die-hard IBDs onto the shifting landscape of electric bike technology and embrace this new phenomenon on behalf of their customers—from Seattle to Singapore.

I was hardly a newcomer to the industry. My foray into what was considered a fringe bike segment began in 2008 when a former fitness equipment client of mine, Bill Hebb of Hebb Electric Bikes fame, commissioned me to a study of the emerging trend he’d witnessed first-hand in Asia. The question he wanted answered—with data to back it up— was simple: “Is it the right time to start an ebike company in the US?”

After my thorough conclusions led to a green light on Bill’s idea to start a US-based ebike company, we quickly set out in earnest to become—and succeeded in becoming—the #1 rated independent electric bike brand in the mid-priced category in 18 short months.

It was not easy work. I won’t get side-tracked and bore you with all the challenges we faced with Chinese manufacturing, shipping, customs, and quality control. Those were mere speed bumps in the road. The real Mount Everest challenge was selling the ebike category–and an untested brand–to the 4,000 IBDs in America, 90% of which had zero interest in carrying an electric bike on their showroom floor.

It took me the better part of a year– after many hundreds of phone calls, demo videos, and emails– to discover a deeply etched pattern of resistance carved into the psyche of the dealers we were targeting to join our distribution network. I heard the same belly-aching over and over. “Electric bikes are a fad, they’ll never catch on…ebikes are crappy and unreliable…they’re dangerous when it rains…they’re illegal in most cities…they’re too heavy.” But the one that proved the most daunting—the one that persists today, albeit in diminishing intensity, is this one: “Ebikes are for cheaters. Our customers like to get a workout and wouldn’t dare sit on an ebike for recreation OR commuting.”

I won’t dignify that last comment with a response because anyone who owns an ebike will tell you they get just as much exercise as they want, but with two exceptions—they either go way faster or way farther than their conventional bike-riding counterparts. Plus, they have twice the fun.

Even in Portland, bike capital of America, there was staunch resistance to ebikes. In fact, in the early 2010’s I found skepticism rampant, especially among the Chrome-branded, messenger bag-toting bike commuters who rode, rain or shine, to and from work and the corner coffee café. Like a modern-day John the Baptist crying in the wilds of the Northwest with a solemn declaration ”Get ye on an ebike,” I feared a day would come when I’d get stoned in one of Portland’s many elitist bike shops, or at the annual bike show where I was slated to speak: http://smoothstonepartners.com/wp-content/uploads/2011/10/Pedal-Nation-Portland-Bike-Show-2010.pdf.

Contrary to my fears, the presentation was a big success and paved the way for me to do additional work for LEVA and its ebike industry pioneer guru Ed Benjamin.

What I hear these days from manufacturers, distributors, dealers and their staff is clear and simple: “Our future is electric.” We’re now living in the bright, long-promised future for electric bikes.

Over the years I’ve learned a lot about how to successfully sell electric bikes to even the most skeptical prospects–including the shaved-leg, carbon-frame criterion riders and custom bike shop owners. Here’s what I’ve learned, the rules for engaging potential ebike dealer customers and their ebike riding consumer prospects…

1. Shake the dust off your feet when dealing with doubters and haters — My friend Seth Godin once taught me that some skeptical buyers who are immediately dismissive to a new idea will always say “no”. For years I beat my head against the wall trying to persuade naysayers to carry the ebike lines I represented for two of the nation’s top-rated brands. Over time I learned a vital lesson: Avoid “casting your pearls before swine.” With a few exceptions, I’ve  never looked back. Those two brands that earned their top-ranking in the ebike industry got there quickly, partially by me figuring out which dealers to recruit and which to avoid.

2. Go where you’re celebrated — Similarly, it’s also critical that you get unilateral buy-in from several key stakeholders in any traditional bike dealership–the owner/manager, the lead service tech, and the star sales person. Any of the three can be the one bad apple that spoils the whole bunch. When the star sales guy with massive quads, shaved legs and bike pants saunters up to you (if you’re making an unannounced sales call) and asks Can I help you with something?, be prepared for a bit of banter and bluster. Better yet, opt for #1 and move on quickly. Your time is too valuable, and there are too many other open-minded IBD teams out there who are looking to enter the ebike foray with a solid ebike line to add to their traditional bike brands.

3. Start with 10 bikes — The worst thing an IBD can do is commit half-heartedly to the ebike category. No, even worse is when the owner buys two ebikes, they never sell so he gives up on the category. Big mistake. If you’re going to take ebikes seriously you’ve got to make a whole-hearted commitment to 10 bikes on your floor (with at least three of those ebikes in the sub-$2,000 retail price point). Otherwise, you’re ebike footprint looks like an afterthought and will be buried with other inventory. Worst of all, if the prospect walks out of your store and into an ebike retailer like a Pedego-branded store, well, you probably just lost a sale.

4. Do demo events often — Every successful ebike retailer will tell you, you must get prospects on the bikes to get them engaged emotionally, and consequently appeal to their rational left-brain sensibilities when explaining the financial benefits of ebike commuting. They must go together —  the head and heart — when making an important purchase decision.

5. Give stuff away — I’ve never met a successful dealer who wasn’t willing to wiggle at least a tad on either pricing or accessories. It’s just part of the “art of the deal.” Everyone needs to know they got a great deal on a big purchase, especially when plunking down $2k on an ebike when the similar-looking non-electric slow-mo bike next to it is priced at $500. Prospects need to feel the rush, the fun of a demo ride, then pencil out the savings over a one or two year period, which then becomes a no-brainer.

6. Charge $125 per hour for service — My friend Mike Wolfe runs one of the largest ebike dealerships on the East coast. He charges service and maintenance fees similar to cars and motorcycles. Why? Because an ebike, once it’s properly integrated into a person’s lifestyle, becomes a car. And motorcycle.

7. Always upsell — It’s not about how much you can add to your average monthly ticket or boost of incremental sales. It’s about providing safety, utility and style solutions for the rider that could be worth another $300 in gross revenue per unit sold. Always think of the win for the customer, though, before your own financial gain.

8. Make customers for life — Do you know how much each new customer is worth to you? If you are thinking transactionally you’re probably thinking $1,000. The truth is that each customer could be worth $10,000 at a minimum in net revenue. Why? Because if you treat them with respect and dignity they will buy again…and again…for themselves, their family and friends. And they’ll send you referrals.

9. Have fun — No one knows more about how to make ebikes fun than Don DiConstanzo. As he constantly proclaims (like he did with me back at Interbike when we shared the podium together), “At Pedego we sell fun!” Maybe that philosophy is part of the reason Pedego is the # 1 electric bike brand in America.

10. Become a Pedego dealer —  By the way, if you aren’t an IBD but have toyed with the notion of opening your own ebike shop with a modest franchise investment, call Don. If you’re in a good local market and you’ve got a sensible head for business, hanging a bright neon Pedego sign in your shop window may be your quickest way to fulfilling that dream of yours, of owning your own lucrative business.

As most of us old-timers in the ebike business will attest, the US has for over a decade been woefully behind the Europeans and Asians in electric bike adoption. But as Ed Benjamin has so often stated — with fierce conviction (and data to back it up) — “In the past few years many dealers have finally discovered they can make good money on ebikes. And what manufacturers, distributors, dealers and their staff tell me is simple: “Our future is electric.”

Indeed, we’re now living in the bright, long-promised future for electric bikes.

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SmoothStone Partners is a business development firm that carefully crafts brands in the sports, entertainment and lifestyle space. SmoothStone Entertainment’s Talent Division is led by Phil Herzog who provides marketing and social media support to recording artists, entertainers, fine art and photography talent. Reach him at phil.herzog@smoothstonepartners.com.