ebike brands — what are bike brands doing in ebike era?

2020 might be the vaguest year I have ever met. The impact of COVID-19 reduces our sales behaviors oversea significantly. On the other hand, COVID-19 also pushes us to reinforce our operation process to fulfill what our customers’ demands without any face-to-face communication.

I would like to share my two cents of how bicycle brands reinforce their business strategies in the ebike era. In this article I will describe two of four major business strategies I found. The other two would be posted in next article.

Merge and Acquire

Some traditional brands favor this way. They have occupied several market segments and sold significant quantity for years. From the finance point of view, these brands have stable and regular profit every year. They have sufficient money in their pockets. With the boom of the ebikes, capital literally becomes one of the most powerful weapon they can leverage.

By merging or acquiring the other potential brands, they can quickly reach the higher market share. The large quantity somehow equals to their supplier’s headache. If you were their supplier, originally you sold your products to some customers, while now you can sell your products to a single customer. Everybody knows what these brands will do next. The brand’s profit partially comes from their supplier’s margin. These brands can "efficiently" make use of their bargaining power to squeeze their suppliers’ profit.

Completing the product portfolio can be the other benefit. Let’s take e-Cargo as an example, if we analyze the specification of a cargo bike and a city bike, we can clearly observe numerous differences on frame design, bike geometry, wheel size, e-system, and even seat post. These differences of product lines also implicitly reflects on the demands of the varied talents as well as the market manipulation. Acquiring helps these brands gather all materials and ingredients to cook their desirable dish rapidly.

Can money always make the world go around? The BenQ lesson seems to be an opposite story. Let me ask some questions you might feel familiar with in your working life. How long do you get used to your new boss after reorganization is executed? How many talents leave after reorganization is announced? how long do you or your team make order out of “reorganization” chaos? No matter what the answers you comes out. A one of the undoubted consensus would be — A real benefit of a reorganization always comes after the new team is “smoothly” melted into.

Differentiate ebike design

Many new players start with this business model. Technically the business model has nothing special. Working on developing an unexceptionable product to catch customers’ eyes in the market is always one of the most important tasks a company shall focus on. So what makes this business model great again in bicycle field? (I am sure this is not a slogan…)

As I mentioned in last articles, bicycle industry has been existed for more than 200 years. After hundred years evolution bicycle supply chains are stable and standardized, fewer and fewer innovation of bicycle parts appeared in the past decades, only a few high-end (mostly focus on lighter weight) parts are launched.

Perhaps the standardization of bicycle parts is one of the main reasons resulting in more than two hundreds bike brands existing in European market. Standardization of bicycle parts makes supply chain management easier, which also allows new players to enter this field with lower barrier. However, there are two sides to one coin. If most bicycle parts are standard, where else can these players contribute their innovation to except for the bicycle frame? If the frame is the only thing they can elaborate, how potential can we expect the bike they design?

Ebike for these players is definitely a new area to explore. The unsaturated development of an e-system encourages them to spend more time developing appropriate e-parts for the bike they design as well as integrating every single e-parts into the frame. They need to pay more attention on designing a complete bicycle to hide as many e-parts as they can. Moreover, some of these new players even spend significant resources on e-parts development. In a word, the more uncertainty an ebike has, the more differentiation these players can do.

From the market’s point of view, the rapid growth of an ebike creates additional bike categories (ex: speed pedelec) and values some originally-cold bike categories (ex: cargo and kids bike). These niche markets give these new players good chances to settle down their innovations before suffering attack from those huge competitors. When these players win the first battle in these new battlefield, they have sufficient resources and experiences to fight in major battlefield.

What about these players’ risks?

Take speed pedelec as an example, the category is estimated to occupy at most 1.5% of the total ebike market in Europe. Will this category become bigger or vanish in a few years? Stepping into an area with fewer competitors is a good idea, but extending this area is a challenging and unpredictable mission. If you have only one bullet, shooting a guy you expect him a general but eventually he is nothing but a soldier would be a terrible misery.

Developing own e-parts is an art as what I wrote in previous article. Having a careful and complete evaluation of your capability is extremely important. Some issues happening in bicycle component is acceptable, while these could never work in electronic components. A scratch on your seat post might mean ugly, but a “scratch” on your electronic components normally means no assist power. Who wants to buy an ebike having no assist power? When this kind of issue happens, none of your brand image would ever exist.

In addition to the above strategies, what else would you do if you were a brand? Let me share you more in next article.