ebike system — How do you select your supplier?

ebike system always dominates BOM cost when we build an ebike. To select supplier we usually start with supplier’s scale, product spec, or payment term. I am trying to stand on brand’s side, and would like to analyze existing ebike system suppliers from their business background — automotive industry, bicycle industry, semiconductor industry and software industry.

Automotive industry

Example: Bosch and Yamaha

The group are full of big guys. Perhaps these big guys focused much more on e-car at the beginning — ebike system was nothing but a grindstone at that moment. While after years they suddenly found the grindstone could be a golden stone, a customized-knife therefore emerged.

Selecting this kind of suppliers, they do nearly everything for you. They do market research, they plan, develop and produce total solutions, some of them even prepare brochure and press for your dealers and end users.
The other good thing is: they have money, they can invest a lot to develop a solution, or even several solutions at a time.

However, the wool still comes from the sheep’s back — in the long run, whatever you’re given, you pay for it. Expecting flexibility from these big guys might not be realistic as well. Payment term, product change, internal process, etc… they basically have some errands to do for responding you.

If we take a look at the revenue scale of players in this group, we can imagine how difficult letting their ebike business occupies a significant portion could be. From the group leaders’ point of view, investing this business today probably means selling this business tomorrow.

You are encouraged to think about below items if you are considering to work with this group.

a. Do you have limited electric resource?
b. Do you mostly concentrate on bike design?
c. Do you focus on middle high or high price level ebikes?

Bicycle industry

Example: Shimano, SR Suntour

Is boom of ebike a threat or an opportunity for this group? will developing an ebike harm their original business or create a blue ocean?

The group has the most experienced guys. Bicycle industry has been here for more than 200 years. After hundred years evolution bicycle supply chains are mature and stable. Players in this group know everything about bicycle. They are familiar with bicycle market. They have solid relationships, they built the rules for the game, amd they know each other very well.

New players want to jump into this pool? I doubt. Instead of saying them incapable, I’d rather say they are hard to open the door.

The other point surprises me in bike industry is even you are competitors you can hang out like good friends (real friends I mean). In my opinion, they realize how to balance and reach a win-win situation all the time. That is the way they work together. Because of this relationship almost every component supplier is able to build a complete bicycle for you — if they are willing to help you.

Players in the group know mechanics very well, while they usually understand less electronics. When they want to develop ebike system, most of them start with building a team. the first challenge they encounter is always to find a real electronic team. it’s absolutely not shameful — how can a farmer build a barn easily? but if they are stuck here too long, it’s always not possible to well manage product timeline. At this end they might lose timing even they plan a good product.

Warehouse control is another issue in my opinion since the MOQ and lead time of electronic components are extremely different from these of bicycle component. Shipping out electric goods usually takes more than 90 days while delivering bicycle component probably needs 5 days only. The “90 days” difference somehow means changing ERP/MRP systems as well as optimizing cash flow control. Running a company without cash? are you kidding me?

Here are the questions if you are about to work with this group.

a. Do you have strong background on electronics?
b. Do you need more bicycle knowledge?
c. Do you need someone to guide you into bicycle industry?

Are you interested in semiconductor industry and software industry? Have a coffee, it’s coming soon.