How’s Business – July 2023

Welcome to How’s Business, brought to you by Knog – Australian designed and lighting up the world.

How’s Business is our monthly chat with bicycle shop owners and managers across Australia and New Zealand.

We’ve decided to open up the opportunity for an exclusive sponsor for How’s Business, so from this month onwards, you’ll see a brief message from our sponsor at the start of each How’s Business article.

Before starting this month’s column, we received a call from a dealer who was very concerned about a huge increase in illegal ‘California Mini Bike’ style e-bikes being sold in his area through surf shops and other non-bike shop outlets. He said many of these bikes were double or triple Australia’s power limit of 250 watts and he’d often see people riding them with no helmets, on footpaths and at excessive speed.

Prompted by this conversation, our follow-up question for all How’s Business participants this month was, “Are you noticing many sales of non-compliant e-bikes via other channels and do you think this is impacting your business?”

Every store we called this month is located either right on the beach front, or near a waterfront location where recreational beachside riding is popular.

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Mitchell Fletcher from Chain Reaction Bicycle Company, in the southern Sydney beachside suburb of Cronulla, said:

Business has been slow. The workshop is still doing plenty of service work, but we definitely don’t have the six-month wait like we did during Covid. We really were booked six months in advance during Covid. It was crazy and people were actually waiting that time and bringing their bikes in six months down the track. It was mental!

We are still getting a fair amount of foot traffic through the shop but they are people “just having a look” or kicking tyres. The bikes we are selling are discounted anywhere from 20%-50% off recommended retail price.

Customers that are buying at the moment are over 60s who don’t have a mortgage. It is a buyers’ market so they are purchasing e-bikes that are heavily discounted.

From about three months ago, we did that 50% off Momentum e-bike sale. We ordered 50 of them, sold through and ordered another 20 of them, then we ordered another 50 of them and we’ve got about 10 left. We’ve sold almost 120 of them within the past three months. Just because they’re half price, they’re a good looking bike. They’ve got 27.5-inch wheels with a 2.5-inch-wide tyre on it, so they’re kind of beach-cruiserey, comfortable, cool colours.

We’ve sold them mostly to people 60 and over. They grey nomads who want to drive around and don’t have a mortgage and they’re making money on their money due to higher interest rates.

Are you noticing sales of non-compliant e-bikes via other channels?

The illegal e-bike market is affecting our sales. In Cronulla, the surf shop and the skate shop sell moto style e-bikes with throttles, that are put together by untrained retail staff and reach speeds of 45kmh.

We have seen these bikes carrying three teenagers at once, without helmets. They are sold as “legal” but all you have to do is email the company for a code and the bike (power restriction) will be unlocked.

We have heard many stories of elderly people being knocked over. An elderly man got knocked over on the esplanade. The rider sped off and on-lookers had to call an ambulance. Does someone have to die before the police will crack down on this?

We don’t want to look like the bad guys or “uncool”, but explaining to a 14-year-old why they are illegal and what could happen if you get caught riding one really just goes over their head.

While the parents agree with us 90% of the time, an e-bike is not purchased from us because it’s a big investment and won’t get used by their kids because it’s not the same as what their friends have.

I think it’s having quite a bit of impact on our business because that’s what everybody’s riding and everybody wants. It’s not that busy at the moment but we’ve got people coming in and asking about them all the time.

It’s not something we can get. It’s not something we want to sell. Because it’s illegal and we don’t want to get involved in that.

Axel Sandgren from Electrify which is near the harbour in central Auckland, NZ said:

Sales are a little bit slow to be honest with you. I think that’s a nationwide phenomenon. It’s the opposite to how it was two years ago. Now everyone has stock on hand and the demand has reduced a little bit.

We’re seeing industry-wide discounts across the entire country. Our sales are a little bit slower compared to last year and the year before, but our workshop is cranking harder than ever. So that keeps us going. We’re busy every day of the week with repair jobs.

I think we’re lucky because we’re such a centrally located shop and because we specialise in electric bikes. Our workshop is mainly busy with our own customers (ie people who have bought their bike previously at Electrify). But we’ve developed quite a good reputation over the past couple of years, so we do have workshop customers from all over the place who have bought bikes from different stores.

We mainly repair e-bikes but we also do some road bikes and non-electric mountain bikes as well. The only difference with e-bikes is you might have some e-bike specific components but otherwise it’s just straight-up Shimano or SRAM gear on the other bikes too. The e-bikes are a bit heavier to work on as well.

We just sell electric bikes. Our biggest brands are Black and Magnum. Black is our in-house brand. We have our own production for these – our own factory. That helps you customise the bikes year after year, taking on feedback from customers. “What’s gone wrong? What’s gone right?” Improving them year after year.

We’re really happy with those and they come in at a really good price point that’s attractive for most people.

Magnum is more entry level commuting e-bikes. Magnum is an American brand originally, made in China of course. They’ve been our bread and butter since day one at Electrify and responsible for a huge part of the success of Electrify – where we are today.
I probably sell at least one Magnum bike every single day.

Are you noticing sales of non-compliant e-bikes via other channels?

Yes, that is quite a big problem, I would say. All of the bikes we sell are within the legal limit for NZ – 300 watts continuous output. There are different procedures how you measure output and how people advertise their bikes.

Some people advertise their peak output. The most powerful ones would peak at around 900 or 1,000 watts.

We’d love to see more regulation in general on e-bikes and firmer restrictions in place when it comes to importing. But I wouldn’t say they have a huge impact on our business.

Kristian Phipps from Giant Glenelg, at Adelaide’s most popular beachside location, said:

Business has gone reasonably well. It’s winter, so things have slowed down. There’s not a lot of foot traffic, but bikes are still moving.

I came from outside the bike industry. I bought the shop in February 2022 and I’m enjoying it. We’re moving in a positive direction and you’re surrounding yourself with good people. There are plenty of people commuting via the Mike Turtur Bikeway along the tram line into the city.

We’re still trying to catch up with demand on certain carbon models. Aluminium is quite still. Hard tail mountain bikes are moving along alright. We sell Giant, Liv and Momentum, which are all Giant brands.

Most bikes are plentiful but some high end is difficult to get and there are a few gravel bikes still in short stock supply.

E-bikes are taking a larger and larger percentage of our revenues. Beach cruisers, the Momentum Vida E+ step thru is a model that sells a lot here. No front suspension, nice big bag tyres, perfect for the coastline here that’s flat.

Are you noticing sales of non-compliant e-bikes via other channels?

I haven’t seen too much of that down here but there were a couple of bikes that came through Aldi. We do sometimes get some strange bikes through here and people that build their own from internet packs. Things that are more like scooters than bikes, you don’t actually have to pedal them.

One of them caught on fire here in South Australia a few months ago. I don’t trust them very much.

We do see them but I wouldn’t call it a threat to the business. There are those other segments of the market, but I wouldn’t say it’s a direct competitor to what we offer.

If it’s a homemade bike, we wouldn’t service it. If it’s a decent quality bike, I’ll speak to the mechanics and generally we’ll service the larger brands, but we don’t service cheap no-name brands.

Mark Stout from Mikes Bikes, which has been at the same Gold Coast location since 1979, said:

It’s not too bad. We’ve had a very steady June and early July. We’ve had rain at the start of July but it’s been pretty steady.

Our workshop is always busy and that hasn’t changed. June was okay. I noticed sales had slowed down a little bit but we got lucky with a few big sales at the end of the month, which was good.

We’re in a fortunate position in that I employ a couple of professional triathletes and road racers. This time of year is the European and northern hemisphere racing season, so those staff go away during the quiet time of year here. Then I’ve got less staff on and it keeps them busy during this quieter time while the other guys are off doing their thing and racing.

It’s good for the profile of the shop to have that sort of athlete in the business.

This week it’s been mostly around 24 degrees maximum. I think one of the nights this week only went down to about a 17 degree low, so we’re very fortunate.

Victoria is full of cyclists but horrible weather. We have good weather, but we could do with a few more cyclists in southeast Queensland.

Are you noticing sales of non-compliant e-bikes via other channels?

Not from other channels, per se. There’s a few of what I’d call the stranger shaped e-bikes getting around, with fatter tyres and funny shaped frames. I’m not sure of their compliance.

We do see them getting around and sometimes have to put tubes in them and that sort of thing, which encouraged me to get an e-bike specific workshop stand to hold the weight of these heavier style e-bikes.

Most of them are bought direct. I don’t think they’re necessarily bought in other retail stores like surf shops and that sort of thing. I could be wrong but I’ve never heard of it yet.

Super 73 and I think there’s a bike called a DiroDi Rover – I’m seeing a lot more of them. You know, they’re head turners and with some of the Gold Coast beach front riding, you want to turn some heads!

We’re selling more and more e-bikes through our shop. The mountain bike scene in e-bikes is where a huge part of the growth has been since about 2015. That’s where the volume has been and where the market has flocked to.

We’re not that close to the trails so we don’t see a huge amount of that business. The e-bikes that we do sell are typically Specialized e-mountain bikes or Specialized recreational bikes.

We sell a fair number of Electra beach cruisers. They do an e-bike and a whole bunch of analogue bikes as well. Being 100 metres from the beach, we sell a lot of beach cruisers.

Unfortunately, we don’t have a massive commuting culture on the Gold Coast. That’s where our thought we could focus our sales on here, but it’s not as heavy in the commuting culture, at least not distance commuting. We don’t have enough volume of people doing it, particularly compared to Victorian cities.

Regarding cycling infrastructure, very much along the beach front and even for general suburban riding, we’ve got to share everywhere we ride. There’s not a lot of time you’re riding in a bike-only lane. You might be encouraged to ride on a footpath in built up areas and then you’re going to be sharing with pedestrians.

I believe the light rail doesn’t allow bikes on it, so it’s a big piece of transport infrastructure that doesn’t allow cyclists to utilise fully. If you could add a catchment of five to 10km from any station, you might get a heap more usage out of it.

(Editor’s note: A check of the Gold Coast Light Rail website revealed that only kick scooters and folding non-electric bikes area allowed on the light rail. All e-bikes and regular bikes are not allowed.)

Robert Astromsky from LifeCycle Bikes in the coastal tourism town of Margaret River, WA said:

I can’t complain. We’ve had probably one of our best years this past financial year.

During the Covid years, a lot more people were coming into Margaret River and hiring bikes than what we’re experiencing now. The tourism for us, with bike hires, was actually down on previous years’ figures.

My belief is that a lot of people who are tourists from Perth are now coming with their own bikes. The overseas people, I think there are just fewer of those.

I would say e-bikes have contributed to our good year, and higher-end performance mountain bikes. They’re being bought primarily by locals or by regional people who live say within an hour of Margaret River.

The funny thing for us is that sales are higher than they’ve ever been, but we’ve sold fewer bikes. But I’d rather sell fewer, high-end bikes than more low-end bikes, which is more work.

We specialise in selling and repairing bikes. We don’t have a side gig where we’re selling coffee, doing tours or anything like that.

Are you noticing sales of non-compliant e-bikes via other channels?

I think a lot of those are being sold direct to the consumer. They’re definitely out there. We are located in country Australia. There’s no policing of this sort of thing.

There are people who come into our shop looking for servicing of these bikes and it’s not something we can provide. We don’t have the parts for them. We don’t have the diagnostic equipment. And frankly, if they’re not compliant with Australian law for riding on the road legally, we simply will not be able to work on the electric side. We can do puncture repairs and things like that, but that’s about it.

I would say it’s probably positive for our business in that they raise awareness of e-bikes as a possibility for people to get around on.

There are all sorts of levels of bikes. People do often buy on price. If they feel that it’s good value for them to buy something inexpensive, in a box delivered to their door… well, there’s just as many people who feel differently who want to buy from a shop that can support them after the sale.

The fat e-bikes are definitely ridden on the beach in Margaret River. It’s a viable solution to a problem. Surfers who want get to the beach, other than walk and carry their board for a kilometre to get to a surf break … it’s a better option than driving a four-wheel-drive down a sand dune.

I don’t think you need two tonnes of steel to get you and your surfboard from here to there. The e-bike is a better option that has given them access to much more remote surf breaks.

Jay O’Mara from O’Mara Cycles at Black Rock, on the popular Beach Road cycling route in Melbourne, said:

Business is fantastic. We’re doing really well down here. We have had a cold winter but we’re doing well. Location, location! We’ve got an amazing location.

(Editor’s note: We’ve read reports that up to 10,000 cyclists per day have been counted along Beach Road and the adjacent waterfront bike path on sunny weekends)

We know our market really well. We’re mid to high-end road, triathlon, mountain and gravel. We’re not so much your whole family and your cheaper mountain bike and hybrid commuters. We do a lot of high-end and our customers never question anything as far as price. They just want top quality service.

Our three brands are Trek, Cervélo and Scott. We’re very fortunate to have three of the premium brands that are doing really well. They’ve all got good gravel bikes and good road bikes.

The gravel scene … we’ve seen a huge shift. Gravel has just exploded. It’s probably our biggest market sector at the moment.

They’re using them every day. People’s road bikes and other bikes are getting parked and getting dust on them because a gravel bike in essence is your ‘do it all bike’. You can ride to the mountain bike park. You can do your fire trails. You can do your single track.

I do the North Road ride in the morning or even the Hell Ride sometimes (a high-speed bunch road ride along the bayside) still on my gravel bike with big gravel tyres. They’re fast on the road and they’re just an adventure bike, so they’re fun!

Are you noticing sales of non-compliant e-bikes via other channels?

Good question. For us, anything that we don’t sell as far as the motor and battery system, we don’t work on. We’ll turn them away.

We know our business. We know what works. We know what we do. Anything other than that, we will turn them down and direct them somewhere else.

There are a few of those bikes and there are a few ‘hotted up’ e-bikes out there as well. Even with some of the ones that we sell, you’re never going to stop people going for the black market and doing those sort of kits themselves.

But your actual bikes that are non-pedal assist, let’s call them a cheap electric motorbike, I don’t think there’s a place for them really in our world, in the bicycle space.

I don’t think they’re impacting our business. I think they’re a break-out customer.

Most people who want a good quality e-bike as a commuter, they’ll stick to the main brands and the mainstream battery and motor systems that will give good support and good warranty.

They still want to be able to pedal it as well. They still want to be able to be riding a bicycle.