P&A Wholesalers Share Their Experiences and Predictions Regarding Covid-19 Disruption
We’re now rolling into the fifth month since Covid-19 began turning the bicycle industry, and the world more generally, on its head.
Last month we asked leading complete bicycle wholesalers for their stories and predictions. This month it’s the specialist P&A wholesalers’ turn.
Of course in reality, with a few exceptions, wholesalers don’t exclusively sell either complete bicycles or P&A, so our criteria in dividing them into two groups was based upon what they predominantly sell.
We’d like to give our sincere thanks to all of the P&A wholesalers who gave us such well-considered responses, that you can read below.
We asked these P&A wholesalers to respond to three questions:
1. Have you noticed a strongly Covid-19 influenced increase or decrease in demand for any particular product ranges within your portfolio?
If so, can you please give details of which products have been most affected?
2. For which product ranges has your supply chain been most disrupted and how long do you think it will take for supply to catch up with demand?
3. What do you think the longer term bicycle industry impacts will be as a result of Covid-19?
Matthew Bazzano from Shimano Australia said:
Changes in demand:
We are now some months into a new world as a result of the pandemic which has been unprecedented.
Myself and the entire Shimano team do sincerely hope that everyone and their families we associate with have remained safe and healthy, and continue do so as we see restrictions being eased.
To broadly respond to your question, we have seen an unexpected sales ‘tail wind’ the past months and this tail wind has seen higher unseasonal sales in all categories.
Supply chain disruption:
Locally, not so much disruption as we’ve received strong support from our factories and other suppliers.
In those instances where fulfilment has been challenged, mostly all non-seasonal type products have seen quick replenishments.
Longer term impacts:
Overall Covid-19 has been a huge disruption and the effect it has had on many people’s lives cannot be discounted or overlooked – and we genuinely feel for the many Australians that have been directly or indirectly affected by the health or economic hardships that quickly impacted people, especially after the summer bushfires and other natural disasters the start of 2020.
Though, reflective of this – so many people in the past months have purchased new bikes or upgraded existing bikes for family recreation, for health and exercise, plus also to commute to better able isolate/distance as was the directive.
For the bike industry and even more broadly for people riding bikes, it could be a longer term positive with a recent increase in cycling awareness from general media and also government recognition that riding a bike can offer solutions to allow the economy and society once again regain confidence and strength in the next recovery phase.
I guess as the economy improves and risk of any new wave of infections reduces, it will be up to all of us, being stakeholders, to work towards this momentum that has been created, is maintained. We need to continue to support industry associations such as We Ride Australia to lobby for better cycling infrastructure & access, and continue see sales positively grow in a safer cycling environment.
John Dunnachie of Bikecorp said:
Changes in demand:
The increase has come across the board. Bikecorp’s brands are positioned in the recreational/leisure part of the market which has seen the biggest increase in purchases from consumers nationally. Definitely a spike in DIY products indicating unused bikes being brought back to life.
Supply chain disruption:
The majority of products have had some delays, although in the majority of cases, only minor. Our strong relationships with our overseas suppliers has seen us been able place extra purchase orders to cope with the demand and have these shipped earlier than the usual lead times.
Longer term impacts:
We as a company believe the long term impact will be a positive one. Even if 20% of people that have purchased new bikes ride them regularly it will have an ongoing benefit.
Cycling is once again at the forefront of both local and national Government conversations which can only lead to better outcomes for the industry in Australia and internationally as well.
Andrew McEwin of Bicycle Parts Wholesale said:
Changes in demand:
Yes, dramatic changes that have seen surges in demand for certain categories and it has been dramatic. We pride ourselves on good stock service but right now we’re out of stock of tricycles, 26 inch tyres and tubes, saddles, saddle covers, training wheels, some wheels and phone bags… obviously a lot of newer riders are wanting to have their phone displayed in front of them – huge demand!
We can make our own wheels. (Bicycle Parts Wholesale has bought two different wheel making businesses over past years and has what is probably the largest wheel building operation in Australia.) We are making our own wheels but the stocks of the hubs in particular have been decimated. The other components we can cover for but we can’t make the correct wheel without the correct hub.
The high saddle demand is a reflection in our view of a lot of first time riders saying, ‘Oh! This isn’t so comfy, is there a better saddle?’ We’ve sold a lot of the larger saddles. People wanting a wider saddle.
Supply chain disruption:
The manufacturers will certainly supply, but no manufacturer that we deal with, in either Taiwan or China, has a warehouse. They do not hold stock. They only produce to order and that’s the reason that they can produce at a reasonable price. But that means that we have to place the order, they then contact their raw material suppliers so that they know the pricing details. They then send us back the price, so that they’re guaranteed never to make a loss on any sale.
Once we confirm, the order is locked in and goes into the production schedule. This might be two, three, four, five, six weeks out.
I’m sure production is running 24 hours per day at the moment, but it’s a matter of how long before our order actually comes up for production.
With some suppliers that can be five weeks for others it’s 12 weeks, then the shipping time on top.
Retailers can see a product and order it from us that day. But we have to order months in advance.
Our normal process is to order more stock on any item when we’re down to six months’ stock on hand. We would then receive it when we’re still holding two to three months’ worth of stock. But in this particular case, demand has been enormous and we have no stock (of certain items) and it will take time for it to come back into stock.
Nobody can deliver it faster to us than the normal lead time. It’s yet to be seen if they’re slower. When we place the order, they don’t guarantee a delivery time.
Some very big names are very slow and can be anything up to six months.
Tyres and tubes are the fastest. They are more like a definite three month turn around time.
We’ve been receiving some stock, but that’s from orders we placed prior to the Covid-19 demand. So those orders may or may not be good stock (in terms of what’s in high demand now). For example, we normally carry about 20 different models of 26 inch tyres but looking at the shelves right now, there’s none.
We’ve got two orders that are just about to leave from two different suppliers, so we’ll have some very good replacement stocks shortly.
Longer term impacts:
The optimist in me says that, given there’s been a huge increase in the number of new riders, I think that some of them will say, ‘Gee, that’s pretty good fun! We’ve had some good family time and good connections.’ So there will be a continuation.
I certainly think that for the foreseeable future there will also be an increase in commuters. As the workforce goes back to work, I’m sure that not everyone’s going to feel safe going on public transport. So for the inner suburbs where it’s a feasible commute by bicycle, many will be doing that.
So I think there will be an increase in demand for servicing and a lot of product relating to commuting.
I definitely think that the online traders have certainly had a very good period. There will be a lot of consumers who will have liked that experience. There will be others who won’t have liked it, but I think overall there will be an increase in demand through the online channel.
But I think that, particularly in recession times, previous challenging periods in the economy have seen an increase in the demand for servicing. Servicing will continue to be of high demand and hopefully the retailers will be able to gear up for that demand.
Manfred Otto, Director, Velo Vita and TMO Sports said:
Changes in demand:
The bike market has been going quite well for us, while the outdoor business (in which Velo Vita is also involved) has been badly affected due to travel restrictions.
Initially in March bike dealer demand was softer, but we experienced a good rebound from April onwards. Our quality brand consumables have been selling especially well.
Outdoor has started to pick up again recently.
Supply chain disruption:
We have not experienced any significant disruptions in supply, but some shipments were delayed. We import mostly from Europe and Taiwan/Vietnam, hardly from China. Right now, everything seems back to normal.
Longer term impacts:
We hope that people will commute more by bike as a safe and healthy means of transport, with government and councils providing for improved cycling infrastructure. There has never been a better time than now to recognize that the bike is one of the best solutions to transport problems, and never been a better time to justify increased spending of tax payer money for safe bike routes. We believe that the bike industry can grow as a result.
Brent Dawson of Dawson Sports Group said:
Changes in demand:
Yes, we’ve seen an increase in sales of smart trainers. Our smart trainers retail under the $1,000 mark. They’re silent & easy to install. So for new cyclists who are as we call, ‘Zwift curious’, it has been an excellent option.
We’ve also increased sales of replacement workshop parts (Praxis chainrings, cranks and BB’s, upgrade parts, hubs/wheels (new MTN wheels and hubs from Industry Nine).
Supply chain disruption:
We’ve been caught out recently with the US riots and Fedex trucks not be able to safely pick up orders, but Covid has been ok. The biggest issue has been air freight time. We have had orders stuck at airports and depots simply because the aviation industry has been obliterated… no cargo holds for shipments. We are not heavily reliant on sea freight as majority of our products are not bulky goods.
Supply will be fine by July, I anticipate.
Longer term impacts:
Once the Job Keeper subsidy ends we may feel the full brunt of the economy retracting. Hopefully the governments at all levels invest into cycling infrastructure and people who have recently purchased bikes for their family all continue to enjoy riding.
More bikes sold, more people riding, more tolerance and awareness for bicycle safety. Less cycling deaths, less obesity, less strain on the health care system. I really hope this snowballs… but it will take some work.
Johnny McLean of Lusty Industries said:
Changes in demand:
Most certainly we have seen a very volatile trend over the last few months in both directions. Our portfolio in summary has been built on offering premium brands. When categorised in the ‘Good’, ‘Better’ and ‘Best’ model, we tend to play mainly in the ‘Better’ and ‘Best’ space, but some of our suppliers have done a tremendous job recently adding reasonably priced product in the ‘Good’ space.
During early April, data showed that entry level bikes and the flow on associated P and A was leading the market upturn but then by mid-April we saw it come through our ‘Good’ and ‘Better’ product ranges. The high end of the market returned to strength mid-May now holding strong year on year again, so good to see if this can hold strength as the uncertainty continues.
Supply chain disruption:
Thankfully our supply chains overall have had minimal impact, we have some great suppliers who we worked with quickly early to pick up stock out of USA warehouses to keep in-fill and limit stock outs. We should be back to full supply chains within the next few weeks but yes, very fortunate we have had limited impact to date. More so just the vast volume on unseasonal demand has exposed some holes in our inventory.
Longer term impacts:
With the entire bicycle community growth over the last few months I am staying optimistic that even if this community retains 30% of new consumers, not only will our nation be healthier and happier but as an industry we have a great chance to weather the financial storm I am cautiously optimistic is still to impact us.
I’ve seen a lot of our great customers tackle this head-on and have reaped the benefits. It certainly wasn’t a period to sit back and watch and wait to see what is going to happen.
As a business, I’ve always wanted to build our own brands and now we have started some of our own product sourcing and manufacture here in Australia. It could be a great time to have local manufacturing turned back on with a weak AUD and potential for fast to market products. I know I’m excited to very soon be able to offer Australian Made and Owned product ranges.
As a nation, we just rallied together to overcome the pandemic and now we can’t travel I think it’s a huge reset for everybody to support the shop local and travel local message. Although it’s been a roller-coaster it has been a good time to drive efficiencies, look at ways to pivot quickly like we did with the home delivery service and work closer and more empathetically with our dealers.
I’m sure there’s more testing times ahead but at the end of the day we have seen a tonne more bums on bikes and that is great thing for the long term bicycle industry. 2020 will be one to remember good bad or otherwise but we can ride through this together and hope to see you on the other side out on the trails.
Eamon Thompson of KWT Imports said:
Changes in demand:
For us the demand has been more in the mid to entry level of the parts and accessories market. It started with Mag trainers and indoor cycle equipment then moved to generic tyres particularly 26 inch and 700c Hybrid.
We then saw runs on items associated with new bicycle purchases such as floor pumps and bidon cages or also, when larger equipment wholesalers were out of mainstays, sell throughs such as rotors, cassettes and derailleurs.
Tyres in wire bead 24 inch to Hybrid size. Tubes in all varieties and folding road tyres have been keys sales in rubber with shortages in all wholesalers across the industry.
As mentioned earlier, as larger wholesalers have temporality run short on key mainstay items, we have had large demand for substitute products, particularly MicroSHIFT Derailleurs, Shifters and Cassettes and Yaban chains.
Comfort saddles have also seen a huge spike in demand as new entrants to the market look replace their seats. We have been out of comfort saddles for some time and don’t expect stock until August.
Supply chain disruption:
CST from China had about 4 week delays on usual leads as did Joes No Flats and Pilo Chain Rings and Hangers from Israel. Velo & MicroSHIFT lead times are presently a little longer than usual.
To be honest we haven’t had a huge level of disruption, just a massive increase in demand. All my smaller parts suppliers in China have been operating at full capacity with no delays for three months at least.
Longer term impacts:
From a wholesale perspective we are finding Covid as an opportunity to introduce other brands and their products into the market as mainstay suppliers keep running short.
From a more general industry perspective, I assume there will be more commuting in city areas and more cycling in general.
If there’s another spike or second wave to some degree, it will have an impact on the industry. If things get back to normal the bike industry will still be larger since Covid. There are far more people riding bikes these days.
My local trails at parklands and Tewantin on the Sunshine Coast are packed with new faces and hordes of Utes packed with bikes and avid entrants to the sport. I assume this is Australia wide.
Local councils and governments may even dedicate more resources towards cycling infrastructure, particularly as there are concerns about a recession and no international tourism.
Alan David of Link Sports said:
Changes in demand:
The first two weeks of lockdown were a little stressful with operational uncertainty, compounded by one of our larger accounts putting a buying hold in place. But then the phone started ringing and online orders kept coming in. So in net, we experienced a spike in total order numbers and an increase in new account openings.
Our general stock management strategy has always been to hold excess stock as ‘just in time’ inventory management can’t work along the entire supply chain and tactically we see it as a differentiator to hold stock. Our customer service team had also put in a massive effort to contact our new and existing customers in the months leading to COVID lockdowns, to better inform stores on what we actually do here at Link.
Good jobs guys and thanks to our awesome retailers.
What also helped was our ongoing strategy to be ‘problem solvers’. We offered stores a dropship service to help them facilitate ‘zero contact’ transactions. We think that helped out in the early stages, given the numbers that took advantage of the service. We’ve now wound this down as restrictions ease.
In terms of our brand suite. Perennial favourites like KS dropper seat posts continue to be very strong. We have struggled a little to hold onto high demand posts like 27.2 droppers and our entry level price point models like the ETEN and RAGEi. However, again our workshop crew put in big efforts to fill gaps in our stock and custom build posts on demand. This could only have been possible with their efforts and our penchant for deep stock of KS spares.
Our newer brands like Granite Designs, Do Little and other consumables like fork fenders, cargo straps, tools, IXS armour are all hot and flying out the door. Behind the scene, our product team have been boosting order frequencies and our suppliers have been eager to help.
The real turn around has been ControlTech, as stores help new bike buyers with fitment and have come to recognise ControlTech as a real workshop solution. It’s rare to have such high quality on components that can suit both a sub $700 bike as well as help manage custom builds to sneak below budgets without compromising build quality.
Burgtec composite pedals and Spank’s multiple sized Spoon range are through the roof. Super price points and the three pedal sizes just give so much flexibility, to meet the demands of customers walking through the door … women with small feet; young BMX’ers needing flats; those big dudes with size 12s. Real store favourites.
Supply chain disruption:
KS being the most popular dropper on the market has been a real struggle to keep on the shelves, even despite our strong stocking strategy. We order 90 days in advance and our current shipment which landed 02 June is based on winter slow-downs. Thankfully, KS are awesome and have helped fast track shipments so we are landing the next shipment two months earlier than planned.
All other lines are in good supply and there are no persistent hurdles logistically, so it’s business as usual with any gaps filling as normal.
Managing stock depth is going to be interesting leading into summer peaks, but we prefer to be over stocked rather than understocked.
Longer term impacts:
I’m an economist by education and worked a good chunk of my career in funds management, prior to founding Link Sports.
I’m upbeat and have advised all our suppliers that we expect a post COVID bounce. We are actively on the hunt for new brand opportunities, particularly aimed at boosting our complete bike offerings. So in short, I don’t see COVID specifically, as changing the landscape fundamentally. Similarly, I can’t see reason why a COVID induced downturn will be persistent, understanding there are other current global issues brewing. The upcoming round of nationwide redundancies will create pressure points for sure, but the fundamentals both for cycling and the Australian economy haven’t changed in my eyes.
Looking wider and putting my oracle hat on, just for fun, I’m betting on Vietnam becoming more of a hub for cycling production. Taiwan quality will be relied upon even more. I can see ‘made in Taiwan’ as a differentiator.
I can’t see that the global consumer will be willing to pay a premium for ‘made in the USA’ but there has to be a shift back surely.
We’ve already seen the influx of B2C and online direct brands so I can’t see this reversing or slowing down. But, from our discussions, 70% of suppliers we talk too still want, demand and value retailer support and wholesale channels.
Flexibility is always key. Understanding your niche and your value proposition is more critical than ever. I see the smart, innovative and adaptive will always be rewarded with success. In my 10 years running Link and being an industry outsider. I have to say, the number of high quality people and businesses in this industry, that I have come across, is definitely something we all should be proud of.
Good luck to all … let’s hope my crystal ball is sparkling 🙂
Branko Brkic of FE Sports said:
Thank you for inviting me to comment on the current circumstances within our industry as perceived by FE.
I would like to abstain from providing an opinion at the moment. I just wish the industry and everybody in it, all the best for now and into the future.
Kerrie Lee of GKA Sports Distribution said:
Changes in demand:
It’s certainly been a busy time for the cycling industry. We have seen a high demand for 26” tyres and tubes with consumers bringing in their old bikes to stores for repairs. Along with that consumers have needed lights, pumps, helmets and now winter is approaching gloves and jackets. With consumers’ reduced ability to buy from overseas websites we have seen local demand for products increase. Hopefully consumers will continue to support Australian retailers once restrictions are eased.
Supply chain disruption:
We have had minor delays with some shipments. Stock which was in high demand and we have sold out of has been reordered and will be restocked over the coming months.
Longer term impacts:
More families are out riding and hopefully now they will take the bikes away with them on holidays and enjoy riding together. This can only be a positive for the industry.
Wayne Chapman and Richard Powell from Dirt Works said:
Changes in demand:
Wayne said, “If we said that we hadn’t noticed a strong increase, we’d be lying, really rare, or dead! The market is booming right now.
“Firstbike, it’s bigger than Christmas right now, and it’s the middle of winter. It’s cold, wet, horrible, who wants to go outside? We’ve been doing this for 26 years now and we know what to order at what time of year, but we’ve sold out of quite a few key models of our Firstbikes and some of the accessories that go with them. There was no way to plan for it with the lead times that come with container loads of Firstbikes. It just doesn’t work like that.
“Service, repair and upgrade components: for us that’s Pillar spokes, Cane Creek headsets and bottom brackets, e*thirteen cassettes, even things like titanium cranks and brakes, none of these are cheap products, they’re all high end products, yet they’re selling at rates that have to be seen to be believed.
“You sell headsets every day. But titanium cranksets at $1,600 to $1,800 per set, let’s be realistic, do not sell every day of the week… well they do now actually! That’s the surprising thing.”
Richard said, “Maybe this is just a stuck at home with access to the web thing. You start lusting after high end parts!”
Supply chain disruption:
Richard said, “We really didn’t suffer any setbacks. Cane Creek don’t have any supply issues. Pillar in Taiwan, everything’s business as usual in Taiwan.”
Wayne said, “The most noticeable change in spokes for us was, back when we were selling DT, everything was three months lead time, but Pillar run a three week lead time. We’ve got this constant roll going. It has worked well for us in this situation. Spokes are selling phenomenally.”
Richard said, “The dealers have been brilliant. They’ve trusted us to give them a good product and we’ve got reorders.”
Wayne, “The only thing I’m upset about is that we’ve completely sold out of our Wayward touring bikes. And right on the nose of being completely sold out of fatbikes. The lead time to get more will be greater than ever, because everyone’s trying to play catch up.”
Longer term impacts:
Wayne said, “The boom that we’re all experiencing now, is it related to dad and mum wanting to go out and ride with the kids, or single 20 or 30 somethings wanting to go out and get fit? Or is it more what we’re seeing – people who suddenly have more disposable income, want to spend it?
“The whole JobKeeper thing, with people suddenly getting $750 a week, the young guy who’s a first or second year apprentice wasn’t taking home anywhere near that money and all of a sudden he’s got a pay rise. So he’s upgrading his bike.
“Equally those on unemployment benefits have been getting a double benefit for the past few months. They’re upgrading what might be their only form of transport.
“Will that suddenly drop off the moment the government stops what I refer to as its ‘Bucks for Bikes’? Once that’s shut down for both groups will we see a drop off? We don’t know what to expect because this has not happened before.”
“What I’ve noticed from the people that we deal with, I think we’ll see going forward… a lot of shops have geared them selves up to be bike selling showrooms at the expense of everything else. It’s turned out that what has kept those shops open when the bike supply stopped… and it stopped very early on because we’re in the time of year when the big bike brands were doing their close outs of 2020 stock to make room for 2021… the bike shops needed to do something and the workshop has kept them open.
“The workshops are often treated as the poor stepchild in most bike shops. The mechanic used to be the God. Now the mechanic is the guy who assembles bikes so that the sales guy can sell them. But the mechanic is giving them income now. It’s P&A sales, upgrades and repairs and service work that’s keeping the stores open (now that they have few bikes to sell). So maybe the mechanics will be getting more respect.”
Richard said, “Yes, that section of the business will probably get more attention. But if there are going to be any long term gains, it really needs to be government bicycle infrastructure spending to support it. If there are indeed so many new cyclists as we’ve been told, we need the extensions to the bike paths, the protected bike lanes, to keep those people out there.
“You ride 800 metres and the bike lane ends and you’re expected to shoulder it with the traffic.
“We’ve got what appears to be a solid boost to the bike business right now and that could taper off over a long period and maybe even go back to the old status quo if there’s not support from government to keep riders out there and hold back the threat of motor vehicle interaction.
“I can’t see how it will be maintained unless we have infrastructure support. In the past there has been nothing holding riders back except fear of traffic.”