Five Tips for Electric Bike Businesses

[NRG]

................

Similar bike as an e-bike, now £400 with motor, controller, battery, controls etc

Add EU anti-dumping duty 48.5% = £594.00

Add UK importer margin for small selling item @ 100% = £1188

Add cycle dealer margin 40% = £1663.20

Add UK Vat 17.5% = £1954.26


.

Flecc, Are you sure about the anti-dumping duty?

Bike Europe - Facts & Figures - EU regulations: No Dumping Duties on Chinese E-Bikes and Pedelecs (updated for 2010)

Your figures would make a £600 bike here £123 from the factory or a £400 one £82...which TBH seems a touch high!

 

[dmcgoldrick]

very interesting.......'' There seems to be a running joke that no one’s making any money (as in ‘real money’).''

i would suggest that plenty of people are making money on the premium products....these highly marketed products at premium prices are being sold worldwide from what must be a small number of actual manufacturers. sales growth in europe has boomed in the past 18 months according to all the reports.
where is all the r&d ?, well just on battery technology which is shared across multiple outlets..... everything else on bikes is 'mature' technology.

e bikes costing over a grand must be making money !!!!!!
e bikes costing up near two grand must be making a lot of money......!!!!!!

we pay these prices for reliable well made product, good service facilities, and warranty. companies who offer this will do well in the niche market.

as the battery technology becomes more reliable and the service/warranty element becomes less important then the 'tesco's' of this world will step in at a low price high volume strategy sourced from china or wherever.

the niche suppliers will by then, need to have developed highly desirable very high quality products to survive the next phase and operate more like quality car suppliers in their approach to customers than 'bike' shops (eg part ex deals, transferrable warranty, good service facilities).........apple are the prime example of this in the computer world.
we dont actually manufacture much in the uk anymore and have always been a high price point market, so quality and service are the only added value our suppliers can offer...........(getting something patented also a good idea for european sales).......

just a ramble on my part based on over 40 years selling premium priced products all over the world.....

regards

 

[flecc]

Flecc, Are you sure about the anti-dumping duty?

Bike Europe - Facts & Figures - EU regulations: No Dumping Duties on Chinese E-Bikes and Pedelecs (updated for 2010)

Your figures would make a £600 bike here £123 from the factory or a £400 one £82...which TBH seems a touch high!

Thanks NRG, the bicycle anti-dumping figures I gave were correct but I didn't see this e-bike exemption. There's also an exemption on components for EU manufacturers.

Although that changes the figures I gave, the differential due to percentage additions holds true. The changed figures from my examples using the 6% are:

Normal bike final price = £289

Similarly based e-bike final price = £1395

so still a vast difference. If the importer took half margin only per the alternative I gave, the adjusted final e-bike price would be £1046, still three times the unpowered equivalent.

If the e-bike importer in the example only took the same margin as the unpowered bike importer to try and achieve bulk sales, the e-bike version would still end up two and a half times the unpowered version price.
.

 

[NRG]

OK understood Flecc, however, 15% on the E-Bike is more profit for the importer then 15% on the normal bike. 4 times more in fact but obviously he's not going to shift any where near as many.... I feel given your last paragraph in post 10 (which I agree with) we'll never see volume E-Bike sales like we all would want to in the UK...it would be interesting though if David or any other manufacturers has market data for sales growth as an industry for the next 3 years say...

 

[Trevor Holloway]

As it is possible to buy an electric bike for £320 (with "sale" discount - no names mentioned) or a range of ready built bikes in a variety of styles for £500 - £600 it does not strike me as an expensive initial outlay as many non-powered cycles are around that price.

Just like the car new market ranging from £6,000 to £600,000, there is something for every pocket.

 

[flecc]

very interesting.......'' There seems to be a running joke that no one’s making any money (as in ‘real money’).''

i would suggest that plenty of people are making money on the premium products....these highly marketed products at premium prices are being sold worldwide from what must be a small number of actual manufacturers. sales growth in europe has boomed in the past 18 months according to all the reports.

e bikes costing over a grand must be making money !!!!!!
e bikes costing up near two grand must be making a lot of money......!!!!!!

Worldwide? No, most of the higher price bikes are sold in very restricted number of markets. Kalkhoff are now in the USA after a long time not there, but you won't find them in most world markets. Wisper aren't available to most of Europe, and eZee only appear in a limited number of markets, they mainly rely on the USA.

Nor is the market booming in Europe as you suggest, the boom is confined to about 3 or 4 of the the 27 member countries and is primarily in the Netherlands where well over 20 suppliers share the market. In many of those 27 countries they scarcely know what an e-bike is.

A very small number of suppliers are making a little bit of money on the higher price bikes in the UK Summer, only to see it disappear in the Winter to meet their ongoing costs as in the present weather. No queues of buyers at the moment!

The fact is that no suppliers appear to driven around in limos, many have gone broke over the years and many of those remaining routinely have to lay off staff every winter. So while no evidence is ever offered for the inferred vast profits, there's plenty of evidence to the contrary.
.

 

[EdBike]

On the subject of targeted emails: if Wisper had got my email address before I bought one and they had started sending unsolicited publicity material my reaction would have been the same as I have for any other company that cold calls me on the phone or email: straight on my ignore list and I refuse to have any dealings with that company.

Sorry, I may have been unclear. Spam is totally illegal. You have every right to report people under the CAN SPAM act. I wasn't suggesting anything damaging like that!

What's different is if you have someone who isn't 'red hot' and whipping out their wallet, but clearly isn't against the idea of owning an electric bike. An email autoresponder service (which works with a double opt-in so you confirm your subscription - like when you registered for this forum) which follows up with a buyers guide for you to look at, perhaps some useful forum posts on here and an offer of a free two week trial is totally legit. People can always unsubscribe.

Take a read at this article: Why Email Marketing is Dead (And How to Bring it Back to Life) | Copyblogger

Really, the reverse should be happening. I think ebikes have the potential to become a massive market and prices should fall enough to be attractive to the public at large. How this is achieved is a tad more difficult and would require brave financial investment.

You'd expect the average prices to drop overtime as volumes increase, economics of scale come into play (such as importing, fixed costs of running shops and hiring staff etc.) but that differs from having a higher price overall in the first place.

The e-bike is a replacement for cars, trains and other public transport where it can prove itself as faster (in urban situations), cheaper and more fun to run than anything else. You still ended up paying hundreds of pounds more than a 'traditional bike' because it made huge sense to you. To a cyclist it's crazy, but to the oyster-addicted commuter or motorist it's a fantastic saving.

That's where the win is. So I'd say…

Forget About The Mainstream.

I think we're a long way from having Tesco stock volumes of e-bikes, and educate their staff about the intricate details. Besides, who wants to be in a commodity business when all your trying to do is compete on price?

The volume will come from targeting large, but specific niches like:
* Commuters
* In cities
* In London
* In Richmond
for example.

I like dncgoldrick's dissection of the situation…

very interesting.......'' There seems to be a running joke that no one’s making any money (as in ‘real money’).''

i would suggest that plenty of people are making money on the premium products....these highly marketed products at premium prices are being sold worldwide from what must be a small number of actual manufacturers. sales growth in europe has boomed in the past 18 months according to all the reports.
where is all the r&d ?, well just on battery technology which is shared across multiple outlets..... everything else on bikes is 'mature' technology.

e bikes costing over a grand must be making money !!!!!!
e bikes costing up near two grand must be making a lot of money......!!!!!!

we pay these prices for reliable well made product, good service facilities, and warranty. companies who offer this will do well in the niche market.

as the battery technology becomes more reliable and the service/warranty element becomes less important then the 'tesco's' of this world will step in at a low price high volume strategy sourced from china or wherever.

the niche suppliers will by then, need to have developed highly desirable very high quality products to survive the next phase and operate more like quality car suppliers in their approach to customers than 'bike' shops (eg part ex deals, transferrable warranty, good service facilities).........apple are the prime example of this in the computer world.
we dont actually manufacture much in the uk anymore and have always been a high price point market, so quality and service are the only added value our suppliers can offer...........(getting something patented also a good idea for european sales).......

just a ramble on my part based on over 40 years selling premium priced products all over the world.....

regards

Interesting to read comments about the shear cost of the battery. Is it cheaper than petrol? Are you better off on a motorbike?

I've spent a few evenings in the past having a read through this website called the Battery University. Really informative guide I thought: Battery information from Battery University

 

[NRG]

Interesting read on sales figures:

sales figures

 

[flecc]

Interesting read on sales figures:

sales figures

Taking the fairly reliable Bike Europe sales figure of 400,000 electric bikes across Europe, divide by those 82 suppliers to make less than 5000 each average, then divide down by the various countries' national importers where relevant and the numbers get quite small for each.

That's one of the points I've been making, there are few or no fortunes to be made until the overall market is very much bigger. 400,000 or 750,000 pedelecs and e-bikes sold look impressive numbers, but against Europe's over 460,000,000 population they aren't significant yet.
.

 

[NRG]

Yep, I agree. Using the 2009 figures powered bikes where outsold by 25:1, dropping to 19:1 for 2010(estimated) although the figures don't break out what age groups these bikes fit. IE how many Childs bikes make up the numbers where we really need to look at adult touring style bikes to form a more accurate picture.

 

[EdBike]

Taking the fairly reliable Bike Europe sales figure of 400,000 electric bikes across Europe, divide by those 82 suppliers to make less than 5000 each average, then divide down by the various countries' national importers where relevant and the numbers get quite small for each.

That's one of the points I've been making, there are few or no fortunes to be made until the overall market is very much bigger. 400,000 or 750,000 pedelecs and e-bikes sold look impressive numbers, but against Europe's over 460,000,000 population they aren't significant yet.
.

I suppose it gets worse if you look just at the UK market then? That 400k is inflated by Holland/Germany etc.?

 

[dmcgoldrick]

The fact is that no suppliers appear to driven around in limos, many have gone broke over the years and many of those remaining routinely have to lay off staff every winter. So while no evidence is ever offered for the inferred vast profits, there's plenty of evidence to the contrary.
.[/QUOTE]

hi flecc, you obviously have a very good inside knowledge of the e bike retailing market and the lack of margin that must exist.

i dont think anyone is suggesting that vast fortunes are being made by uk retailers/distributors/agents of e bikes. however, they are only the end of a long chain which puts the e bike onto the market and in very basic terms, just buy a product and resell it.the service and warranty elements which they add on should still enable a good working profit margin. if that 'costs' them money instead of generating a profit then they should get out of the business immediately.
the bike manufacturers around the world will be making money.....and lots of it .......they will also view europe as the niche high price target market.
regards

 

[indalo]

There's a couple of things about this forum which I find a little distasteful.

One is the inbuilt descriptive title which appears next to each member's name. ie, senior member, junior member, etc. I dislike that because it seems to infer some kind of hierarchy or pecking order based on...well, I'm not sure what exactly. I know some other internet forums operate a similar system but it's pointless.

My other complaint is that I dislike being "shouted down" as it were for holding an opinion on a matter. It's not like I'm some jumped-up, young whippersnapper who knows nothing and I must quote Flecc here:

"Sorry Indalo, but the truth is that the consumer is too ignorant of the facts to form a realistic judgement."

Far from being a young, argumentative whippersnapper, I've had a bus pass for a few years now and although my background is in engineering, I have actually some experience in the finances involved in running a business and I took that remark about the ignorant consumer to mean me.

Now, to get back to matters pertaining to this particular thread, I'm just glad I wasn't the one to point out to Flecc that the ADD on non-EU bikes ended last summer. I found that straight away on Google as I couldn't believe that 48.5% duty quoted by Flecc although it did run at that rate for quite some time evidently. As for the rest of the figures in Flecc's illustration, well the term, "creative accounting" springs to mind. Is there an importer who charges 15% on regular bikes and 100% mark-up on the powered variety? Or perhaps there's an importer who only deals in electric bikes with no other business?

Quoting Flecc again:

"So there you have it, £281 against £1954, all clear now?"

Emm, sorry Flecc but no, I haven't. If the situation for dealers is as tough as you imply, no-one would make any kind of living from selling electric bikes but perhaps they only do it out of the goodness of their hearts. Alternatively, these ebike shops might be a front to conceal drug importation for example but what do I know?

What I do know is that if you can be wrong on one fact, you might be wrong on lots of other facts. I don't doubt your great wisdom on many issues to do with bikes but you really ought to stop acting like an official spokesman for the ebike dealers and importers not to mention the battery manufacturers.

Can I just add Flecc that you were somewhat unfairly singularly dismissive of the work being done by MIT in the US. Perhaps you aren't fully aware of the progress being made there on Li-ion but it's not just stuff that the universities do. They are light years ahead of anybody else on the planet. Without breakthroughs made there in recent times, Li-ion technology was effectively stalled and may well have simply stagnated. It wasn't the manufacturers who discovered how to "split the atom" as it were; it was the collective genius of the research scientists at MIT, nowhere else.

If you wish to continue to pontificate about battery prices being reasonable, then perhaps you'd like to back up your contention with some more of your maths, showing everything from acquisition of raw materials through the manufacturing process all the way down to the consumer. My contention is that the consumer is being ripped off and most are riding around with old-hat, fairly basic Li-ion technology in their battery case rather than the latest variety which is only appearing on a few bikes now.

Indalo

 

[flecc]

I've never said you were a young whippersnapper Indalo, your inference entirely. Anyone viewing our previous posts in this thread will readily observe your sarcastic comments about those who defend the commercial position and my entirely polite responses.

The one fact I was wrong on was not relevant to what I've been trying to explain and which you seem to ignore, the exponential effects of adding percentage margins. As my corrected figures show, these effects still account for the multiple in the costs of e-bikes when compared to normal bikes.

15% is a very moderate figure for an importer of normal bikes, and yes, I do know of e-bike importing agents who have routinely added 100% to the arrival price and still had a struggle to get through the winters. The normal dealer margin on bicycles is 40%. There are the odd exceptions where a product is so essential to dealers of substance that the supplier can operate with a reduced margin for dealers, Brompton's 30% being one such rare example.

Nor have I been dismissive of MIT and their impressive research achievements, but I don't hero-worship either. When they've dabbled nearer to the end products they've sometimes made fools of themselves as witness their add-on electric bike wheel recently, laughed at in this forum for it's impracticality. This isn't unique to MIT of course, but there are some universities who are far better achievers nearer the production end of business.

You ask for facts and I've given a number with just one error readily acknowledged and immediately corrected, though not making a great difference to what was being demonstrated. But where are your facts to say that I am wrong, I've only seen the usual consumer views expressed, which as I've clearly shown are ill-informed.

At no time have I inferred that those who trade in e-bikes operate in a charitable manner, but since many have failed and none of the others shown any signs of abundant wealth, clearly the profit margin situation is reasonably balanced. As the figures show, few could be philanthropic enough to make much of a difference to the range of end prices we have.

It shouldn't be forgotten that the substantial increases in bike and battery prices since early 2008 have been largely due to the great shift in exchange rates following the international banking debacle. These drastically changed the prices of bikes and parts from China and many other locations, inevitably forcing up the prices of all bikes whether produced in the Orient or in Europe using Chinese made components.

I'm not a trade apologist, I'm just facing facts and giving as fair a balanced judgement as I can. I was once in the trade many years ago and nothing would persuade me back into it, there's far more money to made in other branches of commerce.

Finally I'm sorry you are upset about forum titles. I didn't ask for mine, it was thrust upon me, but I've regularly made it clear that I am just an ordinary member with no status. When I was asked if I'd accept admin status I refused it, preferring to remain one amongst many and in no way superior to any other member, however new.
.

 

[flecc]

I suppose it gets worse if you look just at the UK market then? That 400k is inflated by Holland/Germany etc.?

Indeed, the UK market sales estimate is roughly one tenth of the Netherlands' total, with nearly three times the Netherlands population well under 4% in other words.
.

 

[indalo]

Flecc, I don't want to drag this thread down to a personal exchange by responding point by point to your incredible claims about exchange rates for example. I'll happily let readers make their own minds up about whether or not battery prices and electric bicycle prices are fair or not.

I really don't care if I'm a lone voice in this matter but having reflected on the various points you have made, I really am at a loss to understand how anyone makes a living out of selling electric bikes. It just can't happen.

Hero worship is not in my nature but you claim that there are other universities which are better achievers nearer the production end. No there aren't! I don't hold a torch for anything American but credit where it's due. There is no facility anywhere, neither in the US, the UK, Indonesia, Japan or China which has advanced the progress of Li-ion technology as much as The chaps at MIT have.

I'm happy to rest my case by pointing to the cost of replacement batteries, the cost of SOME ebikes, (I don't understand £400-£500 ebikes using your "formula") and the fact that all ebike dealers haven't gone out of business.

Now I know that there are some dealers who are members of this forum. Perhaps they should be the ones to defend the pricing structures they operate rather than you Flecc. I for one, would dearly like to know how they survive with all their overheads, given the bleak picture you have painted of the ebike market.

In response to a comment from another member re Tesco, I think Tesco simply put a toe in the water to see what would happen. Obviously, they shifted all the bikes they imported somehow and decided to desist from any further activity in that sphere. I have no doubt that Tesco didn't lose any money in that venture but the potential market probably isn't big enough for them to warrant further involvement.

Indalo

 

[lemmy]

I just came back from Den Bosch in the Netherlands, a beautiful town made even more so by the large centre being home to only bicycles and pedestrians.

Lovely to see people using bikes as everyday transport and electric bikes all over the place, common enough that no-one showed any particular interest in them.

Electric bikes may be a niche product in the UK but there they must be worthwhile product for any bike shop to sell.

The problem for the UK is that so many people see bicycles as a fashion item or a symbol of sporting prowess and therefore see electric bikes as for the old, unfit or uncool. Until one or two celebs start using e-bikes, as they did Minis in the 60s I don't see that changing. Until it does and sales thus increase, I don't see the economics getting any better

 

[CeeGee]

Indalo, The manufactures and dealers have stated their case about prices several times on this forum quite recently. They cannot be expected to spend time repeating themselves week after week - they have businesses to run.
I find it interesting that you know so much about the financial and marketing side of Tesco and I am relieved that they didn't lose any money over the Meerkat - perhaps you would provide the figures. Or are you just making assumptions on the figures - the very thing that you are accusing Flecc of doing.

Colin

 

[Alex728]

The problem for the UK is that so many people see bicycles as a fashion item or a symbol of sporting prowess and therefore see electric bikes as for the old, unfit or uncool. Until one or two celebs start using e-bikes, as they did Minis in the 60s I don't see that changing. Until it does and sales thus increase, I don't see the economics getting any better

In the current climate the economics are as good as they get - This article although its a bit old, shows a test of a number of e-bikes by a Dutch consumer magazine. The costs were €1000-€2700 - not at all dissimilar to what we pay for e-bikes, in fact a bit higher than the price of some serviceable machines in the UK! Battery replacement costs are also shown and seem to be about the same if not more per Ah (bear in mind that many e-bikes sold in NL are only 10Ah batteries)

http://www.kampioen.nl/published/kmp/content/tests/binaire-bestanden/k06-test-elektrische-fietsen-pdf-395696.pdf

 

[indalo]

I do like that point made by Lemmy re celebs. It undoubtedly helped sales of the Mini back in the 60s and I think Toyota must have been delighted when Tom Cruise and his ilk began to be seen in the Prius.

There's nothing more I wish to add to this thread CeeGee but thank you for reminding me about dealers making their case.

Indalo