Healthy sales growth in 2013 and 2014
Electric bicycle sales have grown much faster than the overall bicycle industry over the last five years. In Europe, electric bike sales rose 8% in 2013 and more than 10% in 2014, reaching nearly 1,500,000 electric bikes sold every year. In the US, electric bike sales are lower (around 250,000-350,000 bikes sold), but growth has been healthy. These upward movements in electric bike sales are all the more important when you consider that the traditional bicycle industry experienced declines in both sales revenue and sales volume in 2013 and 2014.
Sales growth in Europe continues to accelerate
E-bike sales in Europe were growing at 10%+ annually just a few years ago, but in 2015, annual e-bike sales growth hit 30%, with sales growth for speed pedelecs (45km/h-capable) rising more than 30% (growth has been slightly stronger for S-pedelecs than for those that are limited to 250W/25KPH).
Changes in the retail environment
Given that sales growth has been healthy, does this mean that retailers will invariably benefit? Not necessarily. Retailers have been forced to specialize in small niche markets in order to be successful. For instance, American electric bike company Pedego has succeeded in large part due to its focus on the active adult and senior markets, which has been resilient because older riders are less price-sensitive and offer higher profit margins. San Francisco-based The New Wheel has focused on selling high-end bikes and offering top-notch service and support, and is expanding its presence in the Bay Area to include a new shop in Marin County, just north of San Francisco. The New Wheel’s major competitor in the Bay Area, Motostrano, opened up a second location in central San Francisco to tempt urban buyers who don’t want to drive 25 miles south to their Redwood City location. Another bright spot in the electric bike marketplace is Crazy Lenny’s Ebikes of Madison, Wisconsin, which has been able to sell high volumes of ebikes by offering attractive prices to both local buyers and out-of-state buyers.
Survival of the fittest
In the world of electric bike retail, shops that don’t have a clear niche will not survive. If a shop relies on a geographical monopoly (a lack of competing retailers nearby) to stay in business, then they might do well in the short-term, but they would still face competition from online retailers that offer better deals, and would also run the risk of having a competing shop enter the local market. Online discounters could see big gains in sales volume as e-commerce sales continue to rise against brick-and-mortar sales, however, if competition heats up amongst online discounters, then their profit margins will fall to unhealthy levels. The high-end retailers that focus on high-income buyers will probably continue to thrive if they keep their customers happy, however, online discounters can take away a lot of business from high-end retailers because the high-end retailers cannot compete on price.
Reading the crystal ball
If electric bike sales continue to grow at healthy rates, a number of scenarios could play out. Retailers could see increases in both sales and profits. Another scenario is one in which sales volume and revenue both rise, but profits fall due to lower average sale prices. That could hurt retailers at the expense of giving better deals to ebike buyers. To be quite honest, it’s anyone’s guess what will happen over the next 24 months.
Do you have a prediction about what will happen in the electric bike market? Feel free to sound off in the comments section below.