DOES SELLING E-BIKES MAKE YOU A BETTER BICYCLE RETAILER?

In my last article for The Micromobility Reporter, I opined that just maybe e-bikes weren’t as good for the bicycle industry as commonly thought. While most didn’t agree with me, there were a number of responses that were supportive of my reasoning, and said the editorial was thought-provoking. The previous article was at the industry level. Now let’s look a little closer to home. From a retailer's perspective, are e-bikes helping your shop and making you a better dealer?   

I’ll stipulate that e-bikes are here to stay, and if you don’t sell them, a nearby competitor will. With that said, you no doubt have the sale of e-bikes in your current operating plan. How big a slice of your sales are e-bikes versus regular bikes is based on the demographic mix of your clientele. So here’s the question: if your e-bike sales come up short, what is your plan to recoup the revenue?

Certainly, there are more margin dollars on e-bikes than most analog bikes. It’s understandable that you would want to sell as many e-bikes as you can. The amount of margin dollars to be made selling e-bikes can be intoxicating. Most bike brands are holding dealer margins on e-bikes, though how long that will last is a concern.

Bike brands are still working through their inventory by promoting sales. E-bikes have seen some dramatic price reductions over the past months, which has also had an impact on dealer margin dollars. Still, e-bikes remain a source of significant revenue, though some of the manufacturers/distributors are looking to retain more of those dollars for themselves. One industry executive has floated the idea that the maximum dealer margin should be capped at $500 regardless of the sale price. What would that do to your operating budget?

My last article asked if customers walk into your store looking for an e-bike but don’t find what they want, what happens? Do they leave hoping to find the bike at a different store? Are they willing to accept a substitute e-bike? Are they willing to wait until you can get the bike they want from your distributor? Are they willing to accept a non-electric bike?

One of the basic tenets of retail is you don’t want the customer to leave empty-handed if at all possible. The customer has more than one avenue to make a purchase. The customer can call around to local bike dealers to see if the bike they want is in stock. They can go to the manufacturer’s website to order for delivery at a preferred bike shop. They can go to the manufacturer’s website and order for direct delivery to their home or business. They can price shop online for less expensive direct-to-consumer off-brand products. What’s your plan if you don’t have what they want in stock?

The price of most e-bikes means it isn’t usually an impulse buy, so it’s not out of the question a customer would do some checking and comparison shopping when contemplating a purchase. Does your store have the particular make, particular model, particular frame size, and the particular color the customer wants? Do you have demo units for the customer to test ride?

Considering this, how many brands of e-bikes does your store carry? How many units do you keep in inventory? How much working capital does that consume? Has the cost of your e-bike inventory caused you to cut back on other types of inventories? Given that interest rates remain elevated and likely to remain so till the end of the year (or longer), this most likely has put a financial strain on your entire business. Is this having an impact on your ability to provide products or services as a “regular” bicycle dealer?

How do e-bikes affect your service department? Typically, e-bikes are heavier than analog bikes, so you may need additional/different bike stands to assemble and service them. E-bikes are more complex, so additional training for your techs will likely be required. Additional tools and diagnostic equipment will be needed to properly maintain e-bikes. Knowing these things, does it make sense to have the same hourly labor rate for e-bikes that you have for analog bikes?

These may seem like rhetorical questions, but each is a real issue for your business. Selling e-bikes is transforming your business in ways you may not fully realize or understand.

If you haven’t seen the guest editorial by Bob Mittelstaedt in the June edition of Bicycle Retailer, find a copy and read it. The editorial rightly points out that Class 2 e-bikes have motors 750 watts or less and are not capable of providing assistance above 20 m.p.h. Bikes with motors in excess of 750 watts or that provide assistance in any gear or mode at speeds above 20 m.p.h. are not e-bikes. They are a type of motor vehicle.

Are you aware of this distinction? The editorial points out the potential liabilities a dealer might face should a customer purchase what they believe is a Class 2 product and find out it really isn’t. The June edition of The Micromobility Reporter did a fine job addressing this issue in greater detail, so you might want to go to the Human Powered Solutions website (https://humanpoweredsolutions.com/) and read about it. Better yet, subscribe to the Reporter and never miss an edition.

There are a couple of other issues you need to be aware of and understand if you’re selling e-bikes. The first is insurance. You need to talk to your insurance broker when you start selling e-bikes. The potential consequences of having them in your store and an accident occurs can be catastrophic. If something happens, you need to know your insurance is in force. The National Bicycle Dealers Association (NBDA) has a protocol that will help you set up handling e-bikes and their lithium batteries in as safe a manner as possible. If you have not already done so, reach out to the NBDA and ask them about that protocol.

Another issue has to do with the ever-increasing limitations certain jurisdictions have imposed on the handling and storage of lithium batteries in commercial buildings. The penalties for violating the statutes can be severe and expensive. If you’re going to sell e-bikes, make sure you know the statutes in your town and county.

Certification of the electrical systems/components on e-bikes is a much-debated topic. Underwriters Laboratories has two standards that should be the minimum you will accept for e-bikes you sell. UL2271 applies to batteries used in light electric vehicle applications. A more stringent standard, UL2849, applies to the entire electrical system. You should require proof of certification from the manufacturer or distributor to these standards for any e-bikes you sell. Your insurance company may insist on it.

Does selling e-bikes make you a better IBD? The answer to that depends on how well you have managed their integration into your business plan, how well you’ve trained your staff, and how well you manage the financials of your business. E-bikes can absolutely make you a better IBD if done right. E-bikes can also destroy your business if their integration is mismanaged.

Which path are you on?

Contact Steve Bina, steve@humanpoweredsolutions.com