Eurocycles is not a typical Australian bicycle industry importer / wholesaler business. For a start, it’s run by scientists. Perhaps because of that, during the few years since its creation, Eurocycles has looked at the industry from a unique perspective and pursued markets that others have probably dismissed.
Bicycling Trade recently visited Eurocycles’ founder Rick Krassoi and Technical Division Manager Abraham Wile at their Sydney headquarters to find out more.
Bicycling Trade: You already run a successful environmental monitoring business, Ecotox Services Australasia, why start a business in the bike industry?
Rick Krassoi: Lunacy I suppose! (laughs)
In a way that pollution testing lab I’ve had running since the 2000 Sydney Olympics pretty much looks after itself now. I’ve managed to get the manager’s in place that I need to look after the running and the ongoing project management. This has allowed me to think about something else that I’ve really wanted to do for a very long time.
It also provided us with the capital to start a new business, which is not insignificant. Particularly with ebikes, because you can imagine a container of ebikes is infinitely more expensive than a container of traditional bicycles. So that’s been an important element of the start-up success of Eurocycles.
BT: Can you please give a little more background about your Ecotox business?
RK: We have anywhere between 10 to 13 staff, depending on how busy we are, a mix of casuals and full timers. They’re all tertiary educated. They all have Bachelor degrees, Masters and a few PhD’s as well.
There’s also an international arm because we do a fair bit of international regulatory work anywhere, but predominantly Europe.
They send samples to us, we don’t tend to get out very much. It’s all laboratory work. We do a lot of work for the oil and gas industry, the mining industry, coal seam gas which is very topical at the moment, waste water treatment plants and those sort of things.
BT: Turning now to Eurocycles. It’s based around ebikes but you’ve also built quite a portfolio of P & A, with Magura, Tubus, Racktime, Nuvinci…
RK: AXA, Hebie… there’s quite a few of them actually. Every time we go to Eurobike we pick up something interesting again.
There is a common thread though. We started off with ebikes but we also wanted to make sure that we had the right sort of P & A that works hand in hand with good high end ebikes. So for example you would expect to see good high end Racktime or potentially Tubus racks on a good ebike. We want to be able to fit out our bikes with the best parts and accessories that we can get hold of.
BT: You’re not just selling your P&A range to your ebike dealers, but more broadly?
RK: Yes, they are available to any bike store that would like them.
BT: Which of these brands are the largest for you in Australia?
RK: They tend to be the ones that are already well known here to some extent through previous distribution agencies. Tubus for example has been a pretty solid seller for us.
BT: You sell direct to the public through your website as well as through dealers. How is that working?
RK: Quite well. For example with Tubus racks, we sell equal numbers to both dealers and general public. We sell to dealers at wholesale price and to the general public strictly at the recommended retail price.
Dealers might only choose to buy a very small subset of the full range, but for us to have that full range we really need to have multiple channels that we can sell to.
BT: How many staff do you employ in Eurocycles and what are their roles?
RK: We’d have eight. We have a mix of administrative and technical staff. Abraham manages the whole technical division, so he looks after the warranty and the repair support side for both Bosch, Magura, Nuvinci and the other brands that we bring in.
We have an office manager who looks after the administrative side. Hamish looks after the sales side, so he will actually be the person that most people speak to.
Then we have other people come in to provide some mechanical services. We have an in house graphic designer, Stephanie. She built our website with developers and has also created the whole look for the business and creates the banner ads that we use.
BT: Looking at your website, it shows five dealers in NSW, five QLD, three ACT, three VIC, two WA, one TAS, and one SA…
RK: Plus two WA and one in New Zealand.
BT: Most of them appear to be specialist ebike shops.
RK: That’s right. These are the pioneer stores.
BT: Is that by choice or have you found it hard to convince non specialist ebike shops to stock your ebikes?
RK: Well they’re the ones that are most receptive to taking ebikes.
When we first approached them, most of them didn’t have any experience with the Bosch ebike system but had read a lot about them and were quite well informed. They were pretty keen to stock it in their stores.
With non ebike stores it’s a different proposition, where they might have been vaguely familiar with the notion of ebikes but not really that understanding of the different ebike systems so it’s a different introduction if you like.
Now the task is to really introduce these ebikes into traditional bike stores. There have been a few early adopters. For example the Onya Bike chain in Canberra have had a fair bit of success selling these Bosch powered ebikes and I think they’ve got quite an eager, interested audience. So I think we need to replicate that across the country now.
We don’t really have a sales rep as such so we haven’t really been doing a lot of ‘pressing the flesh’ out on the open road. That might be something we need to do down the track to broaden the appeal, but at the same time we’ve got to make sure that we match supply of stock with our number of dealers.
Certainly for the first year it was actually very difficult getting stock out of Europe. There was a real shortage of Bosch ebike supply in Europe and at one point we could have been waiting close to a year before you could get hold of a container load of ebikes.
BT: How’s supply now?
RK: It’s improved a great deal because there’s a second production line for Bosch motors in Hungary now.
After the first few containers we had a pretty good feeling as to what bikes people wanted so we could start planning ahead.
BT: How do you see the future ebike market developing in Australia?
RK: There are so many variables at play at the moment. I think it will take some years for the market to find its balance.
The early up-takers were the specialist ebike stores, but now we’re seeing some bike stores become distributors in a sense. We’re seeing chain stores bringing in ebikes and selling them through their network of stores. And of course we’re seeing the more traditional model where distributors are importing and putting on an importer margin and then selling it at wholesale price to retailers. As a consequence we’re seeing a fairly broad spread of price points.
Soon the larger importers will be selling to their dealer chains good numbers of ebikes. I think that inevitable if we see what’s happening in the European markets.
I hope that Eurocycles will have a fair bit of success with IBD’s and those who are not necessarily tied to a particular OEM. I think it will be much broader than the pioneer ebike stores.
When you see what is happening in Europe where those pioneer stores are not really dominating the market. You can go into a normal everyday bike shop and you’ll be buying a Bosch ebike, irrespective of the brand. It’s just a different model. I suspect we’ll be heading more towards that within the next few years.
Abraham Wile: I think the establishment of the Bosch Service Centre is one of the enabling factors in traditional bike shops having the support needed to sell the bikes. Also for the wholesalers who are importing brands, knowing that there’s somewhere local in Australia to turn to that’s working directly with the manufacturer.
That’s one side of it, but really the wholesalers will need internally to have their own enthusiasm for ebikes in order to bring that to their network of IBDs. If their reps and sales people and buyers are not excited about ebikes themselves, then to get their own bike shops excited about them is a much bigger task.
BT: How fast is the Australian ebike market going to grow, year on year for the next five years?
RK: In Europe we’re seeing 20% growth year on year at the moment. I think because we’re in the early stage in Australia, I suspect it could be beyond that here.
It’s not difficult to double the number of bikes if you’re starting from a fairly low base. Eventually, it will peter out to a more sensible figure of 20% year on year at some point, but up until then I suspect it will be greater than that.
BT: Are you seeing that rate of growth in your own business?
RK: Certainly. In the first year we probably saw about a 200% increase in the number of bikes we bought in from one year to the other and we managed to move the full inventory without a great deal of warehouse time.
People were ordering bikes when we announced that there was a container was on its way. So by the time the container actually arrived, most of those bikes were spoken for.
That model is changing now because there is a lot more on offer, different OEM’s, different importers. So it’s actually quite a different situation now then it was even six months ago. I’m not expecting that we’d be able to pre-sell whole containers going into the future.
BT: What do you think is the core customer demographic for ebikes now in Australia? Do you see that changing in the future?
RK: I think the demographic is a bit different to Europe, where I think initially their view was that city bikes and comfort bikes were the primary market, particularly to older riders.
I think it’s been quite a broader cross section here in Australia. For example our mountain bikes were the first things to sell, without a doubt. The people who were buying those would have perhaps not so much in their 30’s but certainly in their 40’s and 50’s and only a very few in the 60 plus age bracket. So I think immediately we’re already selling to a younger demographic.
The bikes that were slower to move were the step-throughs. They would be sitting around for a little longer than the mountain bikes without a doubt. We’re always short of mountain bikes. Generally they get sold to males, but not exclusively.
We’ve been attending seven or eight demo days this last month and the pattern is the same at a demo. The people instantly go for the mountain bike designs, as a commuter actually. People put slick tyres on a mountain bike and use it as a commuter.
BT: Do you understand why many dealers are reluctant to sell ebikes, particular some that were burnt in the early days with poor product and service?
RK: We get the same response. There’s a local bike shop who is just so wary because they’ve been burnt with some older designs and even some current models that just aren’t up to scratch.
I would hope that they would put that experience behind them and try a Bosch powered ebike and have a taste of this new technology, which is exceptionally reliable.
It’s a good looking design and they can have the world best practice in terms of warranty and support behind them.
Technology advances very quickly and the models and designs they might have tried in the past are so very different to what’s available on the market now. I’d say there’d be close to 15 brands of Bosch bikes available here by early next year.
BT: One of the big hurdles to sell ebikes in Australia is price and a big part of that is the battery. What’s your opinion on the rate of future development of batteries in terms of cost, weight and energy density?
RK: I suspect that’s going to transform quite rapidly in terms of cell capacity and density. You can be sure that the whole Bosch R&D program is focused very much on developing the next generation of systems.
As it is, these mid drive systems are so efficient in terms of their battery use, you can actually get away with a much smaller battery, which has fairly high density cells. You don’t need those whopping batteries that you would have seen on ebikes in the past.
Battery cost could represent a quarter of the value of the bike. I’m sure over time that will reduce proportionally. The price of a Bosch battery for example has come down significantly, 30%, even in the last few months.
BT: What’s your opinion about retro fitting existing bikes rather than having purpose built ebike?
RK: There’s already been quite a significant market here in Australia for retro fitting different ebike systems to existing bikes.
Ultimately it just increases the overall awareness of the concept of ebikes and pedalecs. I think it would be a marvellous thing when there’s a greater diversity of high end ebike system options available.
But a complete ebike goes through the full EN15194 testing process where every element of the bike is tested and accessed in total, not only in terms of braking performance and the structural integrity of the frame, but also EMC (electromagnetic compatibility) considerations.
BT: To make sure it doesn’t upset your iPhone or your pacemaker?
RK: Yes. Different elements will potentially change the EMC characteristic of the bikes. For example if you put some lights and integrate them into the ebike system that will potentially change, so each manufacturer has to present a bike as it would be finished.
Once a bike is determined to be conforming then there’s a decal applied to the frame.
BT: Finally, do you think that our lack of cycling infrastructure compared to much of Europe will the rate of growth of ebikes in Australia?
AW: I think the industry will grow even without the best infrastructure alongside it, but good, quality cycling infrastructure is critical for ebikes to replace car trips.
People will continue to buy, use and enjoy electric bikes for recreation, fun routes that they feel confident on, but to be able to leave the house on any day with any destination in mind and choose the ebike over the car or public transport requires good infrastructure.
RK: It’s very much a chicken and egg scenario. I think the fact that we have limited cycling infrastructure is preventing people from taking up this otherwise very enabling new technology.
It’s been said to me on many occasions by women more commonly, maybe middle and older age women, they just don’t feel safe on roads.
They say, ‘This is marvellous!’ ‘This will get me back on a bike.’ ‘This will help me to regain some mobility and some fitness.’ But they’re concerned that they will be unsafe on the roads. Ultimately, it’s only an improved network of dedicated bicycle lanes that will encourage many people to get back on their bikes.
