Unexpected Opportunities After the E-bike Boom

Source: ThredUp 2020 Resale Report

The Signal: In a time when the overall retail sector is projected to shrink by 15%, the online secondhand sector will win big as it grows by an estimated 69% from 2019 to 2021. The secondhand market, currently valued at $28B, is projected to more than double to $64B by 2024.

One well-documented winner of the booming resale market is luxury goods. In fact, the secondhand market for luxury goods is growing 4x faster than the primary market. The high price tag and durability of high-end products make them a good fit for resale. 

Clothing, watches, and handbags are some of the most common items you’ll find on luxury resale sites. What other premium products will be next in line? One candidate that warrants a closer look: bikes. In particular, high-end bikes and e-bikes. 

While the COVID e-bike boom is old news, there are still ways to capitalize, and the resale market is one of them. 

For example, Moore’s is a bike shop based in Hattiesburg, Mississippi. Their refurbished secondhand bikes usually sell within a day. Many are even pre-sold before they go into the shop for refurbishments. On average, the company sells a pre-owned bike at a 64% gross margin, compared with a new bike at 43%. 

The Opportunity: Combine the growth of the premium resale market with the recent e-bike boom, and you have yourself a winning niche. 

Premium e-bikes are one of the biggest-ticket items in cycling. They go for as much as ~$14k out the box. Not only are they excellent candidates for the resale market, but also sales in the primary market are about to go into overdrive, thanks to improvements in lithium-ion battery technology, a shift towards zero-emission vehicles, and government subsidies. The e-bike industry is expected to nearly double in the next 5 years, from $21.1B in 2018 to $38.6B in 2025. 

As the market for pre-owned e-bikes expands, there will be space for more companies that buy, sell, exchange, and refurbish secondhand e-bikes and their specialized parts and equipment, as well as other micromobility vehicles such as the following electric options:

• scooters: 1.2m searches/month (according to Keywords Everywhere)
• skateboards: 201k
• unicycles: 33k
• trikes: 9.9k
• skates: 6.6k  

For those who don’t want to take on the risk of owning inventory directly, there is also the option to create an online marketplace that connects buyers and sellers. Bikesoup in the UK charges people ~$25 to list their bikes on the site for sale. BikeExchange in Australia does the same, with an additional option for customers to pay ~$15 to boost their bike listing in search results. 

Parts Exchange: High-end electric bikes are “absolute prime candidates for part exchange,” noted Cycling Industry News in an interview with Matt Connelley, founder and CEO of Cycle Exchange, in an interview with Cycling Industry News. 

The worldwide automotive aftermarket parts industry is worth $723B, compared with the primary automotive sales industry, which is worth roughly ~$2T. Applying the same ratio (35%) to the global e-bike industry, we can extrapolate that the e-bike aftermarket industry may be worth as much as $13.5B (35% of $38.62B) by 2025. 

An upstart could establish itself as the go-to company for aftermarket e-bike parts and services for B2B and B2C markets. One player already in this space is E-Bike Marketplace. According to their website, their rebuild service currently takes 12 weeks due to high volume.

Rentals and Partnerships: As low- and high-end e-bikes start to flood the market, why not snap them up and start an e-bike rental business?  You wouldn’t have to compete with the likes of Bird and other micromobility startups to win. One niche worth further exploration is tourism.

Partnering directly with hotels, vacation-rental hosts, and other tourist accommodations is one way to capture travelers looking for a fun way to explore a city by bike. One company successfully applying this model in Europe is Greenstorm. 

The company, which recently raised an undisclosed “double-digit million Euro” investment, partners with ~1k hotels in central Europe that let them store bikes in empty rooms in exchange for discounted rental prices for their guests.