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No-one Likes The Middle Man: The Bikes Online Story| #181

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Nathan Bush is a director at eCommerce talent agency, eSuite. He has led eCommerce for businesses with revenue $100m+ and has been recognised as one of Australia’s Top 50 People in eCommerce four years in a row. You can contact Nathan on LinkedIn, Twitter or via email.

James co-founded BikesOnline with Jonathon Allara over 10 years ago and they continue to share the CEO role. BikesOnline is a classic shoe string story. Having started out of the back of a disused electrical substation, and running the entire business from a single extension lead, BikesOnline has gone on to become the largest online retailer for bicycles in Australia as well as a significant player in the USA, with over 100,000 happy cyclists served each year.

James shares the beauty of the Bikes Online model

In this episode of Add To Cart, we are joined by James van Rooyen, Co-founder of Bikes Online – or Bicycles Online as they have been known in Australia. Starting out as bike tour operators, James and his business partner Jono, thought they might be able to get bikes cheaper if they ordered them direct from the supplier. One container load and an eBay store later,  Bikes Online was born. Today, they sell bikes to both the Australian and US markets and have 100 staff spread across every continent. In this chat, James shares how they have been able to create a direct to consumer advantage and maintain it with strong supplier relationships – even as competition has increased. We also discuss James’ tips for expanding into the US, how to snap up bargain domain names and why one of his proudest moments was when one of his team members bought a house. 

“We’re able to cut out the middle man…no-one likes the middle man right?

James van Rooyen

Questions answered in this episode include
  • How and why did you go from bike tour guiding to bike retailing?
  • What were the biggest challenges at the start of selling bikes online?
  • What’s been your proudest milestone to date?

Cut out the middle man

“So really the price is a big factor. It’s the one thing that the customers have to give up to get the product or service. And so that, when they still see that we provide great value, they are like, “fantastic.” Some people don’t question it. Other people will question the credibility of the product. And that was very true in the early days. 

So Polygon, just as a quick backstory, Polygon produced bikes for all the major brands. They’re a huge producer. And so the bikes are the exact same quality as what you’d get out of the traditional retailer. And so that was really a key message for us, for customers to understand that look, the quality of the bike is fantastic. This is how we’re able to save you so much money. But it’s not because we’re trying to de-spec the bike or anything like that. The product quality is there. It’s the business model that’s able to give you that value.”

De-risk the experience

“I think that the hardest challenges at the beginning for us were actually ones that still exist today. And bikes are just not a category of product that people are traditionally used to buying online. And so we really had to convince customers it was okay to buy online. And so that’s been really a big challenge for us for a long time. 

And I think what’s changed recently is the understanding that it’s not so much that we can have an equivalent experience to an in-store buying experience. You can actually have a better experience online, and there are so many things that you can do and you need to do, if you are going to be buying an expensive bike. You want to do your research, you want to have the options. And there’s a lot of things that you can do online to be able to de-risk, well, at least that perceived risk, reduce that perceived risk for the customer. And so, I feel we’re getting better and better at it, but it’s a constant challenge for us.”

Australia and the US 

“The Australian market is a good market in the bike industry, but it also has more than 350 brands servicing 25 million people. And we just don’t have that many people, so not just customers, but also employees. And so you have to be very efficient. That dynamic doesn’t exist in the US. It is not a winner take all market. It is such a big market that it’s made up of lots of different markets. 

And so, one of our biggest competitors really just operates in Florida. And a lot of people actually said to us when we were going to the US, look, just pick one state. Look at that, even online, just pick one state. But we’re probably a little bit over ambitious and we’re like, no, we’re going to do the whole thing.

Look, it’s worked out well for us. And the efficiencies that we’ve gained in Australia certainly have applied in the US. We sort of joke and we say that people ride bikes in Australia the same way they’re riding in the US. So, the business model that works here also works well in the US.”

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