The cycling industry is in bad shape right now.
In March last year, UK cycling distribution firm Moore Large went into administration. They had been trading since 1947.
In May, it was another distributor – 2Pure. Cycling Weekly reported that administrators blamed the crash of 2Pure on “a weak pound, surplus stock from the pandemic and the pressures of inflation.”
In October, Wiggle Chain Reaction Cycles went into administration. Wiggle were sometimes described as the “Amazon for bike bits,” and their downfall wasn’t for lack of wares. As Global Cycling Network reported in October, “the priority seems to be shifting some of their enormous pile of stock. In their latest accounts, Wiggle Limited's inventory was valued at £78m.”
Next it was Orange Bikes. This British cycle brand had been in business since the 1980s, and were known for their cult-favourite mountain bikes. Orange went into administration in January this year.
So what exactly is happening here? And why?
And most importantly… What can be done about it?
The Problems Facing Cycling
“Professional cycling is basically broken. Money goes in, and it all disappears into the business side of things. So we wanted to move away from that, and break the mould.”
– Richard Pascoe, Saint Piran.
Do you remember what we said in our analysis of Supply Chain Trends last year?
“Any chain is only as strong as its weakest link. A long and narrow supply chain features a lot of moving parts – and many of the challenges it faces will be beyond your power to control.
“So in order to grow a robust business in 2023… we need to rethink what a supply chain looks like.”
Now, in 2024, this is the reality in cycling.
The cycling business is facing a perfect storm, in which a fragile and overly-complex distribution network has been exposed and corroded by a series of external pressures.
The factors leading to this crisis include:
Supply chain disruptions: Many cycle brands depend on global networks and supply chains for their components and raw materials. Disruption to these supply chains – whether caused by disasters, conflicts or pandemics – can massively impact production and distribution.
Fluctuating demand: Consumer demand for cycling products varies with the season, being affected by races and competitions, weather, holidays, and more. When demand is unpredictable, suppliers face a serious challenge in managing inventory levels and predicting demand.
Fragmented distribution networks: This is a big one – the distribution model in the cycling industry has a tendency to be fragmented and complex, with countless intermediaries such as manufacturers, wholesalers, distributors, and retailers.
Now here’s where it becomes a crisis...
The cycling industry had reached the point where, between manufacturer and retailer, there was a whole range of other parties all taking a cut of the value. Distributors, wholesalers, and plenty more besides.
The total profit margin on a single product might end up being split 9 different ways!
A system like that is all very well, and it might work – when times are easy.
But throw in a pandemic. Throw in Brexit. Throw in a war in Europe, with global ramifications.
The electric bike company Velco recently put out an article that explained how in the last few years, prices have gone up for:
- Aluminium (+100%)
- Steel (+50%)
- Carbon fibre (+30%)
- Rubber (+70%)
They explain that lead times for some orders have risen as much as 4x since the Covid pandemic – which means demand for certain components must be anticipated as much as 2 years in advance!
But cycling’s seasonality, combined with the fluctuating purchasing power of the average consumer, makes it harder than ever to predict future sales.
This caused what’s known as a bullwhip effect throughout the market – as companies at various stages in the supply chain either panic buy and overstock, or else, they don’t prepare in time and are left unable to fulfil orders. And the problems are magnified at each extra step along that extended supply chain.
In short: it’s a horrible mess. We are watching a beloved industry crashing and burning in real-time.
Something needs to be done about it. And we think we know the answer.
Alvio’s Answer to the Cycling Industry Crisis
“Commerce is the backbone of any sports collaboration.”
– Richard Pascoe, Saint Piran
Let’s talk about Pacenti Cycle Design.
Now Pacenti, in case you don’t know the name, design some of the best bike wheels in existence. (If you’re a cyclist, we’re going to assume you already know them!)
Pacenti are real scientists when it comes to wheels, hubs and rims, but the beauty is in how they keep their offerings simple. All you need to know is that Pacenti wheels perform – and as a result they’ve picked up fans across the spectrum, from commuters to world champions.
However, Pacenti has bigger goals than just helping you to get from A to B. In fact, they are now playing a role in reinventing the entire cycling industry.
Pacenti is one of the growing number of brands to have joined the Alvio collaborative ecommerce platform. They have already partnered up with Saint Piran – the Cornish cycling superstars – which is a match made in heaven.
Now Pacenti is looking to use Alvio to partner directly with more cycling brands and cycling retailers.
Let’s take a look at what changes when the Alvio model is applied.
1. Alvio lets you move data, not products
When you add an Alvio partner’s range of products to your store, it will appear almost immediately – but the products stay where they are. You don’t need to purchase wholesale, and ship products to your warehouse before you can sell them.
Simply sell stock in place – and every time you make a sale, you both benefit, while the supplier ships from their end as usual.
One of the largest issues identified in the cycling industry at present is the overstocking and understocking caused by fluctuations in demand, and strains on the market.
The Alvio model bypasses this issue altogether. You will never overstock, while you can add as many new product lines as you wish without ever investing capital.
2. Alvio simplifies the supply chain
Another problem facing cycling brands is the industry’s complicated and fragmented distribution network. So imagine if you could simplify that down to the basics.
Instead of manufacturers, wholesalers, distributors and then retailers…
What if the retailers worked directly with the manufacturers?
No more middle men. No more overstuffed warehouses somewhere on the continent, clogging up the whole supply chain. Just a return to simple supply and demand. People who make things, and people who can sell them.
We’re building a simpler, and greener, way to do business. Alvio users report as much as a 16% reduction in product mileage, which is good news for both the environment, and for your bottom line.
3. Alvio builds a better business ecosystem
Alvio promotes collaboration across mutually-beneficial relationships.
No more power hierarchies – you simply establish a nimble digital partnership between two companies, and then you both gain from your combined market reach.
This model naturally promotes quality. It squeezes out the counterfeiters – and by allowing independent brands to combine their strength, it challenges the monopoly of the superstore retailers and marketplace giants.
Alvio does away with all that value trimming. Instead, we give value back to the manufacturers and retailers.
The Future of Cycling Ecommerce
“We can only do this together. It has to be that kind of commercial model where everybody gains, in order to drive it forwards.”
– Richard Pascoe, Saint Piran.
We have an opportunity here to rebuild the broken cycling industry. To create a healthier ecosystem between cycling suppliers and retailers.
With brands like Pacenti – and teams like Saint Piran – we can reconnect the industry in a way that makes it faster, more flexible, more sustainable.
Speaking of Saint Piran, they’re already making excellent use of the Alvio platform: having formed partnerships now with Coral Eyewear, Big Bobble Hats, N1 Fan Cave and ArmaUrto!
Pacenti was quick to see the potential in this approach too. They recently had a complete website upgrade, courtesy of our friends at Inspira Digital… and during the process, they redesigned the product setup of their ecommerce store purely to streamline their integration with Alvio.
As Pacenti’s owner and CEO Luke Humphreys has said:
“Amazing platform… UK cycle retailers should be flocking to Alvio.”
Or as Richard Pascoe, team owner at Saint Piran, puts it:
“Alvio have been able to showcase what can be done in the modern business world.”
But if we’re talking about rebuilding a global business community, then the importance of cross currency partnerships cannot be overstated.
The UK and Europe are two of the biggest markets in cycling – and for US brands, an Alvio model could be used in a strategy to create a beachhead in the UK before advancing into Europe.
And on that note…
We are excited to announce that Alvio will soon let you partner with users in other currencies!
We plan to announce the Beta version of this new functionality on LinkedIn in the coming weeks. Alternatively, sign up to our email newsletter to make sure you never miss out.
Join us – and be a part of the collaborative ecommerce revolution.
Check out Pacenti and Saint Piran, both on the Alvio network and looking for partners. Or sign up to Alvio yourself, and start building direct and risk-free business relationships in your own industry!
