Being Frank: Where Are The Bikes?
From first-time buyers to cycling enthusiasts the last year-and-a-half has been frustrating for those looking to buy a new bike or parts. But you may not really know why. While this installment of Being Frank will mostly answer that question, one brief blog cannot cover everything. Nonetheless, I will touch on the big factors, and some of it may be surprising.
To start, and you may likely find it hard to believe, for the last year most brands in the bicycle industry have produced and delivered more than before the pandemic. Many brands had a record year in 2020 and are on pace to beat that in 2021. I know Cane Creek has delivered a lot more product, and we are hearing the same from all of our industry contacts. Furthermore, in the U.S. alone nearly two million more bikes have been imported (yes, nearly every bike sold in America is imported) than this time last year.
If more has been delivered, why can’t you find anything? It turns out the bicycle industry came into 2020 with relatively low inventory. Then in March 2020, Covid lept from the headlines into all of our lives. In April 2020, everyone in the bicycle industry was trying to figure out how to scale down enough to survive. Then in about a month, people around the world cranked up their laptops and started buying bicycles and parts like crazy. It seems with theaters, restaurants, gyms, schools, bars, and most any gathering place shut down, people looked to cycling to get out of the house, get some exercise, spend quality family time, have some safe fun, or just to keep from going crazy.
The world’s factory that China is, was already scaled way down before the rest of the world started to face Covid. On top of that, forecasts were being slashed and purchase orders cancelled when the lockdown first hit. When the aforementioned breakout of consumer buying started, the pipeline was basically empty. And then it took some brands a month or more to realize the increased sales were for real. Trek, with its direct link to many retail stores’ sales data systems, was rumored the first to see the light. With the low beginning inventory combined with a surprise big increase in demand and a slow to re-start supply chain, we had a perfect storm.
Actually, despite hammering away at the issue for over a year, availability of many products has actually gotten worse. Hoarding is a problem. Whether it is your hardworking local IBD stocking up on 11-speed chains for anticipated bike repairs or consumers buying four tires instead of the needed two “just to be safe”, the result is the same. Another problem is ghost orders. Placing orders with multiple suppliers with the plan to cancel the others when one delivers causes major anxiety with suppliers. They have experienced this before and are reluctant to take risks with large raw material positions or capacity expansions. In Taiwan this demand “bubble” is a hot topic. This hits home as well – at Cane Creek we already have orders for 2022 that are near or at our total annual capacity. If a significant portion is ghost orders, then we could be turning away customers in the short-term and getting buried in excess inventory in the long-term.
The law of the jungle is alive and well in the bicycle industry. Big bike brands demand priority delivery, if not exclusive delivery, from their suppliers. Thus, Shimano and SRAM have little if anything for the small brands and the aftermarket. And in the global jungle, the little bike industry is fighting for raw material like aluminum. Even without big brand pressure, suppliers gravitate towards ROI. It’s more efficient and profitable to make a lot of one thing than a little of twenty things. So suppliers tend to prioritize running the biggest orders or most popular items in lieu of stopping and starting. As an example, we have suspended many versions of our eeWings like Tie Dye, Raven, and power meter equipped so that we can get the maximum quantity of the most popular item: 170mm brushed MTB eeWings.
It’s not all bad though. There are a lot more people riding bikes now, and that is good for them and the planet. More than ever people are looking to integrate bicycles into their daily living, and that bodes well for a brighter future. It’s also given a previously flat bicycle industry a shot of adrenalin – hopefully the effect will be long lasting.