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In recent years, driven by a consistent global demand, the e-bike market has developed rapidly.
Europe and the United States are recognized as the main markets for e-bikes, with large market scales and mature consumer environments. However, in the Southern Hemisphere, Australia’s e-bike market has also grown significantly.
Looking at Australia’s import data, the development of its e-bike market has kept pace with the global market, gradually expanding from 2019, with a particularly prosperous market in 2021, until a significant decline in imports in 2023.
In fact, the market had already been affected by declining demand at the beginning of 2022, but due to delayed orders and shipping lags, wholesalers in Australia maintained high import levels for a period. Entering 2024, import volumes for the first two months remained low but are gradually approaching pre-pandemic averages.
You can also check the top 10 electric bike manufacturers in Australia for your reference.
Focusing solely on electric bicycles, their import growth has been more stable compared to traditional bicycles (electric bike vs. normal bike). In 2023, electric bicycles accounted for 28% of Australia’s total bicycle imports, a proportion far higher than the market share of electric vehicles driven by government subsidies, almost four times higher.
Additionally, a feature of the Australian e-bike market is the popularity of electric mountain bikes, which differs from the European markets (e.g., in Germany and the Netherlands, electric bicycles account for 53% and 80% of total bicycle sales, respectively). In Australia, electric mountain bikes are more often used for sports and recreation, rather than daily commuting.
Retail sector faces profit challenges
Although the Australian e-bike market is trending positively, surprisingly, the retail sector, despite its huge potential, is actually struggling with profitability.
Even the top performers have a profit margin hovering around only 10%, and many stores are on the edge of breaking even or are even operating at a loss. This challenge stems from both the extreme volatility of the external market and the complexities within the industry’s internal structure and cost systems.
Cost control and shrinking profit margins
During periods of surging bicycle demand, delayed orders and transportation lags often left bike stores facing inventory shortages.
As a result, many stores had to pre-order large quantities to stock up. When demand later dropped, this led to a significant risk, with excess inventory becoming a heavy financial burden, putting immense pressure on the financial health of these stores.
Most bike shops currently have three main profit centers: complete bike sales, parts and accessories (P&A) sales, and workshop services.
Complete Bike Sales: While this appears to be a traditional profit pillar, the rising supply chain costs and the growing demand for specialized services (e.g., assembly, tuning, test rides) have significantly eroded net profit margins. This is especially true in the high-end e-bike market, where high manufacturing and shipping costs make it difficult to achieve ideal profit margins even with high sales prices.
Parts and Accessories (P&A) Sales: Although the profit margin on parts is relatively high, this sector is more vulnerable to competition from large online discount stores. Consumers can compare prices online and choose more economical purchasing channels, reducing the competitiveness of bike shops in this area.
Workshop Services: Workshop services are another key profit point for bike shops (electric bike shops near me). However, rising labor costs and the indirect profitability of some services (such as free inspections) have further compressed profit margins.
Pressure from rent and operating costs
Australian bike shops also face high rent and operating costs. In Australia, it is rare to see bike shops in large shopping centers or prime retail areas because the rent is too high. Given the nature of the products, bike shops require large display spaces, but with high rent costs, it is difficult for them to remain profitable.
Even in suburban areas, a 150-300 square meter space can cost AUD 50,000 to 100,000 annually. Compared to the U.S. and European markets, Australia’s market is relatively smaller, and sales volume cannot support such high operating costs, making it challenging for bike shops to settle in high-traffic areas.
Lack of subsidies in the industry
The Australian government provides large subsidies for purchasing electric vehicles, but almost none for electric bicycles.
The lack of corresponding policy support has also limited the market’s rapid expansion and dampened consumer enthusiasm for purchasing e-bikes, which has, in turn, affected the profitability of retail outlets.
How do bicycle manufacturers view the Australian market?
Most bicycle manufacturers describe the overall impression of the Australian market as “tough.” They initially expected to reach 2019 sales figures, but in reality, sales have dropped back to 2016 levels.
The market remains unremarkable, and the rising cost of living has severely suppressed consumers’ disposable income, creating significant challenges for bicycle sales. Manufacturers noted, “The current market is quite challenging, and only two things can drive momentum – new product launches and aggressive pricing.”
Despite this, some manufacturers have managed to stabilize their performance to some extent by reducing inventory and improving retail margins, but the overall market remains challenging, with new products and proactive pricing strategies being key factors in driving market growth.
The reduction in import volume is seen as an opportunity to adjust expectations, but the issue of brands over-ordering inventory remains significant, leaving wholesalers and retailers unable to fully benefit, while consumers temporarily enjoy the surplus in the market (wholesale electric bikes suppliers).
Additionally, the market is facing upward pressure on prices, not only due to comprehensive price increase demands from factories but also from rising operating costs and currency fluctuations, such as the depreciation of the Australian dollar, which has increased import costs, further adding to the industry’s anxiety.
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