Lisa Conibear, Zoomo UK and Europe regional director, tells us about the recent challenges affecting both the business and the wider industry
Like the parts of a bike, the global supply chain is intricately connected. It goes without saying that all parts need to be working in order for things to move along smoothly.
For the past 18-24 months, the business has had to navigate missing critical parts due to supply chain issues. We’ve been presented with a number of sizable industry roadblocks, everything from the unparalleled delays caused by Covid-19, skyrocketing shipping container costs, microchip shortages, and the cherry on top, finding out that our main shipment of batteries, parts and a few hundred bikes were on the infamous Evergiven, stuck in the Suez Canal.
Despite witnessing some of the most intense supply chain challenges of our time, we’ve adapted and continued to thrive. No business grows when things are easy; you grow through adversity. We have had no other option but to push forward. The rise of quick commerce is faster and more aggressive than we could have imagined.
Hot food delivery is also keeping pace and increasingly food delivery companies are hiring their workers and providing them with e-bikes. This presents an incredible opportunity for the bike industry as a whole – but also puts more pressure on the supply chain.
To weather the storm, our key to success was planning and getting ahead of the curve. We were lucky in a sense that we planned for mass growth two years ago. We put orders in early and got in front of the trend before it kicked off. As a result, the disruptions didn’t hit us as hard as others in the industry. We also consistently relied heavily on building strong partnerships with our customers, suppliers and stakeholders. We were flexible around each others’ growth, and leaned on each other for support.
By solving these challenges, we have built a scale-ready, flexible and resilient business. Overall, we’ve grown four-five-times globally, and we are expected to grow four-five-times again next year, driven in line with the growth of the grocery and food delivery sector.
Were it not for significant supply chain blockage, the Zoomo business realistically could have experienced almost double the growth last year, in line with the delivery boom. We had to make a very difficult decision earlier in the year which was to stop the assembly of new bikes and ship the parts instead.
It was a tough decision because we had to sacrifice growth, but it was the right one. We don’t only sell and rent bikes, we provide fleet and bike uptime to our customers. If we don’t have the parts we are not doing our job.
The upside is that parts and component suppliers are responding. We are seeing investment in upstream capacity across the supply chain. This means that in case of another industry-wide demand spike the industry will be able to respond quicker.
The e-bike industry is witnessing a time like no other. Turbulence in the supply chain is being felt by 85% of businesses in the cycling industry. This is because demand continues to outweigh supply and market oversaturation is leading to shortages in critical bike equipment.
Compounding this further are delays in shipping and skyrocketing freight costs. To quantify this demand, in the UK alone, e-bike sales are expected to triple by 2023. Every player in the industry has undoubtedly had to make some tough decisions or changes during these uncertain times to ensure their business continues to run. Whether that be changing shipping methods/routes, increasing the price of products to cover freight costs, or simply just riding out the trend, the impact has been profound.
For Zoomo, it has put planning at the core of everything we do. We can’t control this supply scarcity but we can forecast into the future. Working with our customers to closely manage demand and lock in supply as much ahead of time as possible means that we can remain on time and flexible.
Another impact that is less spoken about is the impact on mechanics. Mechanics come to work expecting access to the tools and parts that they need to do their jobs. They are incredibly skilled and proud of the work that they do. If I am unable to provide them with the right parts it is harder to retain top talent. We saw mechanics moving from companies because they were unable to get access to parts and grew frustrated. Having parts is not only the value proposition to customers, but also to employees.
Supply chain issues in the e-bike industry have a ripple effect on the delivery sector, especially at a time when more and more companies are increasingly setting big, public targets to go green, and are electrifying delivery fleets as part of this commitment to reduce carbon emissions.
Without access to light electric vehicles (LEVs), the delivery sector will be forced to continue using highly polluting vehicles to meet the unstoppable growth of delivery, including parcel, hot food and grocery.
The transport sector alone is a whole other beast. Transport is currently the largest emitting sector of greenhouse gas (GHG) emissions in the UK. As world leaders continue to explore paths to net-zero emissions, LEVs are emerging as a sustainable option that is disrupting the traditionally pollutive transportation sector.
The speed at which cities, businesses and consumers can adopt LEVs is hamstrung by current supply chain issues. The longer these issues go-on, the longer it will take our nation to meet its emissions reductions targets.