Retail bike chains anticipate brighter future
Retail bike chains anticipate brighter future
After two years of constant growth, the retail bicycle market is undergoing a slowdown as demand takes a dip, yet investors are still betting on bikes as a venture with long-term potential.
A recent report by Metric.vn on the 2022 online retail bicycle market was compiled with sales data derived from popular e-commerce sites such as Shopee, Tiki, and Lazada. The report indicated that the total revenue from the children's bike market was worth $1.7 million, showing an 11.3 per cent jump on-year. A similar growth pattern took place at physical retail stores.
This is despite many corporate bike traders reporting a 50-70 per cent dip in their overall sales revenue for the third and fourth quarter on-year, in line with global market trends.
Nevertheless, bike retail is still deemed a market with potential, with venture funds considering pumping serious money into developing the sector in the Vietnamese market.
Peter Nguyen, CEO of Blue Circle JSC, the owner of bike stores Xedap.vn and Xedien.vn, noted that kid's bikes represent the most vibrant segment in the market as families often buy as many as three bikes per child, between the ages of one to 15 years old.
Xedap.vn became known in Vietnam from 2016 as the official distributor of Giant International, the world’s leading sports bike brand. Blue Circle has been building up the Xedap.vn brand since 2019, and now consists of more than 20 shops mainly in major cities such as Danang, Hanoi and Ho Chi Minh City. The company has simultaneously stepped into electric bike trading with its Xedien.vn brand.
Blue Circle has just received a fresh capital injection from private equity fund Excelsior Capital Asia to feed its ambition to open more than 100 shops throughout Vietnam in the forthcoming years. Beyond that, Blue Circle aims to invest in advanced tech platforms as they strive to make bicycles the quintessential accessory for urban families in the not too distant future.
Despite high demand, the major global players in the bike market possess just 10 per cent of the market share, with 90 per cent slice held by independent traders without a well-conceived expansion plan.
The second half of the year is the usual peak period for bike trading, thanks to the start of the school year start and annual end of year retail boost.
Some investors consider this an opportunity for new players to join the fray and push for a larger share of the market.
Early last year, top retail chain The Gioi Di Dong (MWG) entered the arena with its new brand AVA Cycle, one of five chains belonging to the AVA World ecosystem.
MWG had previously developed the chain of bike shops in several southern locations in Ho Chi Minh City, where the bikes were sold out of its Dien May Xanh stores. MWG has since grown the brand to move away from the ‘shop-in-shop’ model to open stand-alone AVA Cycle stores.
Currently, AVA Cycle operates 158 shops selling a diverse range of bikes and associated accessories.
At the time of the AVA Cycle launch, MWG CEO Doan Van Hieu Em said that bike shops operating out of Dien May Xanh stores sold an average of 10–15 bikes a day. With current sales trajectories and an average bike price of $130 per unit, MWG expects to rake in $174 million in revenue from bike trading alone in the first year.
The retail bicycle market often grows parallel to the pace of urban development, which averages 15 per cent per year. Currently, an estimated 2.5 million bikes are purchased in Vietnam each year, with a total market value approaching $326 million. The second half of the year is the usual peak period for bike trading, thanks to the start of the school year start and annual end of year retail boost.
