How Bicycles Online Built an eCommerce Hub24 November 2015
Business Beyond Borders – Issue 2
Bicycles Online, a Case Study Download PDF
Australian entrepreneurs Bicycles Online sell bicycles and bicycle parts online. Looking to grow their business and save customer costs, they partnered with SingPost to build an eCommerce hub out of Singapore. SingPost’s warehousing, eCommerce and fulfilment expertise support Bicycles Online as they look beyond Australia to the world.
Launched in 2011 by Australian duo and co-founders James van Rooyen and Jonathon Allara, Bicycles Online sells bicycles and bicycle parts online in Australia and globally
In 2011, James van Rooyen and Jonathon Allara co-founded Bicycles Online. Spotting an opportunity to cut out the traditional route to market — from manufacturer to importer, to retailer, and finally to customer — van Rooyen and Allara believed that, by selling bicycles online, they could bring products to the marketplace at a fraction of the price. To do so, they had to overcome the natural human inclination to want to physically touch and appraise any potential purchase.
“We share the risk with customers. So we have a 14-day free test drive. If you buy a bike from us, and you don't like it, we’ll pick it up from you free of charge, within two weeks of you trying it out. That gives the customer the confidence that it’s a risk-free transaction, but also keeps us on our toes, so that we always deliver what we promise,” says van Rooyen. Online shopping has other benefits too, as customers can take time to appraise a purchase rather than make an on-the-spot decision. “Buying online makes the process easier. It enables you to look at tips, get magazine reviews, and compare spec lists and different models,” says Allara.
Scale and Savings
The move from selling full bicycles to selling parts and accessories made business sense for the duo. A bicycle can be an expensive, once-every-threeyears investment, while parts and accessories represent a much more frequent revenue stream. “We wanted to get into that side of things, so we looked at the best way to set up a parts and accessories business, and it really made sense to set up our eCommerce logistics out of Singapore,” says van Rooyen. “Firstly, it is cheaper for us to ship from Singapore into Australia, than it is to ship from within Australia. Secondly, due to the import threshold in Australia, if you import something from overseas, you don't have to pay duty, so the customer saves 15%,” says van Rooyen. Currently, the threshold on imported goods allows Australians to buy goods online from overseas for up to A$1000 without being charged a goods and services tax.
Saving their customers money is a recurring theme in Bicycles Online’s business model, and one that gives them a competitive advantage over their competitors. “While some of our competitors from the UK and the US can do free shipping over A$100 [S$101], we offer free shipping on every single product. They can’t do that,” says van Rooyen.
From the feedback Bicycles Online get, customers are more than happy to wait a couple of days extra for the cost savings they get. That is not to say that delivery is slow, as there are express options for faster delivery if required. Plus, Australian customers can pick up their bicycles or bicycle parts at numerous collection points across the country
“Due to the import threshold in Australia, if you import something from overseas, you don't have to pay duty, so the customer saves 15%”
Why is it cheaper to ship from overseas than within Australia?
Australia’s import threshold means it is cheaper for consumers to ship bicycle parts and components from Singapore to Australia than it is to order them from within the country itself. As long as what you are importing from overseas costs less than A$1000, you don't have to pay a goods and services tax.
Experience and expertise
While the savings aspect of moving to Singapore was obvious, warehousing and shipping from a foreign country presents its own range of challenges for small- and medium-sized enterprises (SMEs). Expansion can be a difficult and risky time for SMEs, so outsourcing to a fulfilment provider helps both mitigate some of the risks and maximise savings and efficiencies. This is why Bicycles Online chose to explore SingPost’s warehousing and shipping capabilities.
“When you’re growing and starting a new venture, leasing a warehouse and employing staff, represent a very real, fixed cost. You may pay a slightly higher variable cost when you outsource, but it’s flexible. So in your low seasons you can reduce capacity, and in your high season you can increase capacity. And you can manage your costs a lot more efficiently,” argues Allara.
Along with the flexibility to scale, is the issue of staffing your operations. “Managing people is one of the hardest challenges for any business,” says Allara. What SingPost offers is the benefit of on-the-ground staff, without the responsibility of managing them. “Whether they are or not, the guys in the SingPost warehouse feel like a dedicated resource. I’ll send them an email, saying this order needs to be changed, can you change the tracking for this, or whatever, and I’ll get a response back in half an hour. It just gets done,” says Allara.
“The guys in the SingPost warehouse feel like a dedicated resource. I’ll send them an email, saying this order needs to be changed, can you change the tracking for this, or whatever, and I’ll get a response back in half an hour. It just gets done.”
Another advantage of using SingPost was the company’s experience and capabilities in eCommerce. “There are a lot of fulfilment providers in Singapore,” says van Rooyen. “But they specialise in stuffing envelopes. We were looking for someone who has experience in handling product, warehousing product and order picking. The ability to do it all through one company was really important as well. Working with SingPost, we have one bill, and that includes our shipping, warehousing and order processing.” This expertise extends to IT as well, as SingPost provided technological support during the integration of Bicycles Online’s eCommerce and online platforms.
The products are stored in a warehouse configured for eCommerce fulfilment, and online orders are seamlessly sent to the warehouse management system (WMS). Orders are efficiently picked, packed and delivered to the customer on a daily basis. International deliveries are made by ezy2ship, and with track and trace visibility to the customer.
For SME owners carrying large amounts of expensive stock, peace of mind is important. “In terms of a worry-free experience, it's fantastic,” says van Rooyen. “We have a lot of expensive products. Some of the pedals are worth AU$2,000. You just can't store it at the back of some shed. SingPost wasn’t the cheapest option, but we know that the products are safe and stored securely.”
“In terms of a worry-free experience, it's fantastic. SingPost wasn’t the cheapest option, but we know that the products are safe and stored securely.”
Bicycles Online have regional, Asia-focused plans for the future. Over the next few years they envisage increasing their supply, acquiring new sales channels and selling to new markets in new countries. “We’re an Australian company that’s going global,” says van Rooyen. “Our first test market is selling into Australia, but our plans are to go international. Southeast Asia, Japan and China — they’re all on our radar.”
Launching these plans demands that Bicycles Online be centred in a regional space, where it is easier and more efficient to be supplied from and ship to neighbouring countries. Bicycle Online’s primary manufacturers are based in Southeast Asia, as are its prime prospect markets, and Singapore has a well-founded reputation as a regional hub.
SingPost enables organisations to leverage its established logistical infrastructure and knowledge of delivery networks to drive regional expansion across Asia Pacific. With 22 distribution centres across the region, and the ability to blend postal and commercial networks, businesses can optimize their shipping at the lowest cost.
“When we look at what SingPost is doing in terms of their growth and sophistication, it's an opportunity to be part of that growth,” says Allara.
“We’re an Australian company that’s going global. Our first test market is selling into Australia, but our plans are to go international. Southeast Asia, Japan and China — they’re all on our radar.”
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