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Online bike venture riding high...

June 3 2013

Two years ago entrepreneurs James van Rooyen and Jonathon Allara were making a modest income from their bike hire company. Then they turned to ecommerce. Now they are riding with the wind, with their online bikes sales business becoming one of Australia's fastest growing start-ups.

Bicycles Online boasts annual revenue of more $3 million, employs 13 staff and sells 5000 bikes a year. The company's rapid success was recognised in the annual BRW's Fast Starters List, coming in at number 83 and becoming one of just seven retailers on the list. But it hasn't all been easy.

“A lot of people romanticise the idea of becoming an entrepreneur, but it's not nearly as romantic as people think,” van Rooyen says. “There is not much pay and lots more stress.”

Van Rooyen and Allara say they aren't bike fanatics, just two white-collar blokes who saw an opportunity and grabbed it.

Six years ago van Rooyen, who had a job in marketing, and Allara, an accountant, each sunk $8000 into setting up Manly Bike Tours.

 

Bicycles Online

 

The small company catered to tourists, much like the bike tours operating all over Europe.

“We had a dream of running our own business and it was very easy with such a low investment,” van Rooyen says.

“We both went to three days a week and took a big opportunity in terms of cutting our wages in half, but it was fairly low-risk. It wasn't like we were putting our houses on the line.

“We thought we would have a crack and if it didn't work, we'd go back to our jobs.”

But the pair never did return to their day jobs. Instead, their fledgling business presented an opening into a higher-risk, higher-return investment.

“We had to replace our fleet bikes and noticed how much more expensive bikes were in Australia compared to everywhere else,” van Rooyen says.

“Bike sales here are very fragmented. There are a lot of bike shops and none of the big brands would allow their bikes to be sold online because they had such a big distribution network.

“So we went to a big trade show in Asia. We thought we would buy a container of bikes and, worst-case scenario, if we couldn't sell them we would put them in our fleet.”

The bikes sold like hotcakes and soon van Rooyen and Allara were in talks with Indonesian bike company Polygon Bikes to sell bikes online. After 12 months of negotiation with Polygon, the deal was done. Securing an offshore manufacturer allowed Bicycles Online to bypass Australia's expensive bike supply and distribution network and sell bikes cheaply.

Today the average bike at Bicycles Online sells for $600 – a far cry from the $1000 to $8000 price tags on other brands. With the negotiations over, the last hurdle was setting up the online shop.

Van Rooyen and Allara used ecommerce platform Bigcommerce to set up their domain name, website, payment gateway and email accounts “Neither Jono or I were online people and we needed to get online without investing a lot,” van Rooyen said. “For us, Bigcommerce was essential to having a platform that we could use quickly and cheaply.”

While their online presence was ticking all the boxes, their warehouse was not. For 14 months Bicycles Online HQ was based at a former electrical substation, which van Rooyen likens to a “dingy garage”. An increasing demand for its bikes meant the company quickly outgrew its shoddy surroundings, eventually moving to an impressive warehouse and showroom in Manly.

“It was with the biggest sense of dread that we went from the substation and signed up for the 1000-square-metre warehouse and showroom,” says van Rooyen.

“It was a huge step for us. We had taken out fairly big loans to purchase our first three container loads of bikes. While I was confident with the business model, there were some sleepless nights.”

Van Rooyen says there is a long way to go, but eventually he and Allara aim to make Bicycles Online a national brand. In the meantime, they have employed a manager to continue operating Manly Bike Tours. Much like its bigger sister company, the hire and tour business is now making more than modest revenue.

 

 

Read more: http://www.smh.com.au/small-business/growing/online-bike-venture-riding-high-20130527-2n695.html#ixzz3mhyJHl5A