Investing In What Matters

How our consumer direct business model has shaped us as a company

Since we first launched the RadRover in 2015, Rad Power Bikes has been a consumer direct business. We were by no means the first bike company to do this, but it was relatively uncommon when we first started out as the bicycle industry has, traditionally, been dominated by the local bike shop. From the get go, we knew that if we wanted our mantra to be “Built for Everything, Priced for Everyone,” using the traditional bike distribution channel wasn’t going to be an option. There are a few reasons for this, one of the largest being it would have meant for a higher price tag for the consumer.

 

We had huge ambitions for Rad Power Bikes back when we started in 2007 making custom ebikes out of a garage in Northern California. At that time, ebikes were unheard of outside of the small community of enthusiasts who were building them as a hobby. Countries in Europe and Asia got a huge head-start on ebikes and adoption was already well underway then, but the US was definitely lagging behind. If we wanted ebikes to be as commonplace here in the states as they were overseas, we needed to make them more affordable, simple to maintain, and readily accessible. Being consumer-direct has enabled us to do that.

 

For an ebike company, what does being consumer-direct actually mean? Well, it means you can only purchase our bikes directly from us. There are no third-party dealers, distributors, or retailers that sell our bikes. There are some challenges to this (that we’ll get into in a second), which require us to think a little creatively to overcome, but there are also many benefits that impact both us as a company as well as you as the consumer.

 

The Benefits

 

No Markups

 

Like we mentioned earlier, being consumer direct means a lower price tag for you. Let’s use a real-world example for why this is by looking at how the prices of our bikes would be affected specifically if we were not consumer direct. We (Rad Power Bikes) design and manufacture our bikes, that part stays the same. We would then sell our bikes to a third-party distributor who ships these bikes to local bike shops that wish to sell them. The retailer receives these bikes, finishes the assembly, then puts them out on their showroom floor for people to buy. These two links in the chain are where your "dealer markups" come from and the reason why most ebikes found in bike shops are much more expensive than ours. The distributor and the retailer need to make their money, so they have to add markup when they sell them to cover their costs. Since you buy directly from us, those two levels of markup are eliminated.

 

Higher-Quality

 

Another benefit to being consumer-direct is that we can make higher quality bikes. Using the traditional bike distribution channel, an ebike in the $1,500 range would not be able to use most of the components we are able to use on our bikes. This is because higher-quality components cost more money, so if an ebike company wants to hit that $1,500 price point while selling exclusively through dealers, they have little choice but to use less expensive components, smaller batteries, generic motors, etc. Being consumer-direct means our $1,500 ebikes are unrivaled compared to a $1,500 ebike you find in a bike shop.

 

Builds Community & Trust

 

Since we are involved in every bike purchase by being consumer direct, we have a much deeper connection to our community of ebike owners than many other bike companies. There is an inherent separation of consumer and company that exists with the traditional distribution channel as the bike shop may have no affiliation with the company who makes the bike. The bike shop is able to really build those relationships with customers, but that rarely (if ever) makes it back to the company. This allows us to have very genuine, consistent interactions with our community. They share their stories, send us pictures, and act as enthusiastic advocates for our bikes which is such a valuable aspect of our success thus far. Getting to interact directly with the manufacturer is pretty rare in the bike world and our community really enjoys that commitment we have to our owners.

 

If you've ever had to deal with a pushy or less-than-truthful salesperson, communicating with a consumer direct company may be a breath of fresh air. All of our support is done internally and we train all of our employees ourselves. This allows information to be consistent no matter who you talk to, they aren’t trying to upsell you on a bike that may be out of your price range or have a feature set you don't need, and we aren’t going to lie to you to try to make a sale. A lot of times, bad bike shop owners will push you to their highest margin product even if they know it’s a poor fit for you. This is by no means the norm, but it’s sadly a reality that exists across the dealer/retailer industry and is not isolated to just bike sales.

 

The Challenges

 

Being consumer-direct does not come without its challenges. While we feel the benefits of this business model more than make up for these challenges, it is completely understandable for people to be a little weary about investing in it.

 

Limited Physical Presence

 

The most obvious challenge is that consumer-direct bike businesses may lack the ability for people to see their bikes in person prior to buying. This is a huge selling point for bike shops because, especially with an expensive bike, making sure it fits correctly and feels good when you ride it are very important factors. The way we solve this problem is by offering an extensive network of test ride locations around the country. Whether they’re offered through velofix Mobile Bike Shops, rental fleets, or tour companies, there are a wide variety of businesses that have our bikes on hand for interested buyers to try. Check out our Where to Ride page here.

 

Limited Maintenance Options

 

If you get a bike delivered directly to your door, who services it? This is a pretty common question we receive from interested buyers and, for those who are new to ebikes, can be a dealbreaker. As consumer-direct bike companies become more common, this issue is slowly solving itself as many traditional bike shops are more than happy to service any bike, regardless of where you bought it. People being able to purchase bikes at a lower cost means more people are buying bikes, and more people buying bikes means more people needing their bikes serviced. Most bike shops have embraced this as a prime opportunity for them to make money off of servicing these bikes as that’s where the majority of the money in a bike shop business comes from. Sales are, generally, just a fraction of a bike shops overall revenue stream so it makes a ton of sense for bike shops to open their doors to all bikes that need servicing.

 

When designing our bikes, we keep ease of maintenance and serviceability as a major priority. 

 

The electrical system is very “plug and play” in that components can easily be unplugged and swapped out should something go wrong. Most of the time, our bike owners are more than happy to perform maintenance themselves as it gives them a better understanding of how the bike works. While this is never required, we do encourage people to do this as it’s a great skill to possess. Not having to rely on someone else to fix something on your bike is really empowering, but we do understand that not everyone feels comfortable performing such tasks.  Our partnership with velofix has made this even easier for a lot of people as velofix brings the bike shop directly to your door, no need to take the bike anywhere.

 

It’s Why Trust & Quality are Most Important

 

There are, admittedly, a large number of less-than-honorable companies trying to sell you things on the internet. If you don’t know what you’re looking for, it can be hard to determine what’s legitimate and what’s an elaborate ruse. Building consumer trust is a huge priority for us, so we invest a lot of time and resources into showcasing real Rad bike owners, sharing real reviews people have posted, telling you about the real people behind the company, and making it as easy as possible to contact us directly. We want you to be confident going into your purchase so we provide numerous resources for you to research on your own time.

 

Moving Forward

 

More and more bike companies are moving into the consumer direct space, and for good reason. They are seeing the potential of reaching more people with convenient online ordering and more affordable pricing. The local bike shop isn’t likely going anywhere anytime soon as it’s a massive endeavor for larger bike companies to completely shift from traditional distribution to consumer direct. There’s no doubt that local bikes shops offer a valuable service and they will continue to do so, even with the rise of consumer direct.

 

If we decided against the consumer-direct business model, who knows where we would be today. It’s hard to determine for certain, but we firmly believe it has allowed us to make the best ebikes on the market at this price point and it has opened the door to ebikes for a lot of people who were on the fence or left out due to price. There is an incredible amount of use cases for ebikes, so getting them into people’s hands so they can experience them is what we strive to do better than anyone else.

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