Bikes sell out across the country, disrupting supply chains
The Pro’s Closet Founder & CEO Nick Martin joins Yahoo Finance’s On The Move panel to break down why the U.S. is facing a bike shortage and disrupting supply chains amid the pandemic.
Video Transcript
ADAM SHAPIRO: Well, some of us old enough to remember oil shortages thought, OK, ride a bike, makes life easy. But guess what? Now we're talking about bike shortages. But there's a way to get around all that. It's called The Pro's Closet, TPC for simple. And joining us now is Nick Martin. He is TPC's founder and CEO, and he knows a thing or two about biking. We're going to get into all of that right now. But tell us about the company. Because you sell certified used bikes, correct?
NICK MARTIN: Yeah, that's correct. We are legitimizing the secondary market for bikes, so rolling out the trade-in infrastructure to our industry, and also providing the channel for customers to trade in their bikes directly to us. We buy them, certify them, and then resell them with a guarantee and the same customer service you'd expect from your local bike shop, only online.
ETHAN WOLFF-MANN: So Nick, Ethan Wolff-Mann here. I have actually given your company a fair amount of my money over the years. But kind of during this coronavirus pandemic, obviously, the bike market has become just insane. I wonder if you can share with us what the demand has been like for people buying bikes through you, trying to sell you bikes, and also how the prices for used bikes have changed during the past six months?
NICK MARTIN: Yeah, absolutely. So we are definitely in a bike boom, as you can probably see from looking out your windows and the streets around you. The secondary market-- we're tapping into every garage in America to buy bikes from people that have more than one bike in the garage, or maybe a bike that they're not using. And instead of people going to gyms to work out, people are looking for ways-- both for their mental health, but also their physical health-- to get outside safely. So getting on a bike is a great way to do that.
We're selling through our inventory-- every 13 days is our sell-through rate. So bikes are just flying off the shelves. Because the traditional supply chain for bikes, which is coming out of Taiwan or overseas, is completely delayed. And everyone in every bike shop in America is dependent on that. So we're in a unique position to own our supply chain, and provide bikes to meet demand. And we believe if we could process twice as many bikes, we could be selling twice as many too. And we're up about 130% year over year right now.
JULIE HYMAN: Nick, do you have trouble finding people who are willing to part with their bikes? Because as you said, maybe if you were thinking about getting rid of your bike, this pandemic happens, and you say, well, maybe I want to get back on it instead, and get around that way, for example. So how are you getting the word out to people and convincing them?
NICK MARTIN: Yeah. Well, we are part of a sponsorship for the Tour de France, so you can see our ads. And we're getting a lot of core cyclists submitting their bikes. Most core cyclists-- our customer-- the average sale price is $3,200. So that bike new was $5,000 to $7,000 dollars. And if you have a bike in your garage that is that expensive, you probably have more than one, and you're turning over those bikes on a regular basis.
The bike technology is just incredible, it's been booming. And these bikes are really sophisticated. They're made out of carbon. They could be electronic. They're GPS enabled. They're electric and wireless. So certifying these bikes, and providing that trust and guarantee is really valuable. And nobody else is doing that.
So yeah, the supply chain is in our own hands. And about $2 billion worth of quality bikes at our price point go into the market every year. And since we're selling used bikes-- and this is in the US-- since we're selling used bikes, over the last five to six years, you know, there's a lot of quality preowned bikes out there in people's garages.
ETHAN WOLFF-MANN: So, Nick, one thing that I think is really interesting is that the used bike market for so long has been mainly eBay and Craigslist. And it hasn't had that kind of seal of approval that, you know, you talk about when you talk about a certified option. I'm wondering why this hasn't been done before? It seems like a really low-hanging fruit. However, obviously, it requires a lot of work to make sure every bike, you know, for liability reasons is safe and all that. You know, why has it taken so long for somebody like you guys to get this up and running?
NICK MARTIN: Well, it does take a lot of capital to be able to buy all of this inventory, and process it and hold it and certify it. So that's part of the reason why we just finished our A2 round of funding. We raised $27 million to date. So we have the capital to buy the bikes which is rather large, to be able to do that and supply that.
And then they're also very complex. So to be able to certify that, you're solving a lot of complex problems with processing. We processed over 130 different brands last year. So to be able to know these bikes inside and out takes a high level of expertise to be able to put a stamp of certification on 130 different brands, and process that level of inventory.
ADAM SHAPIRO: And you are meeting demand. So many people need bikes right now. Nick Martin is TPC's founder and CEO. Continued success. Thank you for joining us "On the Move."
