BikeExchange positions to help overstocked businesses, Kitzuma suspended

Online bike sales platform BikeExchange has used a recent investor presentation to flag recent partnerships that have given overstocked brands a further route to market to shunt oversupply; listing recent client wins including Decathlon, 3T, Bulls and some of Australia’s largest retailers too.

The presentation writes that in both an under and over supplied market, Bike Exchange “creates value” and “is well positioned to support brands, distributors and retail sellers looking for channels to market.”

Partnerships with retailers and brands has long formed part of the online portal’s sales structure, which likewise lists second hand bikes from consumers, as well as offering numerous other services. It is now actively positioning itself to help ease the industry’s overstock issues, providing a consumer direct channel for partners that has a shop window of millions of active shoppers.

For BikeExchange this is proving a fruitful strategy and in the latest financial figures we see that net revenue is up 49% in Q2 of FY23, conversion rates rose by 22% and average order values also bumped upwards, simultaneously bumping up the firm’s commission from 7.9% to 8.2%, on average.

The firm is not without its struggles, as demonstrated by a share price that has freefallen from IPO (not unusual in the stock market lately) to see the share price decline from 0.180 (AUD) at the start of 2022, to just 0.010 today.

Driving the investors away are snippets of uncertainty in recent reports that cast doubt on the Kitzuma operation, as one example. This on the road bike delivery and service operation was acquired a little over a year ago with high hopes rested on the ready to ride delivery model. However, the company has since warned that the business offshoot is burning through cash and as a result it has now suspended the operations prior to a planned expansion in the Northern Hemisphere in summer.

The cash burn issue caused a raise of $4.4 million ($4.1 million after costs) in December. This cash will help the restructuring effort. BikeExchange now aims for a positive cash flow by H2 FY24. Between Q3 FY22 and Q2 FY23 the company has reduced its cost base by nearly half, though the greatest reductions have come from employee costs.

Set to launch shortly will be a new consumer storefront, designed to significantly improve the buying and selling experience for consumer and retail partners. These upgrades will build in AI driven recommendations and customisations in a hope to further develop conversion rates, as well as building in improvements to the payments process.