How PedalMe’s logistics strategy now targets multi-billion pound goals

“Our operational strategy… gun it!” Those are the words of Ben Knowles, founder of Pedal Me, the London cargo bike logistics firm that’s becoming ubiquitous in the UK capital, an urban space where the firm is eating the food of much bigger fish, and right under their noses too. CI.N seeks to understand an astonishing growth forecast…

After several rounds of oversubscribed raises with retail investors the next step for Pedal Me is to onboard an institutional investor or two. To be precise, £5 million is sought in the near future to further Ben Knowles’ business.

CyclingIndustry.News visited the firm’s London HQ during February to gauge Knowles’ reaction to the question on everyone’s minds; just how large bike can the cargo bike market get? His response, by any existing measure, was astonishing.

“We think this company, over decades, could come to have two million employees and to be a global business, but we’re only in London for now,” he said, indicating that this would not remain the case for long.

“Our numbers are based on 0.9% of London’s GDP being an accessible market to us, so we applied that 0.9% to the GDP of the top 600 cities globally. Half of the population live in cities; therefore, half of that trade is made in cities – we then assumed we could usefully help half of the population that live in cities. Actually, it’s likely much higher. Assuming we can work effectively in these spaces and we have proven we can, that’s $450 billion a year worth of work – with each employee earning $100,000 for the company in revenues. We’ll need 4.5 million employees.”

Knowles points out that the company is only just on the cusp of maturing some of its efficiencies and that the introduction of artificial intelligence will further bolster the firm’s ability to far outcompete other more cumbersome logistics businesses. At the present time we are told gross margin per hour is sat at 40%, yet can easily target 60% with the implementation of the AI soon to come into play, plus the firm’s rapid staff expansion and training.

“All I’ve done since having these numbers presented to me is look at it and thought ‘ooooh, that’s an awfully big number’. We need to be extremely aggressive in our expansion now. Pedal Me brings a lot of social benefits, so I’m keen to go for it. With the current crude setups, we produce a third of co2 of an Electric car or van. The embedded carbon in a single electric vehicle’s production is enough to build three of our cargo bikes and cover 300,000km,” says Knowles.

Also lending to the growth is the efficiencies of scale. Pedal Me are on a recruiting spree where Ben anticipates a tripling of headcount by this time next year. With this Pedal Me’s numbers suggest the business will be capable of doing “five times as much work with three-fold staff,” thanks to coverage and technology efficiencies.

The proposition is strong for those that can hit the ground running. The firm has its own now City and Guilds recognised course for the would-be cargo bike logistics rider.

“If candidates apply themselves, we can get someone riding and working within eight hours. This week we added six staff and the ongoing target now is to add seven a week with no cut-off date on that,” explains Knowles of the “gun it” approach to securing that lofty revenue goal.

At the time of writing 75 of the current fleet of 80 bikes are out on the capital’s roads and Knowles himself has been filling in where staff have been off. Nestled under the historic arches of the Northern Line there’s a plot that you would expect to be full to the brim when the fleet returns and as such there is now an active property hunt on the go.

“We’re looking at former fire stations, they’re perfect for us. We have aspirations to provide accommodation so people outside of London can commute in and bunk, plus we would like to help people off the street into employment, with accommodation as part of the package. The fireman’s pole also helps to communicate the urgency of our trade! We are looking for a number of properties,” outlines Knowles.

Behind the scenes the assessments of the potential addressable market and how to capture a lion’s share piece of the pie have been bolstered with some high level appointments. Non-exec directors now include a former CTO of Vodafone, plus a CEO from a sustainable investment think tank.

The front-line workers that will handle the bulk of the operation will get their fair share of the business, says Ben, who has already targeted a pay rate averaging £27k a year, including bonuses. Riders can, in theory, earn much more, we’re told.

“Riders are given access to their data to see how their commissions are paid. Pay is linked to performance on top of the hourly rate. Interestingly, the top performing riders can earn double what lower are and yes, there is a gender difference, but it’s not what some might expect. 10% of our riders are female, yet the top 30% of performers are largely female. I think women are less likely to apply as sadly what we do looks intimidating, but we have action policies for under-represented groups so that we can nudge candidates through the applications process for interviews,” explains Knowles.

The cargo bike market has been growing at an incredible clip, compounding by 50% or more in recent years as a result both of personal and business use. Germany now has 1.2 million private users of cargo bikes (the modal share doubled between 2019 and 2021) and 8.4 million potential buyers.

Pedal Me’s interest is to be a significant player in the B2B arena where analysts foresee as much as 43% of cargo bike sales being made to logistics divisions of businesses.

An in-house data scientist has registered Pedal Me’s accessible market at 90% of commercial urban tasks, which is substantially ahead of what a typical provider can offer. Part of the reason for the firm’s advantage in the marketplace is its research and development partnership with PON’s Urban Arrow brand, for which it has co-developed some unique cargo hauling products such as its house designed taxi seats.

Why can’t larger, more established logistics giant fight back against a business like Pedal Me?

Knowles concludes: “I think the reason is that larger logistics companies today are generally very simple creatures; they are not able to do what we are doing. A typical logistics model has a company providing a platform and bringing contractors on to operate through that platform. This works for vans but is not as easy for cycle logistics where people are carrying all sorts of different things. There aren’t enough skills available for people riding these cargo bikes. We are a centre of excellence for this, we train people to carry more than double what an untrained member of staff can