Stefano Migliorini, CEO of THOK E-Bikes, shares his view on the extraordinary current state of the bike industry: the market is overwhelmed by a demand that exceeds the supply. What consequences does this entail? And above all, what does the future hold in such an uncharted landscape?
The opening picture shows Stefano Migliorini and the THOK MIG 2.0
How was THOK’s 2020?
It was very challenging, obviously, but THOK was nevertheless able to grow. We capitalised on the work done up to today and managed to maintain a steady growth. THOK is a young company, as it was established a little over three years ago.
2020 marked a further growth compared to 2019. We launched two new THOK bikes and two new DUCATI bikes, we entered new markets, including Germany, and hired more staff. In particular, we have perfected our omni-channel sales system. Of course, the demand for our products played a key role in this: it was indeed very high, but only partly due to the pandemic. We witnessed a comprehensive growth of our brand. Throughout 2020 the credibility and image of the THOK and the DUCATI powered by THOK brands also grew, consequently having a positive effect on sales.
To what extent did the pandemic affect the company?
Covid has made things more complicated, especially in terms of production, making it hard to regularly get ahold of components; at the same time, it created great opportunities for all the companies in our industry. We looked for other suppliers, but of course they all have some delivery and logistical problems, not just our usual suppliers.
The greatest challenge was meeting the great post-lockdown demand and honouring our omni-channel commercial policy. In fact, we enable our customers to buy a bike wherever they want (online or at a THOK point), to pay it however they wish to (credit card, bank transfer, at the THOK Point on delivery or with HP finance) and to have it shipped to where it is most convenient for them.
On the bright side, people have rediscovered the beauty of outdoor activities. I had never seen so many people out on their bikes, walking, cleaning paths and opening new trails. People often don’t think about this last activity, but it is vital for us as riders (and for many other fans of the mountains, too) and I am happy it has been rediscovered, thanks to the pandemic.
Just a few weeks ago you introduced the TK01 R. How were you able to launch a new bike in such a challenging period?
It was quite a challenge. We came up with the TK01 R together with the TK01. As with the MIG line, we wanted an entry level model and the high-end “R” line which, in fact, only differ in terms of components and livery. Covid made it more complicated: the delivery times of some suppliers prevented us from launching the two bikes at the same time. THOK designs and develops its bikes in Italy, but production takes place in Asia, like with all companies. Being unable to go to Taiwan to personally follow the production stage, as I always do, was very hard, it affected our confidence and our sleep.
Fortunately, we have our on-site team, headed by our trusted Scott Lin, who took firm and effective action.
We were then faced with an increase in component and shipping prices. To make these higher prices worth it for our customers, we focused on other services: the TK01 R is delivered with the THOKcare set and customised suspensions and tyre pressure setting. To do so, we called each and every new THOKer, who all appreciated our care. Now that it’s over, I can truly say it was a very challenging adventure. At one point, anywhere we turned our eyes there were new setbacks. In the end we persevered and successfully reached our goal. As poet Vittorio Alfieri once said: “I dared, I always and tirelessly dared”. And so here is the new, accessory-rich model in stock. It was our own personal way not to give in to the virus.
New TK01 R has been launched a few weeks ago
The TK01 R was sold in stock, which seems unthinkable to most people today. What’s your secret?
We waited until we had the TK01 R bikes in stock before we launched them on the market. We wanted to be sure there would be no setbacks that would force us to postpone the delivery date.
In the past months purchasing one’s dream bike has meant that many consumers have had to face endless waits. It’s frustrating, although our customers are getting used to it. We wanted everything to go back to normal, to when to buy a THOK bike you would go on our website or to a THOK Point, choose a model and size, and in a couple of days it was delivered home to you. We wanted to make our customers’ dreams come true. This was a good idea that was well-received. We will do the same with our upcoming 2021 models. And trust us, there are more coming!
What are the delivery times of the other models in the range?
The TK01 R has been in stock for less than a week, although we had a decent number of models in our warehouse. After just 10 days the bikes scheduled to arrive at the end of April had also been booked, and now so have most of the June-July bikes.
These days all THOK bikes are selling like hot cakes, and the waiting time for reorders with our suppliers is of about 20-24 months. When we run out of in-stock bikes and customers start ordering those from the following deliveries, waiting times increase.
We are doing our best at scheduling the reordering of components, anticipating each time and increasing the numbers, but months ago it would have been hard to imagine that demand would reach such high levels! And what is happening in the world prevents us from increasing quantities in the process and creates great uncertainty. Very often, even when everything seems to be going as planned, something unexpected happens – for example the blocked cargo on the Suez Canal.
We remain passionate about our work and confident about the future, as we try to understand what happens around us and anticipate where this crazy situation may lead us, so as to not be overwhelmed today and be ready tomorrow.
What do you expect from 2021-2022?
Covid has led many people to discover nature and outdoor activities. On our e-bikes moving around and exercising are both easy and fun. We at THOK are expecting a remarkable 25% yearly growth up to 2025, then we will stabilise. More in general, I believe that there will be a great increase in product demand in the 2021-2022 period too. We will introduce new models and will further improve our sales policy. I believe that once the market has stabilised, the bike market will record a 25-30% general increase.
By contrast, unfortunately, Covid will also negatively impact our industry: I’m afraid that the hard part is yet to come. Serious complications may arise in the near future, complications that remain unknown today. For example, the lack of raw materials such as aluminium or other materials used to build frames. But I’m also afraid that there will be other problems related to managing logistics at a global level, owing to the virus. At the same time technology is not wasting any time and there will certainly be new materials and construction processes. Take for example the iPhone 12 cover, which is no longer in aluminium but in plastic: this solves the availability of raw materials problem. I’m sure there will be similar interesting developments in the bike industry too.
Do you have any investments or production capacity enhancements planned?
We are working on different levels to overcome the fact that raw materials and components are hard to get ahold of. The easiest solution would be for us to opt for a completely “in-house” production, but it would be very difficult with certain components, such as the motor. We are therefore working on the supply network to have an “a-b-c” plan, with bikes with different components based on the production period. After all, since we sell them online, we can more easily change the specifics along the process, communicating directly with the final client, compared to sales made through paper catalogues. However, in this respect, one of THOK’s rules is “no model year”, which we have followed from the very beginning and intend to keep. We are also working on alternative materials for frames and components and to ensure that availability will not be as complex as it is now, given that certain materials are more easily obtainable than others. In any case, I believe that the suppliers’ centre of gravity will soon shift towards Europe.