During COVID, e-bike sales exploded. I'm talking parabolic sales growth. Most of the e-bikes sold were import bikes sold by US marketers. Rad Power was one of those companies, but they are not the only one.

Let's stop for a moment there and be crystal clear about what I'm saying when I say "import bikes sold by US marketers". Rad Power is a marketing company, not a bicycle company. They don't design and engineer e-bikes. They spec e-bikes that are manufactured overseas, imported, and sold to customers. They're not quite drop-shippers (RP has stores, support, operations, etc) but it's a spectrum, not a dichotomy.

On one end of the spectrum you have drop shippers. These are sellers with no domestic market presence. They sell through common marketplaces direct-to-consumer (D2C), and the bike's ship from overseas to the US. Any domestic warehouse operations are part of the marketplace and fulfillment company they use, not the e-bike marketer. The marketer's only focus is sourcing the right bike to fit the market demand at the correct price. They're notorious for a lack of support and popping in and out of existence in a revolving door cycle of business startup and roll-up.

In the middle, you have online D2C brands like Rad Power, Aventon, Ride1Up, Lectric, and others. These marketers have their own web presence. Some have a small retail presence. They have closer relationships with their manufacturers, but they are still not engineering companies who are designing and engineering new products. They are buying what is available overseas, selling, importing, and supporting the product.

Then you have tier 1 manufacturers like the big-3: Trek, Specialized, and Giant. These companies have engineering departments who design bikes. The manufacturing is still outsourced to partners, but the bikes you buy from these manufacturers are one-off designs that are exclusive to each of the manufacturers. They maintain a network of dealers who will support the bike and provide warranty repair, as well as service out of warranty.

Price scales with tier, because each tier adds overhead.

During the COVID e-bike sales explosion, all segment saw growth, but the D2C segment is the one that really grew. Rad Power was, for a moment, the larges e-bike seller in the world (by volume). That growth meant the entire company grew. The very things that made RP the leader in growth are the things that dragged it underwater when the post-COVID market contracted. All that support staff had to be paid. The company sold a lot of bikes, so they had a lot of customers, but sales contracted hard and fast. Next thing you know, new sales weren't bringing in the cash needed to support operations.

All businesses are growth-dependent, but the D2C e-bike business is especially harsh. Because these companies are primarily marketers, Rad Power's competitors were racing to the bottom of the market. Prices were dropping fast, and Rad Power found themselves competing with other companies with lower overhead. This squeezed margins, and pushed operations deeper into the red.

At some point, it because unsustainable. Rad's pandemic growth led to operational bloat that ultimately killed the company. It's retail presence — once a differentiator — was now an anchor around its neck.

And so here we are today. Rad has been through bankruptcy. They're still around, but they're a shell of a company, and there is no guarantee they'll exist in a year. There's no guarantee that any of the D2C brands will. If there is a silver lining, it is that the D2C e-bike market went through a real trial-by-fire. Companies like Lectric appear to have found a sound operating model that balances product, marketing, operations, and profitability.

The product we ended up with is largely disposable. Don't buy a D2C e-bike thinking you'll keep it for decades. At some point, it will become unserviceable, and you'll buy another one. That day will come sooner than you think.