Quest for cheaper bikes turns into niche business
CHICAGO (Reuters) - As undergraduates at the University of Southern California, Jonathan Ross Shriftman and Jake Medwell got caught up in the campus's ardent bike culture. The problem was they couldn't afford the hip "fixies" their cycling peers were riding, so they built their own.
That simple solution has morphed into Solé Bicycles, the pair's Los Angeles startup that specializes in single-speed bicycles -- fixies or fixed-gear bikes -- that sell for $310, less than half of what bike enthusiasts usually pay.
"We couldn't figure out why such a simple road bike, basically a chain and a couple of wheels and some cranks, was so much cash," said Shriftman, 23, who at the time was enrolled in USC's entrepreneurship program with Medwell, 22. "Jake and I had always been business people so it sort of came naturally to us. Once we got those bikes, we decided we wanted to make them better. We realized we could really make a business out of this."
Initially looking only to build bikes for themselves, the two students used the Internet to locate suppliers in China. They had bikes made to their exacting specs, but quickly found shipping them by air pushed the cost up by about $200 a piece.
"We realized that by reaching out to sources directly and building bikes the exact way we wanted them to look would be much more affordable for us," Shriftman said.
After developing a prototype they entered a business competition sponsored by Inc. Magazine and won a $15,000 grant. The money afforded them the break they needed: last spring they headed to China to meet a chosen supplier in person and subsequently purchased their first container shipment of 150 bikes.
"Jake and I said we want to make really, really high quality bikes and cut out the middle man, ship to the consumer so they can save cash and money on cars, and use less fuel," said Shriftman, noting that the when first batch sold out within two weeks, his hunch about a market was affirmed.
GEARING UP DEMAND
With only a few shipments under their belt, the co-founders are still trying to master supply-demand issues faced by all importers. Backlogs have built up for their trendy bikes, which are made of high-tensile steel, come in 25 color combinations and accommodate riders ranging in height from five feet to 6-foot-4.
"I've been out of bikes for a month or longer," said Tepi Benjamins, owner of L.A.-based boutique Store XIII, one of the first retailers to carry Solé. "I've lost tons of sales because I didn't have inventory."
"We're growing faster than I think we know what to do with," said Shriftman, noting that Solé has been building sales without outside investment.
Whether or not the company's fixies, which are also sold directly to consumers through their website (www.solebicycles.com), will appeal to a broader demographic remains to be seen.
Jay Townley, a former Schwinn executive and partner in Gluskin Townley Group, a market research firm that specializes in the cycling market, said they are likely to remain a niche product.
"Will it be mainstream? No," Townley said, adding the physical demands of one-speed bikes limit their appeal to younger riders in good physical shape. "It's got no ability to gear down when there's a hill. If you're not fit, you're not going."
Townley added it appeared Solé has done a good job undercutting the market while still delivering a quality product.
Roadblocks aren't slowing down Solé's co-founders, who said they are turning a profit and soon hope to offer their bikes in other cities, including Chicago, New York and Boston. They're also working on the introduction of a fully customizable version.
"I think it's the perfect bike," said Shriftman. "It's really lightweight, there are not many moving parts, it's really simple and they don't break."