s an audience of 29.1 million consumers each year. In the first half of FY21 annualised, BikeExchange generated over $1.5 billion in sales leads and enquiries. It plans to use the proceeds from the IPO to scale in key overseas markets, onboard more cycling retailers and brands and improve the customer experience. We recently spoke to global CEO Mark Watkin about the decision to go public and what’s next for the e-commerce business. Inside Retail: Several online retailers have gone public recently – Adore Beauty, Booktopia, MyDeal. Why was it the right time for BikeExchange to do an IPO?  Mark Watkin: It’s been a 14-year journey for us. For the first seven or eight years, we were just in Australia, but then the business started opening up in other countries. I think the pertinent point is that it takes four or five years to establish yourself in a market. It’s not like you can just flick a switch and away you go. You’ve got to do the hard work to get the retailers and the brands and the products on board. We’ve built a strong foundation without significant investment, so now is the time to bring some capital in to really help scale the business properly.  We’re pretty mature in Australia, but we’ve got large penetration growth to get to in Europe, North America and Latin America. They’re big regions. A lot of the focus now will be to help those regions grow.  The other thing is that for a long time cycling was a sport and a recreation, but increasingly, people are seeing it as a mode of transport. With something like e-bikes, you’re starting to see new types of people come into cycling. It’s not necessarily at the performance end of the market, it’s just the realisation that a bike is a mode of transport or a recreational vehicle. That makes it a really interesting time for us as a business IR: When you talk about scaling in markets like Europe, North America, South America, is it more around brand awareness or infrastructure? MW: In the markets where we’ve been for four to six years, we’ve still got an awareness and an education piece to do, but we’ve got the right foundations in place. Our approach has always been about getting brands and retailers on board and building confidence, and then the consumer audience grows organically. We’ve spent very little on marketing to date. Eighty-five to 90 per cent of our traffic is organic, which comes from having well-optimised pages and evergreen content that helps consumers on their journey. That’s been key. But there are different dynamics in each of those markets, and navigating that is obviously important to do.  IR: As a marketplace, you don’t hold any inventory, right? The brands and retailers you work with fulfil the orders? MW: That’s right, but we’ve got direct integration into their point-of-sale systems. We’ve done a lot of work to bring live inventory onto the site. That’s important because it gives a better customer experience at the end of the day. IR: You have a slightly different business model to other online marketplaces. Can you explain how it works? MW: A lot of marketplaces tend to just take a commission clip and that’s it. Our model is all about diversity of revenue, so we take a commission clip on transactions that occur, but we also charge retailers and brands for a business subscription, which gives them an admin portal they can use to drive their presence on-site. We also bundle quite a lot of communications support through email, display media and so forth. Subscription represents well over 50 per cent of our revenue, but as volumes have started to come up, we’re taking more of a blended approach to subscription and commission percentage clips on transactions. Our third revenue stream is media inventory, programmatic display media and ancillary products, such as private secondhand bike listings. IR: What sort of things can brands or retailers do if they have a subscription?  MW: They can choose how they want to publish their products, whether to make a listing enquiry only, full e-commerce, deposit payment, or even click-and-collect. The thing that distinguishes us from other marketplaces is the ability to make enquiries. We had around 600,000 individual enquiries in FY20. Some of those result in transactions on-site, some of them result in transactions in-store. The opportunity for us lies in converting a greater amount of those on-site. IR: Do you think the ability for customers to make enquiries is more important for your business because of the high cost of bikes compared to an online marketplace that sells clothes for instance?  MW: One hundred per cent. Certain people are only going to tolerate spending so much online before they get a bit nervous. We see people becoming more and more confident in buying a bike online, but equally, if you’re able to make a deposit payment or do click-and-collect, people may feel a little bit more confident. Some people also want to touch and feel the bike and get it sized properly, which is great for our retail customers. We’re absolutely there to enable retailers and brands and help them in that bricks-and-mortar space.  One of the things we’re working on is a concierge service to help customers with their enquiries and convert them to transaction through both human intervention as well as more online help tools. That will play a big part in the next couple of quarters as we evolve.  IR: You mentioned a few different types of cycling customers. Who is your core customer? MW: If you wound the clock back, our core customer probably leaned more towards the sport end of the market, road cycling. But now it’s absolutely diverse, and the sport end is actually quite a small piece of the total pie. The hobbyist or occasional rider makes up a bigger opportunity.  We’ve done a lot of work on our audience segmentation and personalisation to develop what we call a ‘single customer view’ tool, so we can see that you bought a mountain bike three months ago and now’s the time to talk to you about wheels or shoes. You’re getting more relevant engagement, and as a business, we’re getting greater customer lifetime value. We’re pretty excited by that as we progress. IR: Are you planning to enter any new regions, such as APAC? MW: In the short term, we’re very much focused on the regions we’re already in. Any natural country extensions will be in those regions. We take a hub-and-spoke approach. In Europe, for instance, we have a lot of resources in Germany, so we’ll hub-and-spoke out of there. It’s the same with Colombia in Latin America. With the right partnership and person on the ground, we wouldn’t rule out Asia, but we’d be very selective. IR: What about onboarding brands and retailers? Is that a big focus for you right now? MW: Yes, particularly in Europe, North America and Latin America – there’s a fair way to go there. Part of the reason for the raise was to have more resources to help with that and what we call our customer success team members. They’re all about organic growth and making sure retailers are successful and trading well. That’s really important thing for us as we progress forward. But the acquisition of business customers is really important too. IR: How do you approach having both brands and retailers on your site? MW: Particularly in Australia, we’re doing more and more work with brands and distributors. It’s not to cut the retailer out, it’s more about connecting stock. You can have stock at a parent brand level, which is then made available across the dealer network. From a customer experience perspective, that means you can shop by postcode to see which five retailers have the bike you’re interested in. We call this a brand multi-store, and it’s a nice piece of functionality for the consumer. The cycling industry is very fragmented like a lot of categories. Propositionally, we always say we’re trying to connect the dots and bring it all together. We’re not trying to compete. We’re trying to enable.