Beeline Bikes

Beeline Bikes

The latest update, as of September 2018, Beeline Bikes is essentially defunct.  Unfortunately for this mobile bike shop chain, they’re now no-more.  In theory, Beeline is still operational.  They still have a number of operating franchises spread throughout the country.  But Beeline-HQ is no longer selling new franchises.  Instead, they’ve pivoted toward their new “Powered By” program, a software subscription service that’s available to brick and mortar as well as independent(non-Beeline) mobile bike shops.  More on that later.

When Beeline was selling franchises, they were a less-expensive version of Velofix.  According to Beeline, their initial purchase price can be as low as $78,000 (and as high as $130,000). As with Velofix, the variability in cost lies within the type of van that’s purchased (or leased), and the respective van’s build-out options. Beeline’s ongoing franchise fees seem to be nearly identical with Velofix, 10% per month, but with some exceptions, most noticeably their monthly ‘technology’ fee of $175.

So, what happened?

Hard to say, exactly, for sure.  But the mobile bike shop craze became popular enough that the Accell Group, makers of Raleigh and Ghost bicycles, purchased 100% of Beeline Bikes in the spring of 2018. Accell had invested earlier in Beeline and apparently liked what they saw. From many perspectives, the acquisition made a lot of sense.  Accell, like many non-Specialized-Trek-Giant bike manufacturers, always had the bike-distribution cards stacked against it.  The vast majority of brick and mortar shops are aligned with one of The Big Three.  Getting floor-space as an also-ran bike manufacturer is hard.  By buying Beeline, Accell opened a fulfillment avenue that bypassed the traditional, and mostly locked-up, traditional brick-and-mortar distribution method.

Very quickly, things went south for the Accell Group, the parent company of Accell North America, the builder of Raleigh and Ghost bikes.  As of December 2018, following another lackluster year of decreased and disappointing sales and earnings, the Accell Group announced that Accell North America would be operated as a separate, noncore business.  That’s a nice way of saying they’d like to break up, but still be friends.  That decision, likely in the works for some time, almost undoubtedly played a role in the ANA’s decision to stop selling new Beeline franchises.  Coupled with that, and here’s some big-time speculation, there’s probably not a lot of money in franchising mobile bike shops.  Bolstering this view, see the discussion on Velofix’s corporate earnings and a reverse-engineered-shoot-from-the-hip estimate of the gross earnings of an average Velofix franchise.

But back to Powered By Beeline.

What is it?  Put simply, a software subscription fulfillment service offered to brick and mortar establishments as well as mobile bike shops.  Part of ANA’s click-to-brick program where a customer can shop online then select and purchase a bike that’s delivered to a local bike shop.  A local shop that subscribes to the Powered By Beeline service would then receive and assemble the bike.  The customer would then be notified when the bike is ready for pick-up.  The monthly subscription fee of $79 to brick and mortar shops seems a worthwhile investment.  That monthly investment opens a distribution channel that’s independent of Specialized, Trek, and Giant without having to fuss with making additional floor space and running afoul of the various Big Three contractual obligations.  And for as little as one bike-sale per month, that might cover the cost of the subscription.

What about Powered By Beeline for independent mobile shops?  That subscription service is $379.  At first blush, that seems high.  An independent mobile bike shop operator would be paying a lot more than a brick and mortar counterpart while also doing more work in terms of delivering the bike as opposed to a customer picking up the bike.  Another reason the mobile bike shop subscription fee is higher, there may be some placating of existing Beeline Bike franchisees out there who are not happy and may already feel abandoned by ANA.  Rubbing salt in the wound by offering independent mobile bike shops who are competing with existing Beeline Bike franchises could result in some additional hard feelings between ANA and those Beeline franchisees.