Jono Allara and James van Rooyen’s passion for cycling motivated them to launch Manly Bike Tours, a cycle hire business in Sydney, while in their mid-20s, and it eventually carried them into the price-plus-service-driven world of online retail.
When the pair discovered that most bike parts are made in just 10 factories and then assembled under various brands, they set about getting a better deal for their annual bike fleet upgrade.
With inspiration from a trade show ‘Taipei Cycle’ in Taiwan in 2011, the boys found Indonesian brand Polygon. They had to commit to a minimum order of 130 bikes to get a good deal, which at around $56,000 was a risk for the young business. “We decided to put 70 bikes into the bicycle rental suite and set up a store on eBay,” recalls Jono. “We sold the first load of bikes in three weeks. That’s when we knew we were on to something.”
In March 2012, the pair decided to take on a much bigger shipment from Polygon: 1000 bikes at a heavily discounted price as they were old stock taking up warehouse space.
“We’d spent a lot of time making the eBay store look polished and keeping costs low by running our businesses from an old sub-station,” remembers Jono. “All of a sudden 1000 bikes were arriving. We found a bigger warehouse and did the fit-out while starting an e-commerce site, selling bikes as fast as we could put them together.”
While eBay had been useful for getting customers, it also collected a 7 to 10 per cent commission on every sale. “If you can get shoppers to your own online store it’s much more profitable,” says Jono.
“The first thing was to get a domain name that was going to be powerful in search engine optimisation (SEO). We bought it from someone else and switched over our company registration to the new name: Bicycles Online.”
Most traditional bike brands (apart from Polygon) weren’t interested in selling online as they’d invested so much into their dealer networks. While Jono admits Bicycles Online undercuts traditional channels on price, he believes it’s his business’s customer service, not price, that persuades people to buy.
“We do our own photography, advice and reviews. We offer free shipping Australia-wide, free 14-day test rides and access to a growing national service network,” Jono says.
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Online muscle lifts sales
Jono is a fan of the software-as-a-service model for online stores – like Telstra’s Neto – because businesses can quickly scale up at predictable monthly subscription rates, rather than spending thousands on coding, design and physical infrastructure. He recommends that businesses create their own images and product descriptions to stand out in online searches, but outsource the integration of databases for sales, marketing, inventory and shipping.
“Our previous e-commerce platform couldn’t handle database integration well,” he notes. “As we expanded, it was a disaster trying to manage all the issues, not only between our platform and marketplaces like eBay, but also our connections to shipping modules and inventory management.”
Fortunately, a contact introduced them to Ryan, a director at Neto. “Neto is a better solution for e-commerce. Shipping, marketplace and inventory management are now a lot easier to do,” Jono attests.
“We track sales leads throughout the site. The customer service team will get notified of abandoned carts, as well, to follow up either by email or phone. We also have tools for tracking stock levels … so we can see best-selling items and slow-moving items to help us plan stock levels.”
Great local service makes a big difference, too: the fact that Neto is based in Australia means help is always at hand.
“Typically, things get done a lot quicker now we’re with Neto,” Jono says. “We had a lot of support setting up the new e-commerce system. Everything integrates well, from email marketing to SEO and marketplace connectors – the eBay integration is probably the best I’ve seen – and reporting is much stronger on Neto. For an Australian business trying to expand, innovation is important as it keeps us relevant in the global marketplace.”
Insights from Kevin Udell, Telstra’s Executive Director strategic development
“Telstra acquired a majority stake in Neto in June 2015. Neto’s cloud-based software allows small and medium business retailers and wholesalers to build and maintain powerful online shops that integrate with leading accounting platforms, payment gateways, shipping carriers and marketplaces. It makes it easier than ever for businesses to begin selling online. Neto is just the beginning of Telstra’s digital commerce strategy to offer world-class solutions to help businesses of all sizes automate and streamline their processes, increase productivity and drive sales.”
- Kevin Udell, Executive Director strategic development