After Vanmoof was acquired by Lavoie due to massive losses, its competitor, Belgian E-bike brand Cowboy, announced that the company achieved profitability for the first time in July and expects to be profitable for the full year in 2024.
Vanmoof and Cowboy, both European electric bike manufacturers, followed similar paths of development. They both target the high-end market, invest heavily in research and development, and have a high degree of integration in their smart and innovative products. They also assemble high-end bikes from customized components, incurring high marketing and support service costs. However, during their rapid expansion phases, they both experienced significant losses and relied on external investments to survive.
Vanmoof once set the record for the largest single financing in the E-bike industry. With substantial capital injections, they expanded their market and increased sales. However, behind the praise for being the ‘Tesla of the bike world’ and producing ‘the most beautiful electric bikes,’ Vanmoof had to bear the huge costs of maintenance. Vanmoof committed to providing three years of free maintenance for all products it sold, significantly increasing their after-sales costs. Eventually, with no financial support, they had to halt operations. In contrast, Cowboy, following a similar product strategy, achieved a different outcome. Cowboy’s co-founder pointed out that ‘unit economics and cost control’ were the key reasons for their profitability.
Pragmatic Profit Goals
As the biggest driving factors in the Ebike industry began to wane, the market’s excitement gradually subsided, making pragmatic profitability essential for a company’s survival. To cover costs, Cowboy started by adjusting the prices of different product lines based on unit economics. For instance, on August 1st, the price of one electric bike was increased from $3,490 to $3,790. Two years ago, this bike was initially launched in the U.S. with prices as low as $1,990. Initially, Cowboy had a steady stream of investments to expand its market, following a similar strategy as Vanmoof, selling at a loss.
After the market cooled down and demand dropped, Cowboy began to offer lower-priced Classic, Cruiser, and Cruiser ST models, which provided fewer features, such as using an oil chain drive instead of the maintenance-free Gates carbon belt drive. They also increased prices for high-performance products like the S5 flagship model. Cowboy’s Core electric bike also increased its price for the belt-drive electric bike from $3,490/€2,990 to $3,790/€3,290 on August 1st.
Compared to VanMoof, Cowboy’s pricing strategy appears to have more profit potential. Cowboy has repeatedly stated that the company’s income and expenses are close to being profitable, while Vanmoof has reported nearly €80 million in losses over the past two years.
Cowboy achieved €41 million in revenue in 2022, a 2.7-fold increase compared to the previous year, demonstrating a product gross margin of over 40%. They maintained stable operating capital conditions by ‘increasing efficiency and productivity.’
Unlike VanMoof’s direct brand stores, Cowboy chose to continuously expand its sales channels through independent bike dealers and retailers. In May of this year, Cowboy announced plans to expand its offline business through a new network of retail partners, aiming to cooperate with 300 IBDs in 60 European cities this year. With the expansion of sales channels, Cowboy’s inventory decreased by 50% compared to a year ago. Cowboy is gradually transitioning its after-sales model as well. Currently, Cowboy is partnering with over 100 independent bike stores for sales, maintenance, and service.
Cowboy also differs from VanMoof in its choice of production location. Cowboy assembles products near its market customers, whereas Vanmoof’s electric bikes are assembled in its Taiwan factory and transported remotely. After continuously cutting costs, Cowboy’s brand operating costs decreased by 30%, and production costs decreased by 20%. Furthermore, this year’s sales revenue has grown by 40% compared to 2022.
In contrast to VanMoof, Cowboy has achieved profitability and sustainable growth. Through channel expansion, cost reduction, and price adjustment, Cowboy’s development has been positive. The company remains committed to improving product quality and customer service and increasing investment in hardware and software development. Co-founder Roose is optimistic about future growth, noting significant monthly revenue increases this year. In the realm of cost reduction and efficiency improvement, Cowboy has set an example.