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Past, Present and Future of Australian Online Cycle Retail – Interview with Gina Ricardo of Wiggle

Ask Aussie cyclists to name popular online bike shops and both Wiggle and Chain Reaction Cycles will be among the top answers. But these UK retailers are facing tough competition, particularly from Australian bike shops. In 2017 these two retail giants merged and amidst Brexit chaos, geo-blocking from brands like Shimano and changes to taxation (specifically GST on the low-value imports into Australia and New Zealand), it has become harder to dominate down-under. Christopher Jones from Bicycles Network Australia met with Gina Ricardo, the Country Manager for Wiggle in Sydney to discuss the past, present and future of online cycling retail.

The credentials of Gina Ricardo includes previous roles with BikeBug and Rapha. In 2017 Ricardo joined Wiggle as the Marketing Manager and last year became the Country Manager. Beyond the office-desk, the 26 year old is also part of the Sydney Uni (SUVelo) Staminade women’s cycling team, competing in Australian National Road Series and major races.

Top Ryde overlooks Homebush and the Sydney Olympic Park and it is here that Wiggle Australia ‘keep things lean’ with work-space inside a trendy co-working office. With her bike parked on the side, Ricardo is at-ease and as we sit down in one of the creative meeting rooms, she accepts the questions with a smile.

Christopher Jones: In the last two years there have been a lot of changes in online retail, can you discuss the changes that Wiggle has faced.

Gina Ricardo: I joined the company at a pivotal point where we had just had a change in CEO’s and the direction of the company from the top management had changed a couple of times. If you look where Wiggle was ten years ago, the local competitors weren’t as strong and the online market was still growing in Australia, it wasn’t very established. I think the one thing we had on our side was currency. The currency was really strong in Australia which helped with sales and cost-prices. So we were first-movers in the market and that was a big advantage for Wiggle.

What has changed since then is that the locals have become a lot smarter with the way they trade. Brands are doing more to protect the local markets with Shimano geo-blocking, for example, and the currency is not doing very well at the moment. There are a whole bunch of things which have added together and made trading tough.

On top of that, Brexit and the [associated] uncertainty had led to an internal restructure and made us look at the way we do things. The numbers were published last year. A lot of it [£345 turnover and £36 million loss1] is depreciation and costs from the merger [with Chain Reaction Cycles] but the numbers don’t lie so the focus of the business right now is about the bottom line.

Christopher Jones: Is Australia a unique export market for Wiggle with the growth in local competition and currency exchange or does it align with global export markets that have become more mature and competitive in general?

Gina Ricardo: It’s different for each market, with the currency it swings both ways. The US is quite a strong market for us because of that but [currency exchange] is not a sustainable model because it is always going to swing around so it really varies for each market as they have their own intricacies. In Japan, for example, ProBikeKit is a huge player in that market and they are also a UK based company. The major players in Japan are mostly international companies as opposed to Australia where you’ve got the likes of Pushys, BikeBug and 99 Bikes really starting to step-up.

Christopher Jones: Do you feel that as Australian bike shops, such as the My Ride (Avanti PLUS) chain, start to mature and realise that there is ‘The Internet’, that this increases the level of competition for Wiggle?

Yes, definitely. Avanti PLUS in New Zealand is one of the major competitors and if they can get their model right and have the physical stores to back-it-up, I think it is a good business model.

Christopher Jones: Returning to Brexit, you mentioned that this created uncertainty in planning-ahead. Now the United Kingdom has formally left the European Union but the UK still needs to make trade agreements with the EU and with other nations, including Australia, is planning-ahead still an unknown factor at the moment?

Gina Ricardo: I haven’t been as close to this project but we have been putting measures into place to prepare for all eventualities. But it is still an unknown, we won’t know until December this year. Who knows, they could extend the negotiating period for another year and we will still be in the same position in 2021 not knowing how it will affect us.

Christopher Jones: Last year the GST exemption threshold on low-value imports was removed, now imports valued under $1000 have GST applied and Wiggle is obliged to collect the GST at the point of sale when a customer purchases (Wiggle in the UK is registered with the Australian Tax Office to collect the tax). Has change this had a noticeable impact on sales?

Gina Ricardo: Yes, if you think about price elasticity we essentially raised our prices by 10 percent, it was unavoidable. We definitely noticed an impact on sales but we are committed to the market and running a sustainable business so we just had to do it. As an Australian myself, I feel Wiggle is now on a more level-playing field with the locals which makes me feel happy working for the company. This means contributing to the local economy and we had the same thing with the New Zealand GST in December which was another blow to the bottom-line but a necessary step we had to make.

Christopher Jones: With the Wiggle and Chain Reaction Cycles (CRC) merger in 2017 I had the impression that CRC would eventually fade away however will they continue to present as two independent retailers with the same inventory?

Gina Ricardo: We are definitely planning to keep the CRC brand separate from Wiggle. We have two offices in the UK; Belfast is CRC and Portsmith is Wiggle. If you look at the two brands there are very different store-fronts. Chain Reaction Cycles is definitely a more masculine brand, more hard-core with Mountain Bikers and BMX. When you look at the shopfront it is very MTB focussed and off-road. Sam Hill is the Nuke-Proof rider, one of the best riders in the world and is the ‘hero’ for the CRC brand and it is really cool to get him as our Aussie connection to the UK.

The direction of Wiggle is as a Tri-Sports / Multisports brand. We still have 80% of our customers who identify as cyclists but we also have our new gym and outdoors categories and we are looking to grow these categories. There are a lot of brands that want to work with us on Wiggle but not necessarily on CRC so in terms of our marketing strategy, we are continuing to keep the two brands separate but take advantage of the single-warehouse and having internal teams that work across both to get the best of both worlds.

Christopher Jones: Are you able to share the roadmap for the next five years and the direction that you feel Wiggle and Chain Reaction Cycles are heading?

Gina Ricardo: For Australia our two big focusses are to grow our house brands and to grow our local warehouse here. We have a third-party logistics warehouse that we work together with in Sydney and one of the things that we want to do is to really grow that part of our business. We are working with a few key suppliers at the moment so the dream in five years time would be to have it at a point where we have our fast-moving consumer goods in that warehouse so we can compete with the local competitors and offer much faster delivery, local returns and work with brands that we can’t necessarily work with in Australia.

The other side of that is to grow our house brands. Dhb is a really strong brand of cycle clothing for us. it is one of our biggest brands on Wiggle. I worked for Rapha and I fully believe that the Dhb product is comparable with the Rapha kit in terms of the top Aeron Lab range. So that is really exciting as we can grow that brand and we have seen it do pretty well in comparison to the rest of the brands we sell on the website.

Christopher Jones: With regard to Shimano specifically and the local warehousing for Wiggle, is this the solution to overcome the Geo-blocking and be able to formally offer Shimano products for sale to Australian customers.

Gina Ricardo: Yes, that specifically started on the first of January, 2019 when the geo-block came into effect globally. You see various retailers who are kind-of honouring it or not honouring it. There is still a bit of grey-sourcing going on in the market but we just have to trust that Shimano are now working to control their supply chain.

Christopher Jones: So you now deal with Shimano Australia to sell Shimano locally?

Gina Ricardo: Yes, we have a reduced range which is easier to manage and it has not been an easy process. There has been a lot of learning and issues to fix along the way but we have got it to a point where we are now fairly confident with the process. We have just expanded the range slightly to twelve-speed gravel parts and there are things we are doing just for Australia which we are not doing for the rest of the world which is exciting.

Christopher Jones: Does it now mean that for the other brands who have blocked sales from online retailers to Australian customers, that there are now options. Some brands such as Mavic are well-known for restricting sales across territories, are you working on partnerships so that more cycling gear from well-known brands are available through Wiggle in Australia?

It’s a very touchy subject, a political subject as Wiggle has not necessarily been everyone’s friend in the local market. That’s the aim, to reach out and work with those brands locally and keep all of the processes in Australia so we are no different to your local online retailer who is buying and selling in Australia.

Thank you Gina Ricardo for sharing these insights on Wiggle and Chain Reaction Cycles.


Footnote:
1. Wiggle Annual Report and Financial Statements for 2018 (filed 26.09.2019)

06.03.2020 Update: Two minor text edits.

Christopher Jones
Christopher Joneshttps://www.bicycles.net.au
Christopher Jones is a recreational cyclist and runs a design agency, Signale. As the driving force behind Bicycles.net.au he has one of each 'types' of bicycles.
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