Online bicycle marketplace operator BikeExchange (ASX: BEX) is addressing one of the biggest pain points to buying a bike online, by offering them fully built without the need to put it together from a box via their acquisition of delivery and logistics company Kitzuma.
As a growing business that services all major regions of North America, the Kitzuma online platform will be a value-add service for BikeExchange customers that want to pick up their bike fully built without the need to assemble it. This will be particularly popular amongst those less handy, as well as parents that do not want to take any risk by assembling their childrens’ bikes themselves.
“Kitzuma’s purpose-built logistics platform, which allows bikes to be transported box-free and fully-built, will eliminate a significant barrier for many customers purchasing a bike online – having to unpack and assemble it,” said BikeExchange CEO, Mark Watkin.
“Kitzuma will be a compelling white-glove service for retailers and brands using the BikeExchange marketplace and broader.
“From the early meetings with the Kitzuma team there was clear chemistry and alignment on the synergies and opportunities for the collective business. The Kitzuma acquisition is transformative for BikeExchange and will be a significant driver for our e-Commerce first strategy and enhancing both the seller and customer journeys for buying and selling bikes.”
Total consideration for the Kitzuma acquisition will be USD $3.375 million (approx. AUD $4.75 million) comprising USD $2.25m in BEX shares at an issue price of $0.157 per share and $1.113m in cash.
BikeExchange anticipates the acquisition to add over A$2 million of revenue to the Group in the second half of FY22.
Based on sales data from the 10 months ended 31 October 2021, Kitzuma generated annualised sales of USD $1.4m having shipped more than 6,200 ‘Ready built Bikes’ across North America from an extensive fleet of specially equipped vans.
Founders of Kitzuma, Taylor Essick, Chris Cosgrove and Tony Eggers, will remain with the business and drive the online integration of Kitzuma’s platform into BikeExchange.
“We are clearly delighted with the acquisition announcement. Since the initial meetings with Mark and the team at BikeExchange we could see the significant opportunity and potential to create a strong end to end process for buying, selling and shipping bikes,” said Kitzuma CEO, Taylor Essick.
“We want to see this model grow and expand in North America and around the world. The breadth of choice across retailers and brands and the regional footprint of BikeExchange is an excellent foundation to build from with the Kitzuma model”
Taking a clip on all transactions processed through their online bike exchange marketplace, BikeExchange generated $1.24m in revenue for the quarter ended 30 September 2021. This represented a 31% increase on their previous corresponding quarter as their clip from $6.86m in total transaction value from the platform over the same period.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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