Radek Záhejský has told BicycleBusiness he was been working on Bike Components Eurocenter for nearly two years.
"Ambitions of this portal are really high. We would like to become the biggest business portal specialized for bike components in Europe," said Záhejský.
"Our portal is a combination of nowadays very popular enterprise activities and terms: e-business – business-to-business – virtual banking."
The site aims to make money from banner ads and taking commission cuts from inventory close-outs.
Due for launch in December, there's a preview site up right now. Turn your speakers down, the music will drive you nuts!
Záhejský was recently interviewed by Czech magazine Velo and a translation can be found below.
VELO: Tell us something about the history of the project called VIRTUAL WORLD of BIKE COMPONENTS EUROCENTER, how did it arise?
R.Z. Our project has been prepared for about 15 months. I traveled all around Europe and visited most of the assembling companies. I kept thinking of “sore spot” of bicycle industry. I made a summary of history of bicycle industry for the last ten years and tried to analyze market. I found out that bicycle industry is generally comparable with e.g. computer and motorcar industry. For example computers: they consist of many components as well as bicycles. Computer components are imported from the Far East as well as bike components. There is a big amount of money as well as in bike industry. The computers are assembled by people who are irreplaceable. It is the same in bike industry. Or motorcar industry: a car has got hundreds of components – parts, as well as a bicycle. Most of the parts are imported (especially electronic) from Far East, as well as bike components. It does not make sense to talk about amount of money in motorcar industry. There are many things in common! On the other hand, there is a big difference: balance of tying means and generating of profit in motorcar and computer industry is positive, in bike industry it is zero or negative. I asked myself a question. Why? Where is the problem?
VELO: And have you found it out?
R.Z. I think I have. The success of all three industries is strongly influenced by logistics. That who creates a new system in logistics will be successful. Both mentioned industries have been affected by informational technology, which will be able (in case it will be used correctly) in principle to simplify and cheapen the whole logistics chain. The informational technology affected the computer industry logically, the motorcar industry has been affected only due to its long-term profits and it is more advanced and commercial. There will be hardly somebody in bike industry that will invest a lot of money into IT when he is not aggressively gainful but vice versa, he has many problems. People from bike industry have now different worries. I would say, they fight against themselves, against their past and practically they have existential problems. I think their biggest problem is that they do their business too long. It is a generational problem! Very often those people are really clever and intelligent. There is a nice abbreviation, which has the origin in USA: TAT (turn around time). That who will not be able to change it, he will loose his position in Europe!
VELO: Your project means a big step forwards and this step also means that you will have to persuade the above mentioned people that your step is a right one. It will be very difficult, don’t you think?
R.Z. Yes, it definitely will be difficult but on the other hand, there must be somebody who starts with it. I recently took part in two trade fairs in Germany and I discussed there with tens of people from Germany, England, Taiwan, India and Holland. Some of them said this project would be amazing. On the other hand, there were some of them who said that bicycle industry and market is not prepared yet for such a thing, it will be ready perhaps in three years!
I thought: And who should prepare the market for IT? They? Well, in this case it would not take three years, but five years or even longer because they like the present situation in the way it is now, they do not like any changes. This is a question of a habit, which will be our biggest enemy.
VELO: And what about bicycle industry and information technology? Aren’t they worried about this connection?
R.Z. I think the European bike industry is an ideal business for IT. There is everything what is information technology the strongest in and what our portal concentrated the most on:
e-business , virtual banking including transfer of money and business to business . I am convinced that the other portals, which will be made later, will mostly copy our portal. I know nowadays we are the only ones in Europe who are so far and our business portal tries to comprehensively care for the European bike industry. Due to this our persuading position will be simpler.
VELO: And what about America, Asia…?
R.Z. One journalist started to make me wise on one trade fair: “There were some people in America, Asia and Western Europe who tried to create something like this and nobody was successful. Why should you be successful?
VELO: And was he right?
R.Z. He compares incomparable things! The American continent is not as much closed as the European countries from EU e.g. with their antidumping duties. What is more: there is only one useful language – English, one mentality and one logistic. There is no space for such a portal of the similar character like VW of BCEC. And Asia? It is completely different! After all, 80% of all bicycles and components are produced there! This continent does not need to comprehensively solve the logistic b2b and virtual banking. The participants of this market are not so worried about surplus stock like Europeans. That journalist e.g. forgot to think of time zones between Europe and Middle and Far East. At first sight it seems to be inconsiderable detail. No advanced continent suffers from the time zones between customer and deliverer as much as Europe and Far East. No advanced market in the world has as complicated and difficult logistic as Europe together with the Far East.
VELO: And Europe?
R.Z. It is something completely different! 32 countries, 32 sorts of mentality and 32 specific markets, 32 currencies, EU and other countries from Middle and East Europe, many possibilities of logistic and over 20 languages. And mainly: it is a second advanced market in the world. And also different kinds of motivation! Isn’t it a world specific?
VELO: Motivation? What sort of motivation?
R.Z. Nowadays, Europe becomes united – because of market, logistic, business and continental competitive ability. In bike industry the “iron wall” did not fall down in 1990! It is one of the branches of west European industry, which did not enter hard the Middle and East European market with its product – bicycle assembled in west Europe. It is exactly vice versa. The bikes are assembled by tens of people in Poland and Holland. In Holland the worker costs three times more than a worker in Poland. Again, the logistics and the price of the transport becomes a problem. Nowadays, there is following situation: assemblies of bicycles move to Middle and East Europe – this makes stronger the motivation to create such a portal just in Middle and East Europe. Where will a man from Holland or Belgium look for a motivation to create a similar portal when he now solves the problem of moving his assembly to the Czech republic, Poland or Hungary? It would not make any sense.
VELO: The Czech republic seems to be an ideal place for such a portal…
R.Z. Exactly. Geographically it is a perfect European country. It has advantages of the East and it is not far from west European market. Of course, the portal can be controlled from any European country. It is a virtual world. For verbal communication, which will be necessary especially at the beginning in order to fully start the portal, the Czech republic is a favorite.
VELO: You say you are the only one in Europe who is so far with such an idea! Is there anything what could threaten the success of the portal?
R.Z. I can say I still think of it. When I started creating this idea 18 months ago, I realized that our Internet server must fill up some criterions in order to be successful. It must be global, specialized and must not be operated from inside, but directly from the users. It means, it must be very simple to use it. Due to this I also wished two things: a big investment from a significant manufacturer in Middle Europe and essential breakthrough of investments of large west European assembling groups into the same region. Both realities already happened. It means that the start of this portal can be threatened only by money. The users will decide whether the portal will be successful or not.
VELO: Your talked about globosity and specialization. What is portal going to offer?
R.Z. One of my targets is: it must address everybody in bike industry. Everybody who has something in common with this business must find here something to have the reason to open the portal and actively use it. Retailers and wholesalers can find here “e-stock” – a local market for elimination of surplus stock in pieces. For wholesale stores, assembling companies and manufacturers – there is “on line trade” – a continental market for elimination of surplus stock in boxes, pallets… To exclusive wholesale stores we offer BCEC Trading – an trading company, which is assigned to summarization of orders from the whole Europe and creating only one order towards producer of components. This company is also assigned to communication between retail shops and wholesales, so called b2b. To manufacturers and and assembling companies we offer creating of their own catalogues and controlling their business partners and deals with them all around Europe through this portal, including using of b2b. This virtual world has a big advantage. Let’s have an example: a manufacturer e.g. from China will create a catalogue on our portal, which will be afterwards used by the whole Europe because he can create his own catalogue out of that catalogue. E.g. a wholesale store from Poland, which is allowed to distribute thank to this catalogue, which was created somewhere in China, his components into retail shops and offer it to the final customer. In different words: who will not have his catalogue on the similar global business portal, will get his goods into certain isolation. His competitors will engage his place and the market will get used to the completely new product and new trademark presented and distributed in certainly simpler way.
VELO: Are there any other services on this portal?
R.Z. Yes, there are. VW of BCEC will be a portal of the whole scale of services because it must involve all participants of the market; it means also magazines and organizers of trade fairs. Due to this we are creating a net of European medial partners so that a user would be allowed at his computer to start a European medial campaign for his product (from any part of the world) in one concrete European country. It has also its secondary advantages. E.g. cooperation among magazines in getting information from any country by the help of chat (internet discussing forum) and e.g. access to electronic archives among particular magazines by the help of our portal. We also want to offer those magazines a new form of distribution. Our users will be also allowed to order tickets for trade-fairs including accommodation and e.g. a translator, of course, if the trade-fairs are interested in this service.
VELO: At the beginning you hint at a certain crisis, which has his the European bike industry…
R.Z. At the beginning of 90´s when the Far East entered the European market with components and finished bikes and cheap assembly from Middle and East Europe opened, the market started to stagnate. The worst situation was about 1995 when economical results of assembling companies in West Europe were disastrous. Even until now some companies has not been able to overcome the crisis and some of them bankrupted. These are not results of my studies, but yearly created statistics of European banks, which categorize the risk of particular branches of industry. The year 1995 was the worst one for the bike industry. I was surprised that the assembling companies did not try to solve this problem and the situation repeated the following years again.
VELO: What do you mean, they did not solve the problem?
R.Z. When I entered the bike industry in 1997 and started visiting assembling companies in West Europe, I found out this thing: in most of the countries of West Europe it is not possible to make profits out of assemblies of any kind of bikes. Logically, it must move to Middle of Far East or to Middle or East Europe. Martin Havlena (AUTHOR) says, it will be Far East. I think it will be Middle and East Europe. I insist on my opinion due to the following facts:
a) SHIMANO invests in the Czech republic
b) Large bike groups invest into the assembly in Middle and East Europe (e.g. ACCEL in Hungary). Hereby they open their doors into the new markets in Europe.
c) There is an arising business portal in the Czech republic for the whole Europe. Of course, I involve this control.
I think these three facts will give a new life to the bike industry and bring them new trends.
Who will be adaptable to those trends can be successful!
VELO: Does it mean that a new stage of the European bike industry is coming?
R.Z. Yes, it does. I think that above mentioned facts will affect it and quicken the whole process. At least transfer of assembly to Middle and East Europe will be quickened; it involves the investments into their equipment. Further on, it will change logistic, ability of competition, new forms of financing and elimination of surplus stock will arise. Our portal wants to help all these things to be workable.
VELO: Can you tell us an example?
R.Z. According to the model of HERCULES Company in Germany the bike industry will be clearly divided into three parts: purchase of components – assembly of bicycles – sale of the product. In this case organization of the purchase of components will be kept in Holland (the owner of the company is ACCEL), the assembly will be moved to Hungary (Schwinn Csepel – the owner is ACCEL) and the most important part – the sale of the product – bike – will stay in hands of capable businessman in Nürnberk where was originally the seat of Hercules and its trade mark is owned by ACCEL.
VELO: Let’s go back to your portal. You often say that one of the ambitions of your portal is being an active participant of the start of the new stage of European bike industry. Isn’t is too brave?
R.Z. There is one saying: If I will not do it, somebody will do it! Or at least somebody will try it. And I decided to try it!
VELO: Well. What is going to follow the start of the BCEC portal?
R.Z. Firstly I feel that businessmen and assembling companies are interested the most in on line trade – the continental market for elimination of surplus stock in boxes – pallets – containers. That is exactly the fact, which all participants (European manufacturers, assembling companies and wholesale stores). According to my opinion, at first there will be a big move and elimination of the surplus stock all around Europe, assembly out of that stock and secondly release of financial means. According to the theoretical calculations, nowadays the amount of the such a sold goods reaches totally € 700 000 000,- . On line trade is not affect able because it is very interesting e.g. for bankrupting companies, which need quickly and very often also for any price to sell their surplus stock. Logically, the parallel step will be temporal but basic elimination of purchase of the new goods not only in the Far East, but generally at all manufacturers. This period of “purification” will mean the gradual release of store space, creating of financial reserves and thank to the portal it will come to more economical and deliberate purchases of new components. Assembling companies and wholesale stores will try to purchase through the portal (in on line trade or e-stock) only such a goods, which liquid in case it is necessary. Further, thank to the central catalogues a person who is interested in components can look at the specification of the offered product even some years back, which means that the component becomes more liquid. And that is another reason why should manufacturers create their catalogues just on this portal: if they make their goods more liquid, they will sell it better.
The “purification” does not end here. Also owners of retail shops can take part in such a system (by the help of e-stock and BCEC Trading, which will enable not only communication among wholesale stores but also among all local markets in Europe). I think the retail shop will be able to extend his offer of bike parts and bicycles and eliminate the amount of stock because in case he needs something, he turns to e-stock, an assembling company or a wholesale store, which will be able to assure delivery to his shop practically from the whole Europe in a real time. This situation will lead to creating of financial reserves and new trends of bike retailer because they will be allowed to invest into themselves.
VELO: Who takes the part in this project?
R.Z. There are some investors: wholesale stores from the Czech republic, one from Slovakia, manufacturers, some physical persons and forwarding company ESA s.r.o. Otherwise, it is organized by employees of BCEC and by GLOBE Internet Company, which controls the software of the project. Hereby I would like to thank all of them.
VELO: When are you starting?
R.Z. The final version of the portal should be started in the end of December 2001. At the moment we are testing the particular parts of the portal, which are very difficult. We do not want te run the project before it really starts working.