Wednesday, January 13, 2016

News: Loughran back in the saddle at Planet X

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As its founder returns as CEO, Rotherham-based cycle retailer Planet X has explained how and why its business model works after it is continually asked "why are your bikes so cheap?"

Planet X specialises in time trial, road, track and fixed wheel bikes along with mountain bikes under the On One brand. They relocated to new premises at the Ignite development in Templeborough in 2009 and have gone from strength to strength.

In 2014 the firm broke through the £20m turnover barrier with international sales of £6.1m. An impressive growth in exports of 43% on the previous two years placed Planet X at 69th on The Sunday Times BT Business SME Export Track 100 league table 2015.

In a blog post, the company explains its "direct to customer" business model and explained that its bikes are not cheap in the traditional sense of the term but are instead much better value and inexpensive compared to other bike brands.

The post states: "The traditional model of taking bikes to market is broken. It is too time-consuming, operationally and logistically heavy and most of all, too expensive to be sustainable from a small holding in Rotherham. It's not just bikes you pay through the nose in the same way for any product that reaches retail through a network of dealers, distributors and importers- it's wasteful and expensive.

"To be successful Planet X had to adapt and remove steps, ultimately there were too many parties involved, all of which demand a fee for their services. We cut out the middlemen and managed all the process stages ourselves.

"We source frames and components from all over the world, frames from China, saddles from Italy, and tyres from Germany etc. These components are then shipped to Planet X in Yorkshire, England where they are assembled into bikes. The bikes remain with us until an order comes through on our website and the bike is shipped directly to our customers.

"We have no distributors or retailers, no storage, less shipping and lower freight costs and importantly - We don't take our supply chain and manufacturing savings to the bank, we pass it on to our customers. We are not cheap, we are inexpensive and efficient, it's other brands that are expensive."

Founded by keen triathlete Dave Loughran in the 1990's, Planet X is now the largest builder of high performance bikes in the UK, designing and selling under its own Planet X, On One and Titus brands. It has also acquired the respected Holdsworth and Viner brands, relaunching them by manufacturing the bikes in the UK and Italy.

Having taken a step back from the business, Loughran is back "in the hot seat" as CEO at Planet X and he is approaching 2016 as a big test and a big ask. He said: "I never started this with a plan or a structure, I started because I didn't want a job and I loved my bike riding. The responsibility of having, and being accountable for, 100 or so staff and their families is not one I ever planned for or wanted.

"In the past 25 years, the cycling industry has been transformed from one run by individuals and families whose hobby was their business and pleasure to one that is now a bloodbath run by corporates intent on market share and domination."

David Hanney, previously of Sheffield retailer, Go Outdoors and Chris Potter, a logistics specialist who has previously worked for IKEA and ASOS, have recently been in the CEO role at Planet X.

A recent review of the business identified operational issues and a £1m book write-off took place after it found that realisable stock values were overstated. After investing in new warehouse facilities in Rotherham, the group expects to return to appropriate levels of profitability from April 2016 onwards.

The company also discussed why it imports frames from the Far East, stating that "very few brands produce their own carbon frames anymore, large factories in Taiwan and China contract the production of frames from the major specialist frame manufacturers. In order to provide a product that is technically excellent, to a consistently high quality at a competitive price we have chosen to develop our frames with these same factories.

"A steel frame that has been hand built in Sheffield makes sense but, carbon is a dynamic, modern material that is always improving and adapting. Would you be more encouraged if your new SMART TV or iPhone had been "hand built in Yorkshire?" It's unlikely.

"The bottom line is – we are successful. Like any business, we have small issues that need our attention and we learn from them but if we weren't keeping customers happy with quality products then we wouldn't continue to grow."

Planet X website

Images: Planet X

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