SANTA MONICA, Calif. (BRAIN) — X-Lab is generating considerable attention in the consumer cycling media for its bargain-priced road and gravel models, with the narrative often focusing on the brand's direct-from-the-Chinese-factory cost savings. Less noted is that X-Lab is not quite a direct operation: It's decided to focus on sales through independent bike shops instead of the consumer-direct focus of most new market entrants in recent years.
And while the media is focusing on X-Lab's super light road frames and carbon gravel bikes, the brand's initial limited product portfolio in the U.S. also includes two sub-$2,000 e-bikes and a $800 city bike.
X-Lab’s parent, China's XDS factory, is a massive OEM manufacturer, making about 8 million bikes a year. In its 31 years in business, it has supplied many of the most famous brands in the industry. It became better known two years ago by sponsoring the XDS Astana men's WorldTour team. This month it began selling its X-Lab bikes through about 40 U.S. dealers with more to come. It's also opening distributors in most other major international markets.
The company has hired some veterans of the U.S. speciality market, including design, sales and management talent from Trek, Canyon, Giant and Specialized. Patrick Pan, X-Lab’s director of international growth, is new to the industry, with a background that includes stints at Therabody and L’Oreal. He is a partner in Vierra Ventures, a venture fund that focuses on the health and wellness and fitness sectors, among others.
With its aggressive pricing, including a $3,200 carbon gravel bike with Di2 components (see a review by our colleagues at Velo), X-Lab has the potential to shake up the current dealer and consumer-direct marketplaces. But Pan said the brand is looking beyond that.
"We'll take some market share from bike brands. But we don't win until we create new riders," Pan told BRAIN this week.
He said XDS's decision to focus on dealer sales, rather than consumer-direct, is in part an effort to reach new riders.
"With e-bikes there's no reason someone who has never ridden couldn't adopt riding in general. But they need the full-fledged experience. You can't just give them a bike and tell them to put on the handlebars and go nuts. You want them to have the touch points you get from dealers and shops," he said.
"We built X-Lab to service U.S. dealers," he said. "Most of our resourcing is directed at dealers first. We have direct sales if that's truly a customer preference of the customer can't access any of our current dealers. But even our inventory is (allocated to) dealers first, before DTC gets its hands on it."
Currently the XDS U.S. site has a dealer directory but does allow direct purchases by consumers.
Pan said the company is adding a "Ship to Shop" option to the website for consumers to designate a bike shop.
"The dealers are a major component of our rider experience, so we prefer this route. Ideally, every customer can choose a local bike shop to ship the bikes to, and we would share some of the margin with that shop for receiving and assembling on behalf of the customer. I expect this to be available by next week," he said on Thursday.
"For the time being, the e-bikes, which are a bit more complex to assemble, are for dealers only. Consumers can have the road and city bikes shipped directly to them, with all necessary tools including a torque wrench enclosed," he added.
X-Lab's U.S. product offerings include just nine models, six of them with dropbars, the two flat-bar e-bikes and the city bike model. There are no mountain bikes in the launch.
Pan said the brand decided on a reduced product line for its launch because it didn't want to "come in and confuse the audience too much."
The brand plans to expand quickly, however, with new models to be shown at Sea Otter next week and more to come in the mountain bike category and others.
A company statement released this week focused on its decision to sell through dealers. "Fragmented supply chains, inaccessible consumer entry points, and punishing dealer agreements have made performance cycling hard for new riders to enter and even harder for retailers to sustain."
The company said owning its own factory allows it to bring innovations to market more quickly. The company makes more than frames: it also makes wheels and other components in-house.
"The bicycle industry has incredible heritage, and we respect that deeply," said Edwin Tan, CEO of XDS International in the press statement. "But when engineering, manufacturing, and supply chain live in different places, innovation becomes painfully slow, and costs rise needlessly. X-Lab starts from a different premise. If you design the whole system together, you unlock better performance and better economics at the same time."
