For some reason most people expect a EUC to cost like a cheap or a mid-level mobile phone… I often get asked on the streets how much they are and when I tell them the majority act like they got a genuine shock. Before becoming a dealer myself I was the same – thinking that the sellers are just being greedy by charging us a massive premium. Now that I am a distributor I see what costs are there and I just wanted to share my insight from inside the industry as it’s a very difficult business to be in as it turns out. So what makes up the cost of a EUC you get at your door? Let me try and explain.
A EUC is born in a factory. The factory has to overcome certain legal, technical and financial hurdles before it can begin producing these innovative products. As it’s a new technology that’s constantly evolving there is hardly any blueprint for it. The market itself is small (when compared to some of the other industries). EUC is not in the mass market by any stretch (although it’s been doubling year on year from birth). Machinery costs a lot of money and EUCs are constantly evolving so investing in an assembly line may be a little too early..? So while cars are made by robots, EUCs are assembled by hand. Luckily labour in China is still cheap and when coupled with weak licensing laws that create a perfect environment to manufacture these Electric Unicycles. If you take this process elsewhere you’ll quickly learn that this product is so expensive to produce that the already niche market will shrink to a level that is uneconomical for a business to flourish.
Once the EUC is produced it has to be shipped across the world to a distributor. I live in the UK, where we have rules, regulations, and taxes that are strictly enforced, which makes importing goods from China a bit of a logistical nightmare. UK is a conservative country and the English legal system is time-tested but slow to adapt to changes. Once we left the EU importing goods became even harder. We have to pay for the goods in full, then wait for months for them to be delivered to us by sea. It used to be by train and that also took months but it was still quicker and cheaper than sea freight. Shipping by air is a lot quicker but is also is a lot more expensive.
Once the goods arrive we have to deal with customs and that can amount to a bill that is as high as half the original cost of the order. This cost consists of import tax, VAT and various charges imposed by the freight companies – in order to unload the goods and to deliver them to our door. Once a certain threshold is reached, we need to register for VAT and hire a competent accountant. This allows us to claim back the VAT that’s paid upon import, which is deductible from the VAT payable to the government from every sale we make. That’s another 20% added on top of everything we sell.
The next major cost is warehousing. EUCs are heavy and are classed as dangerous goods due to their lithium-ion batteries. Finding storage is difficult enough, let alone that which will allow 24/7 access to the goods or even ship the goods on our behalf. A lot of resellers start off by sending goods from their house simply because it makes life much easier.
Every batch of wheels needs to be thoroughly inspected and prepared for sale. You would think that the scooters come ready from the factory but that’s sadly not the case. A lot of EUCs come broken out of the box and we need to order and replace parts before we can sell them (meaning this stock will be dead weight for another several months). If you have ever replaced a tyre or any part of a EUC you would know that the process of opening up an Electric Unicycle is tedious in itself and takes up an immense amount of time.
Once you build your brand, sort out all the numerous quirks of setting up the site, invest in SEO and get the payment methods sorted (services like PayPal charge 5% on top of your price so that’s about £80) we start getting orders and need to find a shipping company. That can also be tricky because of the batteries and if you’re not lucky you may get an odd box returned to you instead of it being delivered to the customer.
Then comes the after-sales service. All distributors have it in their contract to provide after-sales service. When something goes wrong we have to request broken parts from our orders and negotiate terms of these replacements with the factories. We then either ship the broken part to the customer or replace it ourselves if the customer chooses to ship the wheel to us (at their own expense while we ship it back to them at ours).
Given all the above may have been easier if products came from Japan. Because we expect the EUCs to be dirt cheap and because Chinese factories are not running charities corners are being cut and final products do not always to the QC that we would like to see on them. The fact that the product is innovative and is constantly evolving isn’t helping either.
The market is very small and we are the pioneers of this technology thus we have become the public testers of it. At this stage, a EUC is reliable enough to be ridden at low speeds but it’s still not recommended to push it past a certain speed level, especially without any protective gear. I generally don’t advocate riding at above 30km/h. As thrilling as it may be, the consequences might be dire. I for one would rather ride sensibly my whole life than have a bright but short-lived EUC future if you know what I mean.
After taking into consideration all the above, an Electric Unicycle is quite cheap and us running our distribution business at this time is fuelled largely by our passion for the sport and less so out of an expectation of getting big bucks out of it! At least not in this stage of its development.
