On Wednesday, October 23, the auction for the last physical assets of online bike reseller The Pro’s Closet closed. Successful buyers descended on the company’s massive former warehouse in Louisville, Colorado to cart off loads of office equipment, toolkits and workbenches, and even a few pallets of random parts and wheels. For all intents and purposes, the site that pioneered certified used bikes was dead.
Less than two weeks later, it’s back.
On the morning of November 4, the site re-opened for business under new ownership and run by two longtime TPC employees – chief revenue officer Justin England and chief operations officer JP Gage – who worked for the company for 15 and 12 years, respectively. The first priority, according to England, is re-stocking its once-formidable inventory. “Starting [Monday], we’re making offers” on used bikes from sellers, he told Escape Collective, with an eye to starting sales before the holidays. “JP and I have been a part of the business for ages, and we’re excited about the prospect of bringing TPC back to market, and, cleaning up some of the missteps that we made over the last few years.”
It’s a stunning turn of events. The Pro’s Closet had struggled for at least two years as the pandemic bike boom wound down and its premium reseller business model faltered in the face of industry-wide surpluses as companies blew out inventory at closeout prices. As we first reported in late September, that came to a head with news that TPC was in imminent danger of closing, an event which came to pass just weeks later. How did the company go from a bloated and over-leveraged mess, bleeding cash, to a kind of death in “bankruptcy lite” as England called it, and back to life again in just over a month?
The Pro’s Closet’s new owner is Elshair Companies, a small private equity investor that specializes in online consumer retail. TPC founder Nick Martin is not involved. Founded by Yasser Elshair, the company claims that it has no external investors or financing. That’s a marked departure from TPC’s previous owners, medium-sized private equity firms that plowed some US$90 million into the business, but did so at least partly using classic PE strategies that left the company burdened with debt.
That’s a key point. While England says that the old TPC had courted investors for six months, none emerged to take control of the faltering business. That led the company to its final option, a streamlined liquidation process called Assignment for the Benefit of Creditors, which is an alternative to formal bankruptcy.
While the auction of TPC’s physical assets played out in public, there was a second, quieter fire sale happening for its intellectual property. Elshair bought all of the latter: the website (including the URL and the code it runs on), all branding, and assets like customer email lists. That’s when Elshair reached out to England and Gage to see if they were interested in restarting the business. England couldn’t say if it was a conscious strategy from Elshair (he wasn’t involved at that point), but by waiting until after TPC entered the liquidation process, Elshair was able to buy the IP without assuming liabilities like debt or the lease on its significant warehouse and office space.
But it also means the company has to start over; England confirmed that Elshair never bought any of the physical property from the old TPC. From desks to derailleur hanger alignment guides, the new TPC has to build and buy from the ground up, and that includes the one thing it needs more than anything else: inventory. Which is why it’s open to bike sellers now.
“It’ll take a couple of weeks for sellers to accept those offers, for the bikes to get to us, and to go through the refurbishment process, so realistically, it’ll be December before we have bikes for sale and probably January by the time we have a decent selection of used bikes on the site,” said England.
But there’s one crucial element of the rebuild on which TPC already has a head start: staff. Dozens of TPC employees lost their jobs last month (after successive rounds of layoffs the past two years), and England said that he and Gage have reached out to a number of former staff and have been “pleasantly surprised” at the interest among them at having a second crack. The company will start with a “core staff” and England said it hopes to hire back many more over the next 6-12 months.
“Being able to hire back employees who understand, fundamentally, what the business model is, how we process bikes efficiently, and how we beat the demands of the market is a must-have,” England said. “We’re excited about having that leg up in restarting the business.”
For customers, the new TPC will likely look pretty familiar at re-launch: a similar website and buy/sell processes, including sales options for cash, consignment, and store credit. But some things will necessarily have to change. He and Gage have ideas about where TPC went right and wrong, and England says he’s not alone. “I would honestly say that the staff recognize all the pitfalls that have happened over the last few years. It will be an easy transition to say, ‘Hey, we’re tweaking this, we’re fixing that, we’re changing this,’ and gain immediate adoption from all of the people who are on board for TPC 2.0.” Fixing past mistakes is far from the only challenge.
The previous version of TPC struggled for any number of reasons, but one was that the resale market has gotten increasingly crowded the past five year. TPC was squeezed by the rise of peer-to-peer platforms like Facebook Marketplace and hybrid competitors like Buycycle. And one of the biggest grumbles from TPC’s customers was low purchase offers for bike sellers and high resale prices for buyers.
“Cycling is a passionate niche where riders, through no fault of their own, assign a lot of personal value to their bikes, right?” England noted. But especially in the current industry situation, the market for resale bikes has never been harder. “Right now, a three-year-old [Specialized] Stumpjumper is worth less than it ever has been in the history of the bike industry,” he continued. ‘What we will aim to do is be as open and transparent [as possible] with both buyers and sellers about the realities of the resale market right now, and try and build trust.”
Even amid the increased competition, England views this as a chance to take what the original TPC pioneered and perfect it rather than rip up the model entirely. “The value of what TPC brought to the market over the last decade was this convenient, trustworthy experience for both buyers and sellers to deal with used bikes, and and we’re not looking to reinvent the wheel there,” he said. “We want to largely fill the same niche and be a resource for buyers and sellers to buy quality, pre-owned bikes.”
There are no guarantees. As England said bluntly, right now is “probably the worst resale market in the history of the industry.” That’s an inauspicious time to launch a used bike business, but for England, Gage, and other ex-staffers, TPC 2.0 is a chance to re-write an ending that none of them wanted. Only time will tell if they succeed.
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