Seriously: They bought a lot of expensive machinery to build things, rented and furnished a lot of shops, and hired a lot of people to staff those, and sales didn't grow to to use their production capacity, sales area and staff time.
Their prices for that trace-or-replace service were quite a bit higher than what my insurance agency charges me for my theft insurance. That operation may have lost money, but that's not obvious.
I think that insisting on operating boutique shops around the world was a very costly option. They could have made it much cheaper for them (and convenient for customers) by affiliating with existing bicycle shops when they went worldwide.
I share your worries about the trace-or-replace service. Specifically about the "trace" part of trace-or-replace. Ok, the program is excellent promotion, and did put them on the map. But, tracing stops making economic sense very quickly: Bills rack-up very rapidly when you send a couple of your people in a multi-day hunt in an unknown location.
No kidding on the boutique shops, an expensive street in Covent Garden is super cool to pickup a bike from but running a specialised servicing department from there was clearly commercial suicide. For profligacy this was topped only by a datacentre I was asked to help decommission that was in an Art Deco building on Strand. Next to The Savoy. Overlooking Cleopatra’s Needle and the Thames.
That said, it is a shame that you can’t have specialised bicycle service shops in the centre of London. VanMoof offered a pretty good bespoke experience and my X2 has had a few issues but it’s going quite well four years in. What goes up quickly comes down quickly, I suppose.
In their defense: if the trace efforts succeed in disencouraging thieves (big if), I'd consider it far more valuable than insurance. I'd rather have the bike not stolen than stolen and replaced.
Their prices for that trace-or-replace service were quite a bit higher than what my insurance agency charges me for my theft insurance. That operation may have lost money, but that's not obvious.