Thursday, May 26, 2016

Change Is Coming

Direct to Consumer brand Canyon is coming to the US in 2017
You may not be in the bicycle industry, but if you are, you've likely already have heard about Canyon Bikes and their planned entrance to the US market in Spring of next year. The details of the story are best read here, so I won't bother with all of that. What I wanted to discuss today is how changes are coming to the bicycle industry, and how Canyon's presence here may hasten that change.

The bicycle industry has been mostly stagnant, or arguably decreasing in size, since 2000 or so. The industry, largely entrenched in its ways developed over the past 40 years or more, hasn't fundamentally changed the way it does its business internally or externally. This is about to be changed, is changing now, and will change more over the next ten years. My prediction is that what we see as a "bike shop" now will not exist in ten years. Oh, there still will be bicycles, and they will still be sold, serviced, and replaced in time with newer ones, but the way we see that being done is going to be very different in the very near future.

Direct to consumer bicycles are not anything new, but let me be clear- what you get from this channel now is sub par compared to traditional bike shop brands. I know, I know..... Those of you that own such bikes are going to get your hackles up and say I'm wrong, I'm being a snob, or whatever. But just you wait and see what Canyon Bikes will be offering. We're talking bikes that will blow a Motobecane out of the water when it comes to the levels of engineering and performance, and you'll barely have to assemble anything when it comes to your door. There is zero comparison to what Canyon Bikes is doing with anything currently available direct to consumer in the US now, and even the big bike brands know this.

Canyon Dude 9.0 fat bike $3240 and change USD
Take for instance the Dude fat bike, which is on par with anything any other company does for a carbon fat bike. Most of these top of the line carbon fat bikes are 5G plus. The Dude? If Canyon was selling it here today it would go for sub-$3300.00. That's a substantial difference that many won't ignore. I can tell you that the established brands here are not ignoring this.

Trek started offering their bikes on-line last year, and soon the other big brands followed suit. The convenience of buying from home though is not going to be enough, and in the case of the other brands, you still have to pick up your purchase at a shop. Canyon won't be hamstrung by such limitations. That's going to force the hand of the established companies in some way if Canyon makes any sort of a dint in the marketplace, because there isn't enough "pie" to go around now, much less if Canyon takes a slice.

While that sounds dire, it may not be the biggest motivation for change in the marketplace of bicycles. There are many internal issues within the industry itself which are unsustainable, not to mention how bike shops themselves are operated. Many stories about that can be found all over, but suffice it to say that change is in the wind and even without Canyon's influence, the changes would happen. I just think it may be sooner than it would have been with their entering the US marketplace.


Phillip Cowan said...

Just curious but what's your opinion of Planet X/On One and their business model? I'm asking you because A, you work in the industry B, I know you've owned at least one of their bikes and C,I'm really interested in their London Road model. It looks like a lot of bike for the money and I think they really got the geometry right although I'm not a big fan of aluminum frames. I'm not looking for a bike review but was wondering if you think they're an ethical company with a good product. Or are they just out to pile'em high and sell'em cheap and cut the throats of the LBS.

Guitar Ted said...

@phillip Cowan: You are correct, I have had and still do own two On One Inbreds, and I have several of their other goods including tires and clothing.

Are they out to destroy the LBS? Many think so. That said, I don't know that they have done a lot of damage in the UK, but I don't live there, so I really cannot comment any further on that. Here in the US? In my opinion they've barely made a dint.

Canyon Bikes are a different animal. They have the scale of a Trek, Giant, or Specialized in terms of their offerings and ability to produce that range. Their engineering horsepower is as good, maybe even better than, any bicycle company's engineering.

On One/Planet X is not at that level, clearly. They do have a lot of products, but they, in my opinion, do not operate at the same level as Canyon, and appeal to an entirely different customer base. On One/Planet X has tried to crack the US market but I haven't seen a lot of influence here. Canyon on the other hand will have a big influence.

Phillip Cowan said...

Well put. Thanks.