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German bike manufacturer Canyon officially opened its consumer-direct online business for U.S. customers on Tuesday. Bikes ordered online through the company’s website will be shipped from Canyon’s new California warehouse directly to the customer. This consumer-direct sales model comes with a heavy dose of controversy as it cuts bike shops out of the equation. This contention isn’t enough to deter Canyon though, as it expects a big American appetite for its competitively priced premium bikes.
“We’ve always had a huge demand from the U.S.,” says Roman Arnold, Canyon founder and CEO. “The people always said this is like the forbidden fruit and we want to taste. So there was always a lot of interest.”
Canyon’s early hesitation in entering the U.S. market stemmed from distribution hold-ups rather than lack of demand, company representatives said. In 2010, Arnold considered working with Competitive Cyclist, a large American online cycling retailer, but decided not to embark on the partnership. Arnold said Canyon’s global production process was not robust enough to meet the anticipated demand of the U.S. market.
“The main problem with Canyon [coming to America] was that global demand was so high and our production capacity wasn’t enough to meet that demand or just barely meet that demand,” says Matt Heitmann, Canyon’s chief marketing officer. “So we just kept postponing and postponing [in the U.S] and continued growing globally at an unprecedented pace.”
To accommodate this growth, Canyon built a new factory in its hometown of Koblenz, Germany to facilitate assembly and shipping. Per Canyon’s business model, a customer receives the bike almost completely built out of the box, with minimal assembly required.
The consumer-direct sales model continues to stir anxiety in the bike industry. The consumer-direct model cuts independent bicycle dealers out of the sales process entirely, which trims the product’s price tag. Canyon’s top-end Aeroad CF SLX 9.0, for example, retails at $9,000 with Shimano Dura-Ace Di2 electric components. Similar top-end carbon racing bicycles with those components can cost as much as $12,500.
Critics of consumer-direct purchasing say the process removes the customer from valuable shop services, such as bike fitting and proper assembly. Additionally, removing shops from the equation only deepens the wound of what some say is a bleeding industry, one with tight margins and high competition.
Canyon execs say they are not the enemy of the industry or of independent bike dealers, either. It points to service opportunities that bike shops can capitalize on with new Canyon customers. “It’s a big chance for the dealer to service these bikes that are bought online,” Arnold says. “Canyon will bring new customers to the dealers.”
Canyon bicycles will be shipped out of the brand’s Chino, California-based warehouse while the company’s new U.S. headquarters will operate out of Carlsbad, California. Canyon enters the U.S. market with a limited number of bike models compared to its European offering – less than 20-percent of the full Canyon lineup is currently available in the U.S. “We’re putting our toe in the water,” Heyman says. “We’re putting it pretty deep in the water but we’re just testing things out to start.”