The most talked-about cycling brand has finally come to America, and it wants to disrupt the bicycle industry by selling some of the world's best bikes directly online at a steep discount, but insiders say it faces fierce headwinds
Daniel McMahon/Business Insider
The most talked-about cycling brand in the world right now is Canyon Bicycles, which opened for business in the US on August 15. The German company manufacturers high-end road, mountain, triathlon, and commuter bikes and sells in more than 100 countries. And though its origins date from 1984, Canyon is only now making its American debut.
Canyon says it differs from its rivals by offering technologically advanced performance bikes at comparatively low prices. And though price comparisons are not easy to make, because similar bikes are often specced differently, Canyon says its bikes sell for 20% to 30% less than comparable bikes from major rivals like Specialized, Trek, Cannondale, and Giant, but some observers suggest those figures are overstated.
Canyon sells only online, at canyon.com, direct to consumers. There is no bike shop or middleman. By comparison, if you want to buy a bike from Specialized, you must do it through a brick-and-mortar retailer. You can order a Trek online, but you still have to complete the transaction at a physical shop. Some lesser-known companies also sell bikes online directly, and there are successful third-party sellers, but Canyon is looking to be among the first brands to sell high-end performance bikes directly at a discount on a larger scale. Bike shops make money by assembling, marking up and selling, and servicing bikes, in addition to selling gear and accessories. Because Canyon sells direct and skips the shop, it says, it can afford to sell bikes cheaper. Canyon calls it "democratizing performance."
Canyons are highly desired, award-winning bikes, but US consumers haven't been able to purchase them until now. Riders in the States who own a Canyon most likely had the bike shipped from Europe through a friend or found other means. But their cachet also comes from a German-engineering heritage, which emphasizes a technology-driven approach and matters of detail drawn from a unique industrial-design language that appeals to discerning consumers. Canyon's chief brand officer, Frank Aldorf, who worked at the brand's chief rival, Specialized, comes from the advertising industry, where he did creative for BMW, Mercedes, Adobe, and other top brands. Canyon recently won the prestigious international Red Dot design award.
Canyon says customers will receive nearly fully assembled bikes on their doorstep (direct signature required), with US orders taking no more than a day to process. Customers choose from three shipping options: ground, three- to seven-day, depending on destination, $89; two-day, $150; and overnight, $175. Customers also pay tax.
Canyon's arrival in the US has many cyclists excited, but it's also brought about a sense of anxiety for some in the industry, and there is debate, on sites such as Bicycle Retailer and Industry News, over what effects, positive or negative, a successful consumer-direct sales model like Canyon's could have on brick-and-mortar retailers. In addition, though Canyon has been selling in more than 100 countries, its entry into the US won't be easy, several insiders who spoke with Business Insider said, pointing to a soft bicycle market and a lack of new riders buying bikes.
Business Insider spoke with Aldorf by phone from Canyon's headquarters, in Koblenz, Germany, and industry insiders about the company's bikes and business model. We also tried out one of the company's most popular bikes, the Aeroad (photos below), which Canyon shipped from its new Chino, California, warehouse by UPS to our doorstep. We had it assembled inside a half-hour and have already ridden it 500 miles.
A brief history.
In the mid-1980s, Roman Arnold was an amateur bike racer in Koblenz. In his teens he traveled to races with his father, a sales rep, who came up with the idea of selling imported bicycle parts from Italy. At first they sold the parts out of a trailer, which they towed around with their family car. When Arnold was 18, two days after he graduated from high school and was set to be conscripted into the army, his father died, Arnold told Pinbike in an interview. He suddenly didn't have to enter the service, so he and his brother, Franc, decided to grow the fledgling side business, which is when they started selling out of the family garage.
That eventually led to the opening of a bike shop, in 1985, and Arnold's shop became a dealer for other brands, including the American companies Specialized, Trek, and Cannondale. (Arnold has said he was for a long time the largest Trek dealer in Germany.) But Arnold dreamed of having his own bike brand, so he started off with a small mail-order catalog before eventually moving onto the web and becoming one of the first online cycling brands. At the time, positioning the business as an internet-based bicycle company was something of a bet, but, according to Aldorf, Arnold believed that selling online direct to consumers was the future.
Germany, then the world.
In developing his own bikes, Arnold said he looked at the best people in the industry and asked them to work for him. In 1985, he eventually put a team together, and "that is when the Canyon you know today was kind of born," Aldorf said.
The business grew, first in Germanic markets but then in France, Italy, and Spain and eventually in the UK and beyond. Canyon now sells bikes directly to consumers in more than 100 countries, and it has sold more bikes outside Germany than in its home country in every year since 2008, Aldorf told Business Insider.
Today, Canyon is one of Europe's largest bike makers, with a global staff of 850 and north of $180 million in annual revenue, according to Cross Border magazine, with revenue growing 30% year-over-year for the past seven years.
"We always knew the path was outside of Germany because that's where the biggest growth would come from," Aldorf said. "In European markets, it was an easier transition, closer to home, and in terms of legal, tax, and regulations. But for the past seven years, there's been a huge number of people overseas asking, 'When are you opening in the US?'
"So for a long time there was a huge demand there already. But it was something we couldn't get our heads around, and Roman was always just a little bit hesitant to go into this market and just didn't know the market well as he did those here in Europe. But at some point it was, like, 'Will we ever go to the US market?' 'When is the best time?'"
Click to doorstep.
While Canyon says a good deal of its success stems from its consumer-direct model — part of what it likes to refer to as "democratizing performance" — Aldorf said that, for him, it wasn't the business model that defined the company.
"We make higher-end performance bikes in road and mountain but also in our urban line and other performance-oriented bikes," he said. "We can offer them to a lot more people because of our business model. But 'democratizing performance' means first looking at the product, and no matter how you received our product, our bikes on a performance level can compete with all the bikes from Specialized, Trek, or our other competitors that go through the usual dealer network," Aldorf said.
"The bike itself is convincing — the design, performance, and quality. So it's part business model, part quality, but it's also the German part that plays into this, because our engineers and the department that takes care of our quality control is really top-notch. So that for us is the opportunity: a product that has won awards, is tested, and gets great reviews, without even taking consideration of how we distribute our product. Then, on top of that, we have our distribution, and it has a really nice price point. You get great value for the money. Combining these two things is the specialty of Canyon."
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