The Canyon Conundrum – How to Buy Your Next Bike.
Consumer habits and expectations in general are changing rapidly. There is some good from this and some real challenges. In the bike industry, one of the biggest changes is growing media attention and thus interest in riders buying specialty bikes directly from the manufacturer. The most recognized brand on the market pursuing this method is Canyon Bikes. The German bike company has done a laudable job getting their product in the pro peloton, getting a lot of press and refining their process.
We get that Canyon Bikes (and other consumer direct brands) are attractive to many riders.
- They produce decent quality bikes that have been proven at the highest level.
- The owners of the company are savvy and smart people who have been in the bike industry a long-time. They are good at what they do.
- They have a cool web portal and they have a good selection of models.
- They offer many bikes at a lower price than what a similarly equipped model through a dealer network based brand offers.
This being said, Canyon is taking advantage of an infrastructure that was built upon the investment of others. Buying a Canyon makes a statement about what you value and who you value. It directly determines what services and providers will be available to you and other cyclists in the future.
We have always valued helping people make educated decisions about what and where you buy and providing insight into how the bike industry works. With this in mind, here is the reality of how dealer networks work in the bike industry and how Canyon relates.
How Dealer Networks Work
Bikes sold in bike shops consist of many competing brands. However, one thing unites all these competing brands and allows the industry and the support service structure to work for riders. That one thing is the support and creation of a bicycle dealer based model. Regardless of brand, the fact that there are bike shops across the country (and world) who sell “bike shop based brands” is what allows you to get your bike, regardless of brand, serviced just about anywhere.
With very few exceptions, bike shops depend on bike sales to exist and to offer related mechanical and fit services. If the “norm” for bike purchases becomes a consumer direct model, you will see bike shops, and their service and support, disappear. If you don’t have any need for a bike shop, you may think good riddance – there have always been some not so great bike dealers. However, if any of the following are of value to you, buying from a bike dealer is the only way to make sure that these things exist in the future.
- Independent dealer advocacy with a manufacturer in the case of a warranty or other issue.
- Being able to buy parts (cable, tube…) in a pinch.
- Bike fittings from a place that has the inventory and experience to help you set-up a bike to match your position correctly.
- Priority service from trouble shooting a finicky power meter to fixing “mystery” creaks and broken shifter cables right before your event.
- Parts inventory to support service work (tune-ups, wheel builds…) and the brands sold.
- Event support, creation and participation from shop staff.
How Consumer Direct Bikes, like Canyon, Sometimes Takes Advantage of the Bicycle Dealer Network
Brands supporting a dealer network based model are the backbone that supports the entire bike industry. Without dealer based bike brands, there would likely be no Canyon. If your thought is, “I can take my Canyon to a shop to have it serviced and fit.” You are basically saying, “I’m going to bring my own wine, beer and steak into a restaurant and have them prepare and serve it to me.” That sounds a little ridiculous, doesn’t it? Why doesn’t it sound so ridiculous when it comes to a bicycle?
Dealer networks have reciprocity. If you bought your Cervelo in California, we’ve signed and agreed to make sure we support you and the product. We don’t do that with Canyon – Canyon hasn’t asked dealers to sell their product. Instead, their model works to eliminate the dealer from the transaction and to capitalize on the fact that a support network was built by the rest of the industry.
In the natural world, this type of activity would be labeled “parasitic”.
Where Should a Canyon Bike be Serviced?
By the owner.
Where available, Canyon’s current service partner could be used. Velofix.
While many dealers currently will service a Canyon at the moment, the day could come where the industry draws a line and says, “We only service bikes from dealer network based brands.” Why? Because shops simply won’t survive if they become nothing more than service centers for brands that they don’t sell.
Conclusions on Canyon and the State of Bicycle Retail
One thing is for sure, change will continue to happen in the bike industry and in the world in general. Retail formats and concepts that worked well just a few years may not work well in the future. Manufacturers and retailers will continue to try to create strategies to help provide what consumers want. What remains to be seen is how conscientious consumerism manifests itself. Will more people actively think about the broader implications of what and where they buy in the future or less?
Whether it be bikes, stoves or cars, if you want the services, products and support that dealer network based retailers provide, these businesses need you to voice your support by buying the brands they sell and doing business with them.
Complaining about a market is like complaining about the weather. Canyon is doing the same thing as Tesla, which might annoy intermediaries but it’s the way it is.
I’ll buy the best bike I can for the money after extensive research and get it serviced (which I rarely need) by the best person who will work on it. It’s just like taking a car to a mechanic, nothing like restaurant.
For folks in SoCal Canyon has an excellent demo shop w v capable salespersons. I’ve generally been underwhelmed my the quality of help at bike shops.
While I get that it’s uncomfortable, it would be better to adapt than complain.
Consumers are generally provided little insight into what bike dealers have historically made or how the industry and margins work. Our intent is to just provide awareness so people understand the “big picture” when they choose to make a purchase.
Tesla is offering service options for the product they sell direct. Canyon may have just started doing some of that, but they didn’t offer any of this for years and still have almost no coverage. They remain dependent on the existing service infrastructure that others invested and built to provide repair and service work.
I’m sorry that you don’t have better bike shop options in S.California, but that is not true everywhere. As a company that played a role in changing the road and triathlon industry to appreciate the value of proper bike fit and set-up, our services go well beyond being an intermediary for our clients. We have adapted for two decades now and will continue, but we won’t sit quiet as companies leverage us and try to distort our role. This article was written years ago and these issues go well beyond Canyon at this point.
We’ll continue to do what we can to be as transparent as possible with consumers about what is going on within the industry so that they can make an informed decision. While it is a few years old as well, another article that relates to this and that discusses more of the details can be found at https://fitwerx.com/specialty-bike-shops-make-money/
Thanks for reading (and thinking).
Hi Ian – good blog and comments on this board. As much as I hate insurance companies, it might make sense to take a page out of their playbook by offering in-network and out-of-network service pricing. I think turning business away because they didn’t buy a bike supporting the dealer network would backfire on you. At least give them an option to use your services at a 10-20% premium on your normal costs.
Thanks for the thoughts, Ty. The challenge that consumers need to be aware is that a 10-20% premium on services to work on a consumer direct bike doesn’t allow a full-service shop to pay the bills. In combination with labor shortages, most shops are at a point where they have to make hard decisions regarding where they are focusing and who they are serving. For our business to do well while selling half the number of bikes we currently sell would require us to raise the cost of fittings and shop labor by 300-400%. This is the conundrum.
For now, we are continuing close to what we have always done. We’ll do this as long as bike sales continue at a pace that can support that. This means service and fittings for everyone as much as capacity allows with preference going to people who buy bikes from us. We’ll see what the future brings, but things are changing seismically behind the scenes in the bike industry right now.
I’m unfamiliar with the LBS business model but it stands to reason it’s similar to the automobile dealer model. With autos, dealers rarely make much money on the new car and are offered volume incentives (and minimums for that matter). Auto shops make money on used vehicles and maintenance. Seems like bikes should work similarly. I’m not sure why adding more bikes to service hurts the dealership where there’s better margin on maintenance. One could also have maintenance tranches, if it’s a LBS brand one gets pricing A, and a higher pricing B for direct brands like Canyon.
Thanks for the post and responding to peoples comments!
Thanks for reading and for the thoughts. While there may be some differences between the auto world and the bicycle world, I’d say that there are very few bike shops who are able to exist without selling new bicycles. For more insight into this topic, check out this post. This is as transparent as we can be about what keeps us ticking and how hard it is for shops to fulfill the service role that many people want if people aren’t buying bikes and equipment from us simultaneously.
Why Won’t I Buy a Canyon Again?
The short answer is, “Because my LBS takes care of me. Canyon didn’t.”
The Story. After shipping my bike I reassembled it. When I reattached the handlebars to my Grail’s proprietary headset, a plastic piece fell out. More likely it fell out during shipping. I didn’t notice it. Nonetheless, the bars went on fine, and all appeared copasetic. Afterwards, I found the small (1.5 x 1/2 in) piece on the floor. It was plastic. Black. Enigmatic, that is, it didn’t look like a bike part. I checked my bike’s bottle-holders, crank, etc looking for where a plastic part might go. No luck. Unfortunately, the part is also critical. It was a part of the head set. It’s the part the lock nuts press against to secure the handlebars to the stem. Without it the lock nuts pressed directly against my carbon stem and cracked it. Shit. Canyon’s solution? Buy a new stem AND a new handlebar. And, there is a 4-week wait. And, it ain’t inexpensive.
My Case. “If something can go wrong, it will” is not a joke; it’s an engineering maxim. Canyon has a critical, proprietary (read “enigmatic”) part, that falls out easily. It’s something that is sure to go wrong, particularly when recreational riders assemble their bikes. The engineering solution is to put things in place to prevent the inevitable. Perhaps directions, warnings, red plastic rather than black, or design it such that it is impossible to fall out.
To be fair, Canyon’s customer service folks were competent, helpful, and patient. After several exchanges of emails and photos they figured out my problem. That said, it took much back and forth, and then their hands were tied by policy…warranty is for mistakes in manufacturing.
The Morals. Avoid proprietary parts, particularly if you’re not an experienced bike mechanic. A visit to the LBS is more enjoyable and efficient than emailing customer service. Your LBS has more investment in, and love for you than does Canyon.
The Bottomline. I will not buy another Canyon.
Thanks for sharing this informative guide. I was looking for my new bike in the near future. Just find the article on this website and yeah, I’m loving it.
the reason people don’t bring their own groceries to a restaurant and have the restaurant prepare it, is because they cannot.
the bike industry is not exactly like the car industry. but imagine if ford/toyota/honda, etc were not allowed to sell their vehicles directly to consumers. how would things change? independent repair shops seem to be thriving.
the reality is that the bike industry is changing (as you state), it’s easier to adapt to the industry, than to get the market to adapt to you.
i believe that if more companies (trek, cannondale, scott, etc) follow canyon’s route, then bike shops will become bike repair shops. the markup for a bike repair will increase to cover the loss of sales.
it’s definitely a scary place to be as a bike shop owner. unlike motor vehicles, bikes are much more simple. most people own cars as means for transportation, whereas bike owners are hobby/enthusiast and much more likely to “want” to tinker on their bikes.
as someone that has used fitwerx services on and off over the past 10+ years, i wish you guys nothing but the best of luck.
with amazon prime, everything is available in a pinch
– this has hurt every industry, not just the bike shops
suggesting that shops only service brands they sell is bad business
– i’m sure your shop gets a decent amount of business from folks upgrading from their huffy/mongoose after bringing it in for a tuneup. not tuning up bikes you don’t sell turn away a percentage of business.
good luck, i like having you guys around!
Your point is the same as mine when it comes to restaurants. Restaurants have seen that allowing people to bring their own food almost never works for a host of reasons, so they don’t let them. The bike industry isn’t much different. If everyone walked into shops all day with bikes and equipment bought elsewhere, the shop wouldn’t be able to make it as people wouldn’t be willing to pay the labor rate to make it sustainable.
I would question whether cars are simpler than bikes for shops at this point. Car dealers don’t spend 4-8 hours assembling a bike from individual pieces. I’ve also seen a couple auto techs who, after looking at the myriad of compatibility challenges, wanted nothing to do with the electronics, hydraulics and routing on a modern bike. Bikes are not nearly as simple as they were ten years ago even. Some independent repair shops for cars are thriving because there is fairly consistent volume year round and enough people driving to make a service only model viable. Related, just because a business is busy doesn’t always mean they are thriving. The margins that are being made by the business have to out pace the volume of work. As noted, the bike industry is selling more product direct, but there is not a proven “service only” model that works across the country to support that model. As it is now, we have to earn more than service business to exist as our industry currently dictates that. If we did not sell bikes, tune-ups would need to start at a few hundred dollars and the price of fitting service pricing would need to more than double.
Yes, you are right that businesses are being put in a position where we may have to choose to turn away a percentage of business. As a small business, trying to manage things when you are at a size that hangs in the balance (expenses too high to hire more staff, but demand for services out pacing what you can supply with your existing staff) is not a place that you can be very long. In some cases, that may mean you become smaller and/or have to limit your offerings to remain sustainable. The only way I know to compete with Amazon and the like in retail is to specialize. This means that you will not be everything to everyone, but hopefully you will do the best job possible for those folks that choose to work with you and buy from you.
In the end, that is my point. Consumers determine whether businesses stay around. If the convenience of Amazon, Canyon and the like outweighs anything we can offer to everyone, we won’t make it. We’re banking that won’t happen; we’re doing what we can to offer specialty service and offerings that hopefully make it worthwhile for people to buy from us despite not being the most convenient all the time.
Thanks for the comments and for working with us in the past. I hope we can earn your business on both products and services in the future!
But I wanna be just like Mathieu van der Poel! 🙂
Thanks for outlining the advantages of supporting the LBS and how it fits into the larger industry picture. My husband is a pro fitter at an LBS,and while he’d like to run his own fit service, he knows even then that relationships with the LBSs will be key.
Hmmm, full disclosure. I don’t own a Canyon but the wife is considering picking one up to replace her Madone. I agree with your conclusion. There will be (and are) massive downstream effects at bike shops of people buying more gear/bikes online. I love my LBS and try and get all my work done there.
That being said your “servicing Canyon” section seems a bit misguided. Some of my points are a bit tortured so I apologize ahead of time.
1) Our cross bikes and wifes Trek were bought at LBS. They “theoretically” get free tuneups for life, but to be blunt “you get what you pay for” and they were all quickies.
2) My road bike is a custom built frame from California. Using same logicI should buy a $700 toolbox and do all work on it myself or contact Velofix?
3) My LBS is a vendor of A, B & C are you cheating on them if you buy brand X from a different LBS? Should you only bring that bike into a dealer of that frame?
4) What if you don’t want a 54 or a 56cm gravel bike with disc brakes which is what they have in stock ?? A 50cm womens bike… or a 61cm road bike.
5) Its a brave new world, when I was racing in my 20s I certainly wanted to retire and own a bike shop.. That concept scares the crap out of me now. I think you just have to floor the customers with service and not just upsell the 2019 version of something
Ending rant… and I do like your blog BTW.
Thank you for your comments Eric. They are truly appreciated.
I think one thing that is is often not fully understood is the many different types of bike shops and bike fit studios that are out there. I wasn’t saying that you should just support your LBS. In fact, our business depends on you not always supporting your LBS; many people travel many hours (in some cases days) to work with us. There is a difference between supporting a LBS and supporting a dealer based network. There is also a difference between supporting consumer direct bike companies and supporting dealer network based bike companies. This is what the downstream effects you referred relate in the article – consumer direct brands vs. dealer network brands.
I agree that you get what you pay for in most cases. This is why we offer a complimentary first tune-up and then minor discretionary adjustments in the future on your bike if you buy it through us. We don’t offer “free tune ups” for the very reason you infer – no one can do a good tune-up for life on a bike they sold and stay in business.
Custom bike sales are an important part of our business. We actually played a role in the popularization of the custom bike, which then led to consumer direct builders competing with places like us directly. That could be an entire article on some of the similar implications to shops like ours if everyone buys their custom bike direct. The point is, regardless of whether it is a custom bike or a production bike, where you buy matters. Shops like us depend on your bike business to offer our mechanical, warranty and fitting services. We can only support at the level of what we sell. We have yet to figure out how to just be a service center for items bought elsewhere sustainably; we can’t afford to employ extra skilled service staff who are here just to service product we don’t carry or sell.
I may not have done a good job explaining my point in the article regarding your third point. I was trying to say that, in the case of brands like Canyon, it is more about the model of business you are supporting than the actual dealer or your LBS. If consumers want bike dealers to be there to service bikes and stock bikes, they need to buy brands that support bike dealers and not on-line only brands.
In the case of your fourth item, this is where we feel the industry is often backwards. You should go to a dealer who provides quality fittings and they should fit you in advance of getting your new bike. Don’t worry about what they have in-stock. Worry about whether they are good at bike fitting, bike design and bike selection and whether they offer quality brands. Get fit first. Use that information to figure out what bikes actually fit you well and then they can order a bike for you that is built to match your needs before you take delivery. The result is a bike that fits you well from the start, is the right category of bike and size. This approach also saves most riders money and time down the road, as they don’t need to make changes nearly as often, and allows us to guarantee that someone will be satisfied with their purchase. We’ve been selling bikes this way for 17 years and firmly believe that this is the right choice for giving riders the right bike and the right fit with the greatest consistency. More bike dealers are “getting” this approach as they realize that they can’t inventory everything and that they need to change their methods if they are going to provide additional value, help people get the right bike and stay out of inventory trouble.
I agree with you completely on your fifth point.
Thank you very much for posting your thoughts and I hope that this helps clarify the points the article was trying to make. As you said, it is a brave new world, but we do all play a role in what the future holds and we speak to that each time we pay someone for something.
Enjoy the ride!