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The Ever-Changing Bike Business

Hugh T

I recently read an article on Velo News in reference to Canyon Cycles coming to the US. I paused after I read it and thought the whole story is not being told. I have been involved in the cycling industry both as a rider as well as a business owner. In fact, I gave up my profession in the early 90’s to start my own company Toga Wear manufacturer of downhill specific clothing.

 Toga Apparel-Mountain Bike Apparel

 

IBrave Cyclest didn’t take long to figure out that if I wanted to be relevant in the biking business,I had to circumvent the distributors as well as the big three at the time -GT, Cannondale, and Diamond Back. They forced the bike shops to inventory the stores with their brand whether it be bikes, shoes, clothing etc. To this day,those business mottos still exist. Bike stores wanted my brand.  Unfortunately, most of their cash was tied up in inventory of the particular brand they were committed to and couldn’t invest in more than one or two items of Toga. A good friend of mine who was manufacturing custom bikes (Brave Cycles) struggled as well and eventually had to throw in the towel. 


 

On that note I was one of the first privateer companies to start my own mail order business. Toga ApparelAt the time that course it wasn’t cheap since the internet was in its infancy I had to advertise with the popular publications and post adds at $1200 a pop- month in, month out. 

 

Today most cyclists purchase online- mainly overseas -for good reason:  the bike shops in Europe don’t buy from distributors. Therefore, they have a wider margin to work with. You can buy over a $150 of merchandise, get twice as much as you can at your local bike shop, and have it sent via mail FREE. I just spoke to one of my friends who owns a high end bike shop in one of the most affluent neighborhoods in Los Angeles. He told me that sales have dropped dramatically and he has customers walking in with brand new Deore Groupos purchased on the internet.   They want to have these installed on their bikes.

 

I wrote a blog on my website not long ago about the big three bicycle manufacturer here in the U.S.  They are the ones who are responsible for the foolishness of exorbitant costs to get into cycling. Just like Nike and Adidas, they’ll have you think the high cost of bikes is due to R&D... NO ,it’s the money they pay out for advertising and the cost of paying top athletes to ride on their equipment. Canyon is proving that you can be relevant involved in sponsorship of high end teams (Movistar’s Nairo Quintana and Alejandro Valverde and Team Katusha Purito Rodriguez) and still carve a profit not at the expense of the customer.

 

The modern age of shopping brick and mortar is dying. If you want to survive you have to adapt. There are many bike shops that have found a way to cultivate a clientele by being involved with them. Not just by standing behind the counter and selling parts. Most cyclists love to hang out at their favorite bike shops.  It’s up to the shop keeper to be innovative and cultivate the relationship. The ones that do will survive.

 

-Hugh



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