Canyon discontinues direct sales to South African market

[stefmeister]

7 minutes ago, babse said:

and specialised you can actually go see and sit on the bike you want, try sizing (not wait months for shipment), and the price you see is the price you pay.

Sorry, I just never felt like Canyon was actually available in/to SA

Valid points, can't remember how many times I've toyed with the idea to buy direct, only to realise after shipping, duties etc, you're still not sure if it's going to be good deal compared to local big name brands.

Looking at other direct sales brands with local agents, prices are also way off, totally defeating the purpose of the business model.

 

[Barry]

2 hours ago, Matt said:

 

We'll ask Erik to confirm the details, but from our understanding Canyon are shutting down direct to consumer orders to SA however Canyon bikes will still be available to our market via Erik / Canyon Cafe. Even with consumer direct orders open to SA until now, Erik has been facilitating many of the orders for SA customers to streamline the customs process and will continue to do so going forward.
 

And Erik sells  awesome coffee give it a try.

[lechatnoir]

2 hours ago, Pure Savage said:

Basically a, "Bye Felicia!"

There is more money sending all the bikes to the US and EU markets, rather than sending stuff here.

I'm not sure I see your logic - are you saying that selling in larger markets is more profitable? Sure, the volumes are higher, but the profit per unit for them is the same no matter where it's sold. Their cost-of-sale to get it couriered is the same regardless - the shipping costs are passed on to the customer.

Edited July 28, 2021 by lechatnoir

[Shebeen]

guys it's obvious!!!!

Canyon sponsored favourite for Tokyo MTB crashes on a course built by a south african trailbuilder......

what other choice did they have?!!!!!

 

 

[Mountain Goat]

That sucks, the business model may have needed some work but fewer brands in SA is never a good thing.

It is going to be interesting to see how this affects Canyon Cafe, great coffee but no more bikes to stare at... ???? 

[MORNE]

1 hour ago, Mountain Goat said:

That sucks, the business model may have needed some work but fewer brands in SA is never a good thing.

It is going to be interesting to see how this affects Canyon Cafe, great coffee but no more bikes to stare at... ???? 

slightly dissagree. More brands just for the sake of having more is not better than having less brands with better overall support for those brands imo. Less brands would mean more people sort of have to buy those brands...which leads to better numbers for the resellers. It's something spez gets right in this country over and over again.  And i'm saying that as someone who has never owned a spez and like my niche brand bikes too lol.  

PS: I think Canyon failed becasue there is TOO much choice here. they are competing with all the popular cookie cutter brands like Cannondale, Spez, Trek etc etc

Edited July 28, 2021 by MORNE

[Mountain Goat]

6 minutes ago, MORNE said:

slightly dissagree. More brands just for the sake of having more is not better than having less brands with better overall support for those brands imo. Less brands would mean more people sort of have to buy those brands...which leads to better numbers for the resellers. It's something spez gets right in this country over and over again.  And i'm saying that as someone who has never owned a spez and like my niche brand bikes too lol.  

PS: I think Canyon failed becasue there is TOO much choice here. they are competing with all the popular copokie cutter brands like Cannondale, Spez, Trek etc etc

I wouldn't say that there is too much choice in SA, perhaps you are onto something rather having fewer brands that offer a higher level of service and support.

But it is frustrating when you see an international product launch or the pros riding something than you can't get your hands on locally. 

[Riaan H]

4 hours ago, dasilvarsa said:

What's a Canyon ?

A VW Amarok with a cool paintjob and moerse pricetag

[OVERDRIVE]

More choice is better, but there are too many brands in that 100k for a bike space. And Spez rules that side of the river anyway, shame they didn't want to fight 

[MajG]

We are already so limited for choice here, 1 less brand option.

Canyon are cool looking bikes, pity that shipping cost was always the underlying issue as to so few were on the roads in SA.

 

[lechatnoir]

11 minutes ago, MajG said:

We are already so limited for choice here, 1 less brand option.

Canyon are cool looking bikes, pity that shipping cost was always the underlying issue as to so few were on the roads in SA.

 

it wasn't the shipping, it was the duties. 1/3 of the cost of the bike... if it weren't for that, we'd all be on a canyon

[Emazing]

I would like believe SA is a big market but compered to the USA the whole of SA orders account for a small town in the USA.  So much effort, so many difficulties to deal -big company’s don’t need the orders from say Benoni ( with respect )  

[Patchelicious]

It’s all Rory’s fault!

[Patchelicious]

I hate to break it the man pictured in the article, he has voided his warranty! 
 

 

[GrahamS2]

11 hours ago, Craai said:

Canyon smanyon, at least we'll always have our Makro Cannondales

Or the merry band of thugs who looted Makro stores will...

[DonatelloOnPinarello]

8 hours ago, MajG said:

We are already so limited for choice here, 1 less brand option.

Canyon are cool looking bikes, pity that shipping cost was always the underlying issue as to so few were on the roads in SA.

 

 

8 hours ago, lechatnoir said:

it wasn't the shipping, it was the duties. 1/3 of the cost of the bike... if it weren't for that, we'd all be on a canyon

Sorry to chip in here, but I have to correct both of you. As an logistics consultant and supply chain analyst, Working in the bike industry, I think I can provide some unique insight, while I having breakfast in Macau, and waiting for what will be a rather unpleasant 47 hour ordeal to get back to JHB…. But you can all thank me later when in about 3 weeks time you are again able to buy some Shimano goodies for your bikes from your supplier of choice.

Canyons business model would never work in SA, but not for any of the above reasons.

Duty on bikes in general, including Canyon is 15%, levied against the CIF (Cost/Insurance/Frieght) price of the bike. Essentially that’s the total purchase price, as delivered to a customs port in South Africa. But every single bike you buy in South Africa is subject to this duty. You just don’t realise it, because it’s already factored into the price on the sticker in the bike shop. The only other tax/add on is VAT, but again, that applies to every other bike sold in the country as well. 
 

You could argue that the shipping cost for mainstream brands is lower because they buy in bulk, but that is also not really true. Bikes are bulky, and expensive to ship. The slight saving they make by bulk shipping is completely wiped out by warehousing and distribution costs locally.

So the price you pay for a canyon consists of: CIF + 15% Duty + 15 Vat

The price of the bike you buy at the LBS consists of: CIF + 15% Duty + local wharehousing + distribution + dealer margin + 15% Vat

(depending on the sales model, there might also be a local distributor/agents margin. But in most cases this is worked into the ex factory price. At least for Spez and Trek and Scott, who all have proper brand representation locally. The others handled by “middlemen” it’s a free for all, and local distributors totally screw the entire supply chain. No wonder Spez/Trek at least are so dominant in the market. Trek is getting there, having only recently gone this route) 

But essentially the Canyon shouldn’t be costing more because of shipping or duties. Those apply equally whether you buy the bike from cyclelab or you import it directly yourself. And granted the exchange rate is reasonable on the day you buy your canyon, then your total cost would have been comparable to local prices for the other brands.
 

When I bought my spectral in 2018, it was very favourably priced, in fact it was a bargain compared to the similar options available locally at the time. Granted I took delivery of my bike in Germany and “smuggled” it back as check in baggage, so I skipped shipping and duties, but I had to pay German VAT at 19%, which I didn’t get back at the airport, because I had ridden the bike in the alps on that trip, so it was used by the time I left the EU, and my excess baggage fee to fly the bike on Air France was 150Eur or something. So all in very close the what I would have paid in VAT and Duty if I had shipped it to SA.

The problem with Canyons business model in South Africa is the South African. They failed to understand South African consumer behaviour. A DTC distribution model will not work for luxury goods in South Africa, and even more especially bikes. Whether you guys on this site believe it or not, you are the minority of the cycling consumer in South Africa. Who follow cycling religiously and know about canyon because you watch world cups and grand tours etc. The typical consumer has probably never heard of red bull tv, and might maybe watch a bit of the TdF, but only because it gets a bit of coverage on the mainstream news, and he doesn’t want to sound an absolute fool when he meets up with the rest of the C group for the Saturday club ride. South African Consumers are also extremely image conscious, what they buy is more about impressions, with very little concern for value. So there’s just no way they going to buy a Canyon, that is essentially an unknown brand here, even if it offers much better commented etc at the same price as a known local brand.

If you buy a S-works, you don’t need to explain your choice to the mates. They will all be wowed by the sticker alone. Same goes for a new pro-Caliber. Or a Spark 900 RC Team. Your mates know it’s the bees knees, and they have seen it on the floor in the shop, and know what the sticker price is. But a Canyon you would need to explain/justify, and that kinda defeats the point here. An upper middle class South African with with a decent credit score, is a sales managers wet dream. The smart marketing folk from the car industry cannot makes sense of our spending habits, same goes for consumer electronics and so on. So to imagine it would be different with cyclists was a oversight from Canyon. We are a relatively small market for Specialised for example, but we sell more s-works bikes as a percentage of all units sold than any other market. I rode SANI in 2017 with the German supply chain manager for Specialised. He was astounded at the number of epic Pro and S-works models, and also the fact that’s almost everyone taking part was on a carbon dual sus of relatively recent vintage. In Europe that simply wouldn’t be the case, at what is essentially a sportiv/social race. Europeans, although having superior spending power, are much more value conscious, and much less concerned with vanity. 

Without a retail presence with storefronts in major retail spaces, there is no way to build the brand awareness needed to become “cool” in SA. Canyons impressive trophy cabinet doesn’t matter to the target market in SA. 
 

Then there is the fact that South Africa is still not really a e-commerce nation. Covid has changed that in a big way, mainstream e-commerce has a long way to go still. I know 30somethings that still use travel agents to book their holiday flights because they are afraid to put their credit card details into a website. Last weekend at a friends place for a few beers, we decided to get a few pizzas. Next thing my mates ask if I wanna drive with him? Perplexed I ask why we don’t just use Uber eats. He says he has never used it, and doesn’t know how. This is after the lockdown of last year when for the longest time it was almost the only way to get take aways. So I say, no problem, I will order. No, he insists, he is happy to drive, and besides he likes chatting to the staff while he waits. On the way to pizza perfect, we chat, turns out he has also never used an Uber either. This is a 37 year old senior manager in a large marketing company, who also travels (locally) at least extensively. So I ask what he does if he needs a taxi, like at the airport or whatever? He uses those guys that Harrass you at the arrivals terminal. Says he trusts them more. At least he knows who his driver is. He is a cyclist, earns close to 2mil ZAR a year. And even though he isn’t the kind to buy a bike based on its “street cred” alone, he is definately not going to be buying R80k + bike, from a website, with zero personal interaction. He may be an extreme case but there’s a lot of people in the target market for top end bikes, who are just like him. We don’t shop online if we don’t have to. 
 

And then lastly, Canyons main market is the EU. As previously mentioned, Europeans are much much more value conscious than South Africans. Labour is also very expensive. So people tend to DIY a lot more wherever they can, especially with regards to hobbies. So cyclists will be a lot more willing to work on their own bikes. Have some tools, and would be more than happy to buy a bike that arrives in a box and they have to build it themselves. Here, a large amount of riders don’t even lube their own chains. Because a wash and lube costs R150.00, and a service costs R500 odd rand. In the EU, a standard service would cost 65-70 EUR. 
 

So buying a bike that’s arrives flat pack in a box when spending R80k plus, that just doesn’t appeal to a South African buyer.

 

So when you consider all that, it’s actually easy to see why it may just not be worth it for Canyon to continue to service a very a marginal market in South Africa. But it’s not because there’s a problem with the model. The model just isn’t right for our market. 
 

The one thing that I do think is wrong with Canyons business in terms of servicing ROW locations, is that they are choosing to distribute from their German HQ. They claim that the raw frames are sent to from Asia, and then finished in the German factory, before assembly and testing, but I don’t buy that, if they were doing half of the value adding they claim to be doing in Germany, they would be allowed to ship the bikes with a German country of origin stamp, and they don’t. If they could claim Germany as origin, the bikes would be able to ship to most of the world duty free, or at worst with 5% duty. However, now they are shipping from their factory in Taiwan, into Germany, where a 15-20% duty is imposed, and obviously added to the total cost, and then when you order the bikes to South Africa, or the US, and now even the UK, they are again knocked with a 15% customs duty. If they kept all the assembly in a single plant in Asia, and shipped direct from there, they would immediately lower their ROW pricing by 15-20%, and that would make them extremely competitive. 

Sorry for the long post. Hope I haven’t bored you all to death.