East West Bikes Parts Ways with Colnago

As many know our story, East West Bikes evolved from our predecessor shop Banning’s Bikes.  Perhaps no one was more responsible for pushing Banning to open the shop than Colnago.  At the time, Colnago’s distributor and sales representative approached Banning and encouraged him to take that huge leap into small business ownership.  They believed in Banning and his ability to be their face for the Northern OC / South LA area for their prestigious brand.  Unlike many other brands that can be loosely categorized as mainstream, Colnago and other high end brands require quite a bit from their shop sales teams.  Stating it bluntly, getting someone to drop $10K on a bike is different than $1-2K.  Banning found the space, opened the shop, and proudly hung a Colnago sign up on day 1.  Our first trading partner was clearly established.


Unfortunately, that relationship has just ended

In many respects, Colnago fits perfectly into the Banning’s / EWB story.  A smaller European brand that has its roots deeply in bedded in pro bike racing and still based in Cambiago (Italy).  Ernesto Colnago, the namesake and founder of the Company, is still very actively involved in day to day operations.  Despite the fact that he is over the age of 80, he still travels around the world and is the face of the brand.  He has built bikes for some of the greatest racers of all time including but no limited to Fiorenzo Magni, Gianni Motta, Eddy Merckx, Giuseppe Saronni, Franco Ballerini, Johan Museeuw, Andrea Tafi, Michele Bartoli, Oscar Freire, Erik Zabel, and Alessandro Petacchi.  Ernesto’s bikes are incredibly distinguishable by the famous clover logo, lugged construction, and colorful and unique color schemes.  Colnago bikes are also very unique because they have a geometry that is more “slack” than a classic racing bike, resulting in a ride quality unlike most other Euro brands.  There still are two models that are hand built in the Cambiago factory, by true artisans, under the watchful eye of Ernesto.

Colnago has developed a loyalty among its customer base that is truly incredible.  I have often compared it to Cadillac. Someone buys a C40, five years later a C50, seven years later a C59, etc.  Some of their customers just simply go right back to the brand when its time to make a purchase without question or consideration for PInarello or Trek.  Its an amazing loyal following that has developed, and they’ve earned it with their heritage and products.

Importing and distribution for the US in the bike industry is typically handled through one of two means:

  1. A brand uses a larger distributor that typically handles multiple brands or
  2. A brand sets up its own subsidiary to handle just the one brand.

Much like many other Euro brands, Colnago has changed its distributor several times in the past decade.  During our tenure with the brand, we have seen two distributors and many different General Managers and sales personnel.  Each comes in with differing philosophies on distribution and sales.  No different really than other products and services from other industries.  We have also seen their dealer network change quite a bit during our time with the brand, mostly resulting from the distributor and sales team changes.


Dealer density & quality of service

Some brands can support having a dealer every fifteen miles in a densely populated region like SoCal, and some (in my humble opinion) should not.  Some smaller boutique brands, like Colnago, Pinarello, Parlee, or Time have a smaller target audience than some of the larger brands like Specialized, Trek, Giant, or Cannondale.  Firstly, the product offering of the boutique brands is usually smaller and more targeted than the larger brands, which often have a wide variety of products in almost all of the cycling subcategories (kids, mountain, urban, road, track, cyclocross, bmx, etc).  Second, the marketing engines behind the larger brands push more potential consumers towards those brands, regardless of quality….perhaps a harsh fact, but a reality.  Third, the price point of the boutique brands, especially the flagship models, is usually significantly higher than that of the more mainstream brands.  Bottom line, there will not be as many people interested in a Colnago C59 or Pinarello Dogma 65.1 as there will be people interested in a Cannondale EVO or Specialized Venge.

Another reality which should inherently limit the number of dealers for high end boutique brands is the expertise required to sell non mainstream bikes.  High end customers are often smart customers, meaning, they are experienced, have done their homework, and will arrive at the shop with specific questions / concerns.  Typical questions could include “how does the C59 compare to my C40” or “Is this model as stiff as the King 3 RS” or “How many welders actually build Master Lights.”  If you’ve never ridden a C40, then you’ve never ridden a C40…no way to cheat on that exam.

Although it seems like every shop has some sort of smoke and mirrors fitting machine these days, not every shop has an actual fitter.  A critical element to a shop’s ability to sell super high end bikes, especially a bike such as the C59 with 22 stock sizes.  Choosing the right size and getting the customer properly fitted can be quite challenging even if the shop has a $25K machine without the real expertise of a fitter.

We’ve seen the number of Colnago dealers in our area increase quite a bit, especially lately.  We used to draw from a fairly large area (Northern OC, Huntington Beach, Long Beach, Corona, Newport / Irvine, etc) which made sense for the brand given its somewhat limited appeal.  There are now dealers within 20 miles of us on all sides.  We’re feeling a little boxed in.  In order to sell a decent amount of bikes and frames, we need more territory.  The picture below was taken from the Colnago website which shows our area and their dealer network…I believe it speaks for itself.


The volume strategy

 
 

Those who have read my (often wordy) blogs know my disdain for extreme discounting in this industry.  Unfortunately, no brand that we carry has been in the center of that mess worse than Colnago.  Whether it be from local dealers or online dealers, we get ridiculous price quotes on Colnago all the time.  We could go months without it on some of our other brands, but with Colnago it is regular and routine.  Now that the relationship is over, I still feel the same way as I did a month ago as a dealer – its a damn shame.  The C59, the M10, the new CX Zero, the Master Light, etc. are all terrific bikes.  But to see them at 30-40% off just devalues the models and the brand.  It devalues the heritage and prestige.  Its a game that we can’t afford to play and just don’t want to play.  There was a brief moment (perhaps a year or so) when the discounting issue got cleaned up by Colnago Italy and Colnago America, but the past year and a half, it is worse than ever.  I wish the other players didn’t feel the need to blow out brand new C59s as their strategy to do volume, but we’re just simply too small without enough of a voice to combat it.  We’ve tried and tried and tried.

Colnago America, the current US distributor for the brand, wants each of their dealers to stock a minimum number of models and have some inventory of the brand.  A philosophy and strategy I completely agree with.  If someone is listed as a dealer for any brand, and the customer arrives at the shop only to find one or two bikes, they will most likely move toward another brand.  That is not appropriate or fair.

When Colnago America’s final request came through to complete our “preseason” order for the brand for 2014, we responded that we were choosing to limit our purchases as we had already ordered several models for the 2014 buying season and we still had current inventory in the shop.  That did not dovetail with their preseason requirements and we understand that.  It was not an ultimatum from either side, but rather, an impasse in the road for both of us.  With much respect and courtesy from both sides, we agreed to part ways.  We will no longer be a dealer for Colnago.


Banning and Eric still love and stand by Colnago bikes

Both Banning and myself still love the brand and always will.  I still get goosebumps when I see the clover logo on a bike.  I will always love the heritage of Colnago and the people and racers that have been involved.  I owned a C59 when the model first launched and it was one of the two best bikes I’ve ever owned.  Because of our love for the brand and the current models, this has been one of the hardest decisions we’ve made as a shop.  Its the end of one of our most significant chapters.  But we’re comforted by knowing we have some amazing other brands that we truly believe in.

I do want to say to those that have purchased a Colnago from us a month ago or five years ago, we still believe in that product we sold you.  They are amazing bikes.  Although we always encourage our own customers to adopt a philosophy of loyalty, we hope you understand our decision, as this was not a quick or easy move, but rather one that we spent a long time considering.

Good luck Colnago.  I will always admire the heritage and will always look forward to the launch of your next high end models.  But its also time to say goodbye.

Your surly friend,
Eric

Eric's PostsEric Popiel