|Colnagos in formation on Las Palmas.|
As soon as I arrived in Colombia, I noticed that Colnago was one of the most popular brands in Medellin. I assumed that Colnago was long established here. But, a couple of weeks later, I met Juan David Cano on a group sufferfest. It turned out that he had only been importing Colnago for 18 months, after he negotiated exclusive distribution rights for the Colombian market. Juan David talks to Switchback Publications about his Colnago business, and the business of cycling in Colombia.
Switchback Publications: Juan, tell us a little about how you got into the business of distributing Colnago bicycles in Colombia?
Juan David Cano: I am a cyclist, and two years ago I decided to start a business related to the sport I love; cycling. At the same time, I was looking to buy a new bicycle; in fact a Colnago. Why a Colnago? Because it’s a classic brand. One day I called Colnago headquarters in Italy and started asking for a bike. And then in the process, I began asking if they have a distributor in Colombia. I built a relationship with the sales manager, and after six months of back and forth I visited Colnago headquarters in Milan, Italy. They wanted to learn a lot about me and my business background, as well as the Colombian market. We met again at Interbike in Las Vegas and from there I think they realized I was serious about being their distributor in Colombia.
At the beginning, Colnago didn’t know there was a strong market here in Colombia. But after one year, our sales did really well – actually, we landed in the top-20 Colnago distributors in the world – so they invited us to Chicago for the launch of the 2012 collection. Now we are working with them hand-in-hand to do something great with the brand here in Colombia.
SP: What kind of support do you get from Colnago in Italy to help build your Colombia business?
JDC: Sales are doing really well so they want to invest in the Colombia market. For 2012, we want to host a Gran Fondo in Colombia. We also want to enter other cities. So far we’re in Medellin and Bogota. But Cali, Boyaca, Buccaramanga, and Cartagena are good markets for us.
SP: How easy is it for someone to start a business in Colombia, particularly with respect to incorporating the business, completing the paperwork, importing products, and employing people?
JDC: Its not very easy, but its not impossible either. To incorporate a company will take about two weeks with the help of a lawyer. Importing products requires paperwork, but there are companies that can help and make it easier for us. Duties are an issue. Bike duties range from 15-20%. Wheel-set duties are 10%.
There are a lot of regulations for hiring people. If an employee is hurt you can lose your company if you don’t have the right insurance. The law protects employees and is very favorable for the employee. Its best to have everything in order to avoid any trouble.
SP: How do you pitch Colnago to a new retailer, and what kind of reaction do you typically get?
JDC: Every retailer knows Colnago. For me, Colnago is like the Ferrari of bicycles. And actually, Ferrari and Colnago engineers collaborate on their products. But, many retailers assume that all Colnago frames are expensive. That is not completely true. Yes, we have high-end frames, but we also have mid-range framesets. So, our job is to educate the retailer to the fact that we have affordable mid-range bikes.
And, the retailers get very excited, because Colnago is a brand that everyone knows and retailers want to sell it. And, the Colombian peso is strengthening, so that is helping us.
SP: What is the price range for a Colnago?
JDC: Prices generally range from USD$2,000 to USD$12,000 depending on the componentry and wheel-set. The difference is that the high-end bikes are made in Italy, while the $2,000 Colnagos are made in Taiwan.
SP: Ok, and to put that in perspective, USD $12,000 equates to about four years of salary for the average Colombian!
JDC: Mas o menos! (“More or less!”).
SP: Do retail stores in Colombia have exclusivity agreements with the major manufacturers, such as Trek, Specialized, or Pinarello?
JDC: No, the only retailers with exclusivity agreements are the biggest retailers. They often have two roles: distributor and retailer. For example, BikeHouse is the Trek distributor and a retailer. But sometimes that is not good for other Trek retailers, because they cannot compete with the retailer who is also the distributor.
We only sell to retailers. We don’t sell directly to the consumer.
SP: Which bike shops in Medellin sell Colnago?
JDC: Ciclo-Linea in Envigado and Euro-Bikes near Parque Lleras. Plus we have a couple of shops in Bogota.
SP: How competitive is the market for you in Colombia? For example, there are dozens of high-end brands in the US. How easy/difficult is it for a new brand to be successful in Colombia?
JDC: The issue is that many cyclists are loyal to one brand.
SP: How big do you think Colnago could be in 5 years from now?
JDC: We’re planning to grow significantly in Medellin and Bogota. We are also targeting Cartagena and Barranquilla.
There is a lot of work to do with the brand. What we’ve seen is that people love Colnagos. Years ago, it was difficult to get service and a warranty. Now, we can provide all of that. Plus, the Colombian peso is strengthening – approximately 40% over the last 5 years. That is good for us.
SP: Do you think you could you be the #1 brand in Colombia?
JDC: The number one brand right now is Trek. We cannot be number one because we only target the mid-range and high-end segments of the market. That is our target market. We don’t target the low-end.
SP: Colnago sponsors at least one ProTour team in Europe every year. Is that something you would consider in Colombia?
JDC: Actually, yes. We are looking at that and have discussed it with Colnago Italy. Future sponsorship deals will depend on how successful we are here in Colombia. If sales do really well, Colnago Italy will invest money in more marketing activities and sponsorship deals.
SP: Besides Colnago, are there other brands or products you would like to distribute?
JDC: Yes, we currently distribute Campagnolo group-sets and wheel-sets. The main competitor is Shimano. Every shop has Shimano. There is some SRAM in Colombia, but very little. We see a great opportunity for Campagnolo and its positioning is very similar to Colnago: high-end and Italian.
SP: Okay, the last question: what is the key to success for running a business in Colombia? How is running a business different in Colombia than the rest of the world?
JDC: The key is perseverance. Every morning you have to wake up and work on it. If business was easy, everyone would do it. You really have to persevere a lot. If you fail, you have to try again. Its the same all around the world.
Too many people search for too long for the right idea. You can sell anything; it doesn’t have to be the perfect idea. You just need to differentiate your product from the competition. You could sell pancakes, chairs, tables, whatever. Just do it really well.
SP: Great, thanks Juan David. Good luck with your business!