Astana's Surprising New Title Sponsor

Astana, one of the most historic cycling teams, shocked the bike industry when they announced their new title sponsor for the 2025 season. The official name of the team is now XDS Astana. If you were like me, you might also be wondering: What is XDS, and who are they? Well, it turns out that XDS is a Chinese bike manufacturer that historically made frames and sold them wholesale to other brands who are consumer-facing bike brands. For this reason, it is surprising that they are spending money to sponsor a team whose audience is mostly end consumers and not other brands. However, like many other industries, cycling is seeing more companies selling directly to consumers to cut out some of the middlemen in the supply chain. That’s what XDS is doing here. Follow me as I review the status quo supply chain, why companies are incentivized to go direct, and what I expect to see with this shift in the industry.

Even though, over the last few years, there has been more awareness of factories in Asia selling bikes directly to consumers, most of these factories are not new. In fact, a large percentage of consumer bike brands have outsourced their manufacturing to these third-party factories, many of which are in Taiwan and China. Historically, these factories' customers have been other companies, which allows the factories to sell frames in large batches and generate more steady, predictable revenue. However, the trade-off in selling wholesale is that the factories can't charge as much for each frame.

With more people making online purchases than ever before, it is becoming increasingly possible for Asian factories like XDS to sell directly to consumers. A few years ago, it was still the norm for people to make smaller purchases online but save bigger purchases for in-person transactions. But now, people have developed enough trust in online merchants to start choosing online for bigger purchases as well. It’s even common for people to buy cars online now. For this reason, selling directly to consumers is now a more attractive option for companies, allowing them to increase their margins and make more money on every bike they sell.

This shift in the supply chain will bring some change, and there are aspects that, if they play out, may be challenging for the bike industry to adapt to. First off, some of the middlemen that factory-direct brands are cutting out play important roles in the industry. Bike shops do more than sell bikes; they attract new people into the cycling community, educate them on the products and culture, and keep them riding by servicing their bikes. Likewise, bike distributors play an important role in providing access to large catalogs of bike necessities that would otherwise be challenging to source. Additionally, some of these factory-direct brands have questionable ongoing support for things like warranty claims and replacement parts.

On the flip side, this change may bring some positives. First off, it’s almost certain that factory-direct brands will become more commonplace moving forward. As a result, there will be some degree of pricing pressure on the traditional brands. This will force the traditional brands to either lower prices to compete or, more likely, continue to innovate and create better products to justify the higher price. Hopefully, this will result in better bikes than what is currently on the market.

So far, I have been using XDS as a proxy for the whole movement of factories starting to market directly to the end consumer. I chose them because of the newly announced sponsorship, but it’s interesting to dive a little deeper into their specifics. XDS is transitioning to marketing directly to consumers instead of selling wholesale to other companies. It’s still early in this transition, but in Australia—one of the first markets available under the XDS brand—they are not yet selling directly to consumers. Instead, they are working through bike shops. In fact, on their website, you can’t buy a bike directly. Instead, it directs you to their dealer network. I’m excited about this strategy because it means they are competing with big bike brands rather than independent bike shops. This means many of the benefits I outlined above will still apply, but without some of the downsides of selling directly to consumers.

All of these factors leave me excited to see how this transition will unfold. Ideally, these factories will provide enough disruption to make the big legacy brands charge less for run-of-the-mill frames or innovate to provide more value to justify their premium prices. Throughout this transition, I’m worried about the role of the independent retailer, but I hope more companies will recognize the important role they play and follow a similar playbook to what XDS is doing. Hopefully, this will leave the bike industry in a better place than it is now.