Editor's note: The following article appeared in the January 2013 issue of Bicycle Retailer & Industry News.
KENT, WA — Sub-900-gram carbon frames built with Campagnolo’s Super Record group are rare, but what gets the double-take and holds it is the Diamondback logo on the downtube.
And when, if ever, was an $8,000 Diamondback road bike tested in consumer magazines alongside $10,000 to $12,000 bikes from Cervélo, Scott, Specialized and Trek, and found to have class-leading ride characteristics?
“When I joined Raleigh in 2004 to take over Diamondback it was essentially a failed brand, selling aluminum mountain bikes at entry-level pricing to a few large sporting goods retailers,” said Phil Howe, Diamondback’s vice president.
“But Diamondback has great brand recognition and a surprising amount of brand loyalty. Part of this is our continually strong youth market, and the fact that almost everyone has ridden a Diamondback mountain bike at some point,” Howe said.
Howe knew he had the brand equity to relaunch a more aggressive course for Diamondback, and the volume of the company’s sales gave him a supply chain willing to help.
“But I didn’t have easy access to the IBD. Specialized and Trek have that channel locked up. The only alternative was to diversify our channel of distribution,” he added.
Diamondback’s distribution is built around four channels. The company does business with 800 bike shops, mostly youth, BMX and entry-level mountain bikes. And it is still a big supplier to Dick’s Sporting Goods and Sport Chalet.
But the focus for Diamondback’s growth in the future is through large specialty retailers such as REI and Performance and multi-store chains like Bicycle Warehouse. And it does a growing business through those retailers’ Internet sites, as well as online retailers Amazon and Jensen.
“I really had to fight internally to develop this multi-channel strategy. Steve and Chris are huge advocates for the IBD. But they realized there are so many barriers for me in the IBD that they gave me the freedom to try something different,” Howe added.
Rather than fight to elbow into the 3 million-unit specialty market, or find room in a bike shop for a new road bike line, Howe is shooting to carve out Diamondback’s piece of the 18 million-unit U.S. bike market.
His strategy for doing this is straight out of the specialty market playbook. A pro road team, maybe even a Pro Tour team, will join the company’s off-road and BMX teams in a few months. And the brand will have a strong presence at specialty shows like Lifeboat Events’ DealerCamp and PressCamp as well as Interbike.
Howe also taps the outside talent he needs to design the bikes he needs. Kevin Quan, who designed bikes for Cervélo and NeilPryde, penned Diamondback’s high-end Podium road bikes.
“Where our marketing is different is leveraging the reach of our retail partners. There is no way I could ever buy access to the number of bike buyers who visit the REI, Performance, Jenson and Amazon websites every day,” Howe said.
Family Bike Shop in Crofton, Maryland, carries Diamondback’s BMX and some 26-inch dirt jump bikes, but Ryan Stouten, the service manager, was surprised to find a ’cross bike in the catalog.
“It looked so sweet I had to buy it, and it’s a nice bike, but ’cross is not a big market for us. Our bread and butter is still Raleigh and Giant, but we are definitely taking a look at the new models they offer,” Stouten said.
Objecting to a strong-arm strategy dictating to retailers how they run their businesses, Howe structured Diamondback differently.
“We ask our retailers to partner with us to build a business with no conditions. We have one price, the same price for every dealer; no minimum buys or demands. We have no expectations except for what we develop, and earn our partners’ business—maybe one bike at a time,” he added.
The strategy is working. Sales have grown between 15 and 20 percent a year and Howe is looking forward to strong growth again this year.