Counterpoint: Is Dengfu the next big bike brand?

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A week ago when Dave leaked his intention to write a blog series on why he thinks Dengfu could be the next bike bike brand I told him it would have to be an exceptionally cogent argument, because I just don't see it happening. And not only for the reasons Dave points out here and then some more here, nor for any reasons having to do with product quality that were inaccurately ascribed to us here. My argument for why Dengfu et al will remain marginal players has more to do with brand and business strategy. Here's why.

1. Dengfu fails as a brand. Brands exist to do one thing for consumers - relieve them of the burden of decision-making. It's why Specialized and Trek and Cannondale sponsor pro teams and buy extensive ad campaigns - so you evaluate their products outside of purely logical and practical analyses of price, weight, stiffness and other measurable and comparable metrics, and instead fall in love with the idea of owning them. Look at the practice in another industry. If you had to read the ingredients of every bottle of shampoo before buying to make sure you were getting something you could trust would meet your expectations, you'd be paralyzed. In the bike business, where purchases are more considered, analysis paralysis is very real. The perceived fear of failure of buying a bike that won't make you more enviable or wheels that won't make you 4 seconds faster in a 40K TT is a powerful force. Go online to any forum site and you'll see this in action: "Vittoria Open Pave 24mm vs Conti 4000s 25mm" (4272 views on Weight Weenies), "Power meter brand reliability" (3391 views), "Help me pick a new bike? Dogma F8?" (2274 views). Want evidence that the Chinese options are contributing to analysis paralysis instead of alleviating it? "Open mold wide profile carbon wheels" thread - 125,293 views. Any company whose products promote such compulsive should-I-or-shouldn't-I is failing as a brand. For our part, we're happy to show up in the forums under these circumstances ("November Rail 52 vs Zipp 404 FC?" - 1198 views) because it means our brand is being exposed to new users. But I know also that every time someone asks if we're a good choice is an instance of the brand not doing its job. 

2. A willful resistance to differentiate. When we launched, our point of differentiation had nothing to do with product (which was open mold and under-adorned graphically) and everything to do with distribution (selling direct) and operations (organized around reducing internal expenses and therefore customer costs). That works great with customers who place price before product, and who do not value product differentiation. We had a realization at some point though that the only thing worse than winning the race to the bottom is coming in second. Now Dengfu is economically better equipped than we are to win a race to the bottom and still survive. Doing so however may grow revenue but does not create brand value. That's not to say that all strong brands are for premium products. Many value-based brands command raving fan followings - Trader Joe's, Southwest Airlines, Pabst Blue Ribbon. But it's not solely because they're less expensive - they're less expensive AND provide a differentiated product and/or industry leading experience. So far, the product strategy of Dengfu et al is to wilfully avoid differentiating and instead to try to resemble recognizable products. Part of the reason is that by all informed accounts, Dengfu et al are not manufacturers at all, but trading companies that simply distribute the products provided by other even lesser known companies. It's impossible to have a consistent product strategy or philosophy built on products other companies give you to sell, so the only product strategy left to them is to suggest that whatever you're getting is just about as good as what you might get from a brand you've heard of.

3. They are not the ones to break through the distribution morass. Currently in the bike industry, a greater percentage of your purchase price goes towards distribution channel expense than product expense. The rise of direct-to-consumer sales (through companies like ours, Williams, Canyon and, yes, Dengfu) is starting to shift that, but only by fractions of a percent. You could argue that the strongest brands are in the best bike shops, but I'd posit also that brands rely largely on the shops as a tacit endorsement of the quality and trustworthiness of the brands. It's not just some company you found online, but one with the infrastructure and scale (perceived at least) to be anointed with shelf space at the shop closest to your home. For Dengfu to become a truly significant brand, it has to give consumers reasons to trust it over the endorsement of their local shop. Trustworthiness is not high on their list of brand attributes, not because of any lack in integrity but because of a lack of transparency. Customers just don't know who they are, who their people are, what they actually do, what their company values are, or why - besides low price - they should consider products. Believe me, it's not an easy thing to compete with products available at shops. You'd think selling for less is an asset, but when it comes down to trust and perceived quality, selling for less is actually a liability. Zipps cost $3K and Novembers are $1.5K? I guess Zipps are twice as good. So they must be 4x as good as Dengfus. If Dengfu does break through it would theoretically pay huge dividends for the brand, but the brand is a pre-requisite to actually turn the tide. 

So those are my high-level thoughts on the topic - basically that Dengfu can't be the next big bike brand until it first starts acting like a brand. And I don't see that happening in the forseeable future.


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  • Hans on

    I think it's worth noting that non-Dengfu (or insert other Chinese trade co or factory) clincher rims might also grenade on you going down a mountain (under heavy braking). Heck, a buddy delaminated his previous-generation November carbon clincher rims on the Savage Man course. It's a hilly course; they tell you not to use carbon clinchers. Apparently with good reason. OTOH, I rode the 200k version of that course earlier this year w/ my LB 45mm clincher disc-brake wheels in the rain and they performed flawlessly (as one would expect).

  • Dunbar on

    I think that consumer satisfaction part purely comes down to price. You spend $400-500 and even if they last you a year you can justify chucking them in the bin by telling yourself "well I didn't pay $2k for Zipps." What personally gives me pause is the idea that they'll grenade on me while I'm descending at 40mph. It's sort of like dental tourism. The up front cost savings are so alluring but the fear of it going horribly wrong is enough to dissuade you.

  • Mike May on

    Oh, I completely agree Darin that they shouldn't be written off. I think they're capturing more sales than many people realize and are poised to grow even more. But there's a difference between selling product and becoming an industry leading brand, which is what I'm talking about here. And I personally hope they do continue to grow. It's good for direct-to-customer companies like ours when other direct-to-customer companies help grow the direct-to-customer side of the business. Our selling proposition against the Dengfus of the world is different than when we're up against established in shop brands. For the former, it's that we have proprietary products of our own design (we haven't used open molds since 2013) offered, tested, hand-built and backed by an American company whose principals are easily identified and reached, while still allowing customers to avoid the markup of the dealer channel. We'll never win on price against direct from China (nobody will) but when as other attributes enter the decision making process, that's where a brand can make a difference. But unlike a lot of companies, we don't alter our pricing in order to either develop or harvest our brand. It's not accurate to say that we price things higher so people will think they're better. Rather, we price things as low as we possibly can to still offer the layer of service that differentiates us from direct-from-China.

  • Darin S. on

    While I agree that they need to act more like a big brand, I wouldn't rule them out just yet. I think there is a ground swell of cyclists who are tired of being raked over the coals price wise. I understand the cost of R&D but when you can by a new car or motorcycle for the same price or less than a high end road bike, that goes a bit too far in my book. So when you can buy a frame for $600 or wheels for $500 that becomes very tempting. Reviews of both frames and wheels from dengfu/hongfu have been pretty positive. 90% as good for 1/4 of the price in general. Seems very similar to when Honda and Toyota first started selling cars in the US. Now compare that to your wheels. They may be very good, you may act more like a brand, but by your own admission you are using open mold rims and yours are still 3x the cost of dengfu. Seems like you are going by the theory that if I price mine higher people will think they are better. They may be very fine indeed but you have priced them higher than a moderately used set of Zipps or Enve's on ebay. I guess time will tell who's business model will work.

  • Dunbar on

    Perhaps grenade was not the right term as that tends to be associated with melting of the brake track due to dragging the brakes down long, steep descents. I have heard of several brand name carbon clinchers grenading in that scenario. Especially in the case of heavier riders. I believe Zipp claims this has never happened on a Firecrest CC. I have seen several instances in the chinese carbon forum threads of rims just spontaneously cracking. Can you imagine if that happened while you were doing 40mph on a decent? Below is a picture of the type of failure that would worry me if I bought a set of these rims.http://fcdn.roadbikereview.com/attachments/wheels-tires/298445d1406605542-ebay-chinese-direct-carbon-wheel-thread-2-0-img_3158.jpg



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