Executive Insight: Backcountry.com
mike lewis
- August 19 2009
- 2,224 views
- 36 comments
Over the last 13 years Backcountry.com has become one of the largest players in the online outdoor retail space and has set the standard for online customer service, product knowledge, and marketing. During this same time the orbits of outdoor gear and action sports have also become increasingly concentric and in addition to carrying brands that play in both realms, Backcountry has branched out to focus on core action sports brands through sites like Dogfunk.com, Brociety.com, and WhiskeyMilitia.com.
We recently had the chance to catch up with Chief Marketing Officer Dustin Robertson and VP of Merchandising Jeff Snyder to get their take on the biggest issues facing action sports retail and where this roller coaster ride is heading.
Let’s start with an easy question: What is the single most critical issue facing the action sports retail industry today?
Jeff Snyder
Jeff Snyder, VP of merchandising: The most critical issue facing the action sports retail industry is the lack of innovation in the market place. Customers’ spending habits are changing and retailers are pulling back and purchasing items that have a high ROI. Add the fact [that] the manufacturers are having their own financial crisis and the result is less innovation, fewer new brands entering the market place, and fewer reasons for the consumer to get excited about the industry.
The industry IS innovation, without it, [it] fails to segment itself from others.
Dustin Robertson - chief marketing officer: 2009 has been the year of the mega brands falling out of [favor in] the action sports retail
Dustin Robertson
(ASR) category. As ASR brands become more widely distributed, they risk losing their inclusive/exclusive appeal. Let’s be honest, when CFOs are sporting the Stone, influencers are not attracted to the brand. If the brands that drive 80 percent of our revenue are no longer core, we have to either change our target market, lower our sales forecast, or get lucky and find fifteen new brands to replace the mega brands’ revenue.
In a soft retail environment, having your largest inventory investment fall out of favor with your customers is a direct hit to the bottom line. Moving forward it is hard to make up this revenue with other brands.
How can the industry address this going forward?
DR: I am not sure the industry can do anything about it. The big brands are public and have to increase shareholder value. Staying niche and core is not something Wall Street rewards.
JS: It’s difficult to address in the current economy. These brands need to continue to reinvent themselves and most are not willing to take that gamble and lose. It could be fatal to their business.
We need to work together to collectively support new brands and collaborate financially to ensure profitability.
What opportunities do you see in the marketplace from this lack of innovation?
DR: This is a huge opportunity for core, niche brands to increase market share with the critical influencers. If I were a small brand that had the attention of the core market, I would find out how to get more inventory in production and partner with a few strong retailers to capture market share in the down economy.
Are you altering your 09/10 snowboard and action sports buys based on this?
JS: We are slightly pulling back on brands that have become more mainstream and focusing on brands that continue to innovate and give the consumer a reason to buy their products. Most other retailers are pulling back or narrowing assortments to ensure a high ROI on their investment. A mistake could be fatal. We are continuing to take chances on fringe styles and feel we will be one of few places for consumers to find these products. The key is to do so responsibly and in partnership with the vendor.
What do you look for when adding new brands?
DR: We look for opportunities that will give us the number one position in the consumer’s mind, and that have the potential for at least ten million-dollars in revenue.
Is there less of a cost of entry for new brands for you due to your business model?
DR: We do have some economies of scale but a new business is still very risky. Every brand is unique.
What will the Internet sales channel look like in five years? How about retail in general?
DR: In five years Internet retail will be a mature channel and growth will come solely from service, innovation, and brand position. Retail should have recovered from the depression and strong retailers will be even stronger with some new shops vying for a piece of the action.
How is Backcountry adapting to stay ahead of the curve as new technologies such as the iPhone app that allows shoppers to compare bar code prices become more sophisticated?
DR: Our retail sites don’t compete on price so we don’t strategize a ton on pricing. Competitive pricing is a reality for any retailer but it is not our strategic focus. The Internet is a way better research medium than a shopping medium. Our strategy is focused on providing the best research experience. If we can be the center of gear knowledge, customers will always start their shopping search with us. If 95 percent of the time we don’t get the sale, that is just the reality of Internet retailing. Being number one in the consumer’s mind is our goal – not having the lowest price.
One deal at a time (ODAT) sites have become very popular, as well as controversial. What do you say to people that say these sites are turning gear into commodities?
DR: The products sold on ODAT have always been on the market, we simply have developed a way to move excess inventory with the least brand damage. “Cool Closeout” has never existed before. Now that it does, some people are riled up. This shows a lack of understanding about the business problem that ODAT solves. Inventory is the biggest risk for retailers and manufacturers. ODAT allows a relief valve for inventory with zero brand damage. Before, manufacturers had Ross and T.J. Maxx where they could sell inventory for pennies on the dollar. Now they get better ROI and don’t have their brand on a shelf next to shower curtains. The ODAT customers are some of the most core customers out there, hence they have the passion to follow the sites daily and buy weekly. The customers don’t hate brands for being on an ODAT site. In fact, they are stoked. Then they spread the word about how killer Brand X’s products are.
What percentage of your business is made up of ODAT sales?
DR: ODAT is about 25 percent of our gross revenue.
You hear a lot about companies giving back to the sports they’re involved in – how does Backcountry support sports such as snowboarding?
DR: Having national reach, we help our vendors get the message out about their programs like, for instance, Burton’s Chill. We also very aggressively support avalanche education and forecasting nationwide. Since the very beginning we have made an effort to support every avalanche center that has come to us for help.
I’ve often heard that you’re more of a software company than a retailer. Would you agree with this?
DR: We are a retailer that sells via computers. This requires a huge software component. So no, I would not say we are more of a software company. We are an etailer. Selling online can look simple, but with just software you don’t have a business. Merchandising and marketing make sales.
How would a new law mandating that online retailers charge out of state customers sales tax affect the playing field?
DR: We don’t get sales because somebody is saving $10.00 in tax. People choose to shop with us because of our selection, content, and service.
Do you guys have any plans to get into brick and mortar? Do you think that is a dying channel in this industry?
DR: We will stay focused on the Internet and have no plans to go into brick and mortar. The B and M channel is not dying and is essential. It will remain the majority of the retail landscape. Remember, 95 percent of online shoppers research online and buy offline.
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August 20th, 2009 at 5:04 am
best work yet TW.
August 20th, 2009 at 3:12 pm
yeah right is all I can say,
25% of there gross revenue is 60% off biz? Odat doesn't hurt brands. Lets be real guys you have a warped sense of reality.
If closeouts aren't such a big deal to you then why are you so pissed about sierra snowboards.
I just hope the manufactures hold up there end of there promise and stop the over production. It will squeeze these guys hard.
August 20th, 2009 at 3:38 pm
yeah right is all I can say,
August 20th, 2009 at 3:39 pm
just an fyi the tax rate in ca. is 9.25 %
August 20th, 2009 at 4:29 pm
anyone caught this one yet? the backcountry marketing guy for their one deal sites talking about outdoor and asr? http://bit.ly/2oNMJu
August 20th, 2009 at 7:39 pm
Awfully negative if you ask me
August 21st, 2009 at 3:28 pm
Super interesting point of view about a channel that most industry people don't know (sometimes willingly) anything about.
August 23rd, 2009 at 8:48 am
Yeah Right you're kidding right, yeah! who the EFF has heard of sierra? backcountries snowboard sites, brociety. and dogfunk are not even in the same league, youre comparing an ant to an elephant.
August 25th, 2009 at 3:26 am
After reading all of the "negative" comments being left on this message board about Backcountry, im not really sure any of you bloggers understand the politics of action sports and business. Backcountry like other online action sports retailers get strong armed into buying more product each year. This is a technique used by manufactorers to move and create more product. The industry is simply over produced…atleast in hardgoods. Therefore the term "closeout" comes into play…. at the end of the day cash is king. Backcountry knoww what they are doing above most online and brick and mortar stores…
Manufacturers have product they need to move as well… this is where the ODAT sites come into play.
Its a partnership for a race toward margin builders… nothing more.
August 25th, 2009 at 3:26 am
…continued…Brick and Mortar X Online sales have begun to flip flop to some extent in action sports, the customers are walking into the shops to buy more… mostly because shops are discounting now to move product in this economy. Customers want a bargin, this how ecommerce got its big boom. Just wait until online sales tax hits…then online retailers will begin to suffer the most. I just would be so fast to criticize especially about something you know not much about… (sorry about the spelling I typed this super quick…werd up)
August 25th, 2009 at 2:20 pm
well from what I hear backcountry has heard of them, and they aren't stoked on someone coming in effecting them, so whatever on the ant thing, but if the ant is scaring the elephant than there you go.
August 25th, 2009 at 2:21 pm
lets hear jeff's view one odat and the effects it has on brands
August 25th, 2009 at 7:54 pm
I don't agree , What are you the expert. Your saying closeout is because they are getting strong armed into buying more product? If anything they are being trained to do smaller prebook and then buy boatloads of closeouts. Every big guy is trying to do the same thing. Bottom line, the back country guys think they are the center of the universe and everything they are doing is right, including the comment "The products sold on ODAT have always been on the market, we simply have developed a way to move excess inventory with the least brand damage. “Cool Closeout” has never existed before."
they create COOL
please they train even their own customer to buy on sale
August 25th, 2009 at 9:53 pm
There is definitely no strong arm going on. BC.com actively peruses closeouts and sets up pre-closeouts before the product is even shipped for inline sales. But in the end, the brand agrees to over produce. so both sides are contributing to the saturation.
August 26th, 2009 at 6:46 pm
thats right
thanks you. I certainly hold the manufacturers to blame the most
August 26th, 2009 at 7:48 pm
Drinking the KoolAid
If the reps would give more love to smaller shops insted of banking off of bigger accounts we wouldnt over produce
August 27th, 2009 at 7:23 pm
this is silly. the big issue we're all not addressing is that there is clearly a lack of communication in our industry. when are we going to mature, and learn from other area's?
i think online retailers and offline retailers each have their place, and they each serve a different market. lots of B&M's are not just places to by your shit, most of them have an element of culture, meaning people come and hang out. People don't come and hangout, in online, they're getting the goods the way they want them.
Slamming either side of the party, even the odat sites is completely a knee jerk emotional reaction. like onlnie retail and b&m's, odats have a place. honestly, that t.j maxx comment was right. it's lame when our goods end up on a crap b&m retail shelf. while its not cool when we overproduce, which happens often, it is important that we get a place to sell this stuff.
maybe instead of selling it all to bc, we should try and sell to shops, but that is more expensive anyways. instead of shipping to one retailer, we have to ship to many, cog's goes up, and the discount is lost further.
stop the hating, it's really immature. instead, try and figure out how to make our biz more efficient, so that this odat market is unable to exist.
August 27th, 2009 at 8:48 pm
Thats right sucka, these companies want to be so big so fast, slow growth, you can still make a profit.
August 27th, 2009 at 8:52 pm
You dont need to sell out to Mr Coffee to grow your business (ADIO) you guys had a sick program going we backed you hard. Earth Products is a great example they did not need to sell out.
August 27th, 2009 at 11:09 pm
well call it immature, but for me its more about passion for the brands I sell. When people come into my store to get educated and then hang out on odat, then it becomes an issue. If I had the power to control it I would, but I don't. As far as the crying about selling closeouts to many shops, it needs to be done and if you are a sales manager who is to lazy to spread the love then you are doing a shitty job, and don't have any interest in protecting your brand.
THE BOTTOM LINE IS THIS. BACKCOUNTRY AND THEIR ODAT SITES ARE DETRIMENTAL TO RETAIL MARGINS AND FOR FAT ASS LAZY SALES MANAGERS WHO CAN'T SKATE, SURF, OR SNOWBOARD TO BE SUPPORTING THEM IS EMBARRASSING FOR OUR INDUSTRY.
August 28th, 2009 at 12:53 am
well, call it immature, but for me its more about passion for the brands I sell. When people come into my store to get educated and then hang out on odat, then it becomes an issue. If I had the power to control it I would, but I don't. As far as the crying about selling closeouts to many shops, it needs to be done and if you are a sales manager who is to lazy to spread the love then you are doing a shitty job, and don't have any interest in protecting your brand.
August 31st, 2009 at 2:53 pm
i guess you don't have a response? You really should re read things before you comment. You made some pretty ignorant comments. I sure hope you are not a sales manager, or if you are you must be one of those lazy ones
September 9th, 2009 at 4:38 pm
is it really selling out when you choose to sell merch at an off price vs donating it to a third world country and losing your ass completely? most brands sell to these guys. core brands. its not by choice, but by necessity. would you rather more brands go under? its survival time for some of these brands. survive or die. will some hurt their brand image in the process of surviving? definitely. but most will survive and keep brand integrity at the same time.
September 9th, 2009 at 4:42 pm
that's an ideal situation….but at the end of the day, who spends more? …and who is better at paying bills on time? the bigger shops. and to be honest, the smaller shops aren't very savvy online and lack major marketing expertise. they are great at reaching the local core kid, but let's face it, its the 80/20 rule in the asr world. 80% of the merch sold is bought by the non-core customer. the bigger shops, although they try to come off as core…and i stress 'try'…they are better at reaching that 80%…which equals more $$ at the end of the day.
September 9th, 2009 at 4:47 pm
Here's a question that's sort of a response to your all cap statement - If there were no ODAT's online today, would Active still go bankrupt? Would CCS sell out to corpo Foot Locker? Would other core shops online have things at 70% off right now, which is more of a discount than most items found on the ODAT sites. The answer is YES. All this would still happen. Why? Because the economy is crap and the core retailers can't hold their ground and say, ' i'm not discounting. i'd rather keep my integrity as a core shop'. They can't do this, simply from a financial standpoint.
So to respond to your all cap statement, ODAT's do not negatively affect the industry.
September 16th, 2009 at 4:29 pm
I don't agree. the reality is one person goes off price, and the next guy undercuts him. If you think that odat does not negatively affect a brand, or the industry, then you apparently are trying to justify your actions and you are either a fat lazy ass sales manager or a guy trying to undercut a odat. The reality is, anyone participating in these activities is training our customers to only buy a 70 off.
You actually didn't really respond to the statement at all, you just made your own statement. My caps said
THE BOTTOM LINE IS THIS. BACKCOUNTRY AND THEIR ODAT SITES ARE DETRIMENTAL TO RETAIL MARGINS AND FOR FAT ASS LAZY SALES MANAGERS WHO CAN'T SKATE, SURF, OR SNOWBOARD TO BE SUPPORTING THEM IS EMBARRASSING FOR OUR INDUSTRY.
September 17th, 2009 at 9:06 pm
steve o ,
whats your comment? Please reply. I'm interested
September 18th, 2009 at 11:56 pm
sounds like steve o is either a lazy rep or a lazy sales manager
September 18th, 2009 at 11:59 pm
yes steve o it is selling out, and if you over produced by that much then perhaps your brand should go out of biz
October 8th, 2009 at 5:11 pm
stevo, your an idiot, I hope you lose your job
October 29th, 2009 at 4:16 pm
these guys are seriously blowing it. Lets train everybody to buy below cost, its a lose lose for everyone
October 29th, 2009 at 7:46 pm
Adio and Earth had been owned by Jarden corp for about 6 years before it all got moved into th K2 offices. There was no selling out involved. It was laways owned by them.
October 29th, 2009 at 7:49 pm
Does anyone making comments on this even work at, or do business with the Backcountry Company?
October 30th, 2009 at 4:00 am
why does that matter peter, all you have to do is look at there sites and see they are screwing up the industry. they are morons, not the brilliant people they think they are.
October 31st, 2009 at 3:23 pm
peter you have no clue, adio, and earth was owned by chris miller, he sold out to k2 who sold to jarden. Don't leave messages you are clueless about
November 21st, 2009 at 12:05 am
they should call this executive lack of insight. these kooks are playing the industry like foolish puppets. I guess I have to give them credit for flexing muscle, but its a little embarrassing for burton and dc I would say.