Back to the Future

You might say that Backcountry.com is going back to the future.

Launched in 1996, Backcountry specialized in selling back-country ski and avalanche gear, and soon earned a reputation for its high quality products and skiing expertise. But attracted by the promise of easy money, it expanded into other related categories, says Jim Holland, CEO and cofounder. "We recognized we could sell toilet paper on the Internet," he says. "We tried to remain focused in the beginning, but increased revenues were very tempting."

Adding more products, however, is a move Backcountry came to regret. "It was a short-term win to add every imaginable category and just continue to build on that," Holland says. "But in time, it`s a long-term loss because you become a generalist, and you`re no longer respected as the experts in the category."

Not slimming down

Backcountry is not, however, planning to slim down its product offerings. Rather, to re-claim its image as a specialist in performance outdoor gear, Backcountry has developed niche sites targeting hard-core skiers (Tramdock.com), snowboarders (DogFunk.com), bargain-seekers (Backcountryoutlet.com and SteepandCheap.com) and middle-market, price-sensitive outdoor athletes (Explore64.com).

"We`ve come to recognize that by being focused within some targeted niches, we can certainly better serve our customers and garner more respect from our customers as well," Holland says.

Analysts say that Backcountry is harnessing one of the powerful aspects of the Internet: The ability to create niche sites, supported by a common infrastructure but that provide a different experience to different segments of shoppers. "What`s interesting is they`re dealing with a specialized experience outside of what their main site may be like," says Patti Freeman Evans, retail analyst at Jupiter Research. "It`s a really interesting test to see the value of a segmented online retail approach."

Founded in 1996 with a $2,000 investment, Backcountry.com reached profitability in 1997, its first full year. The company experienced triple-digit growth during its first six years, culminating in 134% year-over-year gains in 2003. It reported $27 million in sales during 2004, up 84% from $14.7 million in 2003. Backcountry expects to return to triple-digit sales volume growth this year.

Backcountry`s corporate culture can best be described as laid back. Its mantra: "We use the gear we sell." Indeed, both Holland and John Bresee, president and cofounder, have deep roots in the skiing world. Holland, 39, is a two-time Olympian and six-time national champion Nordic ski jumper. He was a member of the U.S. Ski Team for more than nine years. He also was the founder of Wasatch Web Works, a web development company.

Bresee, 38, is described on Backcountry`s site as "a lifelong ski bum who has flipped burgers at Alta, washed dishes at Snowbird, and taught skiing at Stowe." He also founded the Wasatch Canyon Reporter newspaper and became editor at Powder magazine.

Fuzzy focus

Holland and Bresee used their backgrounds to build up an online business featuring some of the top brands in outdoor gear: The North Face, Scarpa, Giro, Jansport, and others. The site sold everything from ski jackets and wool socks to avalanche beacons, freeride snowboards, and climbing skins.

But as Backcountry pushed beyond its base, it began to dilute the brand, Holland says. "We`ve been conscious for a long time of our gradual deviation from our focus," he says. And so the company took a close look at its operations and opted to set up sites catering to different market segments.

The niche sites are designed to attract the serious outdoor enthusiasts and athletes by offering a complete selection of specialized gear. For example, "if you`re thinking about ski gear in July when a local ski shop is selling bikes, Tramdock.com will be selling ski gear and our customer service reps will be talking about ski gear," Holland says.

Backcountry kicked off its niche strategy last July with the launch of BackcountryOutlet.com. "We recognized that at any given time, there`s a certain percentage of inventory that`s appropriate to have on sale," Holland says. "Being in the business that we`re in, overstock is inevitable." Backcountry also buys close-out inventory from other sources, he says.

One of its newer sites, Steepand Cheap.com, offers price reductions of as much as 70% on high-quality products from name brand, category-leading outdoor gear manufacturers. Backcountry posts the items at midnight of the day they go on sale.

Recently featured was the CamelBak Cloud Walker backpack, priced at $29.95, regularly priced at $59.95. That item--posted on April 1--sold out by 9:30 a.m. Backcountry had 54 of the items in stock. SteepandCheap`s fastest sellout of a feature item came on Feb. 23, when 22 Original Sin Snowboards sold out by 12:30 a.m. "There`s always a ridiculous smoking deal and when it`s gone, it`s gone," Holland says.

To be sure, setting up successful niche sites is no easy matter. Each site must address the peculiarities of its target group, for example, by using a different lingo and a different tone, Holland says, and must be staffed by reps with the appropriate expertise.

For example, product descriptions on DogFunk are more flippant, befitting the oddball nature of many snowboarders: A description for the Four Square Crochet Ear Flap Beanie says "You could take the time to make (it) yourself, but why bother?"

IRCE 2008 Conference Multi-Media CD-ROM

But it`s not enough just to give a web site an offbeat name and tone, it also must be backed by knowledgeable people. And so each Backcountry site has dedicated customer-service representatives. Backcountry draws its reps--known as gearheads within the company--from a wide variety of backgrounds, including back-country skiers, climbers, snowboarders and hikers. They are assigned to the site which best reflects their expertise. "We filter incoming calls, so if somebody calls DogFunk, we can direct them to a knowledgeable snowboard expert," Holland says.

One of the beauties of multiple sites under one management, however, is that if reps from one site are overloaded, incoming calls will be routed to gearheads on another site. The rep knows which site the call is originating from and answers the call accordingly, Holland says.

Another key ingredient for Backcountry`s strategy is a common back-end operation for all of the sites, a less costly option than building different operations for each niche, Holland says. "It`s the same infrastructure that is supporting all these sites," Holland says.

But a common back end also poses some challenges. With the same systems for shipping, picking, warehouse inventory and product packing in a 100,000-square-foot warehouse in Salt Lake City, it`s often hard for a staff trained in one system to separate products for six sites, Holland says. For example, all the products are stored in the same warehouse and come down the same conveyer belt to be packaged at the same location. "You have to be on your toes at all times to make it happen correctly," he says.

The mix of products offered on Backcountry.com will change as the company spins off new niche sites, Holland says. For example, once Explore64 builds up momentum, products such as school backpacks will be pulled off the main site. "It`s not really a hardcore Backcountry thing but there`s a big market for it," he says.

The power of viral

Key to Backcountry`s strategy is creating a system to get products out to customers as quickly as possible, Holland says. "We recognize that far and away the first thing we can do to knock the socks off our customers is to get the gear to them so fast that it makes their heads spin," he says.

Backcountry uses different channels to market its sites, including affiliates. It also uses keyword marketing, primarily through Google and Yahoo Search Marketing, formerly Overture Services Inc. However, Google doesn`t recognize the various Backcountry sites as unique enough to list separately, Holland says. "This is the challenge that we have to overcome," he says.

Google in January announced a new policy under which it shows only one paid ad per search query for affiliates and marketers displaying the same URL. Under the policy, if multiple ads compete for the top keyword position under the same URL, Google shows only the ad with the highest AdRank. The AdRank is based on the ad`s cost per click rate and the click-through rate on the ad.

Comparison shopping sites also play a major role in directing traffic to the niche sites. For instance, in one of Tramdock`s early months, nearly 95% of the traffic for the site was generated through comparison shopping sites.

In some cases, word of mouth is generating business. A link to SteepandCheap is featured at the top of the Backcountry`s home page, but it`s not being marketed elsewhere because it is a low-margin site. Yet SteepandCheap is getting some real traction, Holland says. "We`ve been pretty much blown away with just the viral nature of it," he says.

From the beginning, SteepandCheap has had a link for customers to e-mail friends about the site. "We`ve also relied on our employees and loyal customers to spread the word within their circles," Holland says. "Once the word gets out and the deals substantiate the hype, it is just a matter of time."

Mean, clean, focused

References to SteepandCheap have popped up on sites such as Widespread Panic fan message boards, Swedish outdoor forums, FatWallet.com, Teton Gravity Research`s message board and other related forums.

The niche strategy appears to be succeeding, Holland says. "We were having a tough time moving skis from the carve ski category on Backcountry.com while they were steadily selling at full retail price on Tramdock.com," he says. The skis finally began to sell at the main site after Backcountry put them on sale.

"This tells us volumes about how powerful the niche sites can be in attracting the right customer," Holland says. "A skier wants to buy skis from a ski shop because that`s where they feel comfortable, for the same reason you`d feel uncomfortable buying auto supplies from the grocery store. Sure, they`re likely have some things like oil and antifreeze, but you`ll feel much more inclined to purchase these products at AutoZone or NAPA."

Certainly, spinning off web sites is nothing new. But for Backcountry, it marks a return to what Holland calls "mean, clean, focused" brands, an approach that proved successful in the past.

linda@verticalwebmedia.com