Under Armour says it is feeling the impact of Sports Authority’s liquidation, but it has added Kohl’s as a seller.
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“Others talk customer service,” says Harrington, “but we’re one of the few with an 800 number posted on the front page. We staff it seven days a week, not with operators but with sports consultants-full-time employees who have a stake in the company.” The stake is an equity position given to all full-time employees, many of them ex-coaches and others with years of experience selling sporting goods. If that’s not enough, shoppers also can call on the advice of celebrity consultants like fitness expert Therese Iknoian, San Francisco Giants equipment manager Mike Murphy and Adventure Network outdoor specialist Michael Hodgson.
A customer planning a camping trip can send Hodgson an e-mail describing the excursion and asking what kind of tent to buy. For example, a customer buying a baseball glove can call on the staff for help in choosing the right one, breaking it in, and caring for it.
Fogdog’s consultants are one way the company seeks to avoid what some see as a downside to online sports retailing. “There’s a certain try-it-before-you-buy-it thinking with sporting goods retail,” says David Cooperstein of Forrester Research Inc. “There’s a certain feel you lose online.” For many types of equipment and sports apparel, he adds, online purchasing works much the same as clothes shopping from catalogs. But with more sophisticated gear, shoppers generally want to test out or try on what they’re buying.
So far, Fogdog’s business model has generated sales of less than $10 million annually. “We’re on track with our business plan,” says Harrington, adding that sales are growing 8 to 10 times earlier levels from quarter to quarter, and he projects the company will break even in 2001. PC Data Online recently ranked the company 25th among the Web’s top 40 e-retailers.
Brand is central
To ensure it stays in those ranks, Fogdog sticks closely to the Amazon approach, spending 70 cents of every dollar of revenue on marketing. That ranges from customer support to advertising campaigns to sponsorships and affiliate deals. Fogdog’s offline advertising includes cable television, radio in markets with high Internet use, and print and billboard in the San Francisco Bay Area. In mid-June, the company launched a national ad campaign featuring Fogdog, a friendly character in a shaggy dog suit who comes to the aid of athletes caught in various sporting goods dilemmas. The spot, created by San Francisco ad agency Odiorne Wilde Narraway & Partners, currently airs on cable channels like ESPN, ESPN2, Classic Sports, and the Golf Channel.
“We’re trying to get across three things,” says Harrington. “We’re passionate sports enthusiasts, we have lots of products, and we’re out to have some fun.” The cable ads cost an estimated $5 million, part of an overall campaign that’s pegged at $8 million.
A recent multimillion-dollar deal with American Online puts Fogdog in several key areas of that portal, building on existing agreements with the Go Network, Snap, WebTV, and Yahoo! Fogdog is also affixing its name to athletic events around the country. It’s a sponsor of the Hi-Tec Series, 10 regional competitions involving teams of three in kayaking, trail running and mountain biking. It’s also the chief sponsor of Let-It-Fly, a four-on-four flag football tour through 15 cities.
Along with driving traffic and sales to the site, these promotions are building name recognition for a business that fluctuates even more seasonally than the rest of retail. “Baseball and soccer equipment sells in March, for example, so sporting goods are always going to be seasonal,” notes Harrington. “It’s the choice we provide that’s going to remain constant.”
That’s a long shot in the highly fragmented world of sporting goods, where a company that makes basketballs typically doesn’t make soccer balls. Technology is an issue, too. Some manufacturers don’t even carry SKUs, product descriptions, and images in a digital format. Fogdog’s partnerships with seven major manufacturers, distributors, and catalogers are aimed at smoothing out these and other kinks. “We may be slower sometimes because we take the time to integrate the distributors. But we’re going to (help them) grow with us and our distribution plans,” says Harrington.
That’s why Fogdog goes slow in adding new categories of merchandise and specialty shops. In lining up new merchandise it works with pure distributors as well as the brands themselves. The setup also includes third-party distribution centers, which handle 20 to 30% of Fogdog products, and catalogers that can pick, pack and ship smaller orders of harder-to-find goods.
Anticipating the holiday shopping season has meant making sure suppliers are prepared. On the front-end, Fogdog will offer customer conveniences like special gift selections, profile registries and gift-wrapping. “We are building business with front-end marketing,” says Harrington, “as well as back-end distribution.”
Both ends pose enough challenges to chase away all but the most tenacious. “It’s not by accident that no one dominates the sporting goods category,” says Michael Conn, vice president for strategic development at Global Sports Interactive. Global Sports, one of Fogdog’s competitors in the online market, adheres to a model of e-commerce that emphasizes behind-the-scenes management of established bricks-and-mortar operations like the Athlete’s Foot and the Sports Authority. “We create a structure and a strategic relationship with these retailers and we run their e-business,” Conn says.
Manufacturers, especially the makers of high-end and specialty products, have their own hesitations about selling on the Web. Many want to be sure that brand identities built up over many years get suitable merchandising and service. It’s why a brand like Calloway golf clubs wouldn’t sell its products in a discount chain in the bricks-and-mortar world. Web stores must build trust, says Harrington, proving to manufacturers as well as customers that they’re not facades but real companies that stand behind their merchandise with knowledgeable staffs and good service policies. Others manufacturers simply aren’t convinced the sales are there. In fact, overcoming worries that the Internet channel won’t pay off in the long run is one of Fogdog’s biggest challenges.