FOGDOG’S SPECIALTY CONNECTION
Byline: Vicki M. Young
NEW YORK — For Fogdog Sports, the messengers may be more important than the medium.
Tim Harrington, chief executive officer of Fogdog, told the recent PaineWebber Internet Conference at the Grand Hyatt here that the company has knowledgeable online sports consultants working full-time, seven days a week, to help consumers find the right products for their needs.
Just as the Web site itself is divided into separate specialty stores according to sports, so are the consultants assigned to their individual specialties in which they are expected to have selection, functional and quality expertise.
“Consumers want to know about the product, and how to compare the different brands,” he said.
Harrington told his audience that Fogdog is “uniquely positioned” to reinvent the retail segment of the sporting goods business. “Whatever the current models for sporting goods today, the industry is just ripe for innovation,” he said.
One problem with the brick-and-mortar operations, he pointed out, is that they’re too inventory intensive, very fragmented and lacking in consumer focus as well as selling expertise.
“Buyers go out and buy very narrowly and very deeply in a category,” he said, adding that, in contrast to his operation, “Then they see if they can sell it. They hire 17-year-olds at $7 an hour who know very little about the products.”
Noting that the sporting goods chains all have “sports in their names,” he later asserted, “They all sound the same, look the same.”
Much of Harrington’s confidence about Fogdog is derived from market research of sports participation. He noted that there are over 100 million sports participants in the U.S. alone. He cited data from the Sporting Goods Manufacturers Association, indicating that an individual who participates in one sport is likely to “end up playing four to seven.”
Harrington’s goal for Fogdog’s various sports shops, he said, “is to leverage the consumer who has a great experience with one store across multiple sports categories.”
At Fogdog, the consumer makes purchases four to five times a year, with the average purchase price of $70.
“Most companies are selling on price. We’re trying to sell on our brand, our authenticity. When you look at our ads, it’s the product that’s the hero in each and every one of the shops,” Harrington said.
Fogdog had 4 million unique visitors in the fourth quarter 1999, up from 1.3 million in the year’s first quarter. Stockkeeping units are over 60,000 compared with 35,000 in the first quarter, while total brands represented at the site total over 600 from 250.
Helping Fogdog deliver on its promise as the destination shop for the sports participant is the company’s partnership with Nike. Under the arrangement, Fogdog gets all Nike product lines, including early product releases, while Nike gets to build a brand online, Harrington said. Nike has a history of segmenting their lines, with different retailers receiving separate, often exclusive products. Although an exclusivity period ends this month, Harrington said that Fogdog would still have access to all Nike product lines for four years.
“We’ve great terms and conditions from Nike,” the ceo said, such as discounts commensurate with the largest of Nike customers, more liberal return policies than any of Nike’s other customers and, in some instances, drop shipments directly from Nike. Nike also has a 10 percent stake in Fogdog.
For growth, Fogdog is hoping for other partnership arrangements similar to the one with Nike. The company plans to add five to 10 new specialty shops to its existing 17 online “stores.” It also plans on expanding its U.S. presence, and then shooting for an overseas presence.
Harrington said the company has also differentiated itself from competitors and helped to elevate its brand through its distribution practices.
“Early on, we partnered with catalogs,” he said. “These are people with great brand relationships and great cross-shipping capability. We’re working with brands that have drop shipping directly to the consumer. We’re tying together with the proprietary Fogdog distribution network where it’s absolutely seamless to the consumer. The order may come from a different [shipping] source, but they will see the same Fogdog packaging, Fogdog return information.”
Sara Farley, internet analyst at PaineWebber, wrote in a research report issued following the presentation, “Many investors have derided Fogdog’s strategy to build a new brand for sports retailing from scratch…. However, we believe that these investors are overlooking what Fogdog is really trying to do: avoid the pitfalls that have traditionally brought sporting goods retailers to their knees.”
Farley added, Fogdog’s “competition is doing nothing more than moving an unattractive business model to the Internet.”