Russell Rainey, president of Rainey Designs, has decided the company's business plan no longer supports selling through outdoor retail stores and has begun selling his bindings directly to customers through the company's Web site.
The decision, which was made the week prior to Outdoor Retailer Summer Market, was conveyed to Rainey dealers via phone calls from Rainey himself and from Steve Hardesty, president of Cima, Rainey's distributor.
To say that dealers were disappointed with the decision, as well as the timing, would be a mild understatement. Retailers had placed significant preseason orders for Rainey's new, critically acclaimed HammerHead binding. Within days of the delivery plug being pulled, SNEWS® received numerous emails from Rainey dealers that ranged from vitriolic diatribes to, well, vitriolic diatribes.
For his part, Hardesty told SNEWS® that "Rainey was a very good business for us and had a strong retail following. Of course we are disappointed, but frankly, Russell really had no choice as I understand it. He simply could not get enough financing to build enough bindings to sell to us to sell to retailers, and that's tough."
SNEWS® contacted Rainey who told us the following:
"For the last 12 years, we have essentially sold only one product, successfully through retailers -- the SuperLoop binding. The HammerHead is our first new product encompassing everything I have learned about bindings, and the reviews have been phenomenal. As a result of the buzz, retailers responded with significant orders.
"I went to our bank to inform them that we needed to borrow three times more money than we had asked for in the past to make sufficient product to cover retailer orders and the bank said no. In fact, we were several hundred thousand dollars short of what we needed. In the past, I had used my home to secure the necessary funding for production, but this year, I was asking for too much with not enough security -- I understand the bank's decision."
Rainey determined that he had enough money to produce 1,000 pairs of the new HammerHead bindings, which was well short of the 10,000 pairs of bindings he felt was necessary to fly with the distribution format. With 1,000 pairs of bindings, Rainey determined that he could make a go of the business only if he sold to consumers direct and essentially made all the bindings himself. So this year, he will also not hire the 30 seasonal employees he usually did.
"Whether or not we can actually make, deliver, and sell 1,000 bindings remains to be seen," said Rainey. "Certainly there are folks out there who think this business plan is doomed to fail, and they may be right."
Rainey has been very busy shoring up the company's reputation with dealers who, when they first heard the news, offered up a one-digit salute in his direction.
Such has been the swing of emotion that SNEWS® recently learned of retailers who are actually paying Rainey full pop for bindings to place in their demo programs -- $200 per binding.
"We really want to work with dealers through this, and I hope they will be understanding of our situation and realize I am doing this for the right reasons," said Rainey.
"We are able to sell mounting jigs for $80 to any retailer who needs one. In addition, we are in the process of establishing 'Certified Support Centers,' which was an idea several retailers came to me with because I wasn't smart enough to think of it on my own," said Rainey. "We will provide those dealers with warranty repair parts for free and list them on our site as a preferred dealer."
Rainey is in the process of working through other ideas too, including drop-shipping bindings directly to retailers for mounting.
SNEWS® View: Though it is disappointing for retailers to lose access to a binding with such a great pre-sales buzz, the margin on bindings after factoring in selling, mounting, and servicing -- especially when discounted as part of a normal package deal -- isn't frankly much to speak of. And, since retailers don't make much on bindings to begin with, we weren't too surprised to learn of a growing list of retailers who are buying Rainey bindings at $200 and with plans to mark them for more than the $200 in their own store. There is little doubt in our mind that those same retailers will simply discount the markup for the binding to the retailer cost of $200 to any customer as part of a package deal -- and not charge for mounting.
Since Rainey is only able to produce 1,000 bindings, that leaves a void that is likely to be filled by G3's Targa, a fact that is not breaking too many retail hearts since G3 has been ramping up production to be able to meet increased need. Finally, there is the future of Rainey Designs. If we were a betting publication, our money would rest on Rainey being acquired by a savvy, innovative company that supports entrepreneurial spirits and embraces cutting edge technology.… Hmmm, Black Diamond, are you reading this?