Three challenges, three opportunities for online outdoor retail

SNEWS tackles the challenges and opportunities for online retail, and why it's likely the last time we talk of it as a separate silo of the business.
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Online sales have been driving gains for many in the outdoor world, but the channel isn’t a solve-all solution, and there are signs of some hurdles ahead on the trail.

For starters, who didn’t do a double-take when Leisure Trends reported online outdoor sales down 12 percent in January? One would think with all the nasty weather to start the year, more consumers would shop online versus trudging out to the stores. But brick-and-mortar did better during the month, notching even sales compared to a year ago.

This holiday season also brought to light financial troubles for some of industry’s e-commerce pioneers. Altrec filed for Chapter 11 bankruptcy in early January, and in late February, was scooped up for cheap by wintersports online retailer Active Sports Inc. Others just closed shop, such as O2 Gear Shop.

What’s going on virtual Main Street?

“We’re at a very interesting point in the evolution of online retail,” said Eoin Comerford, President and CEO at Moosejaw, a leading name in the outdoor e-commerce space with 11 physical locations as well. “There is a shifting competitor landscape.”

SNEWS looks at the three challenges and three opportunities for sector moving forward, and why this is likely the last time we talk of e-commerce as a separate silo of the business.

Online challenge #1: Rise of the vendor retailer
The idea that anyone can find instant success selling gear online is a myth, but when you’re a big name brand like The North Face, Columbia or Patagonia, a majority of the heavy lifting has been done. Customers know who you are.

A lot of that recognition has ironically come from specialty retailers, who now must face those same vendors as one their largest competitors, largely online. While figures are scarce, public stock filings suggest the well-known brands now generate more than a quarter of sales through their fast-growing direct-to-consumer channels.

“They are no longer acting like vendors, they are acting like retailers,” said Jermey Davis, co-owner with is wife Dana of Summit Hut in Tucson, Ariz., which also has stakes in the e-commerce side. “They are training the customer to go to them.”

And those sales are sneaking into the shadows. Beyond the big boys on Wall Street, analyst groups such as Leisure Trends and OIA VantagePoint have yet to gain access to what private outdoor brands are pulling in through direct-to-consumer sales.

“Where that supposed exploding growth online? It’s there,” Comerford said. “It’s with the vendors.”

Online opportunity #1: Rise of the retail brand
While its clear vendors are becoming more like retailers, biting the hand that feeds them, it’s also apparent that an increasing amount of retailers are becoming more like brands. Outdoor retail leaders such as REI, Backcountry.com and Moosejaw, are all growing their own lineup of branded products, many of which look to undercut name brands in price on the shelves.

More important that the product however, is building the retail brand, Comerford said, and that’s something every specialty retailer, regardless of their size, needs to work on no matter the channel.

“Price can only take you so far … what comes after 90 percent off?” he asked. “Moosejaw has been successful because we have built a brand. So many others are getting in trouble because they are all about price. Why were online sales down 12 percent in January? Because vendors extended their break dates (when retailers can discount the brand). And when much of e-commerce solely is dependent on discounts, then they’re going to get hurt.”

It’s one of the main reasons Moosejaw continues to build physical stores in addition to e-commerce business, Comerford said. “It’s so important to building the brand and making that strong connection with the consumer. What retailers need to ask themselves is: Does their brand have a relationship with the consumer beyond just a transactional one?”

Online challenge #2: Pay-to-play search
As e-commerce has grown into an economic juggernaut, search engines — and by that we mean Google — have begun leveraging their shopping channels. While Google’s main search still follows a relevance algorithm (with a separation in advertising), its shopping channel is now pay-to-play for results.

How important is search? When Altrec filed for bankruptcy, it said that a "cyberattack" blocked the company's website from search engines, leading to the eventual downfall of the business.

Pay-to-play search stands to hurt smaller outdoor specialty online efforts, as many won't be able to afford it. If you look at online outdoor sales, “all the of the growth is coming from an upper echelon of players,” Comerford said.

It’s also benefitting some of the larger non-specialty retailers, such as Amazon, Dick’s, Cabela’s, Zappos, Uniqlo and Urban Outfitters, all which increasingly are offering outdoor goods online and can pay to play with Google.

Online opportunity #2: Developing unique, informative and quality content
Despite the challenges in pay-to-play shopping searches, there are plenty of opportunities for online channels to attract customers beyond the same products everyone else is selling. Increasingly, outdoor brands and retailers are developing and delivering unique content online that can stand out in searchers, lure in shoppers and have them stay around for awhile, just like effective merchandising in the store.

Case in point: Backcountry.com recently hired former Fab.com Chief Design Officer Bradford Shellhammer to spice up its storytelling, design and online merchandising of the products it sells.

Shellhammer’s successful ‘Bottoms Up’ campaign and others for the site show how a run-of-the-mill product category listing can be turned into unique thematic content that’s visually appealing, different and fun. In other words, what enthusiast magazines and websites have been doing for years.

Retailers have learned that they can also stand out online by simply rewriting product descriptions so that they differ from the rest, even including local references to attract business to their physical stores, eg. “perfect for that hike up Bear Peak in Boulder.”

“You have to figure out a way to differentiate yourself,” Davis said. There are ways to create value with your information and entertainment.”

Online challenge AND opportunity #3: Venturing into the omni-channel world
It’s time to broaden our perspective.

To leap online is no longer about the virtual channel alone ... it’s about how to make it fit seamlessly into the bigger picture of business, education and entertainment. That doesn’t mean just incorporating brick-and-mortar and mobile channels, but also including up-and-coming avenues such as the sharing economy and events, where experience trumps product for the millennial generation.

More and more, the product needs to get out of the store and online warehouses and be present where consumers are for immediate consumption. If mobile has taught the industry anything is that consumers are willing to shop anytime, anywhere and that has extended to wanting to physically obtain products anytime, anywhere — two-day-shipping be damned.

Mobile shopping kiosks, outdoor event sales and greater efforts to better match customers’ location to their product needs — see Localgear.com — are on the horizon.

--David Clucas

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