The outdoor industry is at a critical juncture. Customer demand has plummeted from pandemic-fueled highs, retailers are over-inventoried, and brands are struggling for volume.
The pandemic introduced millions of people to the outdoors, but recent Outdoor Industry Association data shows that participation rates are slipping. To pull out of the current doldrums, brands and retailers must work together to welcome, encourage, and retain these new participants while continuing to serve the traditional core audience.
As an industry, we need to provide seamless customer journeys from brand discovery to purchase, instead of the current disjointed process where brands waste time and money openly competing against their own dealers. At issue are the DTC vs. wholesale silos that exist in practically every outdoor brand, where the DTC team is incentivized to focus on their own sales and views sending traffic to their dealers as “lost” sales.
Instead, outdoor brands need to learn from the world’s most successful retailers – Amazon and Walmart – and embrace a marketplace approach that’s agnostic to WHERE the customer buys the brand… just so long as they BUY.
So how did we get here, how would brand marketplaces work, and what’s next?
How We Got Here
Back in 2008 when I started at Moosejaw, one of our bigger sources of online sales and traffic was P2P or “product-to-product” links from brand websites that presented the product but didn’t have e-commerce capabilities. When a customer chose a specific color and size of a jacket on Arcteryx.com or TheNorthFace.com, the brand would then show the online retailers that had that very item in stock.
In 2008-2012, as brands added their own DTC e-commerce capabilities, these links started to disappear. At first the brand would only show “back-up” links when their DTC site was out of inventory, then the links totally disappeared as they questioned the sense of any link to a retailer’s website they viewed as direct competition.
In those early days, brands established their nascent DTC businesses in separate silos to protect them from the much larger wholesale units. The DTC leader reported directly to the brand CEO to ensure that they could get the resources needed to grow. Today, most brand’s DTC businesses have grown to a similar scale as their wholesale business, but still reside in a totally separate silo.
The executives in charge of these business units typically have bonuses tied to the distinct sales and profitability of each unit. If you assume a finite amount of consumer demand for a particular brand, then DTC looks at wholesale and its dealers as direct competition.
This unhealthy competition leads to all kinds of suboptimal practices, such as the DTC site not promoting the availability of the brand through other retailers. If a consumer clicks away to a local retailer and purchases there, that’s a lost sale for the DTC business. Even when brands like Patagonia link to their retailers on the product page, it’s typically a tiny “Check Local Availability” link well below the Add-to-Bag button — a minimal concession from DTC leadership to a corporate edict.
The entire process is disjointed for the customer, who is forced to search multiple sites to find what they want, and inefficient for the brand and retailers that must compete against each other to capture that sale. The only winners are the Googles and Amazons of the world that profit from the extra searches and clicks needed to complete a purchase.
How A Brand Marketplace Would Work
A brand marketplace pulls together ALL the inventory from the brand’s DTC fulfillment center and stores as well as their dealers’ and dynamically presents the results to the consumer based upon their location. The consumer views all the options and decides which best meets their needs in terms of product experience (digital vs. physical touch), convenience (ship to their door vs. go to a store), and timing (wait for delivery vs. pick-up today).
Once the consumer makes their choice, they check out on the brand website and receive instructions either to wait for delivery or visit a store for pick-up, i.e., Buy Online Pickup in Store (BOPIS). Just like existing marketplaces from Amazon, Walmart, etc., the brand charges the retailer a commission on each sale to cover the cost of driving traffic, running the marketplace, and payment processing. The commission structure also incentivizes the DTC team to think more holistically about the business and view EVERY sale as a “win.”
Marketplace commissions are typically 10-15%, though some brands may choose lower rates to create goodwill with their dealers. The program would be voluntary – a retailer could opt out of the program if they don’t want to pay the commission. That said, I think most retailers are savvy enough to realize that a 15% commission is a pretty good deal when you consider the marketing costs of driving store traffic, not to mention payment processing (about 3% of sales). In addition, 85% of U.S. BOPIS shoppers make an additional purchase when they go to the store to collect an order.
While this will be a new model for brands and retailers, consumers will find it easy to understand and navigate as they use marketplaces like Amazon and Walmart all the time, and 68% of U.S. consumers have already made multiple BOPIS orders.
The Benefits of the Brand Marketplace Model
The marketplace model transforms the brand website from a single channel, single retailer view of the brand to THE brand authority for the consumer with the only brand view across every channel and retailer. Becoming the brand authority dramatically increases the chances that any consumer interested in the brand will visit the brand site and the chances that they will buy on that site, whether from the DTC inventory or a dealer.
The site becomes significantly “stickier” with far fewer people bouncing after viewing a product page to see…
- My size or color isn’t in stock. Does someone else have it?
- Can I go somewhere to buy this today rather than wait for delivery?
- Is there somewhere nearby that I can go to touch and try it on?
- Can I get this at a lower price elsewhere?
Switching to a brand marketplace eliminates the first three exit reasons and potentially eases the fourth. So instead of just losing those visitors back to Google, the brand monetizes that traffic by earning a commission, and captures the customer information for future marketing.
By coalescing brand traffic and sales within the brand marketplace, the brand will reduce the brand search volume on places like Google or Amazon, as retailers look to the brand as the source for their traffic versus competing with the brand for that “bottom of the funnel” traffic and driving up click costs. Brands can book these savings to the bottom line or reinvest the savings into “top of the funnel” marketing to promote the brand to a wider audience.
Most critically, the brand marketplace smooths the customer journey from brand discovery to purchase, creating a much better experience and increasing the likelihood that they will purchase from the brand again. The smoother journey also ensures that the customer does not get lost to fatigue, frustration or another brand along the way, and that they are served by a qualified dealer.
The brand marketplace can also be a way to help incentivize Minimum Advertised Price (MAP) policy adherence as all retailers will feed current pricing along with inventory levels. As always, the retailer has the final say on how they price their goods, but going off-MAP will mean losing exposure on the brand marketplace.
What’s Beyond the Brand Marketplace
The fully connected brand marketplace era will open many other opportunities for channel- and retailer-agnostic optimization of the purchase and fulfillment process.
Approved outdoor retailers will gain access to the full DTC inventory feed to complete customer orders on the spot for brand items that they don’t have in stock. The customer will check out in-store and the item will be drop-shipped to the customer by the brand, who then charges full wholesale plus a drop-ship fee. Only the top retailers of the brand will be approved for the program – those that have supported the brand with in-stock levels, employee training, and brand supportive merchandising.
The final unlock will be to fully leverage the distributed inventory across the retail network to compete with Amazon and Walmart on same-day or next-day delivery. The transaction will take place on the brand marketplace and the retailer will receive the sale minus a commission or some other equitable compensation.
Crazy, pie-in-the-sky stuff, you say?
Well, the initial steps are already underway. Technology companies like Locally have built the infrastructure to link hundreds of brands with tens of thousands of retailers. My connections tell me that leading outdoor and active brands are already investigating the model. And just this summer, Trek launched their Customer Choice program where customers can buy from local dealers through their site, accessing inventory in the store or shipped to the store from Trek, with various commission structures.
The brand marketplace future is now.
Eoin Comerford is the former CEO of Moosejaw, where he led successive years of profitable growth that positioned Moosejaw as one of the top U.S. outdoor retail brands. He now is the principal at Outsize Consulting.
