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post #1 of 1 (permalink) Old 02-23-2009, 01:03 PM
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Burton Selling Direct to the Public

First to get what I'm talking about you guys have to read this article... it's from another site, but looking for other opinions...

Burton To Tighten Online Distribution | Transworld Business

The spin in this article is comical. If indeed this strategy is for the betterment of retailers, then it is a very reactive one -- not one of those "proactive" strategies they're always touting -- reacting to the industry-wide problem that they caused by ramming so much product down the throat of the retail community. Will this enhanced sell-direct strategy benefit anyone other than burton? No way. Supplies, which are at an all time high, will stay that way for the foreseeable future. Considerable inventory will be built to supply burton's online operation. If it goes well, they'll pull from pending retailer's supplies (inventory that has yet to ship, or yet to sell that’s sitting in World Warehouse) to support their own online sales. They'll make the money, they'll make the margin. If it goes poorly, they'll dump the excess inventory into general availability, blow it out and muddle up the market with another round of excess and off-price inventory.

They are counting on dealer complicity. They’re betting that dealers have become so dependent on them; that they can’t imagine life without them. They’re betting that dealers will buy the idea that by eliminating their P2P system, they are actually cleaning up the internet business. How altruistic of them! Here’s the reality: They will eliminate a system (albeit flawed) that was at least designed to funnel business to burton online dealers. They will replace it with system that pits direct online sales by themselves against a larger group of smaller, less savvy retailers. Who wins? Who has the resources? Who controls the marketing? Who controls the inventory? You figure it out. Burton has declared “open season” on every dealer who wants in on the mythological e-commerce nugget. Burton is marginalizing their most formidable on-line opponents by reducing their inventories and eliminating their online visibility. At the same time they’re aggressively beefing up their in-house inventory and further augmenting supply, sales and revenue by coaxing hundreds of eager dealers to bump up their orders by 15% - 20%, in the misty-eyed hope that they just might capture some of those coveted internet sales. If these “pennies from heaven” were hard to come by for the e-commerce pros, with their big staffs, big budgets and big inventories, why would they be there for the pickin’s for a much smaller operation that doesn’t have their expertise, their resources, or their reach?

Now every burton dealer can sell online. Sign the dealer agreement order up a few more customs and ba-bammm! Look ma’, I’m a burton e-tailer! I’m gonna’ make money off people that I’ll never meet! I’m stealing dollars from someone on the other side of the continent! Specialty dealers are losing sales to the internet, but if their shop is in a metro area their real competition is big-box chain retail. The specialty ski shop down the block is not going to put them out of business, nor will that cool-guy skate / snow account on the other side of town. It will be the big box guys. There are hundreds of national big-box locations stocked to the gills with tens of thousands of units of your number one snow brand. These stores are better known to mainstream consumers. They have highly visible advertising and marketing, and they have a reputation for offering lower prices. Crack open the Sunday paper and you see big box sporting goods circulars. Drive down the expressways and you see big box sporting goods billboards. Turn on the TV and you’ll see… you get the picture. Specialty retailers cannot have that kind of reach. They need a better plan, a different model.

Industries die when their products become commodities. Remember windsurfing? Skate comes to mind, too. Retailers and manufacturers need to work together to keep it special. This should truly be a symbiotic relationship. Manufacturers should do what they do best – build product and bring it to market. Retailers should do what they do best – make the vital connection between product and consumer, and sell it through. Manufacturers should stay out of retail. Instead, they should invest those resources into increasing the quality of their products and the value of their brand. Retailers should commit to those brands and build relationships with them – representing their products as fully as possible. The result will maximize the effectiveness of the manufacturer’s and the retailer’s marketing efforts. If retailers buy specialty snow products like plumbing supplies out of warehouse bins, then manufacturers will actively seek more secure distribution. If manufacturers appear to be undermining the integrity or profitability of specialty retailers, then they will never get retailer loyalty.

We have an unhealthy, lopsided industry. Yet, we have many new innovations that are making snowboarding better. Every year the hall at S.I.A. is full of ideas and innovations created and marketed by companies other than the “big 3”. We have some dynamic and creative specialty retailers who continue to drive the business by stressing employee expertise and training, fresh and dynamic merchandising, creative and effective advertising and marketing, and focused buying with supportive vendors. There is a better way, but there is not a quick, easy way. Ecommerce is not the pot o’ gold at the end of the rainbow. Distribution cannot be magically grown every year to get that coveted 20% + growth that the shareholders demand. Manufacturers need to commit more fully to their specialty distribution. Specialty retailers need buy from manufacturers in the same way they want consumers to buy from them; with an understanding that value is more than just price. With an appreciation for the technology, expertise and effort that goes into every product, and thus every sale.

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