Whether you work at a cycling, running or outdoors brand, you have almost certainly had conversations about how you sell your products. Should you be selling direct to customers (DTC)? Or selling purely through specialist retailers or dealerships? Or doing both? My guess is that you are probably still having that conversation on a regular basis.
As an example of how the ‘DTC or not DTC’ conversation is impacting on the run, cycle and outdoors sectors, let’s look at bikes.
Selling Direct or Not – the Example of the Bicycle Sector
On a recent trip to the Eurobike trade show, it was interesting to note how the industry is polarising. Many brands (usually the older ones) told me that they will only support their network of dealerships, with whom they have had relationships for years or even decades. The arguments for only selling bicycles through dealerships are numerous and compelling.
At the same time other (usually newer) brands were only selling direct to customers. This allowed them to reduce the cost to the customer because they don’t have to factor in a discount for the dealers as well as have a direct relationship with their customers. In many cases these ‘direct’ brands also told me that they had little choice but to side-step the dealers because they couldn’t get their bikes in enough shops on terms that were acceptable.
The same trend of polarisation is true (to a greater or lesser extent) for every sector that Freestak specialises in – running footwear and apparel, cycling apparel and accessories, outdoors footwear, hardware and apparel, sports nutrition and technology (bike computers, GPS watches and so on). Every business in every sector is continually trying to work out whether DTC or wholesale (or a combination) is the best way to sell it’s products.
Wholesale is Alive and Kicking. But More Competitive
Whilst the headlines in recent years have tended to be all about Direct To Consumer, perhaps news of the death of bricks-and-mortar retails is somewhat exaggerated.
According to the National Bicycle Dealers Association in the US:
While the number of specialty bicycle stores has declined in recent years due to consolidation, they are responsible for approximately the same amount of business through these fewer (but larger) stores today.
So as a whole dealerships’ turnover has not declined in recent years. But there are fewer of them. This is good news on the surface, but as we will see, this is certainly not entirely positive.
In the running sector we see a similar situation; the number of speciality retailers is falling, but those that remain – whether they are single outlets or large multiples – are doing more to attract customers and are putting up some resistance against online retailing. Nevertheless, according to a report on Run Washington:
In 2016, 31 percent of runners purchased their running shoes online, according to that year’s National Runner Survey, which gathered data from more than 10,000 runner responses.
What is apparent from all the whole-selling brands we talk to and work with, is that there is still a disconnect between what is happening in marketing and the daily struggle of the sales teams out on the road. Time and time again, we speak to tech- and sales-reps who struggle to see how the activities of the marketing team is helping them sell more to fewer and fewer customers.
One of the Challenges of Wholesale
At a recent outdoors event, I had several conversations that followed the same pattern. Sales people who are selling to wholesale customers, can’t see how their colleagues in marketing are doing very much to help them.
On the subject of influencer marketing, this issue was even more pronounced. How, asked one rep with decades’ experience selling in the outdoors sector – who we will call Pete (not his real name) – does working with bloggers and social media influencers help sell more of his brands’ technical apparel to specialist outdoor retailers?
My response was to ask Pete this question: how many competing outdoors apparel brands do your customers typically stock? After some thought, we agreed that it was probably eight to ten. Maybe more for really big retailers and possibly less for smaller ones. But eight to ten was probably the average.
Then I asked Pete how many brands is he competing with? 50? 100? More? He guessed 70 to 80.
So each time Pete visits a potential customer, he has to compete with a large number of brands for less and less space in the shops that are his target market.
In reality, the competition is fierce. In the 2017 European Outdoors Group (EOG) report on the state of the industry, 115 outdoors brands were surveyed. Bear in mind, the EOG requires members to turnover at least €5 million and sell in a minimum of four European countries. That suggests that there are far more than 100 outdoors brands.
Wikipedia lists 75 outdoors apparel brands alone. That is before you look at footwear, hardware, equipment, accessories, nutrition and technology brands.
What this means is that wholesale brands have to work much, much harder to convince fewer customers to stock their products.
The same issues affects the cycle sector. Dozens of bicycle brands we talk to says the same thing; they can’t actually get dealerships to take their bikes. The biggest brands offer huge discounts, generous payment terms and a raft of other benefits. But only if the dealerships fill their shops with the big brand’s bikes. When they do this, there is literally no room for the smaller brands’ bicycles on the shop floor. To sell any bikes to dealerships, all those brands without the financial resources to compete with the ‘big boys’ have to do much more to be attractive.
Tactics for Increasing Wholesale Orders
What are the options in that case? Well bigger discounts is probably the most obvious. But that is not a road the brands want to go down. Obviously creating unique or best-in-class products helps. And having a story that sets the brand apart can help.
But ultimately what retailers want is for brands to create demand for their products that the shops can then satisfy. There is a wealth of research that demonstrates that consumers have already done most of the research – and therefore the decision making – about what they are going to buy before they even set foot in a shop.
According to RetailDive 67% of consumers surveyed said they research products online before shopping for them in traditional brick-and-mortar shops. By the time a customer walks through the door of a shop, the chances are they already have at least an idea of what they want and which brand(s) they are interested in.
Retailers know this. So they want to stock brands that they can see are trying to create demand.
So the pressure comes back down the line, from the retailer to the sales rep to the marketing team. And we hear over and over again, that wholesale sales reps are asking their colleagues in marketing to give them the ammunition they need to sell to their customers.
Wholesale Needs Influencer Marketing
So the bottom line is this: if the brand you sell, sees retailers or dealerships as a customer, you have an opportunity now to get ahead of the competition.
There is still an arbitrage in the endurance sports and outdoors sectors around influencer marketing. Few brands are really doing it well.
A good influencer campaign can increase awareness of your products in an authentic and trusted way. The right influencers can massively amplify your brand stories. And done well, influencers can even help to ensure they end consumers know which retailers they can visit to buy your products.
So right now any business that gets to grips with finding, engaging with and running campaigns alongside relevant influencers, at the very least gives its sales people and tech reps another argument for why a retailer should stock your brand and not your competitors’ products.