Case Study: Quivers International Founders Strive To Solve Channel Conflict

Longtime snow sports veteran Brant Berger set out in search of a solution to brand and retail channel conflict in the late ’90s when he was heading up a start-up snowboard brand for step-in bindings.

Fast forward more than ten years later, and that idea has been built upon, trademarked, and brought to the market as Quivers International, Inc., a system of partnering  retailers and manufacturers online in order to make sure brick-and-mortar shops are receiving sales opportunities first.

Quivers International Founder Ruben Martin , Brant Berger, and Jason Linker

“I came across that problem in the late ’90s of ecommerce when the dot.com’s were coming to me wanting me to sell my products to them,” explains Berger. “Retailers wanted me to protect them, dot.coms wanted me to sell to them, so it was a huge battle back then. The dust has kind of settled, but we still have the same problem. If a manufacturer is trying to sell online today, he is still competing with his retail base. He’s not partnering with them in any way. And the solution is ‘Oh we sell at a higher price so we aren’t competing with the retailer. ‘ Or ‘We give a dealer locator so we aren’t capturing the order, we are just pushing them off.'”

Quivers’ model is similar to Shopatron’s, but gives manufacturers more control to hand-select which retailers will get priority ing product sales, and also makes sales visible only to authorized retail partners—several loopholes that are not addressed with the latter company’s platform, explains Berger. The start-up company has been polishing and fine-tuning its program since January 2011, and was able to go live with their finished model last month, after receiving  support from many brands within the action sports and outdoor industries during the last round of tradeshows.

Retailers are also getting excited about the concept from their standpoint, including Sun Diego President and CEO Dave Nash, who recently spoke with Quivers about their platform and where it’s headed. “Realistically, independent retailers need help online and vendors and their websites are taking a lot of the business,” Nash says. “How do you bring it back to the people who helped build your line?” As a retailer that is hurt by “becoming a showroom,” creative solutions to the problem are welcome, says Nash.

At the moment, the Quivers’ platform is live at Quivers.com in the US with KurtisUSA and Art In Surf and is launching Ocean Rodeo next week while launching SUP ATX in Australia within the next two weeks.

“We have over 200 interested brand manufacturers with most of them in sporting goods, and we plan to have 50 plus of those brand manufactures live by the end of the year as we continue to polish our solution,” he says.

We sat down with Quivers Co-founders Berger and Jason Linker (Ruben Martin is based internationally and was not available for this interview), and Director of Sales Thomas Selby, to gain more perspective on the platform, partnering retailers and manufacturers in a way that preserves brand integrity, and increasing sales and consumer awareness around retailers.

Explain how Quivers works, so our audience of retailers and brands understands what services your offer.

Brant:Our solution really targets partnering that retailer and manufacturer online where if that manufacturer is partnering with retailers, he should be able to take that order online and pass it off to the retailers. 

If you are familiar with Shopatron, then you understand that model. Our model is a little different. We don’t do a flagging system or anything like that – we give the controls to the manufacturer. If you have a full catalog you can control each product independently as far as if the order came right here from Carlsbad, it could go out to the Carlsbad authorized retailers only for a certain amount of time. Everything is timer based. So it would go out to those retailers for a certain amount of time and whoever wants to grab that order, grabs and fulfills it first. If that timer runs out, it can go nationwide to other retailers, and if that timer runs out it comes back to the manufacturer to fulfill.

Instead of facing a territory, you can also favor a specific retailer. So even though the order may have come from Carlsbad, let’s say a retailer out in Florida is overstocked and a manufacturer wants to favor them, they can be favored to get the order first. Or you can favor a group of retailers. 

As manufacturers for manufacturers, we aren’t a tech company building it trying to dictate business to manufacturers. It was born out of necessity.

You mention that the service you offer is similar to Shopatron, but has some fundamental differences. Can you explain how it is different, and why you saw the need to develop a platform like this?

Jason: Our one big competitor in this space is Shopatron and we are always careful, because we don’t want to be viewed as the “me too” company. When this problem was first presented out there in ’98, Brant actually wrote and filed a patent in ’99 for this entire solution as it sits today on our platform. This was all developed back in ’99, and Shopatron was founded and started operating in 2000. We have our own way of doing things and even though we are in the same space, we do it fundamentally different. 

If you are familiar with Shopatron, they have a backend system that involves products being flagged. Then you have to wait a day, and then the computer figures out who out of the ten retailers who flagged the order saying they have the product in stock. You come back the next day and they award it to one of those ten, whoever is the closest strictly relying on a geographic locator. There could be ten companies in Carlsbad that said “I got it,” ” I got it.” The next day at 10:30 a.m. Shopatron says okay you get it. So one percent end up happy.

It results in a lot of retailers saying okay we do it because we believe in incremental sales, but it’s really cumbersome and we are constantly going in every day to the system, and we’ll go check inventory and say okay we’ve got these eight items, or some days when they check back they don’t get any orders. It’s a lot of work for the payoff. One of the retailers we work with showed us his report. He flagged 240 times and he was awarded 20 orders over a period of time. He went in checked his stock and only twenty times he was awarded the order, or what they call “winning.”

The system works for them in solving channel conflict and it’s absolutely necessary out in the industry. We just go about it much differently by giving those controls to the manufacturer and they set the limits. They say, ‘hey I want it to go nationwide,’ or ‘I want it to go within a 50 mile radius of the consumer.’ All those controls are set internally, and that retailer sees it pop up internally on our smart phone app, or what we call our flagship product, alerting them through RSS, email, etc. You can literally have it delivered like a text message, and if you have the product you automatically claim it and it’s yours.

Once a manufacturer signs on board with Quivers, can any retailer in the entire system claim these orders? How does that work?

Brant: We give manufacturers tools to only bring on their authorized retailers. So it’s not that the product goes out and any retailer on the system can view that product. It’s only authorized retailers per that manufacturer. And we don’t mix them in, so if another manufacturer has a retailer on board, they aren’t automatically seeing products from other manufacturers. It’s a completely closed system for that specific manufacturer.

One of the issues with not doing it that way is there are a lot of gray market opportunities there.

Thomas: Brand integrity is the most important element here. 

Thomas: There is a reason why Rolex doesn’t sell online. They want to protect their brand; their brand is the most important thing. Yet 58% of consumers, according to research, go to the manufacturer first. So they come to the manufacturer and they are ready to buy, but they can’t.

In our system, Rolex could feel safe that only their authorized retailers are able to fulfill those products, where they’ve never been able to do that before.

How much does it cost for manufacturers and their retail partners to come on board?

Brant: We charge $0 for set up, $0 for a hosting fee, and we only charge a small transaction fee. We really open ourselves up to the small guys as well.

A manufacturer coming into the industry, he has the dilemma of how am I going to start moving these products? Do I sell online first and then try to target retailers which will make it hard because now I’m selling online? Why would a retailer want to pick up my products? Or do I not sell online and start going after the retailers? This solution works because you can start selling online and can then reach out to retailers and say if you come on board, I would direct all my orders to you to support your business.

It’s that partnership that allows the manufacturer to start going after a retail base. His whole marketing portion of the business, getting into magazines and running ads, the whole purpose of that is to drive that traffic into the store for that brand. The job of the manufacturer is to get people into the store asking about my brand. Online I cut that off, I stop it, and now all of a sudden there’s that conflict. This allows those small brands to start moving product and allows the retailer to benefit instantly.

How does the revenue model for your business work – do you take a percentage of the cost of the product?

Brant: If a retailer picks up an order, we show minus 5% our transaction fee and of course we pass off our portion of the credit card. If it’s a $100 item it would go to that retailer minus the 6.5% so it’s picked up on that part of it. The manufacturer, unless he fulfills the order himself, isn’t charged a penny to support those retailers. We felt it was important to do it this way to support the industry. We are starting with the action sports industry because it’s my background.

Jason: The retailer also signs up for free. There’s no hosting, there’s no monthly. They could be on the system and fulfill one order per month and not feel like they are paying for something and not using it. They could look at the app on their smart phone and see the MSRP is $100, do I want that for $94? We do all the math for them so they just decide whether they want to claim the product at the price they are getting paid net, which is transferred to their account. They don’t have to claim it—maybe they think they will have a customer come in — but it’s an incremental sale that they didn’t have to advertise for. The manufacturer is advertising for them, and really pushing orders their way.

What’s the exact transaction fee percentage?

Our service fee includes the credit card transaction fee. We collect 5% and up to 2.9% credit card fee for a total of 7.9%.

What does the process of setting this up for a manufacturer involve?

Jason: We worked very closely with three beta brands who signed on and wanted to work with us because they agreed it was a huge problem. I think a big part of the success was the barrier to entry was almost nil. We are not in it for the quick buck. We believe in the product so much – there is definitely some set up time on our side, design, skinning the site, loading the product – we believe in it so much we are going to put all that work into it, invest in your company and there’s no contract. You can leave a week into it if you don’t like it. That’s our commitment.

Does your system compile and aggreate sales data for retailers so they can see what products have been popular to help with buying?

Jason: There will be a lot of data and analytics that will help them stock their stores properly. It creates it in real time, and a manufacturer or retailer can look it up, and depending on who is looking at it the analytics are customized for them. The retailer will be able to go in and look at what’s hot, what’s not, what’s been “beaconed” the most.

Follow the jump to learn more about specific custom tools that manufacturers can put in place to favor retail partners, ways manufacturers can increase sales through cross-trafficking, and more. 

Quivers International, Inc. Founders in Morro Bay, Calif. not far fromt their official headquarters.

What other benefits do brands get from participating?

Brant:  There’s a lot of side pieces that we’ve built into this system as well. Manufacturers have the opportunity to turn on or turn off parts of the system. We aggregate the manufacturers on our platform and it allows them to become affiliate partners with each other, like a La Jolla Group that has four different brands. All these different brands have different individual websites, with different individual traffic but with our affiliate program it allows them to aggregate their traffic. Now if someone is on Metal Mulisha and they are showing O’Neill suggested products they could click on O’Neill and go over to their site, sharing their traffic amongst individual brands and creating more sales. It’s almost like a Facebook, where whoever is participating can see all the manufacturers and can send out a request to become an affiliate partner to share traffic with that manufacturer. My product will be on your site, your product will be on my site. By doing that, our shopping cart also carries across multiple manufacturers.

Jason: That’s actually one of our strong pattens: multiple users on one interface. We have protection in that realm, but we aren’t the first to be doing it. If you go on Amazon.com and you see suggested products over on the side bar or footer, that cross traffic is very powerful. It’s implemented by thousands of companies out there for good reason. We are able to do that. The La Jolla Group is a good example because they could share their product, but technically since they own all the companies they could figure out a way to do that internally. A better example is Surf Tech and GoPro, who have recently started teaming up at tradeshows, with GoPro cameras on all the Surf Tech paddle boards. They have teamed up with non-competing products as a way to “scratch each others back.” Our system allows you to do this with complete strangers with the ease of a Facebook friend request. ‘I don’t know anyone at GoPro, but I could request them if they are on the platform.’ And they could say ‘Hm, that’s good, I like that product, I’ll swap traffic with them.’ It happens that easily. It really gives you a broad reach, even if you’re traffic is great, once you start cross-trafficking, now your traffic is coming from all these other sites combined. It’s really important for the little guys who may only have 500 vistors per month. Now he can be exposed to anybody he creates a relationship with.

So how does that look on the consumer end? Let’s say they are going to O’Neill to see their products, will they see whoever else they are affiliated with in a sidebar?

Brant: Yes. That’s the big difference between us and an Amazon, where you have no control over what comes up around your products. Google, you have no control on what products come up. It’s up to Google and Amazon and how their algorithm works. Ours is specifically designed for you to partner as a manufacturer. It’s a feature you can turn on and off and its something we feel are benefits to the manufacturer and the retailers. We give these features to create this business social backend for the industry.

Let’s say the retailer has their own online store, is there a way to link it up?

Brant: Their store is still marketing. They have to go out and drive traffic to their store. They could still maintain that if the manufacturer allows that, and it could be for different products. 2013 products they may not be able to advertise yet, but 2012 products they are blowing out. These are all controls for the manufacturer and it can work in different ways. They could say, continue with your store with the advertising agreements we have, and I’m also going to push more product orders to you and still authorize you as a retailer. Or the manufacturer may say ‘you are my biggest retailer and I’m only going to protect you, I’m only going to take you on as an authorized retailer and I’m just going to pump everything through you.’

Jason: Retailers really don’t need any [web] presence at all, you don’t even need a Smartphone. You can get an email alerting you there’s an  order in the system to be claimed. You don’t need any web e-tail presence whatsoever. It’s great for the little guy, who has a store and sitting there waiting. Your phone dings, you walk back and see you have the product, claim it, ship it, and there’s your sale for the day.

Brant: We don’t want to dictate to the manufacturer how to do business, we want to give you the tools to do business the way you want to. We are not a solution that’s just locked in, we are solution to do business the way you want to do it. That’s really important to us, and we try to give as many controls as possible. If you want to favor that retailer in Florida because he’s overstocked, then favor that store. It shouldn’t just be who is the closest.

And it’s very simple to use. You don’t have to be an IT guy, you don’t have to be computer saavy or know code. We are trying to build out our system kind of like an eBay. You go in, set up your own account, enter your product and description, without knowing too much about computers. That’s what we want to do for these manufacturers. They can really control their own content. We give them the tools to login to their admin and control their full catalog on their own. We can do this in a matter of hours, that’s our set up time.

So you aren’t creating a separate website for them?

Brant: No we have the platform and we just plug it in.

Thomas: And we don’t change their website at all, which is a huge deal to most people. If we come in and have to change your entire website, then you are wondering well what happens if I don’t like this solution? We are changing a button, the products button. People who use your website, when they hit the purchase button they are taken to their catalog on our platform.

 Any closing thoughts?

Thomas: I think it’s important to note that before with online sales, the manufacturer was cutting out not just the retailer, but the rep, the distributor, everybody in the middle. Now, as they are taking them back to retail sales, they are putting products in the cue for reordering, and they reorder from their rep and their distribution company. When we are on a tradeshow floor, it’s not like if we meet someone who is a rep we have to hide from them or can’t talk to them. It’s good for everyone. There’s no one we have to hide from because it behooves everyone in the system. 

Jason: It definitely takes the frustration out of the process for the consumer. We’ve all been to sites where you can’t buy anything. We call them billboard sites because they really just wave at you: “check out all our really cool stuff – you can’t buy it, but check it out!” You can search around the world in a third of a second on Google, and use the dealer locator, but next thing you know, you are on your phone calling all these stores to see if they have the product.  The general consumer doesn’t understand channel conflict, they just know they can’t buy it and wonder why they can’t buy it here and now. Our system reverse engineers that: we take the order and we broadcast it out to see who’s got it. It’s a convenience factor for consumers.

Brant: With this system, the customer feels very secure. If you are going to buy a $10,000 watch online, you can feel just as secure as if you are buying that watch in the store. You’d know what you are getting. You know you aren’t going to get a black or grey market product. We’ve all heard those horror stories. That’s why it’s important to us to keep this a closed market system.