How the Internet may change the surf industry.
In the near future, the biggest change in the product strategy of small, hardcore surf shops won’t be in reaction to stores like Nordstrom or Macy’s, but from the quickly developing world of electronic commerce on the Internet.
Sound farfetched? Perhaps.
But it isn’t too crazy to think of some cyber-spunked near future when anyone, anywhere, will be able to buy almost anything online. When surfers can choose from among hundreds of Web sites offering surf products. A future where manufacturers know a good thing when they see it, and sell directly to surfers.
Crazy? To some degree, these things are already happening.
Even now there are a handful of surf shop Web sites where anyone, anywhere can buy products from Da Kine, Hurley, O’Neill, Quiksilver, Reef, Roxy, Rusty, Tavarua, Volcom, and Xcel–among others.
“If I were a retailer, I would certainly be doing it e-commerce. We all know it’s going in that direction,” says one supplier of surf accessories who asked to remain anonymous. “But no one wants to talk about it openly–especially the companies. Everyone is afraid to stick their neck out and embrace it. But it’s definitely happening.”
Still A Hype-Driven Phenomenon
For the amount of attention e-commerce has received in the mass media, it’s still a surprisingly small blip on the U.S.-retail radar screens.
The Direct Marketing Association reported that last year 4.7-billion dollars’ worth of goods and services were sold online–slightly more than five percent of the 87-billion dollars sold by direct mail and telemarketing and a tiny fraction of the 2.6-trillion dollars in overall retail sales in the United States.
But everyone seems to agree that e-commerce is the fastest-growing phenomenon retailing has ever seen.
Kate Delhagen, director of online retail strategies at Forrester Research, an Internet consulting company in Cambridge, Massachusetts, pegs 1999 e-commerce sales at 18.2-billion.
This growth dovetails with the surf industry in at least one significant area: the teen shopper. Teens had a spending power of 141-billion dollars last year, and mainstream companies definitely see the Internet as way to nab a portion of this chunk of change.
For example, Nike is selling all of its high-end, cutting-edge Alpha Project merchandise on the Internet. “Teens see the Web as the arbiter of technological cool,” said Bob Lambie, creative director of Nike.com in a New York Times article. “We need to be looking for opportunities to be part of that.”
According to Teenage Research Unlimited, in 1997 four percent of all teens had purchased something on the Web. In 1998, that number jumped to ten percent–and similar growth is expected this year.
But Does It Matter In The Surf World?
“We’re totally into the Internet,” says a sales director of a surf-apparel company–once again, speaking anonymously, “but surfers want to be able to go into a shop, touch the boards, smell the wax, and talk to the cute girl behind the counter. I remember my first time in a surf shop; it was almost a religious experience. A two-dimensional photo on a computer will never duplicate that.
“However, kids are really into the Internet,” he continues. “It will be an integral part of the future–although I doubt it will enrich us as a species–and manufacturers need to be cognizant of the opportunities it presents.”
Fear Of An “E” Planet
“In this industry the distribution structure is almost set in stone,” says David Gilovich, marketing director of Surfline and organizer of a Surf Industries Manufacturers Association (SIMA) conference discussion group on e-commerce.
“Too many people have been doing too well under the current system for them to want to shake things up,” he says. “For how much we all view ourselves as being this liberal industry, when it comes down to it, we’re all pretty conservative.”
According to Peter Townend, SIMA president and Rusty sales and marketing director, the e-commerce discussion at the SIMA conference may give the industry a common perspective about the entire issue.
“There’s currently a lot of emotion about e-commerce in the surf industry,” he says. “I think we’ve figured out that what happens with e-commerce won’t be determined by the surf industry. It’s out of our hands, and it’s not a question of when, it’s a question of how.
“A lot of the leaders in the surf industry come from the pinball era, not the Sega era,” he continues. “Their minds don’t work like the minds of kids, who don’t need to read an instruction manual to figure out how a computer program works.
“E-commerce is nothing more than mail order on steroids, but I think with the millenium coming, a lot of people are anxious about how technology may change society.”
And some of these anixeties are based on very valid concerns within the surf industry.
“We’re very reluctant to get involved with e-commerce,” says Tom Holbrook, executive vice president of sales for Quiksilver. “There’s not a lot of control over what could happen globally down the road. There’s a real danger of brand overexposure. Because of that–just as we approve each brick and mortar store–we’ll approve the sale of Quiksilver products on a select number of Web sites based on the look and vibe of the site.”
Quiksilver does have its own extensive Web site (found at www.quiksilver.com), but its purpose is strictly marketing, not sales.
Holbrook admits that e-commerce is increasingly a topic of conversation with retailers: “They don’t want to be left in the dust. We all laugh, but the change to e-commerce is like the change from the 8-track to the CD, but on a bigger scale.”
According to Colin Baden, Oakley’s director of design, “Change is the number-one reason people are worried about e-commerce. If you’re not comfortable thinking outside the box, you’ll be afraid. If you spend your life living outside the box, you’ll run at it like a madman and go like hell.”
However, Baden recognizes the concerns some Oakley dealers have about the company selling directly to consumers. “We certainly have a number of retail accounts that have a long-standing relationship with us,” he says. “The last thing we want is to create competition for those accounts.”
Oakley does sell shoes, watches, and accessories on its www.oakley.com Web site, but not its sunglasses.
“We’ve been an eyewear company far long longer than we’ve been a watch, apparel, and footwear company,” says Baden. “Because of that, we have certain relationships that precludes us from selling eyewear directly to consumers. However, that’s not an issue with footwear, watches, and some accessories. Our volumes are fairly low, so the chance of Oakley.com taking business away from our retail accounts is fairly small.”
You still can buy Oakley eyewear online at eyevault.com, however. “We elected to choose one high-quality on-line account to partner with. Our philosophy is selective distribution, and we use that same criteria for e-commerce as well.”
Some surf companies are not opposed to seeing their products sold online–as long as it’s being done by a “good” group of people.
“It seems like I’ve been in this industry 1,000 years,” says the anonymous surf-apparel source. “Everyone knows who the assholes are, and you’re super careful about who you sell to. But really, there’s just as much possibility to get screwed in a surf shop as there is on the Internet. We handle everything on a case-by-case basis.”
This gut-feeling approach is also used at the surf-accessories company: “We pretty much have an open policy,” says the source. “When a shop calls us up and asks if they can set up an online shop, we generally say yes. However, it also d
epends on the account, so we don’t have a uniform ‘yes’ policy. We want to have the ability to say no as well.”
A Look Inside
Quite a few surf companies seem to trust Becker Surf & Sport to sell their product online. According to the Becker Web site (found at www.realcat.com/catalogs/becker/), “We are damned and determined to make this the first and the best surf and sport superstore on the Web. Well, I guess we are already the first. We will add ten items a day until we drop, or our wives leave us–at which time we’ll add 25 items and surf a lot more. This stuff is in our warehouse and stores right now and is ready to ship!”
Becker President Dave Hollander says he generally won’t comment on his Web site or its success. “We decided when we started not tell anyone how it’s doing. Only three people in the company actually know how much business the Web site takes in,” he says. “I generally will only tell people that I work on the site for six to seven hours each day.”
Hollander says this secrecy is necessary. “I can go into one of my competitors’ shops, and tell you pretty accurately what their sales volume is. However, sales volume on a Web site is impossible to determine.”
Hollander does have these words of warning about e-commerce: “I have more than 800 pieces being sold online, but I’m really selling fashion. Everyone has a pretty good idea of what a shirt will look like when you’re wearing it and how it will fit. And I’m pulling my inventory directly from the shop floor, so my inventory risk is minimal.
“However, if there were twelve of us doing this, there wouldn’t be enough sales to go around–for now at least,” he continues. “As soon as that happens, I’m out. I won’t play that game.
“Another big consideration is that there’s not a single manufacturer who will stand for an online price war on products, so gouging prices is not the way to establish yourself.” However, when asked if his prices online were the same as in his four shops, he declined to comment.
The Human Touch
It won’t happen overnight, but e-commerce will significantly change retailing–including surf retailing. For now, however, most manufacturers in the surf industry appear content to hang back and watch things develop.
Oakley sells products online, but Baden says 80 percent of orders are still taken over the phone. Consumers shop online, but they do want to talk to another human when they fork over the cash.
And brands within the surf industry have a unique and dynamic message to tell consumers about their company. “We don’t want a third party telling consumers our story,” says Holbrook. “We want to be in the shops working with the staff to make sure it’s done right. Plus, there’s no return on investment right now for shops. If someone thinks they can launch a Web site and rack up a bunch of sales on a foggy day, that probably won’t happen–and it may not happen for a long time.”
Until the lifestyle of e-commerce takes hold, it’s stillmore hype than substance. But make no mistake, change is coming. Deny it,and you may be left behind.