December 3, 2014

Billabong, You’re Drunk

You know what makes a great surfer, skater or snowboarder? The ability to overcome the scars of a bad slam and hit that spot/feature/wave again. However, should the slam have been a near death experience with an almost nil chance of success in pulling it off, then hitting it again doesn’t make you great. It makes you an idiot.

With that in mind, Billabong is heading back into the physical retail space. Yes, despite the majority of retailers moving to sell online, Billabong has taken the decision to sell off its online retail operations and jump back into a space they exited only recently after loosing 99% of their share value. Is there an advantage in killing the business that I’m not seeing? Management seems pretty damn determined.

Bloomberg has an interesting recap in their article – Billabong Rebuilds Brick-and-Mortar After Closing 215 Stores. Neil Fiske is quoted in the article as saying “The thing you can do in a store that you can’t really do on the Web is connect directly to that customer. You can make it come to life.” That’s true… It’s also something the big surf brands did mighty successfully over two decades by partnering with independent and chain retailers to move their product. And they did it without the overheads of having to actually run the damn stores. Combine that with a competent online strategy, one that benefits the physical stores as well, and you have a low-risk, low-overhead strategy with potentially very high rewards.

Want a way to do this? Pay a percentage of profit from the online sales back to the retailers that support your brand. Make their cut determined by the size of their investment in the brand each season and do not discount online without talking to the retailers and agreeing on strategy and terms first. Make it an actual partnership. Do not doubt that this can be done – companies like Google are pioneering these agreements at both a business to business and a consumer level.

by Dave