FOCUS-Sportswear retailers sign on for e-commerce
(Updates with quotes from Rubin, partners, stock down; pvs
King of Prussia)
By Steve James
NEW YORK, May 10 (Reuters) - In a move to ward off the
challenge from Internet-only companies selling sneakers, a group
of sporting goods retailers joined forces Monday to back an
electronic commerce company to run cyber sales for them.
Global Sports Inc. <GSPT.O>, known as a marketer of surplus
athletic shoes, said its Global Sports Interactive unit would
operate online sites for such retailers as Athlete's Foot, Sport
Chalet Inc.<SPCH.O>, MC Sports and Sports & Recreation, which have
combined annual sales of $1.6 billion.
More retailers are expected to sign up before GSI's Web
services -- individualized for each company -- are up and running
in time for next Christmas.
GSI's retail partners will receive a revenue share of online
merchandise sales generated from their Web sites and will not be
required to make any investments in the development or operation
of the Internet strategy. GSI will run and maintain each
retailer's site.
In anticipation of the move, Global Sports stock had doubled
in price from $15 per share on April 29. It rose $7 last Friday
alone, to close at $33.12.
But on Monday, it fell over $12 to $20.62 in late trading. The
stock traded at less than $6 last June, when it switched to a
Nasdaq listing from bulletin-board status.
Asked to comment on the slide, Chairman and Chief Executive
Michael Rubin told Reuters he did not pay too much attention to
the company's stock price.
Like retailers in other fields, the lucrative sporting goods
industry has been watching as Internet companies such as
Amazon.com Inc.<AMZN.O> and Etoys Inc. <ETYS.O> seized the
initiative in the book and toy industries over traditional
retailers.
Attempting to prevent a similar phenomenon in the sporting
goods industry, Global Sports' Rubin said he approached some 18
major sportswear companies to offer to set up Web sites to sell
merchandise.
The idea of competing retailers using the same e-commerce
company, was not easy to sell, he told Reuters by telephone.
"Some were not thrilled, but at the end of the day, they need
to be in e-commerce and it was a barrier we overcame."
Rubin, who started his entrepreneurial career as a teenager
selling skis out of his parents' Philadelphia home, said even the
largest and best-operated sporting goods chains were not
positioned to develop e-commerce business on their own, given the
high cost of building the technology and organization.
"The world has become enamored with the Web-centric model that
requires enormous investments in brand building and customer
acquisition," he said. "It is questionable as to whether these
investments for many players will ever pay off, and I truly
believe that our model, which builds partnerships with retailers
that already have established brands and customers, makes the most
long-term economic sense."
Two of Global's new e-commerce partners said they were happy
with the arrangement.
"While categories such as books and financial services have
been turned upside down by the infiltration of Internet
start-ups," said Craig Levra, president of Sport Chalet, "the
sporting goods category has yet to feel the full brunt of
e-commerce and remains a wide open opportunity for companies like
Sport Chalet.
"We view our relationship with GSI as a means to aggressively
pursue this opening while also helping to strengthen a model that
will erect significant barriers for Internet-only companies to
compete against."
Athlete's Foot President and CEO Robert Corliss said: "The
Internet is unknown territory. We look at the Internet as another
means of staying in touch with our customer."
The Internet site could produce store traffic by providing
information to customers, who might be interested in seeing how a
pair of shoes fit rather than buying online, he said.
Havin... |
