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Sports Business: Sporting Goods
Fogdog Is Eager to Fetch
The e-biz tracks down anything you can swing, toss, or bounce
Most days are dress-down days at Fogdog Sports. Office workers roam the corridors of the Redwood City (Calif.) headquarters in sneakers, shorts, and ball caps--about what you would expect at a sporting goods e-tailer.
Then there are dress-up days, when attire might include face paint, false mustaches, and--in the case of CEO Tim Harrington--a spotted-cow costume. Yes, Fogdog celebrates Halloween. "This isn't going to be in the story, is it?" Harrington asks warily as he checks his plastic udder. It's one of the few moments of doubt that arises at Fogdog, the hard-charging e-tailer that seeks to sell anything that can be swung, tossed, or bounced--60,000 items and 500 brands.
No doubt, there's money to be made on the Web peddling baseball gloves and tennis balls. Online sports retailing is expected to reach $165 million this year and $4 billion by 2004, according to Forrester Research Inc. in Cambridge, Mass.
And Fogdog has been on a fast track. On Sept. 27, it announced plans for an initial public offering to raise $50 million to $60 million. The same week, it shook the e-tail world by revealing an unprecedented alliance with Nike Inc. to become the exclusive retailer of Swoosh shoes and apparel on the Web. Nike, which has refused past offers to align with Internet stores, did not come cheaply. The agreement gives Nike the right to purchase 6.2 million shares--12.3% of Fogdog--at around $1 per share.NEW NICHES. While the Nike deal is designed to draw customers to Fogdog's site, it also has repelled at least three shoe makers, including Adidas, that now won't let Fogdog sell their products. To quell the backlash, Nike relinquished its seat on Fogdog's board. "Nike is a direct competitor. We have no interest in selling to a competitor," says Francis P. Allen, vice-president for sales at New Balance.
Manufacturers aren't the only ones Fogdog must watch out for. Startups such as Lucy.com, a women's sports-apparel specialist, are staking out niches every month. And bricks-and-mortar competitor Sports Authority Inc. recently launched an e-commerce site in concert with Global Sports Interactive. Now it is leaning on manufacturers to drop their accounts with Fogdog or risk losing the giant retailer's business. On principle, a number are hanging tough. "We don't want to be told who we can do business with," says Ellen Wessell, a founder of Moving Comfort Inc., a women's apparel company. Asked about Sports Authority exerting pressure, CFO George Mihalko says: "I don't feel comfortable commenting along those lines." A Fogdog spokesman also declined to comment on such battles, citing the quiet period prior to its IPO.
Few other sports e-tailers, however, have embraced the Fogdog formula, which emphasizes selection and service rather than low prices. For instance, customers looking for hard-to-find items can summon Fogdog's "Search Squad" to shop rivals' sites and stores (one recent effort nabbed a spare-tire cover with the Dallas Cowboys logo).
At the baseball store, parents can type in their child's weight and height and "Fogdog Fetch" spits out a list of recommended bats for the little slugger. Fogdog also has a 24-hour help line staffed by former coaches. Even experts in fringe sports such as snowboarding are available.
Fogdog's concierge treatment may get you just the right No. 3 wood or swimming goggles, but probably not a bargain. Fogdog doesn't compete on price, notes Harrington. "If you call us saying, `I can get a Callaway driver for $389, and your price is $399. Will you match it?' the answer is `No."'
Sites such as Gear.com have already staked out the sporting-goods market for bargain shoppers. Gear.com got the attention of Amazon.com, which acquired 49% of the company in July. "We're raising the level of the closeout," says Gear.com President Ken Blue.
The Fogdog formula of dizzying selection and un-Web-like service seems to be working, though. In the first nine months of 1999, Fogdog reported revenues of $2.6 million, up from $516,000 during the same period a year ago. Industry experts estimate that the site draws about 50,000 unique visitors a day--up about 13,000 from a year ago. So far, Fogdog appears to be living up to its carefully selected name. Definition: bright spot in the mist.By Mark Hyman in Redwood City, Calif.