Online Sporting Goods Market Sees Consolidation With Recent Purchase

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Consolidation is continuing in the online sporting goods industry with yesterday's announcement that Altrec.com Inc.acquired rival GreatOutdoors.com from Cox Interactive Media in a cash, advertising and promotions deal valued at $10.5 million.


The acquisition of GreatOutdoors comes exactly one month after Quokka Sports Inc. bought ZoneNetwork.com Inc., owner of outdoor lifestyle sites MountainZone.com and SkiResorts.com.


"I think the biggest challenge probably is that we're entering the second wave of e-commerce and getting beyond the more simplified online purchase processes," said Erick Soderstrom, vice president of marketing at Altrec. "Being able to provide a complete online commerce experience is probably the biggest challenge."


The absorption of the 5-year-old GreatOutdoors is expected to boost content on www.altrec.com with additional features on outdoor activities like camping, mountain biking, skiing, paddling, snow sports, cycling and climbing.


Content from the Austin, TX, service will complement Altrec's commerce offering, which includes deals with more than 300 sports retail brands that are sold on the two-year-old site.


"Our goal here is to provide a complete outdoor destination for outdoor and active travel enthusiasts," Soderstrom said from Altrec's Bellevue, WA, headquarters.


Soderstrom said the GreatOutdoors site will retain its stand-alone status during the summer, but he expects to integrate the site with Altrec by the fall.


Competition is extremely rife in the outdoor and active travel industry for products and services -- an offline and online market worth an estimated $78 billion, according to data from the U.S. Department of Fisheries and Wildlife and the Outdoor Recreation Coalition of America.


On the Internet-only side, Altrec's competitors include the highly trafficked fogdog.com; PlanetOutdoors.com; iExplore.com; gear.com; John Elway and Michael Jordan's joint venture, mvp.com; and Global Sports Network, which manages the online arms of retailers like The Sports Authority, The Athlete's Foot, and Sports Chalet.


Traditional retailers such as Recreational Equipment Inc. continue to lead the market. The country's No. 1 consumer cooperative with more than 1.7 million active members, REI last year sold $621 million worth of outdoor clothing and gear for camping, hiking, winter sports, paddling and cycling.


REI Online, at www.rei.com, is particularly worrisome to Internet-only players like Altrec. The REI site alone last year reported sales of $41 million, up 237 percent from 1998 and arguably the online outdoor and sporting goods industry's highest revenue earner. Sales last year for REI-Outlet.com, a sister site, were also up 221 percent. The retailer in 1999 also made an investment in Adventureseek.com, styled as an online portal for active travelers.


"It's a competitive space," Altrec's Soderstrom admits. "We have a very worthy adversary in REI. It's a well-established brand [and] well-positioned."


REI's success has a lot to do with its multichannel strategy. The Seattle retailer found that 45 percent of its online customers also shopped at REI's bricks-and-mortar stores, over the telephone or via its catalog. Moreover, customers who shopped through more than one channel bought more overall from REI in 1999 than in 1998.


The 62-year-old brand recently installed Web kiosks and Internet-enabled cash registers in all 54 REI stores across 23 states. Consumers now can place online orders for items not available on the store floor, combining online and offline buys into one transaction.


Putting a tangible face to its online brand and gaining credibility is key for Altrec. It recently received a $5.7 million investment from venture capitalist Transcosmos USA to enter Asia, followed by an exclusive e-commerce deal with Virtuoso, whose network of 5,000-plus independent travel agents record combined annual sales of $2.5 billion.


"We do feel our broader focus on lifestyle and growing up in the Internet space is something that we see as an advantage that allows us to be a worthy competitor to them," Soderstrom said.


Also, Ray Johnson, former Nordstrom Inc. co-chairman, was hired as strategic advisor to bolster Altrec's retail systems and customer service.


In the months ahead, the online retailer will sponsor events like the May 26-30 Telluride Mountain Film Festival, National Trails Day on June 3, WOMAD USA in July, and some ESPN and ESPN2 TV programs that Trout Unlimited is producing.


"Our focus here is on brand-building lifestyle and activity-specific venues," said Christopher Doyle, vice president of public relations at Altrec. "The results are solid grassroots marketing that generate a highly qualified customer base for Altrec.com and generate revenues for our partner nonprofit organizations and their goals."
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