How bypassing retailers helped GoLite cut costs and increase innovation
Demetri Coupounas, of outdoor gear manufacturer GoLite, talks to Andrew Skurka about their direct-to-consumer strategy, and how bypassing their traditional retail partners has helped them lower prices, tell a better story, and build better relationships:
Andrew: Over the last 1-2 years GoLite has transformed its business model, from being focused on its wholesale business (the traditional model, whereby a manufacturer sells its products to a retailer which then re-sells these products to consumers) to being focused on direct sales, through its website and stores. Can you explain what the model looks like today?
Coup: In the US and Canada, virtually all sales are now direct to customers through our website, our town stores, and our outlet stores. In all other markets, we sell through distributors that decide what in our line to purchase and resell, as well as how to price and market it.
It’s a great interview, and you should read it all now, but I’m primarily interested in how GoLite are exploiting the opportunities offered by distributed digital channels (and how they complete the loop with a direct-to-consumer physical store experience). I don’t know what it’s like the US, but in the UK, the mass-market retail channel for outdoor goods is very poor. It’s a market begging for disruption, and GoLite’s approach seems to be working pretty well for them so far:
Coup: We now sell far more through our website and stores than we ever did through traditional outdoor retailers.
These results are due to a combination of being able to: present the complete brand, holistically; tell the lightweight and sustainability stories with integrity; and pass on to our end customers the dramatic cost savings that this model realizes … We were dissatisfied with how slowly our innovations were accepted in the traditional sales channel, as well as with how diluted the message was by the time it got to the end customer. Previously, there was a merchandiser, buyer, sales rep, store manager, and sales staff between GoLite and the end customer. Now there is nobody between GoLite and the end customer.
As well as lowering costs, this disintermediation closes the loop between manufacturer and customer, strengthening their innovation cycle:
On the backend, we are able to service our customers better because there is a direct and extensive stream of information (e.g. popular products, sizes, and colors; feedback about product design and store layout; etc.) coming into our systems daily, whereas before this feedback loop was much more diluted and delayed. … We also no longer have to sell buyers on entirely new products, convincing them that there is a demand. Instead, we can simply make a single production run and watch how quickly it sells. If it sells quickly, we’ll order more next season; if not, we’ll order less, or discontinue it. This sort of rapid, detail-rich data feedback was simply not available in the past. And with so many more voices weighing equally in the process, it’s a more democratic way of doing business.
Bypassing traditional retail intermediaries is one of the most exciting opportunities for brands, in the new world of distributed digital networks. I hope to see more brands succeeding as GoLite have.