HOW DO DIRECT TO CONSUMER SALES AFFECT THE SKATE ECOSYSTEM?

March 18, 2021/ Alexis Castro/ ARTICLES/ Comments: 12

When businesses were forced to shut down in early 2020 to help curb the spread of COVID-19, skate brands that had online shops in place were able to hunker down and keep sales trickling in, even if board and wheel manufacturers were unable to keep producing their goods. A lot of local shops weren’t so lucky, with no e-commerce infrastructure in place, smaller staff sizes, and little to no extra space to fulfill orders.

The direct-to-consumer online market—which has been forced into accelerated growth due to the pandemic—has shifted customers away from the typical in-person shopping experience that has been central to skateboarding since the beginning. If there is one major lesson for all brands to take away from COVID, it’s that online sales are going to be even more important going forward than they were pre-pandemic.

We all know that skate shops are the lifeblood of our industry and culture, so it’s important to find ways to continue to adapt to the online economy while still supporting shops. In one way or another, every sale a skate brand makes via their own webshop could be seen as cutting out a local shop, which makes the growth of web sales in skating potentially harmful.

We were curious how online sales are currently being managed by brands in skateboarding, so we talked to some about what their current practices are and how brands and shops can work in harmony as we move into this new future.

BORN FROM NECESSITY

Web sales are nothing new at this point, but just a handful of years ago, no brands were selling direct-to-consumer. It’s a bit unclear what brands were first to join the party, but some of today’s best-selling brands wouldn’t be where they are today without web sales.

Take Welcome, for example, which sells to big-box retailers like Zumiez and small mom and pop shops alike, and on top of that, keeps a web store stocked. When the brand first launched in 2010, it was a bit of an outlier, strictly making non-traditional-shaped boards, which a lot of shops didn’t want to take a gamble on. As brand manager Shane Cox explained, “Though we did have a handful of awesome early supporters, it was difficult to gain traction with shops on the east coast. A lot of people were not willing to just take a brand into their shops that they never heard of with riders that they had never heard of that were on ‘weird’ shapes, you know?”

To make matters a bit more difficult, shops that did stock Welcome had figure out how to promote an entirely new brand to their customers. Shane says that in the early years, some shop employees had little to no knowledge of their brand, sometimes even confusing their boards for cruisers. In order to get the Welcome messaging and branding right, their solution was to sell the decks online and throw a shape guide up on the site, breaking every board detail down for their newfound customer base.

“Nothing is better than a dude in your local shop telling you why a board is fucking cool and how it’s gonna work and stuff, so I think being able to have a place where you can have an actual page that tells your brand’s story, you can put as many details as you want on every board to give people the full rundown,” Shane explained. Bolstering those new in-person sales with a webshop that provided a breakdown of every shape they produced helped catapult Welcome into a staple brand over time. It was a business model that quickly took hold as more brands realized the importance of controlling their brand messaging through social media and websites.

LOWERING THE BAR

Selling online quickly became a necessity for new brands looking to break into the industry that didn’t necessarily have widespread support from shops when starting out. Brands from skating’s mid-2010s renaissance come to mind, like Bronze, Alltimers, and Dime, which were able to build cult followings online fairly quickly, but took some time to become skate shop staples. Now, a new generation of brands is following this model, looking to create enough buzz on social media until skate shops catch on and eventually bring their products onto the shelves.

It’s a formula that Sales Manager and pro for WKND Trevor Thompson is familiar with. “[Selling online] is a great way for a non-industry person to enter the skateboard industry, so to speak. If you have a good idea and a sick crew, you can make a company. All you need is a web store, a few thousand dollars, and an Instagram and you can do it. WKND is definitely that to an extent,” he said.

WKND, born from the mind of filmmaker Grant Yansura and his closest friends, started off as a crew making homie YouTube edits and has grown into a full-blown board and apparel brand, and even recently added a separate distribution arm, Hyperion. The brand is a perfect example of a small side project becoming a big force with the help of online sales. “We wouldn’t be a thing in the old model of the skate industry. They wouldn’t have allowed us in. But nowadays there’s no gatekeeper,” Trevor said.

ADDED FLEXIBILITY

Now that skate shops have become popular shopping destinations for everyone from cool dads to hypebeasts, many shops have started to bring in apparel brands like Carhartt, Dickies, and Ben Davis, which means less space on the racks for skate-specific apparel brands. Even large legacy brands struggle to have utmost support from retailers, as Bod Boyle, president of Dwindle, explained.

When brands prepare designs for upcoming seasons, there are many that never leave the cutting room floor because minimum order quantities aren’t met through shop pre-orders, which may become a problem of the past with online sales. “Direct sales have helped us in categories like clothing and accessories and have given our skate apparel more visibility. There are more items we are now able to produce that might have been canceled in the past,” Bod said. With the added freedom afforded by selling online, brands can now explore special projects without relying on shop pre-orders to meet the order minimums.

“Apparel [sales] are definitely higher direct because a lot of shops still aren’t even willing to try it. No matter how much success we’ve had in apparel, a lot of core shops just won’t even take it, especially cut and sew stuff,” said Shane. While their boards are commonly found in shops all over the world, the brand’s apparel may still be a bit too “out there” for shops trying to curate a specific aesthetic with their clothing offerings. The ability to sell specialty apparel items directly online means Welcome can explore their brand identity freely without being beholden to shop pre-orders.

SOME STRUGGLE POINTS

Contrary to the picture that’s being painted so far, it’s not all soaring profits and wins for brands that dabble with selling online. The added branch of revenue brings in a lot of unexpected additional costs that at times, can make having a web store feel more like a burden than a major revenue stream.

“I think you make a little bit better margin [selling online], but I’m way happier to sell to the shops,” said Sami Seppala, brand manager for Sour Solution. Sour has grown enough to afford a retail space in Barcelona, where they are headquartered, but the money from having a store where customers can come in and shop is not sustaining their brand as much as the money from selling directly to retailers is. “The main focus is the distributors and the shops. That’s how we have built the brand. Then come the website and the store,” he said. Obviously, COVID closures have slowed in-store sales even further, but focusing on the web store and retail space the least allows the brand to focus more on producing new merch to get out in bulk instead of packing individual orders of decks and T-shirts.

Shane Cox says shipping costs eat up so much of profits that selling directly online isn’t actually bolstering their bottom line much. “I don’t have the exact hard metrics, but, from what our sales guy has told us, it’s pretty damn close [to selling wholesale] with all the extra stuff. It is more time-consuming and we have to pay our guys to pack all these small boxes,” he said. Between paying for boxes, poly mailers, bubble wrap, tape, employee salaries, and also the extra space it takes to store all these products in big warehouses, any extra profit that is made from selling online starts to disappear fairly quickly.

“If you average the cost per unit, it is cheaper to ship bulk to a shop. However, the additional margin on a higher priced item covers the [added] overhead costs involved,” Bod [Boyle] said. And although Dwindle is relatively new to the online game and only makes about 5% of their earnings from online sales, it’s a bit surprising to hear they deal with the same problems that newer brands the size of Sour and WKND face.

THE HAPPY MEDIUM

Recently, skaters got a fairly public glimpse into what happens when skate brands don’t strike a good balance between online sales and selling to shops. Mike Gigliotti, owner of Lotties Skate Shop called out brands (without naming any names) for being too eager to drop product online without giving shops a chance to get their pre-booked orders onto their shelves.

When everything a brand makes is available online, it leaves no incentive for shoppers to head to their local shops to make the purchase.

Welcome is one of the brands that understands this and tries to make marketing adjustments accordingly. Shane estimates that approximately 90-95% of all of Welcome’s board sales go through shops, but they still need to push online sales to reach markets that don’t have access to the brand via shops. “We just put out a very small handful of boards and posted it on Instagram saying ‘Super low quantities, and the rest are going to be available in your local shop,’” Shane said.

Brands urging customers to check local shops for their products first is a good middle ground where everyone can get a piece of the sales at the same time. While it may not be perfect and some road bumps will come up along the way, it seems to be a reliable plan.

“I don’t know who started that practice, but I think that’s good manners,” said Trevor, praising brands who give shops time to receive and stock orders before selling stuff online. “That’s like skatepark etiquette. We just got done with Skate Shop Day, and it’s been said to death, but it is important to keep that and keep the ecosystem fed in every way. We need these shops to stay afloat, and it gives people the incentive to go in-store.”

A NEW NORMAL

While online sales may not make a brand or shop rich overnight, it could help them see out some troubling times, if they were to come up again. “It was definitely essential last year especially. When shops were all closed, we had to have places to sell stuff or we would have had to lay people off. Luckily we went through last year without having to lose a single employee. We definitely attribute some of that to our ability to sell direct,” said Shane Cox.

If done right, online sales may help keep brands stable by this diversification of sales, so long as brands continue with mindful, supportive practices and give shops perks and benefits too.

Pushing customers to hit shops first, being more transparent about their marketing rollout around the product and potentially even offering discounts or flexibility are all things brands can do to help bolster shops while still selling direct-to-consumer. It’s a slippery slope, but with some care and nuance, everyone can have some level of success.

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Comments

  1. Shop Owner

    March 18, 2021 1:23 pm

    What about giving the shops the ability to access a shared marketplace that allows them to be individual fulfillment points. Doesn’t Parade World do something like this?

    • lazy jizz eater

      March 19, 2021 12:15 pm

      yeah i shop on parade world if I can’t get out of the house for some reason

    • thatdudebehindthecounter

      March 20, 2021 8:34 am

      It does! not everywhere i think… but that’s also another middle man that thin our margin…

  2. Bumbum

    March 18, 2021 3:09 pm

    You should ask that welcome guy about kicking off all the skaters who made them popular enough to sell in shops in the first place. People don’t forget!

  3. Dona Ana kid

    March 18, 2021 5:43 pm

    Yeah for real, dude from welcome threw the homies under the bus fer real. I read somewhere he still owes some of them money. Whack shit, what a buster. Also fuck zumiez for real, for real.

  4. Humberto

    March 19, 2021 8:41 pm

    Also shitty when brands do end of year sales from their warehouse (no names but you know who you are) as a way of passing savings to their customers. All it really is is to blow out old stock. I get it. They need to get rid of it. Many of these sales are very successful. Why not pass these savings onto the shops? The brand clears space. Makes a lil on top. The shops get it cheaper pass some of the savings onto their customers. Make a lil on top. Everybody makes out and the brands show goodwill to the shops loyal to them. Win win.

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