Creating a Web e-commerce category killer has gotten harder and harder as all the easy cherries get picked by those first to market.
One of Amazon.Com’s advantages lies in the extreme consolidation of the middle tier of the distribution system where it has to deal mostly with just two big players, Ingram and Baker & Taylor. This means that the process of offering just about every book ever printed is vastly simplified over industries where distribution is fractured and dealing directly with manufacturers is the norm.
Welcome to Fogdog Sports and a market that resembles nothing less than a clear-the-benches, gloves-on-the-ice hockey brawl.
“I think they’re on their way to being the category killer for online sports,” said Tom Wyman, a vice-president of J.P. Morgan in San Francisco. “Most of the other online sports sites are playing in niche spaces rather than looking at the whole category. “But, he cautioned, they still have a long tough road ahead to get there.
That road, however, is smoothed a bit by $30 million that Fogdog has received in two rounds of funding from Draper Fisher Jurvetson, Intel, J.H. Whitney & Co., Venrock Associates, and Vertex Management Group. Success will mean a piece of a market the company estimates at $70 million in the U.S. and more than double that worldwide. The company said it is looking at an IPO sometime in the first half of 2000.
Wyman said the key to success is nailing down agreements with manufacturers, many of whom are still watching e-tailing from the cheap seats behind the goal.
“Fogdog’s advantage is that they are intensely interested in presenting products to the satisfaction of the merchants as opposed to just throwing a bunch of stuff up on a site.”
This, Wyman believes, is why Fogdog not only has a very large number of products for sale, but also why they have been able to avoid the high-cost desperation tactics that have driven many sporting goods e-tailers to the gray market to fill orders.
Wyman admitted that Fogdog still has a long way to go to offer every sporting goods product in every sport. The running shoe category is a good illustration. Overall, Fogdog offers 82 different models of running shoes (counting women’s and men’s versions of the same shoe) while top running portal Road Runner Sports offers more than 100 just in a men’s size 10.
Road Runner Sports claims to carry around 200 models of running shoes.
The differences become even more distinct when looking at particular brands. Take New Balance: Fogdog carried seven models, where Road Runner Sports carried 22. To its credit, Fogdog has roped in Nike (which Road Runner Sports does not carry) into a separate shop but is has mostly soccer shoes and only two pairs of running shoes, both trainers. Oddly, the running shoe link takes the user to an area that does not include the two Nike models.
The holes in Fogdog’s offerings were reflected in several other categories including hiking boots in which this VC Watch columnist has a personal interest.
“Stay tuned,” said Wyman of the merchandised breadth and depth issue. “They have a lot more brands to pick up. They’re nowhere near complete.”
He also said that Fogdog would be wise to look at acquiring deep killer sites such as Road Runner Sports rather than try to replicate it themselves.
Solving this issue clearly will determine whether Fogdog ends up cooling its skates in the penalty box or slapping in the winning goal.
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