The Hottest Sporting Goods Company You’ve Never Heard Of
This post is about BSN Sports, which introduced a digital platform for selling sporting goods in-bulk to sports leagues and teams.
When most people think of sporting goods, they think of equipment manufacturers like Wilson and Rawlings, apparel brands like Nike and Under Armour, and big box retailers like Sports Authority and Dick’s. It turns out that there is a whole other side to the sporting goods industry – and I don’t mean Lululemon and yoga mats. It is called the “team sports” business, and it is enormous: about $20 billion in annual sales in the US alone.
“Team sports” refers to the business of buying uniforms and equipment for youth & community leagues, as well as high school & college teams. The market is served primarily by local distributors, who maintain relationships with league managers, and coordinate bulk orders for equipment and uniforms. Simple enough, right? Think again. Imagine the nightmare of being asked to coordinate orders for a youth soccer league:
“Can you go collect the uniform specs (color swatches, style & cut, etc.) for each team? Make sure to get sign-off from each of the ‘Team Moms’. Then, get all 100 kids’ uniform sizes and jersey numbers. Hopefully they all remember their forms and checks. We’ll discuss referee gear, equipment, scoreboards, and other infrastructure later… we’re just getting started. The parents will be angry if the uniforms aren’t here on-time, and games start in two weeks, so make sure to stay on-top of the manufacturers and track the packages… we wouldn’t want a repeat of last year’s ‘turquoise-is-not-aquamarine’ debacle. By the way, Johnny’s mom just called to say that he had another growth spurt, so make sure and update his order from XL to XXL. When the uniforms arrive, make sure and find good local embroiderers, and verify that all the jersey numbers, last names, and sponsor logos are correct. Also, Timmy’s parents recently got divorced, so he wants the name on his jersey changed to Johnson instead of Peterson… also, he’s allergic to polyester.”
It’s no wonder that Sports Authority doesn’t even try to serve this business – it’s simply impossible to do out of a stationary warehouse staffed with generalist customer service reps who clock out at night. Local relationships and round-the-clock responsiveness are critical. Distributors connect weekly with the coaches, and often attend the games. It is a high-touch business: one study estimated that, to fulfill the average order, distributors make over 20 phone calls. Many distributors experience burnout or work-life balance issues.
The team sports market has historically been extremely fragmented, with the majority of the market served by a combination of “one-man bands” and “mom & pop” retailers. Enter BSN Sports. Under the leadership of CEO Adam Blumenfeld, BSN is leading the team sports industry into the Digital Age.
BSN’s approach was designed explicitly not to disrupt the existing relationships between distributors and their local customers, but rather to strengthen those relationships, and make them stickier and more profitable. BSN provides its distributors with iPads, as well as access to BSN’s cloud-based ordering platform. The platform includes an online catalog, real-time inventory visibility, order placement & invoicing, shipment tracking and notification, and even an online design studio for each individual team, so that customers can “demo” different uniforms and logos before making purchase decisions. Individual players can even manage their own uniform specs and payments. BSN maintains close relationships with virtually all major equipment and apparel suppliers – often with discounted pricing and access to proprietary product offerings – so that distributors can offer customers a significantly larger catalog, and at superior pricing. BSN manages all of the back-end logistics and quality control, so that individual distributors don’t have to call a Taiwanese factory in the middle of the night if something goes wrong.
The response from both distributors and customers has been remarkable. Over the last several years, BSN has been vacuuming up one-man-band and mom-and-pop distributors across the country, becoming the country’s largest team sports company by a wide margin. BSN “acquires” the distributors for a certain multiple of their prior profits, and in exchange for becoming a BSN employee, the distributor gets access to the BSN platform and a steady salary (with commissions). Typically, within four years of coming on the platform, distributors’ sales increase by 3-4x. Better still, distributors report that, thanks to the reduction in errors, paperwork, and phone calls enabled by the BSN platform, they have better work-life balance. This digital transformation has made BSN the “team” of choice for team sports distributors.
Disclosure: The author is an investor in BSN Sports.
Solid article Cameron.
Do you believe the advantage here is sustainable? I’m not sure what BSN’s right to win sustainably is here, the fragmentation of the local market makes me feel as if the model could easily be replicated – would love to hear your thoughts on whether a company with iPads, inventory management software, and supply chain relationships found on Alibaba could capture a significant segment of the market.
Thanks for the post Cameron. Very interesting idea. I would imagine BSN’s scale moving forward will provide a significant advantage over any new competition that arises in terms of power with manufacturers to command lower prices (assuming they have a solid head start). I would imagine going forward they will need to essentially treat the local distributors whom they have been buying as their “customers,” in the sense that their continued success and growth will rely upon a solid, mutually-beneficial relationship between BSN and its roll-ups. I could see this as a potential lever for competition to play with if they mess it up.