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Callaway Reworks Online Sales

Nov. 20, 2006     By     Comments (2)

In the slow growing golf market, the relationship between manufacturers and retailers has become almost adversarial. Will Callaway's recent move calm the waters or fan the flames?

Bag DropCallaway Golf introduced a new wrinkle in club marketing a couple weeks ago that, if nothing else, is pretty innovative. They've become the first manufacturer to sell their clubs and accessories online directly to consumers.

But perhaps the bigger news is that they're attempting to channel those sales through traditional brick-and-mortar retailers.

Among those I know in the golf retail business, Callaway hasn't engendered a lot of love. Their sales policies are often viewed as restrictive and unhelpful in achieving reasonable margins. The new concept sounds good, but will it work? Here's the story…

The Devolution of Golf Retailing
Once upon a time, there were just two types of golf retailers: "green grass" accounts run by PGA pros at clubs, courses, and ranges and "off course" accounts like sporting goods stores, department stores, and discounters.

Back then, club makers reserved their "pro line" equipment for club professionals and aggressively worked to insure their best product never showed up at off course shops. Ping was especially big on this. The practice helped protect price and foster loyalty amongst their biggest customers – club pros.

Thus, the only clubs you'd see in a sporting goods store were low priced entry-level lines. I remember Wilson's "Sam Snead Blue Ridge" brand of woods and irons. What garbage they were, even if they were fondly remembered as many golfers' first set of clubs.

But times and retailing have changed. Big box stores like Dick's (which just got even bigger with the Golf Galaxy purchase), Golfsmith and Sports Authority now wield a lot more clout than the club pro. Tellingly and ironically, Dick's is the largest employer of PGA professionals in the U.S.

Add to that the boom in online retailing with the proliferation of sites like our buddies at edwinwatts.com and the behemoth that is eBay and it becomes apparent that there are many more channels of distribution to a market that has cooled in recent years. That spells intense competition and that, in turn, spells change.

Callaway's E-Commerce Gambit
Callaway logoClubmakers have been loath to directly market their clubs to consumers for fear of alienating their retail customers. Callaway is attempting to skirt that problem by channeling their online sales through retailers.

When you go to the Callaway "shop" site you're presented with almost all of Callaway's clubs and accessories as well as a good portion of the Odyssey putter line. As you make your selection, you can choose many custom options like length, shaft and even the number of wraps on a grip.

Once the order is placed, Callaway notifies retailers (who have signed up for the program) in your area. They respond if they have the item in stock and Callaway then chooses the retailer who will fill the order. Shipment is to occur within 24 hours of the order being placed. Thus, your order is supposed to come from the nearest possible location saving shipping time and costs.

When launched, the program had about 270 retailers signed up including a good number of course pro shops as well as Dick's and Golf Galaxy. Joe Steranka, CEO of the PGA of America, has blessed it, noting that it gives his members access to online sales while maintaining the "legacy relationship" between retailers and the manufacturer.

It's Still a Buyer's Market
Clicking through Callaway's online store, it felt like a typical, slick online buying experience. What you get is access to most of their products, custom order options, and Callaway's guarantee of satisfaction.

Callaway Order Page Example
Want to buy an FT-3 driver? Callaway's site lets you pick shaft, length, grip, and even wraps under the grip.

What you don't get is a chance to hit clubs or try on shoes and clothes. You also don't get discounted prices unless it's a Callaway promotion. And there may be the rub.

People shopping online have access to many, many different outlets where they can quickly compare prices. Whether Callaway's suggested retail pricing and shipping costs can stand up to the competition of comparison-shopping will be interesting.

In the End…
While innovative, this new tactic presents some questions. I have to wonder about Callaway's selection process. Would they give PGA pro Marty Strumpf at Farmer Brown's Golf Center the same shot at a sale as the Dick's Sporting Goods a few miles away at the Freehold Mall? Especially since the Callaway sales rep seems to have no interest in calling on Marty's account?

I also wonder what this means for existing online retailers like edwinwatts.com. It would appear that, in some ways, Callaway is going into direct competition with them.

The answer may be that as any industry evolves, it seems the big get bigger. I'll be interested to see what the reaction of my retailing friends is as this program rolls out. What do you think of it?

Posted in: Bag Drop Comments (2)

Discussion

  1. Marty Strumpf says:

    I am not overly concerned whether Callaway will give me the same shot as Dick's. What I am concerned about is the fact that I will never have the ability to maintain the same inventory levels as Dick's. If one of my customers wants that FT3 Driver with that "special" shaft, I can get it for him through special order. It will probably take a week to 10 days. Dick's or any other "big box" account has a far greater chance to have that item in stock. Hopefully, I have cultivated my customers relationship and loyalty to the point that he is willing to wait for the club and give me the business. After over 20 years as a golf pro I also know that golfers are a fickle bunch and when they want the newest or the best and can get it NOW, they will choose NOW over loyalty. The overall concept makes sense from Callaway's point of view-they seem to be trying to replace Froogle, Price Grabber, etc. and by doing so steer business to the accounts that support their product line. Will this in the end be another blow for the "little guy"? Only time will tell.

  2. John Reynolds says:

    :eek: In response to Marty I'm sure the little guy (of who'm you speak" is the pompous Pro who has been there since year dot. (my heart bleeds for you) It appears to me that golf is still as stuck up as it ever was and Callaway / Ping / Taylor Made and a few others (including pros) want to keep it that way. I have been trying to set up a site selling clubs etc but unless you are a courses original pro or are lining the pockets of manufacturers who lets face it make a club out of metal in chinese sweat shops in 15 minutes and then sell a set for $2-2500(us) "See Callaways website" you're out of luck. The internet is the only place for new entrepreneurs to stand any chance of achieving a reasonable living from scratch, yet these elitist snobs don't like it, not to mention they have spies on E-Bay asking sellers for serial numbers etc and then getting the product banned? not me I hasten to add. Also Callaway (see there website) state forcefully don't buy from E-bay as all there listed retailers have been told not too sell on E-bay or auction sites? I think this says it all perhaps E-bay should buy them out or at least say "Don't buy Callaway clubs as theyr'e too good for E-bay, we shall see. E-bay is the only place for the little guy to get started without paying $100 per page for a website + everything else. I think you get my point.

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