Sporting goods company Global Sports, Inc. (Nasdaq: GSPT) said Monday it has formed Global Sports Interactive, a new unit that will operate e-commerce business for retailers with combined annual sales of $1.6 billion (US$).
Global Sports said it won exclusive agreements to run e-commerce for The Athlete’s Foot, Sports Chalet, MC Sports, Sports & Recreation and one other retailer Global refused to identify because its web site isn’t up yet. Global predicted the big names with well-established customer bases would drive traffic to its Web sites.
The latest announcement likely will give Global Sports’ stock another boost after the price more than doubled from $15 in just over a week. PTraditional Net Competition
The move represents an attempt to gain a stronger foothold in a niche market with enormous, though still largely untapped, potential: selling sporting goods and sports apparel on the Net. Global, which reported 1998 revenues of $131 million, will compete against both traditional sporting goods retailers and Internet-only distributors like Just Balls! and Fogdog Sports.
Global’s interactive division will handle all e-commerce functions for the new partners, including building and maintaining Web sites that will serve as the retailers’ sole Net presence. Global will order, warehouse and ship merchandise sold on the sites. Launch is expected by the 1999 Christmas shopping season, Global said.
Origins of New Venture
The new division grew out of Global Sports’ effort develop a Net presence to sell its own products — Ryka women’s athletic shoes as well as discount athletic shoes, clothes and sporting goods. The company said it quickly recognized the merits of teaming with other well-known brands.
“What began six months ago as a search to extend Global’s existing divisions into cyberspace quickly evolved into what we believe is the next generation of the Web-centric e-commerce model,” said Michael Rubin, Global Sports chairman and CEO. “We realized the best opportunity in the online sporting goods category was leveraging the tremendous built-in advantages of leading traditional retailers.”
Each of the retail partners will integrate its Web site address prominently in marketing and advertising efforts, for which they spend a combined total of more than $50 million a year, Global said.
Robert Corliss, CEO of The Athlete’s Foot, said his company teamed with Global because of its “commitment to developing world-lass technology and operating systems.”
Global said retail partners will receive a revenue share of online sales generated from the sites that will top the average returns in the sporting goods industry.
In developing the Net sites, Global has teamed with some of the best-known tech and creative developers. They include Organic Inc., an online business builder whose clients have included Barnes and Noble, Gateway and Iomega, and ClientLogic, which provides customer service and order fulfillment for customers including Dell Computer, Readers’ Digest and Warner Brothers Studio Stores.