Simms President and CEO K.C. Walsh
CEO K.C. Walsh Answers The Tough Questions
Simms Fishing Products dealers were informed last week about the company’s decision to make substantial changes to its distribution plans. Most notably, starting in August, consumers will be able to purchase Simms gear through www.simmsfishing.com. The company also says it will forbid dealers to sell current products on or through Amazon and eBay.
The decision by Simms to sell direct comes as a surprise to few. Still, Angling Trade has received feedback from the retailer community ranging from anger to total ambivalence. In most cases, the reaction has been a desire to get more facts.
With that in mind, Angling Trade editor Kirk Deeter interviewed Simms president and CEO K.C. Walsh. Here are the questions and answers:
AT: How will Simms selling direct possibly benefit the specialty shop? Do you recognize that there are consumers out there who buy waders at fly shops now, who will not do that in the future?
K.C.: We see four basic consumer groups in fly fishing: 1) Traditional fly shop consumers (like myself) who like the experience of being in a shop. They want to try things on, and they’re looking for expertise. I think they’ll continue to shop that way. 2) There are “efficiency” shoppers, who work in a tower, and don’t have time to shop in stores. They shop online, and are not super sensitive to price, sales tax, and those things. 3) The “close-out” guy is shopping at consumer shows and looking for deals on close-out websites. 4) Then there is the “brand fan” that connects with Simms specifically. These are the guys who will skip a day of fishing to visit our factory. We know they exist, because the call all the time to complain that we won’t sell to them. That’s who we’re catering to by selling direct. (Note: While Simms is moving to a newer, larger facility with a showroom, the company affirmed it will not sell retail from the new location).
No fly shop in the U.S. carries 100% of our product line. We do. But we’re only selling full MSRP, with taxes, and we’re charging a shipping and handling fee. Consumers will have to pay a premium to buy direct from Simms. And when they shop online, they will have three options: Buy direct, but from the nearest fly shop, or buy through one of our 12 affiliate shops.
I don’t see this as a move to compete with fly shops, rather a way to fill in a void that is not being filled. We’re also investing significant dollars in the website and web support, in a way that ultimately strengthens the brand, and I believe will ultimately benefit our dealers.
AT: So if Simms sees added revenue as a result…
K.C.: We’re going to be investing heavily in the website, web support, and other things that support the brand. And I think a stronger brand will benefit dealers.
AT: Orvis, Patagonia, and others have long had their own direct sales platforms, but Simms is often considered a different animal in that context, because it was born of the specialty fly shop. Is this a change in philosophy?
K.C.: Our number one core value is that “Specialty Matters Most.” We depend on the health and vibrancy of the specialty dealer, and we intend to grow the brand through the specialty dealer. I firmly believe that moving to clean up our distribution (shutting down retailer sales through Amazon and eBay) will grow the specialty shopping. I don’t expect all dealers to believe that now. But if we see that direct sales are having a negative impact on specialty dealers, we will stop doing it.
AT: Do you run a risk on the inventory/fulfillment side? If a dealer cannot get product X from Simms, but his customer can get it by ordering direct from Simms, isn’t that going to hard to explain in the context of not competing with dealers?
K.C.: Good point. We have actually promised our dealers that they will take precedence over Simms on inventory calls. Unlike (some of our competitors), our inventory is all in the same warehouse. If we start to run low on an item, we plan to take Simms off the Buy Now option list.
AT: Do you think this opens the door for other companies that now only deal through specialty retailers to follow suit? Is this the tip of the iceberg?
K.C.: When I wake up in the morning, I think about three things: The Simms brand, the people who work for the company, and the specialty retailers. I know if we clean up the distribution situation (removing eBay and Amazon) and solidify the Simms brand, that’s going to lead to more stability. I think that’s also going to drive more customers. So I know this decision is good for Simms. But I can’t tell you about other companies, and I can’t say their plans or possible actions factored into our decision. I think this is a decision all manufacturers have to make for themselves.
AT: Do you really think you are going to be able to clamp down on sales through eBay and Amazon?
K.C.: Yes I do, I think we can and we will. The issue is that these sales are largely undifferentiated, which turns retailers into showrooms. Amazon has no differentiation. When I last looked, there were 18 different listings for our G3 waders. What I see on Amazon is a junk show for our brand. Now, the counter argument of course is that we get more eyeballs this way, and increased exposure is better for the brand. If that were true, however, we’d open Wal-Mart as an account (not happening). What I want to see at the end of the day are beautiful fly shops, and beautiful online websites that work together and promote the sport and the Simms brand effectively.
5 Comments
While the Platte River Fly Shop is hesitant on the direct sales decision Simms has made, we are in full support of Simms requesting it’s dealers to remove products from Amazon and Ebay. All one has to do is look how these two selling platforms cannibalized the fly rod market. Every Tom, Dick and Harry is selling factory fly rods with full warranty on Ebay and policing of this has been a nightmare. Our fly rod sales have eroded over the last 10 years and the shop business plan has changed extremely in the amount of fly rods we stock. Patagonia is also informing it’s dealers it is going to forbid sales on these two platforms and we sincerely hope that other manufacturers in the industry will follow. Yes, in the near term it will be painful for those dealers that have done the right things with their Ebay and Amazon stores including ourselves, but it will far outweigh the damage these platforms create for all specialty fly shops.
Our number one core value is that “Specialty Matters Most.”
Actions speak louder than words.
And don’t act all surprised when one of your former retailers takes your product over to China to have it cloned.
As a retailer, I understand that it’s difficult to carry all the products from a very broad product line and we try to choose the products that sell best for us. I’d be naive to think that a vendor selling direct won’t cut into my shop sales especially in the short term. But there is a way we can make this work. First, by playing fair-selling at MSRP, and second by better communication. I already deal with venodrs who sell direct, and the ones who “play by the rules” don’t affect us as much. But the ones who”give the store away” have detrimental affects on our business with that brand. By better communication I mean telling retailers about purchasing trends that are happening on your website in our market so we can make our fill-ins and preseasons accordingly. Let’s continue to make this a 2-way street and not knock down the specialty retailers who helped get you where you are today.
Craig Amacker
Fly Fishing Manager/Store Manager
Fontana Sports Specialties
231 Junction RD
Madison, WI 53717
(608)833-9191
B.S. KC,
Great, you made it a point to not have your items on Ebay and Amazon. Good for you and I wish all the companies would do that. But there is no need to compete against your dealers for the business out there. Remember fellow dealers, once it starts, you will not ever see it return. Slowly more and more companies are selling direct, and this is only the beginning. Simms and the rest of them can do a better service for the dealers if they want by cutting off the dealers that violate thier policies. Do it to a few out there, and everyone will get the message. Quickly the reponse would be, “not to discount or screw with us”. If more companies did that, I believe all the dealers would wake up, and then everyone would be on an even playing field. Instead, you have a few out there that discount everything with “on the side websites”, or go thru other avenues to not get caught. Or little stores or dealers that have every single item on thier website that you have, but they stock almost nothing. It’s a slippery slope, and I feel the industry is loosing it’s grip. Hope not.
Eric, I had to reply to your post so that industry people could hear another side to the story. In your post, you stated…”But there is no need to compete against your dealers for the business out there”. The irony of your statement is that many companies are going DTC because dealers are NOT ordering or supporting many products which they should. How is it “competing” when a shop only supports 20 products out of a hundred or so locally appropriate products that a manufacturer offers! Owning a fly shop for almost 20 years, I fully understand the issue. There are many fly shops that don’t preseason and only carry the bare necessities. When Simms visits your & other shop’s websites, there are many appropriate products which are not offered. It is understood how many shops don’t have cash flow, are scared of the internet, don’t do social media…etc, but what is the answer? I had a shop owner tell me over the past month that “you think ecommerce is here to stay?” I have listened for years, shops talk about building websites, integrating their POS and building their on-line businesses, but the reality is that in my territory, the majority of the dealers don’t show a fraction of the Simms products on their websites! How is Simms supposed to offer better programs, prices and policies when the consumers can’t find their products to look at or consider purchasing? Times are changing and the ball is in Simms’ court to show their dealers that DTC doesn’t have to be a death sentence, but instead a means to become a better partner. What if instead of looking to “steal” your customers they actually sent customers to you! What if Simms with DTC drove brand strength even higher and drove customers to local dealers thru the web! Simms dealers are the place consumers go for info, knowledge and expertise. They are the “local showrooms” where consumers can get advise and touch the product. Simms has NEVER existed without dealers and DTC will not change their opinion that Simms dealers are the backbone of the brand! Many brands that went DTC did not ruin their brand by going direct, but rather did so by over distributing their brand in box stores like Belks, Bealls and other local department stores. Simms making sure it will cost MORE to purchase from them will quickly show dealers not to worry. When someone decides to pay sales tax and shipping and handling from Bozeman MT to Vero Beach, FL…they will come running in to buy it. (or order it from you with no shipping/handling fee since you may not have it in stock). I hope to not offend you with this post, but it is tough to read when I know how little Simms products are in many stores that state they are a “Simms Dealer”.
Who is the company that is #1 in getting new fly anglers into the sport? Is is Sage, 3M, Winston, Simms…who? NOPE…there really isn’t even a second place. ORVIS. I heard in 2011 they got over 10,000 people to take their fly fishing 101 course. Why is this? Why doesn’t every major manufacturer in fly fishing run company initiatives in bring people into the sport to insure a vibrant and growing industry? The answer usually comes down to money! Orvis is more than likely the only company with the money to run this kind of costly campaign. My opinion is that if we had all the major companies properly conduct a DTC model and used the funds to not “compete” with you, but rather send new anglers to your shop, this industry could start growing again instead of being stuck like a dog chasing its tail.
The PGA is committed to bringing 10 million NEW golfers to the sport of golf by 2017! Wow…what a commitment! Visit the First Tee website and see for yourself! Imagine being a golf pro shop and having an industry organization committed to the sport getting new participants! Why doesn’t AFFTA have some sort of initiate like this? More than likely the first statement from them would be revolving about money! If Simms and the rest of the major players look at DTC as a means to be able to grow the sport and send people to local pro shops…I am listening! Give them a chance…change does not have to be bad.