Burton To Tighten Online Distribution

Beginning in August, P2P links such as these on Burton.com will be a thing of the past.

In the wake of a season that saw the market flooded with product, forcing almost every retailer into the unprecedented position of going off price on most SKU’s before Christmas, Burton has decided to tighten control of its brand’s online presence and distribution by ending its Product to Product (P2P) affiliations, selling hardgoods direct online, and enhancing its Internet dealer agreement.

“We felt that controlling our brand and brand presence online is our number one priority right now,” says Burton Senior Vice President of Sales Clark Gundlach. “Taking the P2P links off of Burton.com was a component of that. When someone comes into Burton to search a product, a price, for the right product to ride, we want to make sure that rider does get the right information, and when we send them out of Burton…we lose control of that message.”

Gundlach says another major reason for this decision, which will take effect when Burton’s new site launches in August, is to control distribution and the disruptive amount of volume being sold through the Internet channel. “”Eliminating a P2P link to an on-line partner will directly affect the amount of product purchased by that dealer. Again, our strategy is controlling the distribution inside the channel. Ultimately we believe this strategy will provide us with control….so the Internet environment is not predatory,” says Gundlach.

Eric Kuester, owner of Milwaukee’s MODA3 and a long time Burton P2P affiliate illustrates how P2P has had this effect. In order to get P2P designation, shops had to increase orders to often-unsustainable levels, multiple shops were doing so, and manufacturers were willing to continue adding vendors. “That’s part of why the industry is in the state it is right now,” says Kuester. “We were making calls like going from a brand where we’d be doing 10k at brick and mortar and just sprinkling it online, and then see what was the next step to get P2P and it would be 100k, and we’d be like ‘cool.’ And that’s a huge part of the flood.”

Jake Parr, president of Burton P2P affiliate Colorado Boarder, believes the changes will be positive for his shops. “Jake Burton is now out of the driver’s seat of our business and Jake Parr is back in [it],” says Parr. “They can’t tell us what we have to buy. It was really successful for the amount of traffic they sent us, but they made us buy so much product that if there was ever any profit it in it, it was all tied back into the product and we had to pay them or take losses…I think with the orders we can now place we can actually make money on Burton,” adds Parr who says he will be decreasing his Burton order by around 80 percent.

Authorized Burton dealers will still be able to sell product through their individual sites, but Burton is requiring that they sign a new dealer agreement that will specifically control presentation, pricing, and promotional cadence, all of which will be strictly monitored by the company to ensure compliance.
“As I understand it, Burton’s position is they are taking these steps to protect their brand image and better preserve MSRP online,” says Tactics Co-owner Matt Patton, who is currently a Burton P2P partner. “In light of some of the things that have gone down the last few seasons, it’s not that hard to see why. Everyone in the snowboard industry probably has an opinion on the causes and the degree to which Burton is itself to blame. I’m all for Burton taking steps to protect their brand and preserve margins. I think that’s a good thing for the entire industry. But I’m not convinced a brand has to become a retailer to accomplish those goals. It seems to me the best way is by working really hard to manage the supply and demand equation. Once production starts outpacing demand, things eventually go sideways whether or not a brand is selling direct.”

The trend of going direct online is nothing new as the retail landscape continues to evolve. Burton has been selling softgoods direct for more than four years and companies like Oakley, Quiksilver, Hurley, DC, Nixon, Patagonia, Vans, and Zoo York are just a few of the action sports brands going straight to consumers.

The Internet channel and E-commerce is rapidly reshaping the industry and retail in general. In an evolving world all companies are focusing on what will make the most sense for them as applications like the upcoming Google phone’s barcode scanner will allow instant, international price comparisons. Retailers like Kuester believe that P2P is becoming less relevant as consumers become savvier and search for product through Google or other channels, however he does feel this will cause a bit of a sting. “Obviously it’s never a good situation when you lose a link,” says Kuester. However, “at this point, with what happened this year, they had to make some sort of call.”

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