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.