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Sunday, November 19, 2006

Callaway Direct to Consumers Like No Other

Retailer Friendly E-Commerce Platform

Callaway Golf Company has announced a new e-commerce platform that attempts to transcend channel conflict with its retailers.  Callaway is going to sell direct to consumers, which would typically create direct competition with its own established retail customers.

Callaway hopes to transcend that conflict with good customers that have helped Callaway grow their brand out not to mention providing on the floor services from sales, training, fittings and even lessons.  Callaway fields the customer in through their websites landing.  When the customer places an order, the order is electronically routed through the web and notified the retailers that might service the order the best.

Callaway uses an algorithm that includes criteria such as inventory, proximity to the consumer and the ability to be able to ship within 24 hours.  The retailers receive the notification of the order and respond if they are interested.  Callaway's system makes the judgement call provides the winning retailer notification.  The product ships within 24 hours and the consumer gets their golf club fast and efficiently.


In addition to working with their retail customers as opposed to competing with their customers, Callaway's web site provides additional benefits.  It allows the company to market the widest possible range of their product directly on the internet.  Not all of their existing retail customers can carry all of their products and accessories.  This provides the consumer with the best chance of finding exactly what they are looking to purchase and reduces the potential of a customer walking into a retail store looking for a Callaway product and getting diverted to a competitor product or accessory.


Callaway has suffered from deep discounting that has taken place in their channel over the past years.  Channel conflict, excess inventory, and stock balancing have taken a toll on the company.  They have had to resort to several extreme stop gap measures in an attempt to stem the bleeding.


This move signals a build out playing to Callaway's strengths as a brand name.  It shows initiative and the ability to come to terms with their customers, over 270 retailers have signed up!  It also shows a recognition of the holistic issues that plagued their channels and a move to make holistic repairs and restructure the foundation of the channel to insure its future survival.  Among other benefits this more streamlined approach should help the entire channel remain healthy, reducing inefficiencies that lead to supply chain misses and compounded later by a rush to build out creating excess inventory and a vicious cycle of discounts, fire sales and sales of products in exchange for media spending funds.