#71 The Ballketing Letter
How Footdistrict is winning in the European sportswear market, how bad are things for Peloton?, winning in B2B on "uniqueness", minimum viable product market fit, the EPL Sustainability Index & more!
Hey there Ballketers,
Welcome to post #71! This week:
We look into how Footdistrict, one of the fastest growing startups in Europe, is winning in the premium sport apparel market.
An interesting fact that demonstrates the power of the “human brand.”
As usual, the best content of the week aimed at helping you take your sport business to the next level.
Let´s get down to business!
It took Watford F.C. ten years to get 170k YouTube subscribers.
It took Watford F.C. goalkeeper Ben Foster one year to get 1M YouTube subscribers.
Harry´s Marketing Examples
Not really a quote, but a surprising fact either way. As Harry explains, it makes you think about the power of the “human” brand vs the sport property. And this is not true of only sport teams; if you follow the space, you notice a similar pattern in B2B businesses all around…
Footdistrict: Winning in the European premium athleisure market
On this week´s brief we cover the story behind Footdistrict, a premium sport apparel reseller from Spain, and how they have become one of the most remarkable startup stories around (In fact, they are listed #29 on Financial Time´s ranking of the fastest growing startups in Europe).
Before moving on though, we wanted to credit this interview on Product Hacker´s podcast to Footdistrict´s two co-founders as a source for many of the things we share with you today.
Origins & business model
Footdistrict was founded in 2012 by two entrepreneurs from León, a region located in the north of Spain and their vision was to become a premium sneaker D2C seller that sold limited editions from top tier brands through their marketplace.
At the beginning though, it was challenging to convince those brands to lend them unique designs of products, given their lack of credibility in the market. Nonetheless they were able to get the business off the ground and become a better known and appreciated brand (both by sellers and buyers). This helped them sign partnership deals with the most recognized players in the market and, ultimately, receive premium products from them to sell on their website.
Today, Footdistrict has diversified its product portfolio and resells limited editions of items across the entire apparel category from brands like Nike, Jordan, Adidas or New Balance.
The pillars behind Footdistrict´s business model
As of today, the business has revenues of about €17 million (vs €2 million in 2016) and their current model relies on three main pillars:
An exclusive product: They pursue a “profit driven” business model rather than a “volume driven” model.
The concept store: This was the element that marked their evolution from an online pure player to an omnichannel business.
Contrary to what is usually seen in the fashion industry, their goal is not to fill the store with a high number of SKUs, but rather develop an “experience driven” store with fewer SKUs that is able to offer moments worth sharing.
One such example is “The Jordan Cube,” a spot inside the store where once a customer places a Jordan brand shoe on a special cubicle, a set of images from Michael Jordan´s career are shown inside the walls of the cube.
Check it out for yourself on the following video:
(Footdistrict currently has stores in Madrid and Barcelona and in case you were wondering, the cost to build stores like these were around €250K in Madrid and €500K in Barcelona.)
Presence in international markets since “Day 1.” Footdistrict understood that the Spanish market did not have enough demand for them to scale, which prompted the decision to sell in other markets from the beginning. In addition, the international customer drove a higher “Average Order” since it was more used to this type of business than the Spanish buyer.
In essence, they challenged conventional industry practices given their particular market dynamics and they seem to be winning at it.
Footdistrict´s growth levers
As explained by their founders in the interview referenced above, they pulled on several levers to drive growth.
Granting “exclusivity” through email: They were able to build a huge customer database by assigning preference for new product launches to those who signed up to their newsletter.
Regardless of your business model, pre-selling is a fantastic way to test demand and create expectation at the same time.
They powered a referral system to acquire new customers recognizing word of mouth as the best organic channel to drive growth.
User generated content and word of mouth was also activated through the amazing retail experiences, which benefited both Footdistrict and their partners.
A big effort in “community led growth” from the user side, for which the founders highlight two key lessons:
Be authentic: Make sure you follow and focus on your brand´s purpose
Be “obsessed” in terms of the experience your customers look for
This is a similar dynamic as the one we discussed last week through Golfmanager´s business case.
With regards to brand partnerships, two other aspects to consider:
Respect the unique positioning of the brands you work with. In essence, Footdistrict became an advertising agency of sorts for the brands they collaborated with thanks to this approach and they were able to secure long term deals because they aligned with their positioning.
Once you achieve success with one major customer, interest from other brands will surface.
In a way, it activates a sense of FOMO among brands that compete with each other.
In terms of entering new markets, they relied on Google Ads & Affiliates to drive growth (performance-driven approach) and with time they pretend to shift to a more brand-driven approach.
Lessons to learn from Footdistrict´s business case
As usual, we want to share with you the lessons we believe that any organization in the sports industry can learn from Footdistrict´s remarkable growth.
Carry out deep market research: Footdistrict´s co-founders were not industry insiders but they did their due diligence; they studied the market, identified the trend towards exclusive sports apparel and, ultimately, they benefited from a little bit of luck while “riding the wave” of the industry.
This idea goes back to this episode of “How to Win w/ Peep Ladja,” in which they discuss that creating a category relies on witnessing a change in the world (what is or needs to be true) but also it needs to be aligned with the timing of the market (You can´t be too early or too late).
Once you identify and validate your niche, diversify your business through additional services based on their needs and wants. Footdistrict not only offers exclusive apparel designs, they developed unique retail experiences as an extension of their brand.
What should you focus on first, the product or the tech stack that enables the business?
They believe it is more complicated to validate the product rather than build the tech related capabilities of the business. In essence, iterate until you find product-market and channel-market fit with the minimum technology possible and then build from there.
Back in 2017, the industry still had not fully embraced the D2C model, so opening the retail store was a way to adapt to the context of the time and also, comply with what the brands they wanted to work with expected from them.
And while around 90% of their revenues come from online sales, they consider the store one of their best marketing investments / assets rather than a cost.
From a pure profitability standpoint opening it was not the optimate thing to do, but it did bring on many additional benefits that actually enabled them to unlock the next phase of growth.
All this to say that profits need to be analyzed at the overall level, and not on individual tactics.
Moreover, in past editions of the newsletter we have shared examples of the framework developed by Category Pirates in which they define that winning businesses have a physical product, a digital service and an awesome in-person experience. Footdistrict is another prime example of the power of this framework for any business out there and the results seem to back it up.
For the time being, Footdistrict´s model seems an interesting source of additional revenues and even advertising for sport apparel brands that want to test out new models and market dynamics. It remains to be seen though, how this will evolve if the push towards more D2C from major brands keeps increasing. At the end of the day, organizations like Nike are embracing D2C as a way to get more access to first party data and own the entire buyer journey, which implies that other brands will follow suit
On the flip side, Footdistrict may have built enough brand equity from both the buyer and brand side which will help them maintain their amazing results thus far. In addition, they have been able to build a capable business around a physical product, a digital service and an awesome in-person experience, which gives them an opportunity to build sustainable competitive advantages.
This will be a very interesting business case to monitor, so stay tuned!
Analyzing Peloton´s business model from all angles.
The team at eMarketer addresses the challenges and the strenghts that Peloton´s business model is facing at the start of 2022. They discuss everything around pricing, the strength of their subscription and retention numbers, intensity of competition, if they brought forward demand or expanded the market and, finally, if the option of being acquired by Apple is credible or not...
This ties to some of the things we covered in our blog, so check it out if you want to dig deeper.
More on potential uses of NFTs in Sport
Joe Pompliano interviews Candy Digital´s CEO and they share an interesting take on the potential for NFTs in the world of sport. In particular, toward the end of the episode, they give out tangible ideas of how sport properties could use the technology to develop more personal relationships with fans.
Raise the bar on your “strategy game”
How your brand can win in “uniqueness”
This episode of How to Win can be of great value for those of you working in SaaS. Some of the lessons you could learn:
The value of storytelling, the importance of “riding the wave” of the category and doubling down on what makes you “unique.” (Something that Footdistrict did very well as we have just seen…).
Over time, the category matures and your product becomes a commodity; invest in your future competitive advantage while milking the current one you have.
Embed differentiation into your business model through the “can´t-won´t” test:
“What is something you can do that your competitors can´t do?”
“What is something your competitors won´t do?”
You need to pass the “can´t-won´t” test to avoid becoming a commodity.
How to create “Buyer Personas” that are actually relevant
Buyer personas are not about demographics; it is more related to understanding why and how your buyers and customers make decisions. In this episode of Everyone Hates Marketers they discuss a framework that starts with this question you should ask them, and even to those potential buyers that you did not end up winning:
“Take me back to the day when you identified the problem and you decided you needed to get a solution to it.”
Random content for better marketing
Brand partnerships masterclass w/ Dude Perfect
The Social Pros Podcast interviews Dude Perfect´s Head of Partnerships & Digital Engagement in an episode that covers good insights into developing better brand partnerships. Three ideas stand out:
Don´t compromise on what your brand represents
Value consumer experiences and future growth above a one-off paycheck for a sponsored video
Adapt your content to the context of each platform
For those interested in selling on Amazon...
This episode of Inbound Success is a great resource for those of you selling on Amazon. They discuss why Amazon & your website can work together to drive greater revenue, Amazon´s DSP, and towards the end, there are a few practical tips you implement across each phase of the funnel.
Getting to Minimum Viable Product Market Fit
Zoe Chew shares an awesome framework by marrying the concepts of “Minimum Viable Audience” and “Product Market Fit.” This is great for any startup and it goes into details on why you need to start with the market (not the product), how to find it, how to measure product/market fit and even when to scale.
Frameworks for designing a category
As you know, we are big fans of the Category Pirates newsletter so we wanted to share an awesome infographic that summarizes 15 frameworks for “Category Design.”
The EPL Environmental Sustainability Matrix rankings are out!
It is great to see top sport brands like Tottenham join the fight against climate change. Their bid is to become carbon neutral by 2040 and we hope to see more and more brands do the same around the world.
In fact, Tottenham has ranked #1 in the Premier League Environmental Sustainability Matrix for the third year in a row, where this year they have been joined by Liverpool at the top of the table. It´s awesome to see this “rivalry” goes beyond the pitch and hopefully they will influence other teams to level up their game.
And that does it for The Ballketing Letter #71! If you have any feedback, please reach out and, if you believe someone will enjoy or benefit from reading The Ballketing Letter, do not hesitate to send it over to them!
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Thank you if you made it to the end of the post and we hope to see you again next week.
Keep safe.