Sporting Goods Industry Moves Online

The global sporting goods category is ripe for transition to the Internet, according to an industry report by Hambrecht & Quist.

According to the report “Play e-Ball! Sporting Goods Ready to Take the Online Field,” online sporting goods sales will exceed $4 billion by 2004, or 7 percent of total e-commerce retail sales.

The opportunity to combine content and product recommendations, along with the highly fragmented nature of supply and retail channels make the sporting goods industry a natural fit for the Internet, according to the author of the report Shawn Milne.

“While the industry is beginning to understand the power of the Internet, issues surrounding product distribution remain key in a market with no master distributor,” Milne said. “Moreover, the largest brands in the category remain hesitant to sell to online retailers, making access to branded products a significant competitive advantage.”

There is no category killer in the online sporting goods arena, the report found, as a number of different models are emerging to capture the opportunity. Pure plays in the industry include Fogdog Sports and Gear.com, hybrid models include REI.com and Global Sports Inc., and content providers entering the e-commerce space include Sportsline.com and Altrec.com. Industry giant Nike is also poised to enter the e-commerce game.

Milne said he expects valuations in the e-sports category will mirror other e-commerce companies, as Wall St. focuses on top-line growth, increasing traffic, and strong brand awareness. He also believes that portal strategies that include both advertising and e-commerce revenues will command a slight premium.