This past week, I presented on Fanatics, a manufacturer and online retailer of officially licensed sports merchandise. In my presentation, I talked about the vertically integrated structure of the business and how it gives Fanatics the speed and flexibility to meet changing levels of demand. This strategy allows Fanatics to seize “micro moments”, as Executive Chairman Michael Rubin calls them. In this blog, I am going to talk about some of Fanatic’s current initiatives that have allowed them to innovate and expand the reach of their brand.
Fanatics and Uber
In February 2016, immediately after the Chicago Cubs won the World Series, Fanatics partnered with Uber to deliver World Series Champions merchandise to fans throughout the city. Consumers were able to order merchandise “on demand” to their front door through the Uber Eats app. The average delivery time for this merchandise was under 8 minutes. As a result of this huge success, both companies decided to partner together again in 2017 for the Patriot’s Super Bowl win and in 2018 when the Capitals won the Stanley Cup. Fanatics was able to meet these influxes of demand immediately due to their vertically integrated system of operations. This has given Fanatics an edge over competitors such as Modell’s and Dick’s Sporting Goods, which both have had to wait to receive shipments of championship merchandise before they can make any sales.
Fanatics and Ticketmaster
In addition to their partnership with Uber, Fanatics recently announced that they would be teaming up with Ticketmaster. The two companies are hoping to better target sports fans who are looking for game tickets and will also be encouraged to buy merchandise, or vice versa. Each time consumers buy tickets through Ticketmaster, they are given $3 to spend on a Fanatics product. This rewards program is aimed to enhance the fan experience, while also generating revenue for both companies. Both businesses will also share customer data, which will allow them to better target sports fans who have made purchases on the partner site. This alliance also helps to strengthen the relationships that both companies have with major sports leagues and other partners.
In continuation, Fanatic’s partnership with Ticketmaster gives it an edge over competitors such as Amazon. Amazon currently sells and ships team branded products and merchandise. One area that Amazon has struggled with in the past has been in the ticketing industry. Amazon unsuccessfully tried to make a deal with Ticketmaster, and additionally failed at starting up their ticketing platform. Now that Fanatics has partnered with Ticketmaster, it has greatly extended its consumer base and has gained a competitive edge over Amazon’s sports retailing business.
In my presentation, I touched briefly on the fact that Fanatics has future aspirations of international expansion. In expanding internationally, Fanatics faces the challenge of maintaining their in-house manufacturing and distribution infrastructure across a wider range of locations. Fanatics is known for their streamlined supply chain that facilitates “on demand” shopping and delivery. As they work towards expanding their business to locations such as Germany, China, and India, they face the challenge of preserving the speed and flexibility that makes their North American business so successful.
In 2016, Fanatics acquired UK-based international sports e-commerce company Kitbag. Kitbag’s strong presence in Europe and the rest of the world was similar to that of Fanatics’ presence in the North America. By combining these two companies, Fanatics is able to form connections with more international sports teams, especially soccer teams. Operating from their base in Manchester, Fanatics now provides merchandise for English Premier League brands including Chelsea, Manchester United, Manchester City and Everton, as well as European brands Real Madrid, Borussia Dortmund and Paris Saint-Germain. Although Fanatics was growing internationally, by the end of 2017, only 10% of their $2 billion annual sales were generated from outside their domestic market (SportsPro).
Most recently, in September 2018, Fanatics opened a technology innovation center in Hyderabad, India. Through this new hub, Fanatics is aiming to enhance its technology, data and analytics platform to better fuel their vertical manufacturing model. Additionally, this hub is one of many global offices that Fanatics has recently opened to better expand operations internationally.
Outside of the US, Fanatics today has operations in Canada, Germany, Spain, Japan, Hong Kong and the UK. As they continue to grow, it will be fascinating to see how Fanatics is able to maintain their vertical business structure while also generating profits in each new country.