Licensors and licensees are watching developments in the brand-specific e-commerce space. While recent announcements from Fanatics and Delivery Agent have little in common on the surface, together they reflect the challenges facing property-specific e-commerce due to fast-paced technology changes, quickly evolving consumer shopping patterns, and ever-expanding competition. Service providers either adapt or fail.
Fanatics confirmed last week that it has paired with Under Armour to share the role of official uniform partner for Major League Baseball. The 10-year deal starts in 2020, with the two firms replacing Majestic Athletic and Nike. Under Armour will be responsible for on-field apparel, including jerseys, game-day outerwear, training items, and base-layer gear, while Fanatics will produce and sell all fan-directed apparel and accessories, including but not limited to jerseys. Fanatics will distribute though the e-commerce site it manages for MLB and its own sites, as well as through retail outlets.
Other recent moves by Fanatics, which has long been the e-commerce partner for the U.S. professional leagues and other sports entities, extend the company’s reach well beyond online distribution (although that remains its core business):
- At the end of October, Fanatics and the NHL signed a 16-year agreement giving the former the right to make and sell replica jerseys and championship locker room apparel, starting next season. Fanatics’ logo will appear on the fan jerseys, which are otherwise similar to the on-ice versions that Adidas supplies. In October, meanwhile, Fanatics announced it would oversee the bricks-and-mortar shop for the San Jose Sharks, the latest of several NHL teams for which it is working on in-arena shopping experiences.
- Earlier this year Fanatics paired with the NFL Players Association as its master licensee for apparel and other products involving groups of NFL athletes. Fanatics replaces Nike as the lead apparel licensee and becomes the association’s biggest licensing partner. Other manufacturers will need a sublicensing deal with Fanatics to sell NFLPA merchandise, starting in March 2017.
- In September, Fanatics announced it would oversee the bricks-and-mortar in-venue store for the University of Houston. It also operates offline shops, along with e-commerce, for Louisiana State University and the University of Texas.
- In 2015, the company expanded its agreement with the NBA beyond the e-commerce realm, adding rights to oversee the league’s Manhattan flagship retail store. Adidas ran the league’s previous (and smaller) New York City shop.
In addition to these and several other deals involving offline and online retailing and manufacturing for sports teams, leagues, and other entities, Fanatics operates e-commerce stores under the Fanatics, FansEdge, and Kitbag names, with the latter two joining its portfolio through acquisition.
Licensors that work with Fanatics for manufacturing and/or retailing in addition to e-commerce say the partnership offers several benefits, including synergies among mobile, online, and retail channels; higher royalty rates; a closer connection to customers, both locally and around the world; a better assortment; and quicker speed to market, including for “hot market” items. The downside, according to retailers and manufacturers, include less choice in vendors for retail buyers, the need for licensees to both compete with and sell to the company; and concerns about too much power being in the hands of one player.
Delivery Agent’s situation falls at the opposite end of the spectrum from Fanatics’. It declared Chapter 11 bankruptcy in September 2016 and, after having no luck finding another buyer, was purchased by one of its lenders, Hillair Capital Investments LP, in mid-November. For a decade, the company has been one of the leaders in managing e-commerce sites for entertainment properties and musicians, including hundreds of property-specific storefronts for clients including Bravado, CBS, FOX, HBO, Live Nation, and NBC. It has had trouble maintaining profitability, however, and had built unsustainable levels of debt.
Delivery Agent has been expanding its operations to make shopping easier across more devices, including televisions as well as computers, tablets, and smartphones. It announced earlier this year that its ShopTV platform was embedded in 41 million (and counting) connected devices from the likes of LG, Roku, Samsung, and Sony, allowing consumers to shop via real-time “t-commerce” while watching television commercials and programming.
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