stringer bell wrote:
I agree with many of your points, but you're quite wrong about the 40% discount costing Brooks money. I contend that they make significantly more money from ID members than they would from selling to running stores.
I posted these figures earlier in this thread, but here goes again. A store will pay approximately $50 wholesale for a $100 pair of shoes. Brooks sells the same shoe to an ID member for $60. There is a slight overhead cost for the "pro deal" website, but it is negligible, especially when you consider there is a handling change attached to every order.
Now your average runner is going to buy more pairs of shoes at $60 than at $100. So in essence Brooks is making more money off of ID members, although they are doing so at the expense of their retail accounts, who won't see as many customers. Too many ID members (especially if they are all clumped in one area) and you're upsetting the retailers. That may be one reason for the "great de-IDing of 2011."
Well, Brooks sells at retail through its own website, so it's losing sales that way.
Also, Brooks loses marketing by having the shoes sold at a lower margin. Let me explain: Brooks does very, very well in the specialty running business, but less so in the general sporting goods market (Footlocker, etc). Brooks wants to have its shoes sold at a high markup, because those margins are what allow specialty stores to provide the services that put more people in their shoes. It's almost like a joint venture. Without the specialty running stores fitting so many people in Brooks shoes, most people would probably just walk in the door and buy the first pretty Nikes that they see. Now, I realize that ID is a drop in the bucket on a large scale, but the question is, shoe for shoe, how does Brooks make the most money? It can let some mediocre runner like me save the markup and then tell the kids I coach that Brooks is great, or it can let stores that are actually fitting people into shoes keep the markup. I suspect that the stores provide more valuable promotion. (Yes, I realize that the optimal mix of promotion may include some less efficient forms.)