Swell is about to hit the Asia-Pacific and European markets.
The wave will come as the Irvine-based e-commerce retailer lends its name to sister properties—Surfstitch.com in Australia and Surfdome.com in the U.K.—after a global rebranding effort takes hold this year.
“It will be a stronger sum of all parts under one brand,” said President Lex Pedersen, who along with Chief Executive Justin Cameron founded Swell’s Australia-based parent, SurfStitch Group Ltd., in 2007.
The group, whose fiscal 2015 revenue was up 29% year-over-year to $140.5 million, plans to keep its corporate name but consolidate its online operations into a single website—Swell.com. It will be upgraded to feature six languages, handle 18 currencies and still provide next-day delivery of action sports apparel and gear to customers in more than 130 countries. The change aims to reduce expense duplication and optimize logistics, among other improvements, according to the company.
Content
The founders wanted to make sure the Swell.com brand, once launched globally, isn’t “just a transactional, sterile e-commerce platform,” but also a content generator that pulls in younger audiences.
“We don’t want to be throwing on a red sticker and competing on price,” Pedersen said. “There is already a lot of noise in that segment of the market.”
They’re instead focusing on “fast fashion-proof male consumers” who are passionate about products’ technical features and are willing to pay top dollar for boardshorts endorsed by their favorite athletes.
Charging “the premium or full price for a product,” however, also called for creating a “richer” online shopping experience—a content-heavy “ecosystem” where consumers can partake in the action sports lifestyle and pick up suggested merchandise along the way.
The group invested $15 million to acquire surf website StabMag.com last May, as well as Magicseaweed Ltd., a surf forecaster drawing some 2 million monthly users to its site. An Australia-based producer of action adventure content and streaming platform, Garage Entertainment, came into the fold in November for about $10.5 million.
“Originally, we were an e-commerce business with a little bit of content type thrown here and there, with no real legitimacy,” Pedersen said. “But our model has really shifted and gone 180 (degrees) where we see ourselves emerging as a media business (whose) engine room is fueled and powered by e-commerce. We actually lead with media and content.”
Data seem to support the strategy—some 10% of customers who reach its sites via Stabmag.com and Magicseaweed.com complete a purchase instead of just browsing, compared to 3% of buyers who go directly to swell.com and other sites. Stab- and Magicseaweed-directed visitors also spend $125 per transaction on average, or about 50% more than the rest, according to the company’s filings.
Stores
The company also is developing marketing stories about products and athletes of labels it carries, including Costa Mesa-based Rip Curl Inc. and Hurley International LLC, even though most have their own competing e-commerce sites.
Pedersen likens their business relationship to the one apparel manufacturers have with major department stores—consumers prefer to view and purchase their selections in a multibrand experience, whether they shop online or at brick-and-mortars.
“You always want to see a product next to a product or a brand you don’t want just to reaffirm your purchasing decision,” he said. “We do compete, but it’s a welcome competition. I’d rather be competing with a brand while selling product at full price than an aggregator like Amazon, which will undercut you on price and there is no sustainable approach on that.”
A number of brick-and-mortar Swell stores are set to open in the “surf capitals of the world” in the next 12 to 24 months. The plan includes a store just a “stone’s throw from” Swell’s headquarters in the Irvine Spectrum area, Pedersen said.
The idea is to pull together all of the group’s offerings—there will be space for brands to launch products, host athlete appearances, and opportunities for consumers to test merchandise. Screening rooms are also in the works, highlighting content from Garage Entertainment and StabMag.com.
Timing
Pedersen and Cameron did not “reinvent the wheel” with their content-first strategy. Swell “was always known for crisp imagery and was trying to do 15 years ago what we are trying to do now,” Pedersen said, referring to its venture with Huntington Beach-based Surfline Inc., a source for ocean weather information and editorial content, still owned by Swell’s co-founder Jeffrey Berg. (See graphic, this page, for details on Swell.com’s history.)
“Those guys had great foresight,” he said. “We just think the timing is right now, with the uptake of mobile phones, the penetration of broadband. The consumption of media now is off the charts.”
