Reggie Barnes Surf Expo Interview
|Date||January , 2010|
In The House That Reggie Built
Since starting Eastern Skateboard Supply in 1985, Reggie Barnes has watched the development of the skateboard industry from a front row seat. He’s dealt with pretty much every company out there and understood the real health of the market like few people ever will.
Eastern’s business has expanded beyond skateboarding to include surfing. As the company’s vast skate-deck filled warehouse in Wilmington, North Carolina shows, however, it’s been an empire built with seven-ply maple.
Humble and gracious, Barnes is also a competitive dynamo. As much as anybody, he personifies the skateboard market (only with a southern accent and wry smile). Surf Expo caught up with Barnes to ask about the market and the state of his business during these unusual times. As usual, we were not disappointed with his answers:
Has the economic downturn of last few years forced you to rethink the way you do business?
Things have been going backwards in terms of gross sales—not just in the last two years, but for the last four years. Our best year was 2005. But none of that changed my philosophies of business. I’m a firm believer of saving money when business is good and spending it when times are bad. That’s what we’re trying to do now, spend money to gain market share. Had we not put away money when business was good, we wouldn’t have been able to do that.
Last time we talked, Eastern had about 3,000 customers in its database of which about 2,800 had placed an order in the previous year. What does the retail landscape look like now?
I wish I had our current count of the stores at my fingertips. We lost a few and we gained a few, but overall we’re probably selling to fewer stores than we were two years ago. However, a lot of stores are ordering more frequently. They’re ordering smaller quantities, more often.
That’s a good thing for distributors. That’s what we do. We give shops what they want, when they want it as opposed to offering discounts for pre-booking. Our whole business model is based on “at once.”
People are taking advantage of that at-once business more than ever. They may spend a little more in freight and they may not get that ten-percent discount for ordering months in advance, but at least they know where they stand week to week.
Given the economy, are you offering other things to help some of your retail clients along?
What we’re doing more than ever is giving shops a data feed so they can see instantly what we have in stock. That has been a major incentive for people to do business with us.
We’ve also started offering drop shipping for a handful of good retailers.
How does that work?
Shops will get an order on their Web site using the data feed of what we have on hand and then we’ll ship it to their end user for them. They don’t have to carry that much inventory and they’re still getting the sale and they’re making something instead of nothing. Drop shipping is the fastest-growing part of our business right now. It’s amazing.
What’s the downside?
Well, it may appear that the retail margins aren’t as high. But the upside is the shop never had to buy the product in the first place, they didn’t have to pay freight to get it, nor did they need someone to check it and put it in to their system. All they had to do is send it to us and we took care of it all. So the downside is less margin—maybe—but when you consider that you never have to handle it, I’m not sure it is that much less margin.
How do manufacturers view drop shipping?
Well, some of them are probably frustrated. They want to know why they aren’t getting that business themselves. But the reason we’re more attractive is that, once again, it’s everything under one roof. But most manufacturers embraced what we’re doing.
Do you still have exclusive brands and are they still such an important part of what you emphasize to your retail customers?
Absolutely! They’re more important than ever. We just added several exclusive brands: I&I, which is Nyjah Houston’s company; Landyachtz out of Canada; and Cliché is another exclusive.
So it’s very important and we’re making it obvious who’s exclusive with us. It’s not that we’re not proud to carry the products of people who aren’t exclusive with us—we are and we’re going to sell as much of it as we possibly can—but we’ll do more for our exclusive brands. We’ll make it obvious, so when a new company starts it will be easy for them to decide their distribution plans.
How has the relationship between Eastern and the brands it carries evolved over the past few years as business has been more difficult?
To be honest, I feel closer to them than ever. When a company—especially some of these brands that are skater owned—comes out of the gate and their sales are setting the world on fire, it’s human nature for them to be a little more difficult when they deal with us. Some might not appreciate the relationship we offer as much as we’d like.
But when times get tough, they realize the value of doing business with a distributor that’s been in business for 25 years, which pays it bills on time—always. Then they understand we’re in it for the long haul.
It’s a shame you have to wait until times are tough for that to be the case—and I’m not speaking about everybody. Some people have been unbelievable since day one. But there has been a change, and it’s been for the better.
What else has changed?
One of the other upsides of the last few years is that skateboarding isn’t as segmented as it used to be. There’s more of the “old way” of looking at skateboarding.If you’re a skateboarder, you might skate street, do some downhill, slalom; you might skate pools or halfpipes. The boundaries have come down.
Back in the 1970s I remember some of the guys had their quiver of different shapes for different kinds of skating. I see that coming back a little bit.
Are longboard sales still strong?
Yeah, it’s the fastest growing part of skateboarding—and not just longboards, but all these alternative shapes, too.
Eastern recently took a majority interest in Birdhouse. Have other skate companies approached you looking for the same sort of arrangement?
There have been some other people, but I’m not trying to change my hat. I am a distributor. I want to continue to be a distributor. It’s been good to me and I want to continue to support manufacturers.
I’m honored to do what I’m doing with Birdhouse, because Tony Hawk approached my and there’s only one Tony Hawk. Had it been anyone else, well, I may have politely declined.
I just don’t want to create a conflict of interest in the eyes of our manufacturers. In fact, I went to most of my key vendors before I agreed to the Birdhouse deal. It’s not like I felt I had to ask permission, but I didn’t want a great opportunity to turn into something damaging to the relationship I’ve built with these guys for so many years.
I don’t regret it a bit—and I’m glad to see how people reacted to it—but I’m not looking for a lot of similar deals.
When you look down the road five years, do you see your business model changing as technology and the retail market changes?
I’m considering other drop ship locations in other parts of the country. We’ve so many retail customers west of the Mississippi now, and as the drop ship part of our business grows it would be great to get more people product in one or two days. That’s something I’m looking long and hard at right now.
It doesn’t make sense to pay freight to ship something from California to North Carolina only to ship it back to California again. So we’re just thinking about it now; it’s a concept.
Okay, be the prognosticator. How will the skate market change over the next few years?
Over the short term we’re going to have to make do with less. I’ve heard it said many times—and I’ve said it myself—we’re going to have to work twice as hard for a lot less.
But skateboarding is alive and well and surfing is too. All boardsports—snowboarding, wakeboarding, wakeskating, skimboarding, all of it—are very healthy on the participation side of things. I just think so many people chose it for their career, the market became flooded. Some of that is shaking out right now. For the people who do survive, it’s going to be a long wait until things get better.
But as far as the health of the sports, I don’t see it ever going backwards.
But it would be very hard to start Eastern now and be successful. If I hadn’t started so many years ago and paid for everything as grew, it would be tough. But because of our approach, even in tough times we’re able to do trade shows, run ads in magazines, continue to have demo, and promote contests. We’re very fortunate.
Author: Sean Obrien