Navigating Global Waters West Marine's Spreads Its Risk by Ex
You're sailing in the Pacific when you lose your anchor. What do you do? Pull out your laptop and e-mail an order for a new anchor from the West Marine catalog, requesting the product be delivered to the marina in Fiji in 10 days time. Sound like a logistical nightmare? Not for West Marine, a boating equipment cataloger based in Watsonville, CA. In fact, this scenario is not entirely unusual, according to Chris Flannery, director of international marketing for West Marine's catalog division. And while the cataloger is able to accommodate most of these requests, if it misses the customer in one port it will deliver the product to the next port the customer is scheduled to visit.
Like many other global direct marketers, West Marine's international business grew from expatriates it started supporting worldwide and has been supplying as customers for 10 years since. Going global seemed natural for the boating equipment cataloger that sells everything from rope to personal satellite communicators. Many of its customers are serious boaters who travel the world—port to port.
Three years ago, West Marine decided to "take a strategic stance on international business and begin to aggressively prospect," says Flannery. As part of this approach, it "conducted a strategic market study on the countries where there was competitive business and a substantial market" for its products. Markets recognized as "hot" for boating often have considerable local competition, whereas markets not traditionally known for boating may be more lucrative. For example, the Mediterranean is a hot boating market, but it also has good local services that provide competition. Flannery sums up this philosophy: "You have to throw mud on the map and see where it sticks."
Noting past problems in Mexico and the current crisis in Japan where the market was good until the economy turned sour, Flannery's key challenge was to spread the cataloger's risk. "What today is hot, tomorrow may be cold," says Flannery, explaining that West Marine decided to diversify its international business. In early 1996 the majority of its business stemmed from its top five markets. Now, it is more evenly spread across 25 markets. By spreading its risk, the cataloger won't take as big of a hit if something like the Mexican peso crisis or Asian economic crisis arises. It appears this strategy has paid off: Despite the economic problems in the Pacific Rim, West Marine has maintained modest growth in Japan.