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.
Since assuming responsibility for marketing West Marine's catalog internationally, Flannery says his biggest challenge has been"getting good quality names and having to create a prospecting model." Because West Marine sells seasonal products within a niche market, finding quality lists that pull well has been difficult. As a result, West Marine has basically had to create its own file.
West Marine's master catalog weighs in at 2.5 pounds, making it too costly to mail for prospecting efforts. Instead it uses a two-step prospecting method, mailing a double postcard to generate catalog requests. Other prospecting tools include space ads and promotions with boating organizations and trade shows. Space ads offering the catalog are placed in consumer boating publications and use a post office box address either in Europe or Canada to collect responses, which are sent in weekly batches to the Watsonville office for fulfillment. According to Flannery, the cataloger enjoys "a great conversion rate of prospects to customers."
After reading the scenario presented at the beginning of this article, it will come as no surprise that customer service is a core part of West Marine's business. Part of its creed is to give better-than-expected customer service with a "no hassle guarantee." West Marine stands by its products and will go as far as to cover a warranty if a manufacturer won't, Flannery says. While the catalog is printed in English and priced in U.S. dollars, ordering information, including its customer service guarantee, is printed in six languages—English, Spanish, Portuguese, French, German and Japanese.
Multilingual customer service reps assist with translating order forms.
Because West Marine ships to more than 150 countries, it has a dedicated international team that is knowledgeable about product pricing and shipping. An international rep might, for example, tell a customer the company can deliver a product within a week but that it would be more cost efficient if the customer is able to allow a delivery time of three weeks.
The international team works out of the Watsonville headquarters where West Marine maintains an international call center staffed with multilingual customer service reps. Also on hand are product advisors to assist reps in answering technical questions. More than 10 percent of West Marine's business comes in by phone—which allows the cataloger to talk to its customers, get direct feedback and find out how to best serve them.
The cataloger also uses the Internet to communicate with its customers, often using e-mail to address concerns regarding costs and delivery. An increasing number of its international orders are coming in via the Internet.
Products are fulfilled from two distribution centers located in South Carolina and California, using one of three delivery options—FedEx, DHL or the U.S. Postal Service. While the cataloger tries to make clearing customs as seamless as possible, it can be a challenge. Currently, its prices don't include duties and taxes. This doesn't hamper sales, however, according to Flannery, because the majority of its customers are savvy travelers accustomed to paying duty and tax on imports. What's more, many of West Marine's products are not available in local markets. Flannery notes the cataloger is working toward being able to quote prices that include duty and tax, but this is a time-consuming task with more than 36,000 items and special order products available that range from 10 cents to $10,000 in price. Says Flannery: "The customs problem is not beyond the realm of solving, but it will take a bit of effort and time."