Sell the Experience, Not the Product: The Wavestorm Board

I knew about this article on the Wavestorm $100 surfboard before it ever came out. In some ways, it’s old news. Less expensive surf boards of various constructions and materials have been popping up for years now, and the Wavestorm isn’t new. I guess the genie was out of the bottle around the time Clark Foam went bell y up.

So on the one hand it’s old news. It was highlighted on Boardistan, and I kind of decided there was nothing to discuss. But it kept popping back into my consciousness, and I couldn’t bring myself to delete the link to it. I even wrote 500 words at one point and trashed it.

But here I am. It’s Sunday morning and I think I’ve figured out what’s bothering me. That is, I finally know, from a business point of view, why I care.

To be clear, yes, I’d prefer that all surfers got their boards from a shaper. Not just because I’d like to see the shaper make some money, but because buying a more expensive board, and maybe having to wait for it a little while, implies a commitment to and enthusiasm for surfing that means maybe we’ve got a long term customer. But the customer always gets what they want one way or the other, and it’s typically somebody from outside the industry- somebody with no personal ties and vested interest- that gives it to them. That was true of the Wavestorm board.

What I want to tell you and explore is that the surfboard, in the mind of many surfers, has in some ways become a commodity. Why would that surprise us? It happened to snowboards and skateboards.

No, not for all surfers. And not for all boarders and skaters either. There is that piece of the market where the brand and the subtleties of the product matter and the more sophisticated and committed customer is willing to pay more for that and perhaps for performance they can tell is superior. Maybe that piece of the market is what we should mean now when we say “action sports.”

I think that piece of the market is shrinking. How can it not when a $100 surfboard apparently performs pretty well and is durable. Granted the six or seven hundred dollar surfboard is better. $500 better? Past a certain level of performance, that price difference is hard to ignore.

I don’t see surf shops ever carrying the Wavestorm. There’s just no money to be made and it takes up the same amount of room as a $700 board. Then again, I’d remind you that it’s been a while since shops made a comfortable margin on their hard goods. And it isn’t just for surf shops that most revenue and profit has come from apparel, accessories, and footwear. Maybe, if a $100 board gets them surfing, it’s not a completely bad thing.

And that’s the strategic question isn’t it? Are we expanding the market with cheaper boards or is it just less revenue for the industry overall? Is it also less interaction with the customer and the shop? If they buy their first board at Costco, will they still come to their local shop for accessories, board shorts, and advice?

The idea I want to leave you with is that a product does not become a commodity just because it’s cheaper or because there’s a lack of product differentiation. It becomes a commodity when enough people want it that figuring out how to mass producing it makes sense. That, in some sense, is hopeful.

I’d also like you consider that we now have customers who view a surfboard (or a skateboard, or a cell phone, etc.) not as a product you buy for its own sake, but as a tool for taking part in an experience. They seek the experience- not the product. I suppose that also contributes to products becoming, or at least being seen as, commodities.

But it’s also hopeful because if we can focus on helping the customer have the experience rather than on selling them the product, we might have an opportunity and point of differentiation. At some level, we’ve always sold the experience. Let’s be more purposeful about it, and focus on the experience the customer can reasonably expect to have.

Costco can sell them an inexpensive, functional board. They can’t help them surf.

 

13 replies
  1. Mark Kelly
    Mark Kelly says:

    Hi Jeff,
    You are spot on here. I was interviewed for the article and was quoted in it. My experience is that if the industry embraces these people who have dipped their toe in the Surfing pond, invite them in to see what really happens the industry will grow. Beginners are the life blood of every industry, industries die without them. Wavestorm via Costco with a super low margin business are allowing people to have fun, to experience surfing to get a taste of it. I can’t see that being a bad thing. They aren’t stealing business from Surf Shops. Our industry needs to stop thinking of these people as “Kooks” and start thinking of them as people who have shown an interest in what we are doing and invite them to see what it is all about.
    Cheers
    Mark Kelly
    CEO
    Global Surf Industries

    • jeff
      jeff says:

      Hi Mark,
      I saw you were quoted. I was interviewed too, but apparently didn’t say anything worthy of being used. I agree with what you said. And, what other choice is there anyway? Surf really, really, doesn’t want to be like the skate guys who tried to be the arbiters of what was or was not cool and ended up letting other companies take over the long board market.
      Thanks,
      J.

    • ian madden
      ian madden says:

      Mark
      i agree with you, but how do you think GSIs recent action that dumping the Hypto Krypto for a massively discounted giveaway price across Europe helps the industry in anyway?? Its one thing to treat potential customers as kooks but what about treating retailers as kooks??

      • jeff
        jeff says:

        Ian,
        Tell us why they did it. How many boards? What did they sell it for? Was this a cash flow issue for them? Were they over stocked? That is, were the handling a short term business problem or was this a more strategic decision?

        Thanks,
        J.

      • Mark Kelly
        Mark Kelly says:

        Hi Ian,

        This is not the actions of GSI nor our Distributor in Europe. We are actively working with the online retailer involved to stop this. It is disappointing and I can tell you it doesn’t help them sell any more product.

        Cheers

        Mark

        • jeff
          jeff says:

          Hi Mark,
          Appreciate your clearing this up. Good for you. Well, bad but good that you are cleaning it up. Back in my days of trying to run snowboard companies, I also had some problems with stuff that escaped our desired distribution. Pretty much sucked.

          Thanks,
          J.

          • ian madden
            ian madden says:

            no idea why they did it Jeff, overstock i would guess. It upset the core surf retailers who are the backbone of surfing in Europe, because the deal was only offered to one retailer. The boards were moved through a non core online retailer, probably the only one who could cashflow 400 boards. They were retailed at £400 as opposed to RRP of £635. It undermines the brand and also the board market as a whole, if a Hypto model in decent tech is only worth £400 what value does the consumer attach to a standard PU model that RRPs at £450??
            Damage done now. Short term move or not the longterm effect on the brand is that core opinion forming retailers will no longer buy it.

          • jeff
            jeff says:

            Ian,
            Yeah, whatever the rationale and reason, it’s not good for the brand. In his comment below, Mark makes it sound like they somehow just lost control of the product. That can happen. Had it happen to me back when I was trying to run snowboard companies. Still not good for the brand of course.

            Thanks for the comment.

            J.

  2. Rich
    Rich says:

    Jeff
    Liked your article. I have been involved in the surf industry before grubby
    And Hobe introduced the foam cores. The way I see the problem started in the 60 when there was A 21% gross margin from manf to end user price, and those margins have only improved slightly to date.
    Plus the industry push back on any sort of technology which would allow us to improve our margins to be more in line with real margins to
    support a hard goods industry that could sustain itself would be of great benefit.

    But the surfer is always trying to push the price down for a better deal
    Leaving the garage builder in each locale Ito set the sales price.

    Early in the skate industry (70s) when we switched away from roller skate products to our own branded goods a group of us got together ,
    And most of us being in the surf industry didn’t want to repeat the surf problem and wanted margins for all the good things we had in the 70 s
    And 80 s but the trading companies came in and now shop decks control probably 70% percent of the skatedeck market leaving the companies trying to support the industry short

    The above is a short visual I’ve had from the 50s to date and I could go on but I think a lot has to do with surfers dealing with 60s technology and skaters with 70 technology not allowing new technology to come into the marked to hold margins higher and allowing the wave storm boards to be our intro to the sport

    • jeff
      jeff says:

      Hi Rich,
      Good to hear from you. It sounds like you’re arguing that the margins are low on surf boards due to tradition? I wouldn’t call it tradition, but I would say that the willingness of so many people to make and sell a product similar to the one the other guy makes is responsible. And if we call that the “mythology and romanticism of the garage shaper” I guess tradition wouldn’t be a bad way to describe it. I have the sense that too many shapers were (are?) willing to treat board building like a calling rather than a business.

      With regards to technology, I’d point out that there’s a lot of technology in Wavestorm boards and in other lower priced boards as well. I’m sure you’ve seen the robotic shaping machines that make surf boards and snowboards. So technology can definitely be a competitive and margin enhancement answer if the technology gives the customer something they want that isn’t easily duplicated. The difficulty is you have to continue to stay ahead of the pack. I’m not sure, for example, that GoPro or Skullcandy or even Apple can do it.

      If the surf industry in earlier days had been able to evolve technology regularly, certainly it would be better off. But I am not sure that was ever a reasonable expectation given the structure of the industry as we know it to be. Our customer has decided that paying $100 (or $300) for a product that is at least adequate is better than paying $700 for a product where the comparative improvement is not perceived as worth the additional cost and may not be noticeable to many surfers- especially beginners. So not only would shapers have had to adopt technology, but they would have had to evolve into a business structure where they could (and were willing) to finance and produce the product the customer wanted. Because if they didn’t, somebody else was going to. I guess I’m suggesting that the margin mess is a result not just of a lack of technology, but due to industry structure as well.

      Thanks for the comment. Call me if you want to kick this around some more. I agree with you about skate. And I’d point out that the technology came along in the long decks but the skate brands didn’t want anything to do with it until it was too late.

      J.

  3. Scott
    Scott says:

    Hi Jeff, another point to you and your repeated suggestion to be open to changes in the action sport industry.

    Seems like Wavestorm could use a little competition from a traditional surf brand that doesn’t see this as watering down their brand equity?

    And it sounds like the market size is already 100k boards.

    How many new/existing surfers might buy a similar board from a trusted brand at a nearby surf shop that offers better service and can enhance the surf experience?

    Sure, probably not 100k, but if the surf brand needs to manufacture at scale to hit the price, sounds like Costco might be worth a sales call – they were built on name brands and still trade on the idea of offering superior products.

    Wavestorm has already said they don’t want a piece of the surf or sporting goods retailers – leaving room for the “familiar” surf brand that is already doing business there to build market share.

    All easily said by me. I’m not convinced some smarter people haven’t already gone down this path and found out they can’t make it work in their current brand. But thinking about and offering disruptive product seems to remain relevant.

    Keep up the good work challenging the industry, Scott

    • jeff
      jeff says:

      Hi Scott,
      if surf brands and retailers can offer stand up paddle boards, I’m not sure I see a barrier, at this point in the industry’s development, to a cheaper board. But I don’t see any reason to do it. The margins are so low (assuming you can buy them as cheaply as Costco, which you can’t, that there’s no money to be made and a lot of room to be taken up at retail. So your suggestion, I think, is that an established brand sell them to Costco and put their own name on them? Where would they get them made? Do you see it at the same price point? Assuming there’s an industry benefit to a $99 board at Costco because it gets more people to try surfing, I think I’d just take that benefit and not try to compete in that market where it would take a big investment to sell enough low margin boards to make it worth while.

      Thanks for the comment.

      J.

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