Fanatics is on a mission to conquer the sports e-commerce sector and beyond. It wants to build a $100 billion empire, and has investors who believe it can get there.
In the past decade, Fanatics has transformed into a mobile-first, direct-to-consumer global brand: part tech company, part on-demand manufacturer and part logistics expert. Using an innovative vertical commerce model and a cutting-edge tech platform, it has turned from a North American e-commerce company into a new breed of mobile-first, real-time licensed sports merchandise brand, optimized for the global digital consumer experience.
The transformation has made it an indispensable partner to leagues, teams and fans. At last year’s NHL Stanley Cup awards ceremony, for example, Fanatics produced the clothes the Washington Capitals wore as they lifted the trophy. And it staffed and stocked the team’s store in the arena and ran its own retail sites.
As sports become more popular, people are spending more money on jerseys and other gear related to their favorite teams. That means a surge in revenue for companies that produce sports apparel, like Nike or Adidas. But that’s no guarantee of success.
That’s where Fanatics has found a competitive advantage: It has developed a system that analyzes traffic on every site run by the company, including those it runs for teams and leagues. It tracks searches, clicks, and purchases, and uses it to spot spikes in sales based on information gleaned from social media and news about players and their teams.
What’s more, a proprietary sales system called Cloud Commerce helps the company avoid overspending on products that haven’t seen much demand yet. When a spike in interest hits a certain player, for example, Cloud Commerce will automatically re-rank products based on the spike and flag them to customers.
It also keeps track of the popularity of products a customer is likely to purchase, which makes it easier for Fanatics to tailor its marketing to individual fans. It also lets the company handle massive spikes in traffic, such as the day before a game or a trade announcement.
A lot of the revenue that Fanatics makes comes from licensing deals with sports leagues, which it then sells through its websites and in its stores. But Madrigal says that in recent years, the bulk of the apparel it sells has been designed and manufactured by the company itself.
In addition, it has developed a software tool to help it monitor its supply chain and make sure the products it ships to stores or online customers are in stock. It can also alert retailers when it’s time to restock items that haven’t sold as well as expected.
These capabilities are part of why Fanatics is able to grow so rapidly. Its 80 million users have a relatively low cost per acquisition, meaning it can bring in more new customers without spending as much money on advertising and promotion.
The company has been backed by several big investors, including Fidelity, Thrive Capital, Franklin Templeton and Neuberger Berman. It also has partnerships with SoftBank and Chinese e-commerce giant Alibaba Group.
