Latest / Selling on Giants: The eCommerce Marketplace Podcast / How Fanatics Beat Starter: Vertical Integration, Sports Merch, and the Future of eCommerce

Transcript

How Fanatics Beat Starter: Vertical Integration, Sports Merch, and the Future of eCommerce · Selling on Giants: The eCommerce Marketplace Podcast

• 0:00
  SPEAKER_00: Welcome back to Selling on Giants.
• 0:02
  SPEAKER_00: This is the show where we break down what is actually happening across e-commerce, marketplaces, and retail strategy, and more importantly, what operators can learn from it when real money and real execution are involved.
• 0:16
  SPEAKER_00: Today's episode is a little different because we are not talking about a new Amazon feature, a Walmart update, or the latest AI tool promising to change everything.
• 0:27
  SPEAKER_00: We are talking about sports merchandise, and more specifically, we are talking about two companies that represent two completely different eras of retail: starter and fanatics.
• 0:39
  SPEAKER_00: This is not really a story about jackets and jerseys.
• 0:42
  SPEAKER_00: It is a story about adaptability, infrastructure, speed, and what happens when a company confuses brand relevance with operational durability.
• 0:51
  SPEAKER_00: If you sell on Amazon, Walmart, Shopify, or any marketplace, there are lessons here that matter a lot more than people realize.
• 0:59
  SPEAKER_00: Let's start with Starter.
• 1:00
  SPEAKER_00: If you grew up in the 1990s, starter was everywhere.
• 1:05
  SPEAKER_00: The jackets were cultural status symbols across the NFL, NBA, NHL, college sports, and beyond.
• 1:13
  SPEAKER_00: The brand became synonymous with sports culture itself, and that matters because Starter did not just have market share, they had identity.
• 1:22
  SPEAKER_00: Wearing a starter jacket said something about you, and that kind of cultural positioning is incredibly hard to replicate.
• 1:29
  SPEAKER_00: At their peak, Starter was reportedly doing hundreds of millions in revenue and became one of the defining apparel brands of the era.
• 1:37
  SPEAKER_00: Retailers wanted them, consumers wanted them, athletes wore them, and celebrities wore them.
• 1:42
  SPEAKER_00: So from the outside, the business looked unstoppable.
• 1:46
  SPEAKER_00: Underneath that momentum, though, was a structural weakness that eventually became fatal.
• 1:52
  SPEAKER_00: Starter was heavily dependent on wholesale retail distribution, which meant they did not control the customer, they did not control demand creation directly, and more importantly, they did not control operational speed.
• 2:06
  SPEAKER_00: That distinction matters because culture can create momentum, but infrastructure determines durability.
• 2:12
  SPEAKER_00: This is where Fanatics enters the picture.
• 2:15
  SPEAKER_00: Fanatics looked at the sports merchandise industry completely differently, and instead of building a traditional licensing company that relied primarily on wholesale relationships, they built what is now commonly referred to as a vertical commerce or vCommerce model.
• 2:31
  SPEAKER_00: That sounds like buzzword language until you understand what it actually means.
• 2:36
  SPEAKER_00: Fanatics controls the licensing relationships, manufacturing, e-commerce infrastructure, fulfillment, customer data, and increasingly the live demand creation around sports itself.
• 2:48
  SPEAKER_00: That changes everything because when a team wins a championship, fanatics can have merchandise live almost immediately instead of waiting weeks for traditional retail cycles to catch up.
• 3:00
  SPEAKER_00: That speed advantage compounds because the closer you are to the customer and the closer you are to the moment demand happens, the more margin, data, and leverage you capture.
• 3:11
  SPEAKER_00: Starter operated more like a traditional apparel brand, while Fanatics operates more like an infrastructure company disguised as a merchandise company, and that is the real story.
• 3:21
  SPEAKER_00: This is not old retail versus new retail.
• 3:24
  SPEAKER_00: This is control versus dependency, and that is where e-commerce operators should really pay attention.
• 3:31
  SPEAKER_00: A lot of brands today are building businesses that look successful on the surface but structurally resemble starter more than fanatics.
• 3:39
  SPEAKER_00: They have heavy dependency on one channel, heavy dependency on paid acquisition, heavy dependency on marketplace traffic they do not control, and very little ownership over the underlying infrastructure supporting the revenue.
• 3:54
  SPEAKER_00: That works during growth periods until conditions change, and conditions always change.
• 4:00
  SPEAKER_00: Algorithms shift, fees increase, competition compresses margins, customer acquisition costs rise, and suddenly the business realizes it does not actually control the system supporting the revenue.
• 4:13
  SPEAKER_00: This is one of the biggest mindset shifts operators need to understand over the next five years.
• 4:19
  SPEAKER_00: The companies that survive are probably not the ones with branding alone.
• 4:23
  SPEAKER_00: They are the ones with better operational positioning because operational positioning creates resilience.
• 4:29
  SPEAKER_00: Fanatics understood something very early.
• 4:33
  SPEAKER_00: Owning demand is powerful, but owning the infrastructure behind demand is even more powerful.
• 4:40
  SPEAKER_00: And we are seeing this same pattern play out everywhere in e-commerce right now.
• 4:46
  SPEAKER_00: Amazon is not just a marketplace anymore, it is fulfillment.
• 4:50
  SPEAKER_00: Advertising, payments, data, logistics, cloud computing, customer trust, and commerce infrastructure all pulling brands deeper into the ecosystem.
• 5:00
  SPEAKER_00: The more infrastructure a platform owns, the more durable its position becomes, and the harder it becomes for brands to operate without it.
• 5:09
  SPEAKER_00: This is also why Shopify has leaned so aggressively into ecosystem expansion.
• 5:14
  SPEAKER_00: Storefront software alone is not enough because storefronts are increasingly commoditized.
• 5:20
  SPEAKER_00: The real value comes from the operating layer around commerce, including payments, apps, fulfillment, customer data, and integrations, because that is where defensibility forms.
• 5:32
  SPEAKER_00: Here is where this gets uncomfortable for a lot of brands.
• 5:36
  SPEAKER_00: Most e-commerce operators focus heavily on front-end optimization, including better ads, better creatives, better conversion rates, and better product pages.
• 5:46
  SPEAKER_00: Those things matter, but eventually back-end structure becomes the constraint.
• 5:51
  SPEAKER_00: Can you move inventory fast enough?
• 5:54
  SPEAKER_00: Can you react to demand fast enough?
• 5:56
  SPEAKER_00: Can your supply chain support growth?
• 5:59
  SPEAKER_00: Can your fulfillment experience maintain customer trust?
• 6:03
  SPEAKER_00: Can you survive platform changes without collapsing margins?
• 6:07
  SPEAKER_00: Those are infrastructure questions, and infrastructure is usually invisible until it breaks.
• 6:13
  SPEAKER_00: Starter learned that the hard way because culture alone does not protect you from operational shifts, retail changes, consumer behavior changes, distribution changes, and when those things change quickly, slow organizations get exposed.
• 6:29
  SPEAKER_00: Fanatics built around adaptability instead, which is why the company has expanded beyond merchandise into collectibles, betting, live commerce, and broader fan ecosystems.
• 6:42
  SPEAKER_00: Once you own the customer relationship and the operational rails around it, adjacent expansion becomes much easier.
• 6:51
  SPEAKER_00: That is a huge lesson for marketplace operators because most brands think about expansion horizontally.
• 6:57
  SPEAKER_00: More products, more marketplaces, more ad spend, and more SKUs.
• 7:02
  SPEAKER_00: The more interesting question is vertical.
• 7:05
  SPEAKER_00: What part of the customer journey do you actually own?
• 7:08
  SPEAKER_00: What infrastructure do you control?
• 7:10
  SPEAKER_00: And where does your leverage come from?
• 7:12
  SPEAKER_00: Leverage is what protects margins long term, and this is where many marketplace brands struggle.
• 7:19
  SPEAKER_00: They are successful sellers, but they are not durable businesses yet, and there is a difference.
• 7:24
  SPEAKER_00: A durable business can absorb platform changes, survive margin compression, and diversify channels without operational chaos.
• 7:33
  SPEAKER_00: That requires systems, process, infrastructure, and a clear understanding of where control actually sits in the business.
• 7:41
  SPEAKER_00: This is where I want to pause for a second because this conversation connects directly to how we think at Belavix.
• 7:48
  SPEAKER_00: One of the biggest mistakes brands make is treating marketplaces like isolated growth hacks instead of operational systems.
• 7:56
  SPEAKER_00: Amazon is not just an advertising platform, and Walmart is not just another channel.
• 8:02
  SPEAKER_00: These are infrastructure ecosystems that impact fulfillment, inventory flow, customer acquisition, pricing strategy, and operational speed.
• 8:11
  SPEAKER_00: Bellivix has helped brands generate over$500 million on Amazon, and one thing we consistently see is that sustainable growth almost always comes from operational clarity, not just tactical optimization.
• 8:27
  SPEAKER_00: The brands that scale best are usually the brands that understand where their constraints actually are.
• 8:33
  SPEAKER_00: Sometimes the constraint is advertising, sometimes it is inventory, sometimes it is pricing, sometimes it is fulfillment, and sometimes it is the fact that the business is too dependent on one source of traffic.
• 8:46
  SPEAKER_00: That is why infrastructure matters, because the stronger the system underneath the business, the more flexibility you have when markets shift.
• 8:55
  SPEAKER_00: If you want to learn more, you can check out Belavix.com.
• 8:58
  SPEAKER_00: Now let's bring this back to Fanatics, because there is another important layer here.
• 9:03
  SPEAKER_00: Fanatics understood speed differently than most traditional retailers because traditional retail systems were designed around forecasting, while fanatics built around reaction speed.
• 9:14
  SPEAKER_00: That sounds subtle, but it changes how the organization operates.
• 9:18
  SPEAKER_00: Traditional apparel companies forecast demand months ahead, while fanatics built systems that capitalize on real-time demand.
• 9:26
  SPEAKER_00: A team wins a championship, a player gets traded, or a historic sports moment happens and demand spikes instantly.
• 9:34
  SPEAKER_00: The company that can react fastest captures the most value.
• 9:39
  SPEAKER_00: That idea is incredibly relevant to modern e-commerce because e-commerce increasingly rewards responsiveness.
• 9:46
  SPEAKER_00: Shorter trend cycles, faster content velocity, real-time demand shifts, social commerce, and AI-driven discovery all reward the businesses that adapt quickly, not just the ones that optimize what already exists.
• 10:02
  SPEAKER_00: This is where a lot of operators are underestimating what is happening right now.
• 10:07
  SPEAKER_00: AI is compressing reaction cycles even further, discovery is changing faster, consumer expectations are changing faster, and platforms are changing faster.
• 10:18
  SPEAKER_00: The pace itself becomes a competitive advantage, which means rigid businesses become vulnerable.
• 10:24
  SPEAKER_00: There is another lesson inside the starter story that deserves attention.
• 10:28
  SPEAKER_00: Brand equity can create the illusion of permanence because people assume iconic brands are safe simply because they are recognized.
• 10:38
  SPEAKER_00: The problem is that cultural relevance without operational evolution eventually decays.
• 10:44
  SPEAKER_00: That applies to e-commerce too.
• 10:46
  SPEAKER_00: There are brands right now doing strong revenue numbers on Amazon that are structurally fragile underneath.
• 10:53
  SPEAKER_00: Strong tacos today does not guarantee durability tomorrow.
• 10:57
  SPEAKER_00: Strong rankings today do not guarantee defensibility tomorrow.
• 11:01
  SPEAKER_00: And strong brand awareness today does not protect you from operational weakness.
• 11:06
  SPEAKER_00: The market changes too quickly for that.
• 11:08
  SPEAKER_00: So operators need to think beyond current performance metrics and ask harder questions.
• 11:14
  SPEAKER_00: What happens if ad costs rise 20%?
• 11:18
  SPEAKER_00: What happens if platform fees increase?
• 11:21
  SPEAKER_00: What happens if your primary traffic source weakens?
• 11:25
  SPEAKER_00: What happens if competitors compress pricing?
• 11:28
  SPEAKER_00: What happens if fulfillment costs spike?
• 11:32
  SPEAKER_00: Those questions reveal whether the business is structurally resilient or simply riding momentum.
• 11:38
  SPEAKER_00: Fanatics built for structural control, while starter built for retail momentum, and over time, structure usually wins.
• 11:47
  SPEAKER_00: That does not mean branding does not matter because it absolutely does, but branding without operational durability becomes fragile.
• 11:55
  SPEAKER_00: The strongest businesses usually combine both.
• 11:59
  SPEAKER_00: Strong identity, strong infrastructure, and strong adaptability create a business that is very difficult to compete against.
• 12:07
  SPEAKER_00: When you zoom out, this entire story becomes much bigger than sports merchandise.
• 12:13
  SPEAKER_00: It becomes a case study in how commerce itself evolved from wholesale distribution to vertical integration, from vertical integration to infrastructure ownership, and from infrastructure ownership to real-time demand response.
• 12:27
  SPEAKER_00: We are probably still early in that transition because the next phase is likely AI-enhanced commerce operating on top of vertically integrated systems.
• 12:37
  SPEAKER_00: Faster reactions, more personalization, more operational automation, and even greater importance placed on owning infrastructure instead of simply renting attention.
• 12:48
  SPEAKER_00: That is where things are heading, and the brands thinking this way now are the ones most likely to stay relevant long term.
• 12:55
  SPEAKER_00: Appreciate you spending time with me today.
• 12:57
  SPEAKER_00: If this episode helped you think about your business differently, share it with a friend, colleague, or operator who would enjoy this kind of breakdown.
• 13:06
  SPEAKER_00: And if you have not already, leave a review so more e commerce operators can find the show.
• 13:12
  SPEAKER_00: Mr.
• 13:12
  SPEAKER_00: Will here, signing off from Selling on Giants.
• 13:14
  SPEAKER_00: Let's keep building.