Backcountry.com sale was planned from the beginning

When Colorado-based Liberty Media Corp. (Nasdaq: LINTA, LCAPA) announced it had acquired a majority interest in Backcountry.com Inc. on May 7, it was the culmination of a plan that co-founders Jim Holland, company CEO, and John Bresee, company president, had put into play when the company first launched 10 years ago.

“It has been our intention since our beginning when we launched 10 years ago to have some kind of pay day and live the American Dream,” Holland told SNEWS®.

In those 10 years, the small Internet company known simply as Backcountrystore.com became Backcountry.com, with multiple related sites including BackcountryOutlet.com, TramDock.com, DogFunk.com, SteepandCheap.com and WhiskeyMilitia.com.

Holland told SNEWS® that while he and John are, obviously, very happy, not much is changing other than ownership shares.

“One of the reasons we chose Liberty in the first place is they are not about managing companies,” said Holland. “Their style is to identify companies that have good management teams, acquire them, and then step back and let those teams do what they know how to do.”

Holland makes no secret of the fact his team hopes to leverage lots of knowledge from Liberty-owned QVC, which in 2006 reported just over $7 billion in revenue. It is Holland’s hope Backcountry.com can tap into the evolving adrenaline factor that is now happening with sales and products on QVC.

It is also Holland’s expectation, and likely Liberty’s, that Backcountry.com will soon be expanding into a global Internet retailer.

“We have obviously seen significant opportunity internationally, but it is a dizzying morass of regulations and processes and trying to figure out what the right first steps are and do it well is challenging,” said Holland. “With Liberty and its properties, we have an existing international presence we can tap into and learn from.”

Domestically, Holland sees great opportunity in the synergies of Liberty-owned properties as well, with the likes of Expedia.com, Match.com and the $250-million-sized Proflowers.com. “Proflowers.com has mastered the logistics of delivering flowers just in time, delivering from multiple locations all over the country, and we can learn a lot from the one-deal-at-a-time sales approach.”

When we asked Holland if others in the selling space should perhaps be a bit nervous, he chuckled and indicated that perhaps yes, since Backcountry.com now has the ability to improve pricing on shipping and merchant fees simply as a result of being part of a much larger empire. In addition, their credit line just soared into the stratosphere and, he pointed out, the company can now consider acquisitions that were once out of reach.

While Holland would not allude to any specific acquisition targets, he did allow that he would like to see a mix of sales from savvy acquisitions that could help to smooth out the cyclical nature of the current business model, where the vast majority of the company’s sales occur in the fourth quarter.

SNEWS® View: Backcountry.com aligned with QVC? Who would have thunk it. Expect lots of quick moves in the next year as we are certain Backcountry.com will seek to find ways to smooth out the small hit it will likely take in 2008 when The North Face pulls its direct link to Backcountry.com as it takes sales in house. Insiders at both companies have told SNEWS® in recent months that sales from the direct buy button on The North Face accounts for between 30 percent and 40 percent of all TNF sales on Backcountry.com, and that TNF sales are a significant portion of all sales for the venerable Internet retailer. Lest one think that TNF pulling the plug is a damaging blow, think again. A minor hit at best as TNF insiders tell us their company still expects strong sales via the Backcountry.com channel regardless of the elimination of the direct link. Consider too that more than two major outdoor brands other than TNF have told SNEWS® in the last month that Backcountry.com is by far the biggest online retailer of product for them — and that’s saying something, believe us.

The only question we now have is how large can Backcountry.com become and will this acquisition have any impact upon pricing and sales via the Internet channel for other outdoor retailers. Only time will tell.