Chapin Co. Makes Direct Push

A manufacturer of outerwear for outdoor enthusiasts, The Chapin Co. is no longer content to sell solely to retailers. The Wayzata, MN-based company is setting its sail for the catalog industry, says president Ken Tarter. But several of Chapin’s retail clients are less than pleased with Tarter’s decision to expand.

Tarter and his wife, Susan, launched Chapin as a manufacturer/wholesaler in 1998. The company mailed its first catalog in the third quarter of 2001; direct-to-customer sale now account for about 60% of Chapin’s revenue. But Tarter wants to increase that percentage and in the process, build Chapin into a $10 million business within five years.

For starters, this year Chapin is doubling its catalog circulation from 50,000 to 100,000. And while last year it had one catalog drop, this year it will have three — two in the spring and one in the fall. The catalog’s average order is $124.

Chapin is also betting on the Web to gain in stature. “As a small company, we’ve got to be careful as to where we lay out our dollars,” Tarter says.

The company aims to capitalize on the cost-effectiveness of e-mail promotions. Two weeks before the war with Iraq began, Chapin sent out an e-mail offering customers 25% off its merchandise. “The response was incredible. You couldn’t mail something that quickly,” Tarter says.

Chapin designs and manufacturers all the products sold in the catalog, featuring what Tarter calls “hard shell” and “soft shell” technology. Chapin uses a new washable waterproof fabric, Epic by Nextec, in its dry vests and bottom shorts. To attract more women, Chapin has signed Dawn Riley, a three-time competitor in the America’s Cup Challenge races, to create a line of women’s outerwear.

‘Dissed’ by disintermediation fears

Not surprisingly, the manufacturer’s retail partners do not want Chapin Co. to sell direct for fear of competing for the consumer orders.

“I was called by the third largest dealer in the marine sector and asked if we were selling direct,” recalls Tarter. After the brief conversation, “the dealer said that he wouldn’t be partnering with any company that sells directly to the consumer.”

Some retail partners have begun making business difficult for Chapin, Tarter says. For instance, some retailers the company works with are demanding that payment terms be stretched to 120 days, when 30-60 days for payment is standard. In some cases, retailers are asking Chapin to hold inventory for a year, often without a purchase order, which means if the merchandise doesn’t sell, Chapin is saddled with the products.

What’s more, Tarter charges that some dealers have taken Chapin’s designs to manufacture them overseas on the cheap. “And all that adds up to less innovative products for consumers,” he says.

According to San Francisco-based catalog consultant John Lenser, manufacturers such as Chapin that are beginning to sell direct to the end user can take steps to diffuse tensions with its dealers. One of the simplest is to create a V.I.P program for your largest wholesale customers.

One perk of the program would be to inkjet a message onto catalogs mailed to areas where those dealers are located. The message could act as a retail traffic drive-for instance, “For more widgets and flanges, visit John Doe and Sons at 12 Main St., Townsville.” The dealer would no doubt be pleased to see customers walk into the store with catalog in hand.

“Disintermediation is a complicated issue,” Lenser says. “But sometimes mailing the catalog can work wonders with dealers.”

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