50 Below — what a great name for a company based in Duluth, Minn., where winter temperatures on the icy shores of Lake Superior regularly plummet far below zero.
But the company doesn’t have anything to do with the weather—it provides Web site and e-commerce services for dealers and manufacturers.
Launched in 1997, the company today provides Web sites, e-commerce services and online marketing programs to more than 22,000 companies in several industries. That includes more than 4,700 powersports dealers alone.
A different startup approach
The founders of 50 Below, Dave Hogge and Mike Rollo, took a different approach to setting up a dot com company some seven years ago.
The two men hooked up in Duluth, located about 150 miles north of Minneapolis-St. Paul, when they fled the corporate rat race of the Twin Cities. Both men had been in sales — Dave in bicycle parts and Mike in computer software.
Their combined experience included working with OEMs, dealer networks, and computer operations. Neither was a programmer, but both had plenty of experience in sales and marketing.
The pair had definite parameters for their new venture: No inventory; personal financial goals, and some type of renewable revenue base that would enable them to make a sale and continue to generate revenue from that one sale.
“They realized they could be in Duluth and be a general Web site host,” says Jason McConnell, the company’s marketing manager. “Even though they didn’t know programming,” he said during a recent interview with Powersports Business, “they knew how large OEMs were organized and they thought they could do something for dealers operating in a dealer network because they knew how the OEM-dealer relationships worked.”
They also felt that dealers and OEMs wanted to be able to trust their business partners and to develop a relationship with them.
They also knew, says McConnell, that if they could set up a system that used a repeatable database, one that they could load once and have it available to all participating dealers, they could have a valuable product.
“They have no desire to go into any industry,” he says, “that doesn’t fall into that business model. We’re not going to build one-off software.”
With those thoughts in mind, the two men launched their company and began targeting OEMs. “They focused on forming partnerships, either contractual or mutually beneficial, with large manufacturers with large distribution and large dealer networks,” notes McConnell.
Polaris Industries, signed up in 1997, was the company’s first powersports client.
50 Below began by maintaining dealer locators for OEMs and doing some behind the scenes software development. Outside programmers were hired as needed.
Part of the deal with Polaris was to offer Polaris dealers a Web site they could use. At that time, most businesses didn’t have a Web site.
“Polaris offered its dealers a Web site template, one that could be manipulated in small ways,” recalls McConnell. Dealers could provide some basic dealer information and event news. One feature included a mapping function, and the sites included links back to the Polaris site.
“The functionality was pretty limited,” notes McConnell, “but it was what dealers wanted.”
Things are much different today. Soon, dealers began requesting different products and different capabilities.
“Then we began offering domain names and then e-mail and search engine optimization,” says McConnell. And then registration and tracking capabilities were added. And, of course, complete OEM product catalogs. Then Polaris offered co-op dollars for Web site activity.
Then capabilities were developed for multi-line dealers. “We realized very quickly,” says McConnell, “that there are multiline dealers who want to have their other products on their site, too.” 50 Below came up with a solution that allows consumers to search for a dealer by brand and then go to the branded dealer Web site they wanted and see only that brand even if the dealer is multiline.
“Now, the Web site look and feel could change,” says McConnell. “If the customer searched for Polaris, the site he finds looks like Polaris. (The programming) strips away all non-Polaris products. In effect, there are multiple home pages.” OEMs don’t have a problem with this approach, he says, because they know customers see other products in the story anyway.
50 Below now works with Arctic Cat, Honda, Kawasaki, and Yamaha as well as Goodyear, American Express and Piper Jaffray in five industries ranging from finance and powersports to tires and pools and spas. The company offers close to 70,000 powersports product variations, from machines to apparel and accessories.
What does it cost?
When a dealer signs up, he gets a free basic Web site that includes three or four pages. The minimum term is one year. If a dealer wants more capability, he can pay up to $3,000 annually for e-mail, e-commerce and hosting functions. There’s also a one-time $200 setup fee. The annual fee can be made in monthly payments, but McConnell says many dealers pay it at one time because often it’s easier to collect on OEM co-op programs. psb
Copyright 2004 Powersports Business