Adventure-book retailer Spencer Newman thought he'd discovered a niche - until Amazon.com came along. Here's how he survived
Spencer Newman's employees are probably not like yours. They climb Mount McKinley, ski down volcanoes in the Pacific Northwest, backpack in Baja, trek in Bolivia, cycle in Nova Scotia, and hike the Appalachian Trail. There's even a seventysomething woman who hitched a ride on a freighter from Chile to New Zealand. They are, in other words, addicted to dramatic journeys. That's good news for the sandy-haired and bespectacled Newman, because he is asking his employees to tread a rather treacherous path with him.
Newman, the 31-year-old founder of Adventurous Traveler Bookstore (ATB), started his business in 1994 as a mail-order catalog, found his niche, exploited it successfully, and then watched it nearly slip away to that Internet muscle man, Amazon.com. But he's snatched it back with the help of his crew. They are his secret weapon.
"This is the perfect place to do what we do," says Newman as he braces himself against the wind that whips off Lake Champlain. ATB's home base, Burlington, Vt., tucked away in the Green Mountains and surrounded by unspoiled wilderness, is a mecca for people who love outdoor activities. Newman and his wife, Karen, both passionate skiers, set their hearts on moving here after graduating from Tufts, in 1990, and searched for jobs in the area. He found a home at Peregrine Outfitters, an outdoor-accessories wholesaler that would eventually become an Inc. 500 company. Among the accessories that Peregrine distributed were travel books - books that Newman, in one of his many roles at the growing company, bought from publishers and then sold to retailers nationwide. "I noticed that there were so many books out there, but that there weren't enough customers in a single geographic area to warrant opening a bookstore," says Newman. Still, the idea of one-stop shopping for adventure-travel books appealed to him, so he decided to go into the mail-order business with his own catalog, featuring the best titles from 100 different publishers. Bob Olsen, Peregrine's founder, became Newman's mentor as well as his primary supplier.
Shortly after he started the company, Newman received an out-of-the-blue call from someone at Outdoor Adventure Online who was starting a site that would be carried on America Online. Would he be interested in putting his catalog offerings on-line? "The guy had just gotten off the phone with my competition," recalls Newman, "and they wanted nothing to do with this thing called the Internet. My response was, 'What have I got to lose?' Sales were minuscule, and I was still running the company out of my bedroom. So I gave him descriptions of 500 books." Newman was shocked when he began getting an order or two a day from customers who had visited the site. "The volume wasn't going to grow the company, but it was an introduction to the possibilities of the Internet," he says.
A few months later, in June 1995, Newman was lured away from AOL by Diane and Bill Greer, outdoors enthusiasts who had ditched their Wall Street careers to start an Internet business called Great Outdoor Recreation Pages (GORP), now one of the premier sites of its kind. Unlike Outdoor Adventure, which simply listed ATB's offerings and provided an 800 number for customers to call, the Greers promised Newman an interactive shopping cart and his own Web site linked to editorial content on GORP. In exchange for managing the site, GORP would receive commissions on all ATB's Internet sales. "They were light-years ahead of others in terms of Internet shopping," recalls Newman. "I'd come in every morning and download 20 to 30 orders." As business thrived - 1997 sales reached $1.4 million, which reflected a 44% increase over the previous year's sales - Newman believed that he had really found a niche his company could dominate.
But by early 1998, a previously little-known on-line bookseller called Amazon.com was beginning to change all that. As Amazon crept up on his niche, Newman began to think of the Internet as more than just another place to sell books. He noticed that it was becoming more and more difficult to grow his mail-order business, and he suspected that potential customers were using ATB's catalog to shop and were then buying at Amazon, where prices were lower. "I didn't believe that Amazon would do what they were setting out to do," says Newman, "but they've done an incredible job." As Amazon began to raise more money, improve its site, and carry more of what ATB was offering, it became crystal clear to Newman that his company couldn't compete on price.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.