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Gym & Fitness bulks up operations

From a simple eBay experiment, Gym and Fitness has grown into one of Australia’s largest fitness equipment retailers and suppliers.

Dave Barnes, founder and managing director of Gym and Fitness, spotted a gap in the online market back in 2002. Wanting to set up his own home gym, he found it difficult to find his ideal fitness equipment.

Once he tracked down the gear for his home gym from a local importer and wholesaler, Barnes decided to list it on eBay, just to see if it would sell.

It did sell, and, importantly, with a reasonable margin. So he repeated the experiment a few times until the wholesaler offered him a better price in exchange for taking the last 600kgs of weights off his hands.

“It went from eBay to the online store, and it was mainly a drop-shipping only business for five or so years,” Barnes told Inside Retail Weekly. “And then we started pushing into bricks and mortar retail roughly four or five years ago.”

Gym and Fitness now has six bricks and mortar stores spanning Sydney, Port Macquarie, Melbourne, Adelaide and the Gold Coast, but initially they started with a bare bones 150sqm shop set up to circumvent importers and wholesalers’ bricks and mortar policies to get access to the products which they could then also sell via their online store.

“We then found the store was actually doing quite well. It was bringing in a lot of extra people, because when you are spending $2000 to $5000 for a home gym, there’s still a lot of people who like to touch, try, feel and check the ergonomics of the machine.

“So we found it was working quite well and we then moved into a bigger premises and changed the model a little bit.”

Barnes said they did very little traditional marketing to promote the stores.

“It was a bit of a surprise to see some of the stores get some good revenue numbers off the bat, which was excellent. But a lot of it was really coming off the back of our web presence and our online and digital marketing strategies to drive all those people instore.

Gym & Fitness
Revenue streams
Since 2012 the company has significantly expanded its operations, resulting in a 100 per cent revenue increase.

As well as retailing to home users, Gym and Fitness provides fitouts for commercial gyms, from design to installation and servicing of equipment.

The business also includes a wholesale division to supply 100 Australian retailers with product. And two years ago an export business was integrated, which now supplies an extensive network of distributors in 11 countries.

Moving into exporting occurred almost incidentally as a result of the R&D and market research that went into the products Gym and Fitness designed.

“We were getting a lot of inquiries from overseas consumers and a few from overseas stores to see if there were any distributors in their regions.”

Barnes said their investment in marketing, product videos and print materials to help support stores resell their products also sets them apart from their competitors.

“We‘ve been using that as our unique point of difference from a lot of the other brands who distribute around the world, just because we do have quite a lot of materials and IP to support people whose core business is to sell fitness equipment, whereas we are also innovators and fitness equipment designers.”

But protecting his intellectual property is no easy feat for Barnes.

“Staying ahead of our competitors with market-leading products is one of our main differentiators,” Barnes said. “Lots of people in the industry like to copy other people’s products, and it is quite hard to protect a lot of those products that people may design. So we’ve decided the best protection is just to keep on innovating.

“We are putting a lot of internal energy into continuing to innovate and improve not only our products, but also our systems and processes for better efficiencies.”
In an effort to improve operational efficiencies, Gym and Fitness recently replaced MYOB with NetSuite OneWorld software to manage critical back-end business processes, including financial consolidation, order management, CRM, warranties and spare parts management across multiple subsidiaries, as well as point-of-sale (POS) in its retail stores.

As an existing NetSuite customer, Gym and Fitness deployed the new software system to simplify its operations, including handling multiple currencies from its export operations.

“We had one retail store and 26 users when we provisioned NetSuite to manage the operational side of our business three years ago and we have grown to six retail stores and 93 users today,” Barnes said.

Barnes credits NetSuite as a critical factor behind its accomplishments, in particular for providing scalability and flexibility.

Fitness goals
Facing pressure from shrinking margins and prices, Gym and Fitness intends to continue to focus on product innovation.

“We are seeing a lot of the prices and margins coming down,” Barnes said. “Whether it’s more people who are importing direct, [or] consumers who are not putting value of brands and warranties as much as they used to.

“So we really need to be doing everything we can to keep delivering high quality products to the market at affordable prices, just so we can stay competitive with the other low-cost providers.”

Barnes said he is seeing more people turning to online ordering and growth in the commercial mid-range personal training and corporate market, which ranges from $5000 to $50,000.

In regard to exporting, Barnes said, “It’s been quite an interesting part of the business so far and we’re still growing that part of the business.”

This story first appeared in Internet Retailing’s sister site Inside Retail, click here to subscribe. 

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