In a year that has been flat for most of the marine industry, boats.com Inc. has seen year-over-year growth of about 35 percent. The accomplishment is an even bigger feat, considering that the company, known best for its online boat listing service, rode the wave and then the crash of the Internet boom a few short years ago.
During the Internet bust, boats.com cut back drastically, says Paul Rabe, president, CEO and co-founder. When the company closed its San Francisco office and moved to Chicago in 2001, it reduced its workforce by two thirds to about 30 employees.
However, the company adopted a strategy at that time that allowed it to stay in business and that it continues to espouse today, says Rabe. The strategy was that the company would be required to bring in one dollar of revenue for two months before spending one new dollar in expense. Using that philosophy, the company has been profitable for the past 18 months and expects to continue to grow.
As of August, the company had 36 employees and was in the process of hiring three additional staff members.
Sources of growth
The growth boats.com has been experiencing can be traced back to three main sources, according to Rabe.
For one, the company’s main revenue source — making up about 60 percent of total revenues — is leads and referrals from its listings of new and used boats for sale.
During tough economic times, there is a jump in the buying and selling of used boats. During good times, new boat sales tend to grow. This combination makes boats.com’s business model somewhat recession-proof, says Rabe.
In addition, growth in Internet usage has led to an increase in business for the company, according to Rabe. Traffic on the boats.com family of Web sites has been growing as much as 50-60 percent per year, which he expects to continue for the next three to four years.
A third factor, according to Rabe, is that there has been a consolidation of boating Internet sites. At the end of this consolidation process, he forecasts that there will be two or three major Internet companies serving the marine industry and 10-20 smaller firms serving niches in the market.
Expanding beyond the Internet
Under this scenario, boats.com Inc. is one of the big players. The company currently has 5,500 brokers and dealers as clients and approximately 360 manufacturers. It offers a range of products and services online, including finance and insurance, listings of new and used boats, online marketing and advertising, and a sold boats database, and is planning to add more – both online and offline.
Though boats.com has offered online marketing and advertising services in the past, it now is expanding into other media, partnering with print companies, for example, says Rabe.
The company’s CallButton service, which involved partnering with newspaper firms, is part of this initiative. Through the service, launched in July, advertisers can better track responses to their advertisements, both on the Internet and in newspapers, according to boats.com. The company also is looking to partner with consumer magazines to expand this service.
Other areas of expansion for boats.com Inc. include targeting other markets, such as the RV and motorcycle markets, and improving its lead and referral service.
For example, boats.com is working to collect more information from consumers on its site in hopes of delivering more qualified leads to dealers.
With these plans for expansion, Rabe says he expects the company to continue to grow at its current rate, if not faster, over the next three or four years. — Liz Walz
Setting the Record Straight
The industry is still talking about the decision by the National Marine Manufacturers Association (NMMA) and the Marine Retailers Association of America (MRAA) to endorse boats.com as their Internet partner in 2000.
Paul Rabe, boats.com Inc. president, CEO and co-founder, shares his perspective.
“The main reason they endorsed us it that we held true to the principle of not getting between customers and dealers or between dealers and manufacturers,” he explains. “[There was] concern over manufacturers selling direct to customers. We’ve been actively working within the industry for the benefit of the whole industry.”
Rabe says boats.com has had many requests from dealers who want to sell outside their territory and offshore manufacturers who want to sell direct in the United States, all of which boats.com has turned down.
In turn, he says both NMMA and MRAA have contributed to the company’s success, and he is grateful for their confidence in boats.com.