MLB Could Outsource Online Merchandise Sales
Major League Baseball may take a step back from its e-commerce business in order to increase profits, The Post has learned.
A decision to completely outsource its MLB.com store is under consideration, sources said.
MLB currently operates the e-commerce sites for all 30 teams – including inventory and pricing – and uses a third party, Fanatics Inc., to ship jerseys, caps, and other items sold on the sites.
But the baseball brass are planning to have the fanatics largely run the operation, three sources familiar with the situation said.
If it outsourced the operation to Fanatics, MLB would be relieved of inventory and pricing issues – while still having access to a greater profit stream from MLB sales on the Fanatics site.
“At this time, MLB is not making any money from Fanatics baseball-related sales,” a source said.
MLB and Fanatics buy the same jerseys and sell them on their sites.
The hope is that the extra revenue from a new deal signed with Fanatics, if that’s the route MLB chooses, would more than offset profit margins of up to 20 percent of the $ 100 million a year it now generates. by running MLB.com itself, sources added.
MLB has been running its e-commerce site since 2001.
Fanatics currently operates e-commerce businesses for the NFL, NBA, and NHL.
MLB’s possible move shows the increased power e-commerce retailers are currently wielding when competing against league sites.
“The fanatics take a New York sports fan and, while selling them a soccer jersey, have the option of selling them a baseball jersey,” a source noted.
This is an advantage that only one league does not have.
In June, Fanatics finalized a funding round of $ 170 million, which earned it a valuation of $ 3.1 billion.
The sporting goods retailer’s backers include Andreessen Horowitz, Insight Venture Partners and Alibaba Group.
However, while the MLB has decided that its current ecommerce setup is no longer feasible, it has yet to decide which changes are best, sources said.
One option for MLB is to continue running its site while choosing a new sender, sources said.
MLB is talking to non-competing Demandware about replacing Fanatics, a source said.
Fanatics could be a thorn in MLB’s side by competing with its partner on price.
“The fanatics cut prices by being a lead product,” a source said. A visit to the Fanatics and MLB.com sites shows several cheaper items on Fanatics.
MLB.com and Fanatics both declined to comment.