Entrepreneurship and Innovation Strategy Mini Project
Professor Adner – Section 1 – Fall 2011
Tuck School of Business at Dartmouth
Taylor Bowman (T’12), Daniel Philp (T’12), Debbie Soon (T’12)
Introduction and Value Vision
Outfittr is a startup being developed by Dan Philp, as an online outdoor gear rental shop and
user community. In addition to competitors, this innovation ecosystem is comprised of five primary
participants: Outfittr, manufacturers, outdoor advocacy groups, shipping services, and end users.
Outfittr maintains an online storefront, ships rental gear overnight to customers from inventory, and
builds a user community. Leading outdoor gear manufacturers supply Outfittr with high-quality gear.
Outdoor advocacy groups such as college outdoor clubs send potential customers to the Outfittr
website. Shippers ensure timely delivery and return of gear. End customers rent or buy gear and provide
feedback, gear lists, and trip ideas to the user community. The value vision for the overall ecosystem is
to efficiently deliver manufacturers’ products into the hands of end users at a lower willingness to pay
than is served by traditional retail. Advocacy groups and end users will have low-cost access to highquality outdoor gear, which will remove a barrier to initial and ongoing participation in outdoor
activities, expanding the market size and providing a new demo and sales channel for Outfittr’s
partners/suppliers.
Ecosystem map
End Users
For end users, the value proposition is threefold. First, customers will be able to conveniently
rent high-quality outdoor gear at affordable prices. Customers will be able to rent gear online and have
it delivered before their trip starts, either to their house, work, or to their hotel during the trip.
Convenience and cost are key, as it is possible to rent gear at outdoor stores to which an end user must
travel to pick up gear. Additionally, gear costs are frequently cited as a significant barrier to participation
in new outdoor activities, and Outfittr will provide a simple way to overcome this barrier. Second,
customers will be able to leverage and contribute to Outfittr’s user community to get trip ideas,
understand gear requirements for different activities and seasons, and get tips and information on
activities of interest. Third, customers can use Outfittr as an online demo center, renting top-quality
gear for trial, with the option of purchasing directly from Outfittr. If properly executed, Outfittr will
provide a high level of value to end customers by allowing them to try new outdoor experiences cheaply
and easily.
Suppliers and Manufacturers
Outfittr’s primary concern is building demand from both end users and manufacturers before
the service has proven successful. Each is critical to driving traffic while conserving capital: critical mass
of customers and favorable terms on high quality merchandise. Manufacturers are Outfittr’s sole
suppliers, and establishing positive relationships with the top gear manufacturers is crucial to the
success of the enterprise. Much of the value to customers comes from the ability to select from a
selection of top-quality name brand gear, not the typically cheap and lower quality gear available for
rent at many of Outfittr’s brick and mortar competitors. Outfittr has been told that financing of terms of
at least 120 days, free gear to launch the endeavor, and discounts specific to rental companies are
arrangements available from manufacturers. Maintaining the optimal solution to launch and as time
goes on will be crucial to Outfittr’s profitability. To do this, Outfittr must offer substantial value to its
partner/suppliers in order to motivate them to finance, subsidize, or give gear to Outfittr.
Outfittr offers value to manufacturers in three primary ways. First, it serves as a marketing and
awareness tool for manufacturers. By renting through Outfittr, customers—who are often new to a
sport—are exposed to high quality gear at the beginning of their participation in an activity. If these
customers decide to pursue the activity more seriously, this exposure will keep the suppliers’ brand top
of mind if and when Outfittr’s customers decide to make a purchase. While the qualitative value should
make sense for potential suppliers, Outfittr should seek to quantify this value early in its existence in
order to refine its value proposition for its partners.
The second way Outfittr can add value to suppliers is through its role as a demo center for
customers, allowing them to try products before they buy. While Outfittr’s initial target customers are
newcomers to an activity (as well as the trip leaders leading them), as Outfittr adds more variety within
a given set of products (i.e. moving from three backpack models to a dozen) and widens its inventory,
Outfittr can expand its market to more seasoned outdoorsmen who are looking to demo the latest highend gear. For gear manufacturers, these “gearheads” are a critical market segment—they purchase a
significant amount of new gear and they are often outspoken supporters (or critics) of a brand or
product. Currently, these higher-end customers have limited means of demoing the majority of outdoor
gear that Outfittr plans to carry. The best existing “demo” substitute is for customers to purchase an
item through traditional retail channels and then return it if it doesn’t meet their needs or preferences,
which is suboptimal for all parties. By giving customers easier access to high-end gear, Outfittr can help
manufacturers remove a significant barrier to product adoption—trial. Once established as a significant
player, Outfittr should negotiate with suppliers to cobrand their site with the Outfittr demo offering.
The third way Outfittr adds value to suppliers is by increasing the overall market for outdoor
gear. One of Outfittr’s goals is to increase overall participation in outdoor activities. Given that cost of
gear is a significant barrier for many would-be participants, Outfittr’s rental model provides a highquality substitute to gear purchase for people considering a new sport. As new participants try new
activities, some of the activities will “stick” and become a new part of that customers life. As their
participation frequency and intensity increases, these customers will reach a point where it is more
economical and convenient to actually own the gear. By helping introduce new participants to the
outdoors, Outfittr will increase the size of the outdoor gear market, to the benefit of the entire industry.
However, Outfittr will need to be able to convince manufacturers that the increase in the overall
industry is greater than the reduction in sales resulting from people renting instead of buying.
Outfittr has the ability to add significant value to suppliers, and several potential suppliers have
already recognized this, offering Outfittr 120 day financing, gear donations to get Outfittr started and
wholesale terms thereafter. But Outfittr also faces challenges in working with suppliers that must be
addressed. One of these is how to handle gear sales to rental customers. Outfittr plans to offer
customers the ability to purchase rental gear rather than return it to Outfittr at the end of the rental.
Purchase prices will certainly be below retail value, but Outfittr must be careful of what prices it sets,
and what condition the gear is in at sale. Outfittr could easily spoil relations with suppliers if Outfittr
retails slightly used gear obtained from suppliers on the premise that it would be rented or demoed in
order to achieve the value for suppliers described above. If Outfittr achieves “better than wholesale”
terms, it will need to be careful that traditional retailers do not become aware of the relationship and
that it does not abuse the relationship by acting as a traditional retailer; taking advantage of the
additional margin by selling straight through to end users before a reasonable rental term. It will need to
carefully manage its relationships to avoid pressure on suppliers from other retailers to raise prices to
Outfittr.
If Outfittr sells lightly used gear at deep discounts, this could be perceived as a competitive
threat to traditional retailers, who may believe that suppliers are using Outfittr to price discriminate by
providing “damaged goods”, much like Ford paying Hertz to create cars for the used car market.
Furthermore, if Outfittr is highly successful and the gear rental model takes off, then Outfittr’s gear
rentals themselves might become a threat to retailers’ sales of new gear. In the extreme, gear rental
could displace sales of new gear, which could cause traditional retailers like REI or EMS to put pressure
on common suppliers to discontinue selling to Outfittr. This scenario, however, would mean that Outfittr
was tremendously successful beyond its wildest expectations, and Outfittr would be pleased to find
itself in this predicament!
Shippers
A large part of the executional risk associated with Outfittr’s model is the shipment of the
rented gear to the customer. As delivery of goods is entirely dependent upon third party shipping
companies such as UPS, this poses a reputational risk to Outfittr should customers not receive their gear
on time. The three major shipping options available are UPS, USPS, and FedEx. UPS guarantees delivery
times on ground shipping and will compensate the cost of shipping if they do not meet this deadline.
USPS, while more cost efficient than UPS for smaller orders, only guarantees shipment dates for
premium Express Mail services and has the same money back guarantee as UPS. FedEx has a money
back guarantee for their US Express and Ground shipments.
While Outfitrr will be able to get a refund on shipping costs from the shipper should the goods
not arrive on time, the possible fallout from such customer service problems will be large. Since the
occasional missed shipment deadline is inevitable, in order to mitigate the problems associated with
this, Outfittr should strive to reassure customers that their gear will arrive on time and if not, they will
be compensated for the inconvenience. Customers need to feel confident that Outfittr will handle their
claims with the utmost level of customer service satisfaction in mind. The process for making such
claims should be easy and hassle-free, as well as fair for the customer. Outfittr should compensate the
customer financially in a way that is commensurate with the inconvenience caused in the form of
discounted rates.
Additionally, Outfittr must build into their delivery schedule an appropriate buffer to account for
occasional tardiness. By keeping the service area localized to the New England area at the start, Outfittr
can reduce their shipper risk at the outset until they can more accurately gauge the potential for such
mishaps. Later on, Outfittr will add regional DC’s to service high-demand markets in order to further
reduce tardy shipments by decreasing the time gear spends in transit.
Advocacy Groups
As a startup, Outfittr needs to find the most efficient means of reaching customers as possible.
Advocacy groups, such as the Appalachian Mountain Club, the Sierra Club, the Dartmouth Outing Club,
and other college outing clubs are the core of Outfittr’s customer acquisition strategy. Each group
acquired represents hundreds or thousands of members who are led in their outdoor activities by the
clubs, representing a dense, qualified population that should be cheaper for Outfittr to target. These
groups have a mission of encouraging increased participation in outdoor recreation and serve a
population who may not have much experience, tightly aligned with the mission of Outfittr.
Conversations with colleges to date have indicated a strong willingness to use the Outfittr service as
described, but no formal agreements have been reached.
Colleges have an incentive to provide outdoor recreation to their students as part of the
experience they are selling at each college. Many already have stashes of gear which they manage,
repair, and replace. Additionally, they require a staff and physical location open to rent gear on certain
days of the week. Dartmouth, Stanford, and MIT gear rentals are not open every day, which is
inconvenient for students. Outfittr is currently investigating whether these operations are profitable for
colleges. Other colleges do not have gear stashes for student rentals, but could provide value to their
students by promoting a service that helped outing clubs run trips that required outdoor gear not
owned by their students. Generally, by consolidating a gear rental service across many colleges, Outfittr
can more efficiently utilize gear to serve students than colleges can by independently maintaining
separate stashes of gear.
To appropriately structure a relationship with a large number of colleges, Outfittr will need to
examine the assumptions it is basing the relationship on. Do colleges want to offer a variety of outdoor
gear to their students to enable outdoor recreation? Are the current gear rental operations a tax on
college operations? Will overnight delivery of gear be an appropriate replacement for in-person rental?
How much do colleges spend, lose, or gain providing outdoor gear rental to students? Outfittr is
currently investigating these assumptions. Stanford has indicated that their program breaks even, are
interested in providing the Outfittr service to students, and may be willing to share further data on their
financials.
Outfittr would like to secure a portion of what colleges are spending in exchange for providing a
higher quality service. However, colleges are likely to be wary of an untested service, and unlikely to pay
for service or reduce their on-campus offering until Outfittr has proven its ability to deliver the service it
promises. Additionally, the process of securing payment for a subsidized service requires negotiating
potentially tricky waters in college finances that have been hurt by the recent financial crisis. These risks
could be mitigated by working with a college such as Dartmouth, which has an established reputation as
a leader in outdoor recreation, to iron the kinks out of an online rental system and the structure of the
relationship. By signing a customer such as Dartmouth, Outfittr would be relying partially on the
reputation of the Dartmouth Outing Club to gain credibility with outdoor departments at other colleges.
Whether or not a formal agreement can be reached with colleges, campus reps can be used to drive
traffic to Outfittr for college outdoor trips.
Trip Leaders
A large part of Outfittr’s value proposition rests with the creation of a robust online user
community. In order for Outfitrr to be a destination for outdoor enthusiasts, beginner and expert alike,
the community must encourage the sharing and hence, development of accurate and relevant
information pertaining to trip requirements, tips, and gear reviews. The nexus of this interface between
the online community architecture and the end-user is the Trip Leader. Serving much the same function
as an “Influential” in social media parlance, this person has influence over the local end-user by virtue of
his or her leadership status and expertise. These people are the key to converting the masses to the
Outfittr model.
Rather than targeting marketing efforts to multiple customer segments (beginner, weekendwarrior, expert, etc.), which will require different tacks and soak up valuable and scare resources for a
start-up, Outfittr can focus the bulk of their marketing spend on converting Trip Leaders. By creating
brand loyalists out of this group of highly influential and visible people, Outfitrr can capitalize upon the
word-of-mouth advertising that will result.
In today’s world of hyper-connectivity, this type of marketing is paramount to the success of a
new organization. Outfittr stands to gain from the importance of the internet in customer decisionmaking. Being an online destination that leverages social networks and the ease of e-commerce, Outfittr
is uniquely positioned to take advantage of the increased number of consumer touch points. Since
consumers are now seeking out information about brands more than ever before, Outfittr serves as a
conduit of information about gear, both pre and post purchase/rental. Consumers today are exposed to
a plethora of marketing from multiple different media outlets, and in order to get through the clutter,
Outfittr must utilize the Trip Leader.
The value of Outfittr’s infrastructure for Trip Leaders is convenience and ease of planning. Since
the burden of planning a safe and enjoyable outing is on the Trip Leader, they will benefit by being able
to have one consolidated place for their planning needs. On the site, they can upload gear lists,
itineraries, and seek out information from fellow outdoor enthusiasts. Gone are the days when the Trip
Leader would have to scour multiple stores to find the right gear or ask friends in his own network to
lend gear for a particular journey. The burden of ensuring that the group has the right gear they need is
taken from the Trip Leader and placed with Outfittr, as participants are able to rent the gear designated
by their Leader directly on the site with a few clicks of a mouse.
In addition to facilitating the planning process, Outfittr provides a place where like-minded
individuals can share knowledge and get ideas for new trips. Trip plans and their corresponding gear lists
will be stored on Outfittr for future use by new users. Over time, Outfittr will have obtained a usergenerated archive of trips and lists, further facilitating the planning process as old itineraries can be
reused by others and improved if necessary.
Finally, in order to get the Trip Leaders on board at the outset, Outfittr will incentivize this group
with reduced cost or free rentals, demos, free gear, samples, etc. By targeting Trip Leaders, Outfittr will
be able to reach more users for their efforts than targeting any other one segment due to the far
reaching influence of this group.
Conclusion
To launch successfully, Outfittr needs to coordinate motivation of end users, manufacturers,
advocacy groups, and trip leaders. It is planning to establish itself by approaching colleges for
commitment to subsidizing rentals for their students; paying for the value mentioned above. With
commitments from a few colleges, Outfittr can prove it has buy in from advocacy groups who represent
thousands of end users. With this credibility, it will be easier to show the value that Outfittr offers to
manufacturers, improving their ability to close deals for outdoor gear. This process is likely to move
slowly at first as Dan learns the process of working with colleges and outdoor manufacturers. If
successful, however, he can grow a company which serves the needs of all groups while improving the
ease with which people can pursue outdoor recreation.