The Pellucid Perspective - February 2012 - (Page 16)

EQUIPMENT The phantom golf ball market Ball sales figures track rounds totals, or do they? By Jim Dunlap I t has been popularly assumed by most analysts that monthly and annual sales of golf balls and other, less necessary, consumable golf products travel in a parallel universe to rounds played. It makes sense – the more, or less, people playing, the more, or less, golf balls they will lose or damage. But is that correlation really accurate? The missing element in the equipment sales tabulations regularly reported by Golf Datatech and in less detail by PGA Performance Trak is online sales of both new and recycled balls. For instance, the most recent Golf Datatech figures showed golf ball sales down in both units and dollars year to date in November by 2 percent, compared to rounds down by approximately 1 percent. According to Golf Datatech founder and CEO Tom Stine, online sales of recycled balls in particular are virtually impossible to track and tabulate, although several of the major players in both online sales of new balls and recycled balls say there are a relatively small number of large players in both areas who account for the vast majority of those markets who could provide a statistically valid number of such sales, if asked. Tom Cox, CEO of online retailer golfballs.com, said he would be happy to provide his sales figures if surveyed, if only to get access to reports such as Golf Datatech’s on sales through other on-course and off-course retailers. Stine also said that his surmise is that online sales of recycled balls are actually “pretty negligible.” I suppose that depends on what one considers negligible. Gary Shienfield, founder and CEO of Toronto, Canada-based Knetgolf and its recycled ball business, roughly estimates the recycled ball sales total at “probably a couple hundred million balls.” While Shienfield would only quantify his current sales as “many millions,” a release in 2010 cited 2009 sales of more than 20 million balls by Knetgolf alone, and he freely admits that the economic struggles of the past few years have been a boon for Knetgolf and other large ball recyclers like Challenge Golf and Professional Golf. Shienfield said Knetgolf gets its balls from a network of over 2,000 courses, primarily in the warm weather, year-round U.S. golf states. Knetgolf pays courses for the right to mine their lakes and roughs for lost balls, then sends them to the company’s recycling centers for refurbishing and packaging by brand and quality. Courses take payment in either cash or merchandise for resale in their own pro shops or use on the range. Shienfield said the payments vary according to a number of variables, including the number of rounds the course hosts, number of hazards on the property, etc. Shienfield views his company’s services as an asset to the industry in the sense that not only do courses receive payment for lost balls (and can actually realize a higher margin on used ball sales than new ball sales), but the cost of the game is reduced slightly for golfers who buy used. And it’s not just North American customers – Shienfield said Knetgolf has over 80,000 international customers, including both individual consumers and retail outlets. Golfballs.com and its online competitors represent another element of the hidden ball sales market. Golfballs.com and its peers buy their balls new from the major manufacturers, but supplement their online direct sales of those balls with custom logo and other personalized treatments for balls and other golf merchandise and apparel. While not strictly limited to ball sales, CEO Tom Cox said the company did $13.5 million in sales last year, which was up 20 percent from 2010, which in turn was up 10 percent from 2009. Anyone notice a trend? Cox said his company’s success is not only a function of the company’s quality and ability to turn around custom logo or embroidery items quickly, but just as importantly, the shift in buying habits among today’s consumers, including golfers. Although Golfballs.com follows manufacturer pricing policies and doesn’t discount its golf balls, Cox said a huge number of customers just prefer to buy online. “You’d be amazed how many people do just order online, even though it’s the same price as the off-course stores,” Cox said. “Apparently they’d rather order from us and have it delivered to their house than take a trip to the store. I guess I’m not really surprised – I know I’ve gotten to be the same way in my own buying habits.” With the economy unlikely to significantly reverse course upward any time soon, it’s a good time to be an online ball seller, n used or new, apparently. Shienfield views his company’s services as an asset to the industry in the sense that not only do courses receive payment for lost balls (and can actually realize a higher margin on used ball sales than new ball sales), but the cost of the game is reduced slightly for golfers who buy used. 16 The Pellucid PersPecTive February 2012 http://www.Golfballs.com http://www.Golfballs.com http://www.golfballs.com http://www.Golfballs.com

Table of Contents for the Digital Edition of The Pellucid Perspective - February 2012

The Pellucid Perspective - February 2012
Contents
PGA/GolfNow deal torpedoed by members’, owners’ reactions
More core golfers playing less = trouble
Point-Counterpoint: Alternative Golf
January weather impact: Golf benefits from an inconvenient truth
Pro Kids Golf Academy builds on distinguished legacy
The phantom golf ball market
Tampa, FL
Forest Preserve still seeking golf course developer
Golf ’s Clash of the Titans

The Pellucid Perspective - February 2012