is partnering with Fanatics to dramatically increase its inventory of officially licensed sports merchandise such as T-shirts, hats and jerseys.
Under the multiyear deal, Foot Locker (NYSE: FL) will be able to list tens of thousands of products from the NFL, NBA, MLB, NHL and NCAA on its website, starting later this year. Foot Locker will control the pricing, marketing and point of sale, but the orders will be fulfilled and shipped by Fanatics, the world’s largest seller of licensed sports apparel.
Deals like this are a lesser-known part of the Fanatics business—in addition to its own shop and the ecommerce sites for major leagues, teams and colleges, Michael Rubin’s company also sells product through a handful of major retailers. The company has similar online partnerships with Nordstrom, Kohl’s, Macy’s and JCPenney. These retailers don’t have access to the full line of Fanatics products; each partner has a different mix.
Revenue sharing specifics of the Foot Locker deal, which also includes the Kids Foot Locker and Champs Sports websites, weren’t provided.
“Pairing Foot Locker’s leadership in sneaker culture with the sports fan and assortment power of Fanatics is a natural fit,” Andrew Gray, the company’s executive vice president for global Foot Locker and Champs Sports stores, said in a statement. “Bringing together these two dynamic forces will drive and serve sport and sneaker culture in exciting ways.”
When product is mailed directly from a brand to the buyer, despite the point of sale being a different retailer (in this case, Foot Locker), it’s known in the industry as “drop shipping.” Within Fanatics, the deals are referred to as “connected inventory” partnerships.
Last year, Foot Locker announced a pilot drop-shipping partnership with Nike (NYSE: NKE), one of the store’s most important vendors. Dick Johnson, Foot Locker’s CEO, said at the time that the program would help increase inventory and shorten lead times, all without the burden of holding actual inventory. The program has since expanded to include more Foot Locker partners, and more banners, such as Champs Sports and Eastbay.
“We continue to roll out our drop-ship program across vendors and regions to give our consumers a seamless extension of choice,” Foot Locker chief operating officer Frank Bracken said on an earnings call in May. “Drop ship also allows us to test new products and categories in consideration of adding them to the assortment in a bigger way, including in our stores.”
Fanatics recently raised money at a $27 billion valuation, 4x its valuation from August of 2020. The company is expanding rapidly outside of its core merchandise business, including a new trading card vertical, an NFT platform, and in the near future, a sportsbook.