Denver E-Commerce Startup Active Junky Preps for Holidays, Big 2015
Whether on the ski slopes or outside shops, it’s going to be a busy next few days for a lot of people in Colorado.
Shoppers will be lining up for Black Friday bargains or surfing for Cyber Monday steals. Up in the high country, skiers and snowboarders from around the world will be flocking to resorts while on their holiday breaks.
The start of the holiday shopping season also promises to be a big weekend for a Denver startup named Active Junky. The affiliate marketing e-commerce site helps outdoor enthusiasts save money on gear and apparel from major retailers including REI, Cabela’s, and Eddie Bauer. It also includes content like product reviews and buyer’s guides.
CEO Kevin McInerney founded Active Junky in 2010, and since then the company has come to work with more than 250 retailers and well-known brands like Nike, Under Armour, and Patagonia, as well as smaller brands that specialize in activities such as fly fishing or rock climbing. At this point, that’s “everyone that has a significant online commerce play,” McInerney said.
For shoppers, Active Junky offers an easy way to find and compare hundreds of deals, some of which save them more than 10 percent. Once they choose, they’re sent to the seller’s website to complete the transaction. Sellers apply the discounts, and every three months Active Junky will send the shoppers checks or put money in their PayPal accounts.
The rebates Active Junky gives users actually are a cut of the commission the startup receives for each deal it generates, McInerney said. Customers who claim the discount still can use other coupons or take advantage of sales offered by the store or manufacturer.
Customer acquisition obviously is a big deal for Active Junky, but for the startup to be successful, McInerney said it needed to build its credibility with brands. If they weren’t using Active Junky to offer shoppers good deals, then shoppers wouldn’t come to the site—which would make it even harder to convince brands to use Active Junky, and so on.
“It did take a while. There was some work that had to be done while we were developing the company. A lot of it has to do with having personal relationships with the brands and retailers,” McInerney said. One thing in Active Junky’s favor was that its founders are outdoor sports junkies, just like the people working for the companies they courted.
It was enough to convince a few companies to give Active Junky a shot.
“There were a handful of brands that jumped on board in the beginning, and we really proved ourselves,” he said. “The data proved that we could drive quality leads and sales for them.”
While online affiliate marketing is widespread, it helps Active Junky that it has carved out a niche in a market segment that has educated consumers with deep pockets.
“We really created this business for people that spend several thousand dollars a year,” McInerney said.
Top-of-the-line outdoor gear like bikes, kayaks, skis, and coats can be expensive, and while people shopping for them do like deals, price isn’t their primary concern. They’ll shop around and read many reviews before finding what’s right and spending what could be a few thousand dollars on a single item, McInerney said. Using Active Junky, they could save hundreds of dollars on a big purchase.
Apparel and equipment companies understand the dynamic and want to be able to reach those high-value customers, he said. By reliably delivering those customers, Active Junky has created a place for itself in the industry. It also allows Active Junky to obtain a high commission for each sale it generates.
Active Junky also benefits from a trend that indicates more consumers are buying outdoor products online. The Outdoor Industry Association said shoppers spent $2.36 billion on outdoor gear during the 2013 holiday shopping season. It found 27.5 percent of those sales were online, up from 21.1 percent of overall sales in 2012.
But to cash in on that trend, Active Junky still has work to do.
“We’ve created a marketplace for the outdoor sports industry so that these different brands and retailers can compete for high-value customers,” McInerney said. “Now the challenge for us is to be able to continue to acquire high-value customers.”
Although McInerney declined to get specific when discussing revenues and sales data, he did say Active Junky expects to facilitate about $10 million in sales in 2014. Active Junky gets a percentage of the sales it generates. McInerney said the company’s cut is high by the standards of the industry, but it also is split with consumers so the company can offer more enticing deals.
The startup has had revenue from its start and was profitable until it raised a $1.4 million from angel investors last spring. The influx of cash has allowed Active Junky to search for additional engineers, marketers, and data analysts. The company started the month with about 10 employees, and McInerney said he’d like to hire four or five more by the end of the year.
After the holiday shopping season is over, McInerney has big ambitions for next year. The site will be redesigned and there will be more content. The vision is that will draw more shoppers.
“We’re really focusing our user acquisition on exactly what our retailers and brands are trying to get,” he said.