Billion Dollar Unicorns: Niche E-Commerce Works for Fanatics

A recent TechNavio report, Global Licensed Sports Merchandise Market 2015-2019, estimated the licensed sports merchandise market to grow 2.74% annually over the period 2014 through 2019. Recent turnover of the industry is not available, but back in 2011, analysts had estimated the market to be worth $15 billion. Billion Dollar Unicorn club member Fanatics is among the leading players in this industry.

Fanatics’ Offerings

Jacksonville, Florida-based Fanatics was founded by e-commerce visionary and former CEO of GSI Commerce Michael Rubin and two football fans Alan and Mitch Trager. The company’s idea came into being back in 1995 when the Trager brothers opened a brick-and-mortar storefront called Fanatics in a Jacksonville mall. Within a few years, the brothers realized the market opportunity for fans spread across the world who wanted merchandise that supported their favorite teams. By 1997, Fanatics had opened their digital storefront and made their first online sale.

In 2011, Michael Rubin’s GSI Commerce bought Fanatics and incorporated their e-commerce expertise into the entity to make it one of the world’s largest retailers of officially licensed sports merchandise. GSI Commerce was sold to eBay, but Rubin held on to relationships with the leagues and Fanatics through a parent company Kynetic LLC.

Today, Fanatics offers officially licensed items and sports collectibles and memorabilia through Fanatics, FansEdge, and Fanatics Authentic. They also power the e-commerce sites of major professional sports leagues including the NFL, Major League Baseball, NBA, NHL, NASCAR, PGA, and UFC and operate e-commerce sites for more than 150 collegiate and professional team properties. They have grown from a small store in the mall to a web and mobile commerce player with over 1.5 million in warehousing space.

Fanatics’ Financials

Fanatics’ detailed financials are not known. But in a recent news report, Rubin had commented that the company was trending at annual revenues of $1 billion back in 2013. Unlike several other e-commerce players, Fanatics has been profitable for a while. In fact, when they were acquired by GSI Commerce in 2011 for $277 million, they had reported revenues for fiscal 2010 at $186.3 million with operating income of $23.8 million.

Fanatics has received funding of $320 million so far from investors including Temasek, Alibaba, Insight Venture Partners, and Andreessen Horowitz. Their last funding was received in June 2013 when they raised $170 million in a round led by Temasek and Alibaba at a valuation of $3.1 billion. The valuation was estimated to have doubled in 2013 from what it was valued at in 2012.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

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