Billabong Value Chain Billabong International

Billabong Value Chain

Billabong International (Billabong) is an Australian company that manufactures, distributes, wholesales and retails products in relation to surf and board sports. Their product line includes: accessories, apparel, eyewear, hard good (such as surfboards), and wetsuits. Licensed and distributed in more than 100 countries, the Billabong brand can be found in approximately 10,000 locations globally. Billabong recorded revenues of AU$1,674.4 million during the fiscal year ending June 2009, an increase of 23.6% over 2008's revenues ("Billabong International," 2009). This increase in revenues is due primarily to the company's effective value chain management.

Billabong's effective value chain management begins with the organization's research and development. The company provides a wide variety of products through eleven brands: Billabong, Element, Von Zipper, Kustom, Palmers, Honolua Surf, Nixon, Xcel, Tigerlily, Sector 9, and DaKine ("About Billabong," 2009). Research on the latest surf and board sports technologies, and their related products, is key to the beginning of the company's value chain. Even the company's suppliers add to the value chain at the research and development level. Billabong USA's primary screenprinter, Melmarc, invests in new screenprinting technologies, such as flocking and sonic welding treatments, that Billabong can then implement in their product lines (Bellantonio, 2001). Whether it's the company's technical skate footwear being designed under their Element brand, or new deck grip on their Billabong brand surfboards, or the latest UV-protection for the lens of their Von Zipper eyewear, continuous research and development is critical in the organization's increasingly competitive industry.

Product design is also a critical part of Billabong's value chain. Although a sports-centric company, the organization's products are also heavily dependent on the fashion industry. The unique fashion styling of the board sports industry has evolved as surfing and skateboarding have developed into their own subcultures over the decades. Not only does Billabong maintain technical superiority in its products, but their aesthetic design and ruggedness that the company was founded upon, especially in the apparel department, are what sets the company apart from their competitors. This value is then enhanced by Billabong's multiple production locations.

Given Billabong's international success, it's not surprising that the company utilizes both a combination of local and international suppliers in the manufacture of their products. Due to the efficiencies available by outsourcing certain production components, products, such as Billabongs multiple lines of footwear, are produced in geographic regions, like China, that are the most cost effective while still being able to maintain Billabong's quality. However, in other instances, local production has been found to be most efficient and effective. This is the case, for instance, with the use of Melmarc and the screenprinting of Billabong's t-shirts and sweatshirts sold in the American market (Bellantonio, 2001). A critical area of the value chain, for Billabong, is marketing.

The nature of the board sports industry parallels that of the fashion industry in many ways, especially marketing. Oftentimes who is wearing a product is worth more than any other form of marketing. For this reason, Billabong has put together an elite team of board sports enthusiasts, from surfing to skateboarding, to snowboarding, to wakeboarding -- the top names all wear and endorse Billabong products. Surfing legends like Andy Irons, Taj Burrows and popular freestyler, Rasta, make sure the company brands are proudly displayed as they travel the world looking for the perfect wave. Endorsements and use by popular athletes have been the backbone to Billbong's success since Wayne "Rabbit" Bartholomew began wearing Billabong gear in the 1970s (Carpenter et al., 2010). Today, even a mention in an article that a popular board athlete prefers the brand, such as longboard champion Schuyler McFerran's preference for Billabong wetsuits ("How I hang," 2008), can drive company sales. Yet, all of these values will add up to nothing if distribution too isn't adding to the product's value.

As mentioned, one of Billabong's greatest strengths is their multi-channel diverse operations. The company operated approximately 335 retail stores and distributes their product through 10,000 other venues.The company recently purchased Florida-based Quiet Flight Surfboards, including their 14 stores, to add to their distribution network ("Billabong aquires," 2008). On November 24th, 2009, Billabong ventured into forward integration with online retailing with their acquisition of Swell.com ("Swell.com," 2009). With complementary product lines, the multi-channel approach allows the organization to target different customer segments. In addition, Billabong's distribution through several channels allows customers to enjoy a seamless shopping experience, thanks to the company's large product base ("Billabong International," 2009).