Traeger made a surprising statement recently when they said they were going to stop selling products on their website. They were big on direct-to-consumer business going back a handful of years, so it marked a major shift in their thinking.
They moved away from selling direct because of the cost and complications with delivering a big, heavy, metal grill. As someone that’s received many dented or scratched grills through the years, I understand this concern. Back when I bought a Traeger Pro 575, I purchased it from Home Depot to avoid any shipping problems and to make return easier if I needed to.
That change has now happened on Traeger’s website, and they no longer sell direct. What I found surprising though based on their prior announcement is they don’t sell any products now on their website. They don’t sell accessories, sauces, rubs, or anything else.
Traeger doesn’t even sell MEATER thermometers on their website, which are mainly sold online as they haven’t really made their way to brick and mortar yet. They must not want to deal with the logistics of any shipping at all, and instead are relying on their channel partners.
They commented about the revenue impact of this change, along with stopping Costco roadshows, on their earnings call last week.
As far as what we’re speaking to right now, we spoke originally around the $60 million just recapture or sorry, a $60 million impact in terms of just overall the shift out of DTC, Costco roadshow and international. That was on a rear-looking number. On the go-forward number, it’s a little bit smaller. What we can say is overall between the full year pricing elasticity and Project Gravity, the shift there is around $70 million of the total revenue impact. And if you’re doing the math on the P&L flow-through, we have margin rate pressure, and that’s driven by full year tariffs and promo deleverage.
Joey Hord, CFO of Traeger
Website Change
Now that Traeger doesn’t sell direct, they have changes the interface on how you can purchase products when you go to their website. Clicking on a product gives you some local options based on your location, then you can click on online options if you prefer to order it. For online purchases, it gives the options of Ace Hardware, Amazon, and Home Depot.
Maybe it still has some kinks from location identification, or maybe they’re intentionally pushing to some retailers, but the local options aren’t always the closest. In my area in the northern suburbs of Detroit, it always seems to default to Ace Hardware stores. When I put in other cities, it will default to all Home Depot stores. In others, it will list a far away store first, then significantly closer stores after.
That inconsistency extends to when I click on “show all local options”. For me, it shows a list of 20 or so Ace stores extending 94 miles down to Ohio before it shows the Home Depot store that is 2 miles from my house and easily the closest place to buy the grill.
I can’t see too many local, independent grill stores getting sales this way. When I search zip codes that I know have local grill stores they do show up, but they’re lost in all of the Ace and Home Depot stores.
With Traeger giving away revenue in the eight figure range to other retailers, the order of the retailers is important. Much like Google search results, people are more often than not going to pick one of the top 3 retailers on the product page rather than clicking for more.