GoPro (GPRO -0.15%) has had trouble growing beyond its core action camera product for years, but it may be gaining some footing as a more niche brand. Cloud subscriptions have passed 1 million users, which should generate tens of millions of dollars in high-margin revenue each year, and now GoPro is leaning into the lifestyle brand market.
Unlike technology products like 360 cameras, drones, and even media editing software, lifestyle products take advantage of GoPro's brand presence and loyal customer base. And it could be a great way for the company to be the growth stock investors have hoped it would be for years.
GoPro wants to be a "lifestyle" brand
GoPro has long offered a limited number of consumer products like shirts and backpacks. But it's now betting much more on the lifestyle brand. Here are some of the key products added to the lineup in the last few months.
- Mezcal floating sunglasses, which have interchangeable polarized lenses and a low price point of $79.99.
- Weekender backpack is a 30-liter pack that's designed with compartments for a GoPro camera, shoes, and even a laptop.
- Five new t-shirt designs.
Shirts, bags, hats, and even limited outdoor gear is now part of the product lineup. The idea is to expand product offerings into clothing and gear that fit the needs of typical GoPro customers. And by making these products available on GoPro.com, the company can potentially reach its qualified customers with very little marketing costs and avoid the retail markup.
A loyal following
The internet has made it possible to build a niche clothing or gear brand without any real brick-and-mortar retail presence. The challenge for new brands is reaching customers who will want its products.
GoPro's 1 million subscribers are a great place to start when launching lifestyle products. GoPro may not be a household brand for most, but it's very well regarded in the action sports niche and that's what management is betting it can translate to financial success with the products currently in the lineup.
We may also see GoPro lean into its digital presence with direct-to-customer products and forego the retail presence. Going direct can take costs like the retailer's cut and inventory risk out of the equation, allowing GoPro to offer compelling products at a reasonable price. We're seeing that with the $79.99 price point on sunglasses, which is low for a well-known brand.
In the first quarter of 2021, management said that GoPro.com saw revenue growth of 224% versus a year ago to $82 million and accounted for 40% of revenue. If that percentage grows, GoPro could deliver higher margins on all of its products and build a lifestyle brand with its growing online customer base.
A path forward
GoPro has a long way to go to prove it can make lifestyle products a growth segment, but it's doing everything it can to maximize revenue and value from its loyal customer base. And that seems like the right strategy after failing to gain traction in new technologies and markets adjacent to cameras. It's not bad to be a niche brand, as long as the business is built for it and GoPro may be adjusting to its niche reality.