MARP Price Fixing Update - Consumers Win!

[CDNScubaMoose]

Ken (offthewall1),

I agree with you 100% that it is wrong for special deals that are off of the tiered structure to be occuring - so far we haven't heard from any other manufacturer's then mdb on if this occurs or not. I have no knowledge if it does occur, I assume you do and are not just going by speculation. I also agree that it is not fair that MAP/MARP not be applied evenly to all the players (once again, if that is occuring with the manufacturer's knowledge). Personally I would like to see more enforcement of these policies or for the policies to be removed ... I don't agree with a luke-warm approach.

That said, I don't agree with the business model you are promoting. In my opinion, scuba gear tends to have a fairly long usage life (minus my wetsuits which seem to suffer from pool chlorine and the unexplainable shrinking during the winter months ).
The idea that a lower margin, higher volume business model will continue is questionable IMHO - I don't think we are seeing a massive influx of new divers into the sport (less so these days with the economy going backwards). Furthermore, even if the entire industry was to move in the direction you are promoting there will always be someone willing to do it cheaper or find a way to reduce costs even further. You said you could cover your costs and make a profit with a 40%, what would you do if someone would go to 35%?

I have no use for the LDS owners that don't want to do the extra work for a sale and I think the internet allows customers to demonstrate their dissatitifcation with this attitude by going elsewhere. As you pointed out, many regulators (that don't have a MAP/MARP) are of decent quality (I have no idea how we could ever come to a way to proper measure which reg is best) and for 99% of the consumers this is an excellent option to express their displeasure with their LDS.

As for your coupon argument - you are right, I've never bought dive gear using a coupon. I have also never bought a car with a coupon, or a lawnmower, or any other medium to high ticket price item. The LDS that I teach for, has put together a newsletter mailing list that gets sent out 5 times a year (with about the same number of reminders) that list specific events to encourage people to dive and stop by the store for various events. By having the customers go through the store on a regular basis and building a strong relationship that isn't just about price keeps their dollars at the LDS ... it is hard work, and sales should be hard work - selling on price is easy, but as a salesperson, I find it much more rewarding to sell based on a relationship that I have developed and cultivated with my customers. I have seen your webpage when it comes to training, you obviously understand and strive to have a strong connection to your students to get them out and encourage them to experience the u/w realm. You aren't a price seller on training so why do you need to be a price seller on gear?

 

[offthewall1]

Ken (offthewall1),

I have seen your webpage when it comes to training, you obviously understand and strive to have a strong connection to your students to get them out and encourage them to experience the u/w realm. You aren't a price seller on training so why do you need to be a price seller on gear?

I think you've missed the point. I don't need to be anything. I'm fighting for what is right and what will fix the industry.

I could easily sit back, relax and dominate my local market and gradually increase my national and international sales numbers... but that doesn't help my beloved industry.

What will help is bringing more people into the sport. The only way to do that is to make it more affordable... and of course interesting to a family of four or five.

The other shops in my area are trying to sell this family 4 sets of gear at $3000.00 a piece... or $12,000.

I sell this same family of 4 gear of equal quality for $1995.00 a piece... saving them $4020.00.

Then with the $4020 I saved them, I take them on a nice vacation for about $1000.00 a piece. They're hooked. They tell their friends... and the next families pour in.

The other dive shops take the $12,000 and don't care if they ever see them again. The divers eventually lose interest, find out they've been ripped off.. and are left with a sour taste... the sport dies a slow death.

While I'm in business to make a few dollars... many still find it hard to believe that that is not why I'm open. I'm open to educate the consumer about all the wrongs being perpetrated on them by unscrupulous LDS owners.

Now mind you, not all LDS owners are this way... but all of those out there with the "I'd rather sell two than work harder and sell five," are the type of shop owners we need to be rid of to help grow the industry. They show no motivation to help bring new divers into the sport... but rather only to take the money of a few who find the sport on their own.

 

[PhilEllis]

Ken, your arguments make much more sense when you eliminate all of the diatribe you included in earlier posts about stores that don't adopt you business model are "ripping customers off" and when you eliminate all of the populist chat about the Supreme Court making an "illegal decision" in the Leegin thing. Neither is the case. Some store choose to sell at large margins; some choose to sell at smaller margins. To the Supreme Court issue, they decided the Leegin decision exactly is almost everyone thought they would.....eliminating the last vestiges of the "per se" illegality argument. The authors of Sherman may not have intended this, the Congress may not like it....but NO ONE did anything for the nearly 100 years that the Supreme Court was chipping away at "per se" price and market illegality.

ON A PRINCIPLE LEVEL.....I think you could make a good argument that the dive industry will be much better off if MAP and retail price maintenance restrictions were to be eliminated. Now, it certainly would not be the current equipment distribution system we have now, but in the long run, it might likely be much better off than the current system. Again, since I favor the complete elimination of government intervention in almost all areas of trade and commerce, I would personally like this ON A PRINCIPLE LEVEL.

ON THE PRACTICAL LEVEL....you need to understand that the largest four or five equipment retailers would simply bury all other retailers as the price races to the absolute bottom and hovers at the point where ONLY THEY can afford to operate at the absurdly reduced margin. Moving the current distribution system from one where there is some restraint on advertising price to one with no restrains would put you and me at a gigantic disadvantage. I currently operate at about a 31% net after cost of goods sold and incoming freight. That is exceptionally low in an industry where is is very difficult to build volume. Those of the largest online stores who have demonstrated more than a willingness to operate at 15% or 20% above cost of goods sold would bury us. They would also pound us with the extremely large purchasing power...power that neither you nor I have.

ON ENFORCEMENT OF MAP PRICES.....you have said over and over that internet stores are allowed to violate those policies at will. I just don't agree with that. I spend a good portion of my week changing my advertised prices to be in compliance with current operating agreements from manufacturers. I know these same manufacturers are also constantly policing the largest three or four internet stores. I certainly don't feel that I have an advertising advantage over any other dealer when it comes to price.

In this recession, it seems to reason that manufacturers will have a difficult time policing their MAP policies. There is clear evidence of that on the internet every day. Retailers will attempt to stretch the limits of the policy, will pull back when there are complaints, and then they will stretch it again. However, I don't feel this is a system designed to favor the large retailers at the expense of the smaller ones. It is just the way it happens in difficult times.

Phil Ellis
Discount Scuba Gear at DiveSports.com - Buy Scuba Diving Equipment & Snorkeling Equipment

I think you've missed the point. I don't need to be anything. I'm fighting for what is right and what will fix the industry.

I could easily sit back, relax and dominate my local market and gradually increase my national and international sales numbers... but that doesn't help my beloved industry.

What will help is bringing more people into the sport. The only way to do that is to make it more affordable... and of course interesting to a family of four or five.

The other shops in my area are trying to sell this family 4 sets of gear at $3000.00 a piece... or $12,000.

I sell this same family of 4 gear of equal quality for $1995.00 a piece... saving them $4020.00.

Then with the $4020 I saved them, I take them on a nice vacation for about $1000.00 a piece. They're hooked. They tell their friends... and the next families pour in.

The other dive shops take the $12,000 and don't care if they ever see them again. The divers eventually lose interest, find out they've been ripped off.. and are left with a sour taste... the sport dies a slow death.

While I'm in business to make a few dollars... many still find it hard to believe that that is not why I'm open. I'm open to educate the consumer about all the wrongs being perpetrated on them by unscrupulous LDS owners.

Now mind you, not all LDS owners are this way... but all of those out there with the "I'd rather sell two than work harder and sell five," are the type of shop owners we need to be rid of to help grow the industry. They show no motivation to help bring new divers into the sport... but rather only to take the money of a few who find the sport on their own.

 

[CDNScubaMoose]

Ken (offthewall1),

From the couple of PM's and also looking at your webpage, I have no doubt that you are passionate for growing the number of divers and to get them hooked on the sport. We definitely have this in common.

However, I'm not convinced that your solution is the right one for the industry (I'm not sure if you'll ever be able to convince - just as it is unlikely I'll be able to convince you). Allowing unresticted internet sales for all items and all brands will lower the price on the internet but I doubt it would affect MSRP which is what a lot of LDS's likely use (especially the smaller ones). So you would still have new divers coming in and the ripoff artists aren't going to disappear just because of new internet pricing. People will still get taken advantage of, there will still be LDS staff that are uninformed and pass this along to unsuspecting prospective customers, and you'll still have people ending up with a sour taste.

I think there are a lot of options already for stores to put together discounted packages and achieve your goal ... and a good LDS will do that. I haven't been in many stores that only carry SP or AL, but rather one of them as well as Genesis or another well known name brand that offers the store more flexibility.

Now I am all for getting rid of those stores that are doing a disservice to the industry, just as I am for getting rid of instructors that do the same. I am unable to see how removing MAP/MARP will allow this.

 

[jpsexton]

"I'd rather sell two than work harder and sell five," are the type of shop owners we need to be rid of to help grow the industry. They show no motivation to help bring new divers into the sport... but rather only to take the money of a few who find the sport on their own.

Your preaching to the chorus here, I have a family of four that I fund the scuba hobby for! What you say here in this quote is why it seems almost hopeless to me though. At the profit margin that these guys make the one's that find the sport on their own is more that enough to sustain these businesses. They use this business model because it works. They already have internet competition so how's changing a law going to effect anything?

 

[offthewall1]

They already have internet competition so how's changing a law going to effect anything?

Because it will allow myself and others like me to drive more people into the sport by advertising pricing that makes sense to budget conscious consumers.

Right now the perception among the masses is that diving is an expensive sport and something outside of their budget.

This is simply not true... We need to change the perception... and the only way to do that is to put better pricing out to the masses through advertising.

As I said in an earlier post... DEMA launched a cooperative ad campaign known as "Be A Diver." Why? Because they know we need to constantly bring new divers into the sport to support the retailers and ultimately the manufacturers - which is who DEMA represents.

In a down economy, that is not enough. We must open the sport up not just to the occassional person walking in the door... but to those who otherwise wouldn't consider it due to pricing.

Look, the people with money will always have the money and spend it as they see fit. the challenge is to get those on the edge to choose scuba over something else. If given a choice, do you sign the kids up for summer baseball or scuba lessons? Aside from the cost of sign-up what does the gear cost? $100 for a good bat, $100 more for a great glove and $75 for the uniform... maybe $275.00 + $50 league fees for baseball.

Can scuba be made that inexpensive? Sure it can... $85 for Basic gear (masks, fins & snorkel) we provide the rest as part of the $308 course fee... and at $393.00 you're in the neighborhood.

A family can dive together... but it's doubtful the 12 year old, with a 35 year old mom and dad are playing baseball together.

Diving needs to be sold as a family activity... not as an individual sport... and when it is made affordable for a family to do so... it will regain it's footing... even in a down economy.

We (people who love the sport) have a duty to work hard on behalf of ourselves, the consumers and the industry as a whole to produce quality - well trained divers who love the sport, feel good about the sport and who spread the joy of the sport to others.

If it takes some government intervention to push us in the right direction, I'm all for it. I agree that I'd rather not have the government involved - but the old cronies who have controlled the sport for so long refuse to adopt the needed changes. They've been given the opportunity... and have failed to budge.

I see them holding onto these policies and running the sport straight into the ground. DEMA as a group knows it... most retailers know it... even the big internet sellers are feeling it. Economy aside... the scuba industry is on the verge of collapse.

I implore you to help us save it. You may just think I'm a doom-sayer... crying doom and gloom... but I read the numbers being put out in trade publications and I see the writing on the wall everywhere around me. Things are of course different in various parts of the country... but overall the sport is in decline... was in decline prior to the current economic downturn and will continue that way without drastic changes.

The sport has not dealt with the internet age at all... other than a few guys with money - popping up websites, buying in bulk from manufacturers and hurting the LDS's. The LDS's have completely stagnated.

Even those of you arguing against the Maryland Law know the current LDS model has failed. Those days are ending if not over already. There are a few exceptions in areas across the country where the old model still works for a few nefarious reasons... but overall... the old LDS is dead... and taking the sport to the grave with them.

 

[Jupiter31]

You just described the four (yes four!) LDS's in my land locked community. They are all doing pretty well it seems. At least they have all been in business for quite a few years. I just don't get the "Why work 5 times as hard" statement though. I've got four divers in my family that I buy gear for and while everyone has all of their gear, I'm constantly needing to replace something. I know exactly what it is and the only assistance I need is for someone to take my money at the register. How's that working harder? I leave for the springs tomorrow and my daughter needs a new wetsuit right now. I'm not going to waste my time locally, I'll stop at one of the major internet retailers on the way down...

The LDS' owners comment, not mine

What he is refering to is if he makes - example purposes only to keep the math easy - say, $100 profit on selling a single reg. he would have to sell 4 to make the same if he was willing to make $25 profit on each one. You can play with the numbers any way you want; result is the same.

His point is, so long as 1 person is willing to allow him a profit of $100 (again, example only) I don't need to sell to 4 others at a deep disscount, because to sell 4 to reach the same profit is 4 times the work.

The trick is getting the one customer in the door willing to pay full mark up.

His point has nothing to do with yours; of course its no "work" to ring up a sale.

What is work is taking the time to explain the features and benefits of a regulator or a BC to some one - if you can do it once, make the markup you wish vs doing it 4 times to make the same $$$ as doing it once. That was the point he was making - the math works out the same; why sell 4 times when you can sell once for the same money - his point, not mine.

 

[redacted]

What is work is taking the time to explain the features and benefits of a regulator or a BC to some one -

And it does not take as much time in the confessional either. So, its a win-win if he can find one sucker rather than 4 knowledgeable shoppers.

And it works .... until he runs out of suckers.

 

[widget]

And it works .... until he runs out of suckers.

Yes, or the suckers get wise. Maybe its too late for them , but from my experience, they WILL tell everybody else about their "feel bad sale."

Most retailers I know, want their shop full and buzzing, it creates an atmosphere which is condusive to sales and keeps them busy and motivated, you cant get that on two reg sales a month, and sitting around with your arms crossed gets "oh so boring" eventually.

 

[CDNScubaMoose]

Can scuba be made that inexpensive? Sure it can... $85 for Basic gear (masks, fins & snorkel) we provide the rest as part of the $308 course fee... and at $393.00 you're in the neighborhood.

On your website - e-learning is $109.95 + $199 (course fees) + $150 (open water) = $458.95 plus gear (you said $85) = $543.95. And this is before the rest of the gear that you either buy or rent to enjoy your new hobby. I'm sorry but it doesn't compare to something like baseball and it is been my experience on multiple times that under quoting the cost of the sport to prospective customers leaves a lot more of a bad taste in their mouths then expensive gear. Especially when there are less expensive gear options already. The LDS that I teach for used to fudge the numbers on a regular basis but it was me as the instructor that had to deal the ire of the customers - it got to the point that I told the store owner that I would stop teaching if he continued that business practice.

I commend you for wanting to increase the popularity of the sport as that would be an excellent thing for everybody in the industry - greater mass will mean more equipment options and more innovations. However, the hidden cost method is just as bad, and I will argue worse, then expensive gear options since at least with expensive gear options that is an option and there are less expensive lines on the market.