BBP:
Nobody has ever satisfactorily explained to me why there is such a difference in online prices as compared to what brick and mortar shops sell them for.
Let's sell apples, shall we?
I'll sell 'em online, you sell 'em in a store.
You're going to buy your apples and have them shipped to you from the orchards; to have your apples there for the customer to take home - so you'll have inventory, and you'll have to move 'em or throw 'em out. I'm going to "blind" drop ship them from the orchards (the packages will have my company name on 'em even though they're coming directly from the orchards). We're both going to pay the same thing for them from the orchard owners, but I'm going to pay the orchard with the money I have accompanying the orders I get over the internet, while you're going to have to pay the orchard when you buy the apples, so you're going to have to use money you haven't yet collected - which costs you the going rate whether you borrow or use your own that you could otherwise have invested and making the going rate. My shipping cost per apple will be higher than yours, but less than the sales tax your customers have to pay and mine don't.
You have to unpack, display, and sell the apples by having a real person there to wait on your customers. I never even touch an apple.
I let a computer program take the orders, collect the money, check the credit of the customers and in fact *move* the money into my account, then automatically place the drop-ship order with the supplier and transfer the supplier's part of the money I already have *after* I have confirmation that the shipment was delivered. If the shipment doesn't get delivered the supplier and the shipper eat it. I oversee the process and make sure the orders are flowing to the right suppliers who are currently harvesting apples.
You have to collect the occasional hot check.
You have the following fixed monthly costs
Store rental : $1800
Sales person (minimum wage + taxes + workers comp + unemployment insurance + a few dozen other mandatory nits & nats depending on the state you're in ) : $1440
Electricity : $200
Water/Sewer/Garbage collection : $ 50
Business license : $ 50 + 1% of gross sales
Sales tax : 10%
Ad valorem taxes on average inventory : 1% of average inventory
Financing on average inventory : 1% of average inventory
Spoilage : 10% of average inventory
Miscellaneous expenses : $300
Owner (you) compensation : $0
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My fixed monthly expenses - I'm using a computer in my house - 10% of my floor space
10% of mortgage payment : $150
Sales person : don't need one : $0
Electricity : 10% of average monthly bill $20
Water/Sewer/Garbage collection (10%): $ 5
Business license : $ 50 + 1% of gross sales
Sales tax : 0% (internet)
Ad valorem taxes on average inventory : $0 - I have no inventory
Financing on average inventory : 1% of average inventory: $0
Spoilage : 10% of average inventory :$0
Miscellaneous expenses : $300
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Do I need to continue, or has the difference been "satisfactorily explained?"
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Now, with the above in mind, the Local Dive Shop is doomed unless there is a paradigm shift in the way they do business. The LDS has some things the online place doesn't... Air, pool, equipment tryouts, on-site service, training, expertise, local information. The LDS must figure out a way to charge for these things to make up for the vanishing margins on equipment that the internet will eventually shove down their collective throats. The industry is trying everything they can think of to delay this inevitable erosion of margins on equipment, but the process is underway and irreversible. To survive the LDS will have to charge more for air, charge for pool time, charge for information, and charge more for classes. They will have to abandon equipment margins as rent payers because customers won't tolerate the price difference with the internet.
As an interim measure we'll see more "reimbursible" services. That is, trying out a BC in the pool will cost you $20, but that comes off the price if you buy.
Rick