Another LDS Experience Gone Sour

[Dive4Life]

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
---------
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

You are absolutely right Rick. I would love to see the LDS's competing and marketing for training and how they are better than the next and charging more than trying to push equipment sales. It just makes better sence, you are safer because you had better training.

 

[BBP]

Uncle Ricky, having grown up in a family owned business I understand the fundamentals of running a business quite well, thank you. And while I expect some differences, the amounts that I see are just not supported. the outfit I order from online own a brick and motar store in Dallas. The prices they charge iin their store are the same they charge on line. I don't understand how they can do it and nobody else has seemed to figure it out. I think the 'paradigm shift' that has to take place is that the store owners, like every other business out there, have a new set of realities to live with. Number one, consumers have choices they didn't have before. It's up to shop owners to figure out how to add the necessary value to make people buy from them at slightly higher prices.
Oh yeah, the first thing they tried was coercion with the whole warranty thing. If you want to piss me off so that I'll do ANYTHING to avoid having to ever buy from an LDS again? Coerce me in a stupidly obvious way.
Like I said, I really like and respect the LDS I go to and they've never tried to pull any wool over my eyes. They're good people and I hoope their business does well. But the world has changed and I they're going to have to change with it. And it wasn't a plot to put LDS's out of business and people who buy online aren't communists.

BKB

 

[H2Andy]

If you want to piss me off so that I'll do ANYTHING to avoid having to ever buy from an LDS again?
Coerce me in a stupidly obvious way.

hehehe... that was my feeling too...

and it gets really old to hear "you're gonna die if you go online to buy THIS EXACT
REGULATOR I SELL RIGHT HERE for 30% more..."

really?

 

[Rick Murchison]

the amounts that I see are just not supported. the outfit I order from online own a brick and motar store in Dallas. The prices they charge iin their store are the same they charge on line. I don't understand how they can do it and nobody else has seemed to figure it out. ... If you want to piss me off so that I'll do ANYTHING to avoid having to ever buy from an LDS again? Coerce me in a stupidly obvious way. ... But the world has changed and I they're going to have to change with it. And it wasn't a plot to put LDS's out of business and people who buy online aren't communists.

In the case of the Dallas store, it's mostly an "economy of scale" answer. They've done the smart thing and captured market share, while the typical local shop (at least the one's I've seen) are busy doing things that run customers off (your "coercive" example is just one of the stupid things commonly going on out there).
Your concluding statement is spot on.
Things have changed. Things are changing. Those who fail to adapt will fail to survive; many won't even understand why. 'Tis a pity.
Rick

 

[The Kraken]

But, Andy, it's LIFE SUPPORT GEAR !!!!

 

[ClassAction]

Well in this case, the markup (which was not 100%, and the shop never got a chance to come close to or match the price the OP found on the similar but cheaper item anyway) was paying for the salesman's time, the display stock, the storefront, and the pool.

I bet if the OP had called the shop, told them about the deal he found, and asked if they could come closer because he appreciated the resources they gave to him, they would have done so.

But we'll never know.

I think you're being way to hard on this kid (mxracer). While the demo was technically a free service, I do think that he should be willing reward the LDS for that service as long as the reward is reasonable. He said that he was willing to pay $60 more for the item, but not $300. Are you suggesting that the hour in the pool and the cost of the lights/AC amounted to $300? I'll bet it's closer to $60. True, he didn't give them a chance to match the price. But he's completely new to scuba, and for Christ's sake, he's 18! I wonder if all the critics were so busy savy at 18. I typically give the LDS a chance to match, but if the lower price is half, I rarely bother. I've tried it and the salespeople get insulted (which is crazy -- if anyone should be insulted, it should be the customer who was offered a completely unreasonable price).

MX: It sounds like you had all the right intentions. Don't feel bad about it.

 

[OneBrightGator]

Sorry that you feel that a customer who buys only small amount of stuffs are not worth your time. I am sure there are other LDS who would appreciate even a small purchase.

I never said that, stop putting words into my mouth.

I said that a $200 purchase is not "appreciation" for a dive shop, it's a commercial transaction and a small one at that. You would not claim a $200 purchase from a grocery store, or any other business, is "appreciation" and entitles you to something from that business or that you've done them a favor.

I appreciate every customer that comes in the store, I spend more time talking with a customer who is going to buy mask, fins and snorkel (a $200 purchase) then one who is going to buy a complete setup (a $1500 purchase) because most people buy M,F&S before their class when they know little about equipment, then buy a complete setup after class when they understand equipment.

 

[Bibendum]

And they have no obligation to expend any more effort on you.

They would no doubt be happy to ring up the sale if mxracer took an item to the counter, but mxracer has made it clear to the staff that he does not value their time or experience.

Unless of course, they are interested in actually making future sales. This is a fact of life in sales, you try your best to make a sale by offering your services, expertise, and courtesy toward the customer. If the customer buys elsewhere, so be it. Be mad all you want, but taking your anger out on a customer for exercising their RIGHT to purchase elsewhere only shoots yourself in the foot and ensures they will no longer purchase ANYTHING from you. Giving free pool time to test equipment to try and create an obligation does not guarantee that an obligation will be created, as in this case it did not. But, that's not the fault of the customer.

Sales today is not what it used to be, customers are no longer limited to the product selection in their surrounding area. Whether local retailers want to face it or not, they are now competing in a global market thanks to the internet.

As a former sales person, would I be upset if one of my customers checked comething out at my store, getting my advice, but then bought somewhere else...yes, but I most certainly would not get angry at the customer or hold it against them in the end. I would realize that the money saved would probably be spent in my store. I would also ask why the person went to the other business...better selection, better price, better service? I would then let the customer know that I am always willing to try and match prices competitively.

Realize too that not all customers are comfortable asking for price matching, it makes them uncomfortable and many just won't do it. Many see this as a form of bartering and they just don't like doing it, so they won't, in order to avoid what they feel will create a conflict. Whether that feeling is wrong or right, you can't hold it against someone for not doing something that they are not comfortable with.

Did the store make it known that they will try and match prices from other stores? In the end, it doesn't really matter, it is solely the customer's decision where to spend their money and how. The fact is, he had made other purchases from the store and was in the process of actively making another when the sales lady went off on him. If that were my employee, they would be off my staff faster than they could ring up that lost sale!

 

[OneBrightGator]

Sounds like a local dive shop. Guess what he lost $2000.00 of my money but of course that "wouldn't pay his phone bill". You sound very angry I'm a pschycology major, Do you need someone to talk too?

Possibly, but only so you could explain what "pschycology" is.

No, I won't tell you the name of my dive shop, because there are a LOT of rabid LDS-haters posting to and reading this thread and they ALREADY hate my shop without even know which one it is. People, especially online, are much too quick to collude together and pile all LDSs into the same box and pitch it out the window.

I like my LDS, I liked them before I started to work for them. As an employee I've taken customers diving so they could try out their new equipment for free, providing them free tanks, air and transportation, I've drove my own vehicle to pick up special order equipment from a vendor that a customer needed ASAP and couldn't wait for it to ship and I've loaned out my personal equipment to POTENTIAL customers so they could try it out. You would NEVER hear any of the horror stories in this thread coming from my shop, not even the one that started this thread. I have no ill will about anything I did, it made good sense then and it still does now, it's part of why people drive from all over to buy from us.

 

[latitude]

A couple points I've seen:

Replies refer to the $300 "mark up". You're comparing apples to oranges... The original poster bought a DIFFERENT product (cheaper one), and hasn't replied to questions of what an apples-to-apples comparison of prices would be...

I agree the LDS part-owner committed a foul by "going off" on the customer like that. Was it bad form to waste the salesman's time by doing to pool trial and all? Yes (like it or not, that's sort of what he did), but still doesn't justify the response he gave the customer (if in fact the one-sided account of the incident is totally accurate... I could see where a "snot nosed 18 year old" could come across as bragging he got a better deal and rubbing it in the guys face - even if that wasn't his intention. Then again, it could be entirely as described... I wasn't there...)

The problem is by the customer saying "that guy was as butt and I'm never going to go back to them" he's kinda shooting himself in the foot too... Is he ever going to want to get that personal service on a piece of equipment again? Is that service available on the internet (no way Jose)? What do the other LDS's do in the way of service (and do they carry the products you'd want)? Tempers flared here and sometimes people (on both sides) over-react.

If people keep going in and wasting the salesman's time like this, pretty soon the LDS's will change their way of doing business. They'll have to in order to stay alive! Intead of hiring 2 salesmen so one can attend to the time waster while the other runs the cash register, you'll have one person behind the register and that's it. Sure the prices will come down when that happens (heck he's got half the employees to pay), but so will the service.