LDS sales habits

[Genesis]

As a Dive Shop employee I don't mind the guys who hang-out. Gives me something to do in the slow season instead of rearranging displays or cleaning. Most of the people who come in to our shop I genuinely like and get along with so it's like seeing a friend most of the time.

I DO have a problem using our knowledge and our stock in order to preview a purchase they are going to make off internet or mail order. If you're going to go internet or mail-order I really don't blame you but please don't waste my time by pretending you are going to buy from me when you know (and I know) all along that you aren't.

Why aren't they buying from you - or at least willing to consider it?

Is it price? You can clearly give them "instant gratification", where mail or internet ordering will never be able to do that.

So..... you set a price that you think is "fair" in the market, but someone who feels otherwise comes in to look at something you have. They're a buyer - but want a better price than you have displayed.

Now you have a tough decision to make, don't you?

You can turn them away, and have them go to the internet or mail order. Or you can sell at their price, or something negotiated that is close to it.

Let's look at the differences here, from the shop-owners perspective, shall we?

You have a "widget" that you paid $250 for and is tagged on the floor at $500. I come in and look at it. I'm going to buy that widget - from someone.

I have a mail order (or Internet, or LP, or whatever) price already, 'cause I've done my shopping. I can buy it for $325 from any of those places.

You want $500 for it.

I won't pay $500. Why should I? I KNOW I can get it for less.

So here are your choices:

1. Sell it to me for $325. You make $75, and order another one to replace the one you sold me. This is a profitable sale for you.

2. Refuse to sell it to me for less than $500. I walk out. You make nothing. You still have your product, but you don't have my money. I buy it somewhere ELSE, which permanently deprives you of the ability to make that $75 profit from me, because I no longer NEED the product you were trying to sell me - I now have it!

Now as a businessman, which is the "correct" choice?

That depends on whether you're more interested in protecting your "honor" in that price, or whether you're more interested in making a profit, does it not?

A sale you do not make is only of no harm to you IF I don't buy it somewhere else. If I DO buy it somewhere else it is a permanently lost opportunity, and money you will NEVER see from me as a customer.

The ONLY way it makes sense for you to hold out is IF (1) the product is hard to source, and (2) you have a reasonable expectation that someone will pay your asking price BEFORE you can replace the product that I intend to purchase. THEN it makes sense, because selling it to me at the lower price will potentially deprive you of a much greater profit on that same piece.

But there are very, very few items in the scuba world that this applies to. Oh sure, its probably not zero, and at certain times of the year there might be a couple products that are hard to get and where you have the tourist (or whatever) traffic that would support such a posture, but in general? No.

In response to those who say they're "unhappy" that someone would come into your shop to look but then buy online, I respond that the fact that someone came in to look means you had every opportunity to make that sale. You decided not to, and if the price asked by the customer was one that was above your cost, you let that profit walk right out the door as a matter of choice.

You, as a shop owner, were in no way abused in that case. You DECIDED not to sell - in fact, the customer who came in gave you every opportunity to make money that day, but you turned it down! The only place you can find fault - or place blame - in such a situation is in yourself.

 

[MikeFerrara]

Jep originally posted about having to hear sales pitches when he stopped by the shop for a visit. I pointed out that those people who stop by for a visit are our primary market. It is rare for a stranger to walk in and anounce that they are looking for a bc, defog or a slate maybe but not a bc.

Now we don't insult someone by trying to convince them they need something they don't need or want. What we do is say..."Hey we just took on Halcyon check it out" or "we're setting up such and such class the week of the x are you interested". If they have questions or show interest we go from there.

Response to Genesis comments. Other might want to skip it...
Not to change the subject but in response to the comments made by Genesis...Yes ther are a number of things you can di in an attempt to make a sale. You can work with price or packages of other products and services. You can offer to let them have it with the promiss of taking it back no questions asked. The only real limit is your imagination and sales skills. The down side of the situation we're in now though is we have been selling things way way cheaper. We sold more this year in numbers of equipment packages (as an example). However our profit is a fraction of what it was last year. The math is simple a 10% reduction in selling price is way more than a 10% reduction in profit. at some of the prices we've been selling for we would have to like triple or better our volume to make the same and we're not even close. At the same time we're still not as cheap on most things as online. Now if such a situation creates return business things might eventually work out. It could take years to see that just because so many people only dive on a trip here and there so once you make that initial sale they're done for a while. So far it's been lose loose all the way around. The fact is that if we kept the price up we would have made enough of those sales to have made more than we ended up making. You set the price higher and some walk. You set it lower and some who would have paid more pay less. What do you do have a floating price? We don't have the volume of sales to put together an accurate marketing info as far as "How many will buy at this price?" kind of thing. there is a point of diminishing returns when it comes to reducing price and we passed it. I mean we really really passed it.

And then there is the fact that the manufacturers have taken notice of the situation. However, their response has been to play hard ball when it comes to the prices they want stuff sold for. That goes for all the major players that we deal with so it's not like we can drop them and go somewhere else. BTW, they don't tell you that you must sell at a given price they just tell you that if you don't, they won't sell to you any more.

 

[Genesis]

is that you don't know if you had held the line on pricing if you would sold ANYTHING!

You can say "well last year we sold X product for Y profit, and this year we sold X*something for Y-something profit, so it was a net lose for us", but that's a fallacious argument. Factually correct but ignoring how the market really works.

The fact is that more and more divers are moving towards the online market. Why? Its simple, really - more of them are learning about it.

Therefore, you don't know if you made a "bad" move, or if you made the only move that was left for you to sell anything at all!

I suspect the truth is a whole lot closer to this than you'd think.... oh sure, there will be people who will pay "suggested list" for things. Always is. But that number is getting smaller and smaller by the day, as the 'net makes information more and more accessible.

Used to be that most people paid "somewhat close" to sticker on a car. Now everyone knows what invoice is, if they bother to look. There are still dealers who try the old games, but they seem to have an awful lot of cars on the lot that still are there month after month..... how much longer they will remain in business is an open question.

"No questions asked" return policies and other service items are indeed worth something. But 2x the online price? For a few people, perhaps, but for most? No.

And then there is the fact that the manufacturers have taken notice of the situation. However, their response has been to play hard ball when it comes to the prices they want stuff sold for. That goes for all the major players that we deal with so it's not like we can drop them and go somewhere else. BTW, they don't tell you that you must sell at a given price they just tell you that if you don't, they won't sell to you any more.

Yes, I know. That's what Diver's Union is all about, natch.

However, Mike, before you scream about this, you might consider that those manufacturers who I've talked to - and who have been actually willing to have an honest conversation on the issue (more than a couple) they have all stated that it is the dealers who have demanded this "protection" be imposed.

So... it seems that directing the ire of the consumer at the dealer is indeed appropriate..... since they're the ones who want these policies!

You don't? Cool. Get together with other dealers and get 'em changed. Since the dealers effectively put these policies in place to start with, a concerted effort to remove them should be just as effective.

IF you really want the seem them go away.

 

[MikeFerrara]

Genesis once bubbled...
is that you don't know if you had held the line on pricing if you would sold ANYTHING!

You can say "well last year we sold X product for Y profit, and this year we sold X*something for Y-something profit, so it was a net lose for us", but that's a fallacious argument. Factually correct but ignoring how the market really works.

The fact is that more and more divers are moving towards the online market. Why? Its simple, really - more of them are learning about it.

Therefore, you don't know if you made a "bad" move, or if you made the only move that was left for you to sell anything at all!

...<snip...

Yes, I know. That's what Diver's Union is all about, natch.

However, Mike, before you scream about this, you might consider that those manufacturers who I've talked to - and who have been actually willing to have an honest conversation on the issue (more than a couple) they have all stated that it is the dealers who have demanded this "protection" be imposed.

So... it seems that directing the ire of the consumer at the dealer is indeed appropriate..... since they're the ones who want these policies!

You don't? Cool. Get together with other dealers and get 'em changed. Since the dealers effectively put these policies in place to start with, a concerted effort to remove them should be just as effective.

IF you really want the seem them go away.

I agree and that's my point. We don't know what price will maximize profit and our volume isn't enough to really draw any conclusions from (at least not in the short term). What I do know is that despite the actions we have taken things have gotten worse. Did we do too much too little I really don't know.

As far as manufacturer policies, I don't doubt that the LDS was originally the ones who demanded the current structure. I supposed it worked at one time because when I started diving if there was anyplace other than the LDS to get equipment I sure didn't know about it. The problem with getting shops together is many if not most are still run by the same folks and they aren't going to change so they are likely still asking for the same "protection" from the manufacturer. I suppose the reason we are different is because we are new and not attatched to the current system. Things have been tough from the biginning so we want a change.

 

[ZoCrowes255]

Genesis once bubbled...


Why aren't they buying from you - or at least willing to consider it?

Is it price? You can clearly give them "instant gratification", where mail or internet ordering will never be able to do that.

So..... you set a price that you think is "fair" in the market, but someone who feels otherwise comes in to look at something you have. They're a buyer - but want a better price than you have displayed.

Now you have a tough decision to make, don't you?

You can turn them away, and have them go to the internet or mail order. Or you can sell at their price, or something negotiated that is close to it.

Let's look at the differences here, from the shop-owners perspective, shall we?

You have a "widget" that you paid $250 for and is tagged on the floor at $500. I come in and look at it. I'm going to buy that widget - from someone.

I have a mail order (or Internet, or LP, or whatever) price already, 'cause I've done my shopping. I can buy it for $325 from any of those places.

You want $500 for it.

I won't pay $500. Why should I? I KNOW I can get it for less.

So here are your choices:

1. Sell it to me for $325. You make $75, and order another one to replace the one you sold me. This is a profitable sale for you.

2. Refuse to sell it to me for less than $500. I walk out. You make nothing. You still have your product, but you don't have my money. I buy it somewhere ELSE, which permanently deprives you of the ability to make that $75 profit from me, because I no longer NEED the product you were trying to sell me - I now have it!

Now as a businessman, which is the "correct" choice?

That depends on whether you're more interested in protecting your "honor" in that price, or whether you're more interested in making a profit, does it not?

A sale you do not make is only of no harm to you IF I don't buy it somewhere else. If I DO buy it somewhere else it is a permanently lost opportunity, and money you will NEVER see from me as a customer.

The ONLY way it makes sense for you to hold out is IF (1) the product is hard to source, and (2) you have a reasonable expectation that someone will pay your asking price BEFORE you can replace the product that I intend to purchase. THEN it makes sense, because selling it to me at the lower price will potentially deprive you of a much greater profit on that same piece.

But there are very, very few items in the scuba world that this applies to. Oh sure, its probably not zero, and at certain times of the year there might be a couple products that are hard to get and where you have the tourist (or whatever) traffic that would support such a posture, but in general? No.

In response to those who say they're "unhappy" that someone would come into your shop to look but then buy online, I respond that the fact that someone came in to look means you had every opportunity to make that sale. You decided not to, and if the price asked by the customer was one that was above your cost, you let that profit walk right out the door as a matter of choice.

You, as a shop owner, were in no way abused in that case. You DECIDED not to sell - in fact, the customer who came in gave you every opportunity to make money that day, but you turned it down! The only place you can find fault - or place blame - in such a situation is in yourself.

Places like Leisure Pro sell on volume so they can afford to make 10% when they are shipping a thousand units. That 10% covers any overhead costs they may have because of the extremely high volume. LDS's on the other hand have a very small market in which to operate. Making 10%-30% is not going to cover the overhead that LDS's have because of the smaller volume of sales.

It's also a matter of market. A dive shop only sells to the market that it's in (Indianapolis, IN for example) while Leisure Pro has the benefit of a national market.

And when I refer to the people who basically use as a fitting room for Leisure Pro I mean those who agree to the price we give them, say they will be back to pick it up and then come back a week later with gear they got off the net. They don't give ANY indication that they are buying off the net. We have had people bring in printouts from Leisure Pro's site and we try to our best to match that or give incentives to buy from us. Most of the people I talk to about seriously buying gear usually end up buying it from us. We can get close to mail order prices on some goods, we offer 2 years free service (no labor charged,) and we have a year same as cash financing plan so we are doing pretty good. This shop has been around for 25+ years and we are still going strong (despite the slow economy.)

The biggest problem is the MARP. For our main line we can advertise no lower than 10% off the retail cost. In order to actually get the volume we would have to have to make a profit while having a competitive price we would have to be able to advertise a lower cost which we unfortuantely cannot do. Until the manufacturers quit this practice we are stuck.

 

[jepuskar]

What really opened my eyes was when I noticed the Aeris 750GT going for $999.95 at my LDS and for $449.99 on Leisurepro. Ofcourse I went with LP....in fact that same Aeris computer is still sitting in the dive shop..now its on sale for $799.00. What a joke!

I made the mistake of comparing what I paid for my setup at my LDS to LP. Seeing this was my first purchasing experience with Scuba, I keep telling myself I did good by buying from my LDS. The free maintenance on my reg/BC is worth it anyway.

I'll have to decide which route to take when I decide to buy more equipment in the future sometime.....but not anytime soon....i have to save so I can move.

 

[redacted]

ZoCrowes255 once bubbled...

The biggest problem is the MARP. For our main line we can advertise no lower than 10% off the retail cost. In order to actually get the volume we would have to have to make a profit while having a competitive price we would have to be able to advertise a lower cost which we unfortuantely cannot do. Until the manufacturers quit this practice we are stuck.

Advertise "packages" that do not violate MSRP requirements, like a Scubapro Mk25/S600 with Oceanic octo and guages for $525.00. That price meets SP requirement for their goods so they can't kick. Same for Oceanic. If customer, who was attracted by your very competative advertisement, sdoesn't want the mixed set then sell him what he wants at a competative price. And then cook the books - one correct receipt for the accountant and tax man, and another for the distributer.

If the profit isn't enough to make it worth it, then close shop and get out of the way of those that can make it.

 

[jepuskar]

This is a family oriented discussion board and your dishonest approach to bypassing the system will not be tolerated. Please refrain from violating the JMUROTS!!

 

[MikeFerrara]

awap once bubbled...


Advertise "packages" that do not violate MSRP requirements, like a Scubapro Mk25/S600 with Oceanic octo and guages for $525.00. That price meets SP requirement for their goods so they can't kick. Same for Oceanic. If customer, who was attracted by your very competative advertisement, sdoesn't want the mixed set then sell him what he wants at a competative price. And then cook the books - one correct receipt for the accountant and tax man, and another for the distributer.

If the profit isn't enough to make it worth it, then close shop and get out of the way of those that can make it.

Well I'll tell ya how it really works. I always figured that I could sell for whatever I wanted and who would even know. I had someone from the board here ask me for a quote. Gave him a real good price. Next thing you know I have the manufacturer on the phone giving me lectures on how to market their products and threatening to stop selling to me. It seems he went to anther dealer and told him what I was asking and asked him to beat it. That dealer promptly got on the phone to the manufacturer. Looking for a good price is one thing but this person was just plain greedy. Untill recently most of these manufacturers weren't even trying to enforce any of this stuff but they are now.

 

[Genesis]

Nothing!

Your issue Mike isn't with the customer. Its with the manufacturer!

So how come you and the other dealers don't get together on this deal and stop it? The dealers made this mess, and they can clean it up!