abitton
Contributor
ROTFLMAO!!!
PhotoTJ:
LDS vs. Online
- Thread starter Jeff Toorish
- Start date
Please register or login
Welcome to ScubaBoard, the world's largest scuba diving community. Registration is not required to read the forums, but we encourage you to join. Joining has its benefits and enables you to participate in the discussions.
Benefits of registering include
- Ability to post and comment on topics and discussions.
- A Free photo gallery to share your dive photos with the world.
- You can make this box go away
DiveGolfSki
Contributor
awap:
gle: Oh noooo! Another site to tempt me to buy stuff I really don't need but will want. 
As others have pointed out, there are so many of these kinds of threads on here about online vs LDS, but in all the posts I've read I haven't seen this answered anywhere:
In my mind I kind of divide up the online stores into 2 main categories, those that are authorized sellers of the equipment they offer (scubatoys.com, scuba.com) and those that are not authorized resellers (leisurepro.com). If someone who is buying online thinks the manufacturers warranty is important they will go for the former, if they don't care about the manuf. warranty then they later is ok with them. (I'm not trying to pick on those shops, just using an example to make a point). So, if we only look at authorized resellers for a moment, the majority of those are either brick and mortor stores only (typical LDS), or brick and mortor with an online presence (like scubatoys.com). Both are authorized resellers, so why does it seem like the LDS has a hard time cutting a deal, or lowering their prices because of a maufacturers agreement when the online LDS seems to have no problem doing so. I don't think that most manufacturers have 1 agreement for those who have an LDS+online presence vs those that only have an LDS, do they? I hear LDS owners complain that they aren't allowed to lower their prices to match the online prices, they must mean lowering prices down to the level of Leisurepro don't they? Cause my thinking was that if a company like, lets say Zeagle for example, says that their authorized dealers can only give a max discount of 20% off MSRP on all their products, then that would have to apply to ALL dealers, regardless of if they were and store only or a store+web right? Now that doesn't mean that all stores HAVE to give that discount, or that they could survive doing so either. If I go into my LDS and look at the Zeagle Flathead reg and they are selling it for $650, and I know that ScubaToys.com is selling it for $460 and I ask them to match ScubaToys price, would it be incorrect for them to say that they can't because of a manufacturers pricing agreement? Surely Larry at ST is also bound by the same agreement? Now, I can understand an LDS owner saying no to matching the ST price because he doesn't want to, or because he wants to make more profit, that is his right.
I don't know anything about owning an LDS or an online store, so this is just a question, not a statment of anything.
In my head I keep relating to to something I do know about, and that is the computer business. A long time ago you could make some money off of selling computer hardware, and you could get a machine worked on for about 25-30 bucks an hour where I live. Now, because the margins on hardware are so low, almost no one makes any money on hardware, esp. since companies like Dell took over. It is impossible for the little guy to build a computer and make a profit in the sale, and still sell the computer for less than Dell can. Cause Dell has the buying power to get better pricing on parts. So what happened (at least in my town)? Pretty much everywhere that tried to make their business survive on hardware sales went under. The places that survived made money on service, and by increasing their services rates to 90-150 bucks an hour. So I was thinking that the time may come when the LDS's may drop their prices on hardware to compete with the online stores, but then will have to increase their service and training rates to make up the difference. BUT, and part of the point of my question is, if the LDS are restricted by an agreement with the manufacturers how can they lower their rates enough to be more competitve?
In my mind I kind of divide up the online stores into 2 main categories, those that are authorized sellers of the equipment they offer (scubatoys.com, scuba.com) and those that are not authorized resellers (leisurepro.com). If someone who is buying online thinks the manufacturers warranty is important they will go for the former, if they don't care about the manuf. warranty then they later is ok with them. (I'm not trying to pick on those shops, just using an example to make a point). So, if we only look at authorized resellers for a moment, the majority of those are either brick and mortor stores only (typical LDS), or brick and mortor with an online presence (like scubatoys.com). Both are authorized resellers, so why does it seem like the LDS has a hard time cutting a deal, or lowering their prices because of a maufacturers agreement when the online LDS seems to have no problem doing so. I don't think that most manufacturers have 1 agreement for those who have an LDS+online presence vs those that only have an LDS, do they? I hear LDS owners complain that they aren't allowed to lower their prices to match the online prices, they must mean lowering prices down to the level of Leisurepro don't they? Cause my thinking was that if a company like, lets say Zeagle for example, says that their authorized dealers can only give a max discount of 20% off MSRP on all their products, then that would have to apply to ALL dealers, regardless of if they were and store only or a store+web right? Now that doesn't mean that all stores HAVE to give that discount, or that they could survive doing so either. If I go into my LDS and look at the Zeagle Flathead reg and they are selling it for $650, and I know that ScubaToys.com is selling it for $460 and I ask them to match ScubaToys price, would it be incorrect for them to say that they can't because of a manufacturers pricing agreement? Surely Larry at ST is also bound by the same agreement? Now, I can understand an LDS owner saying no to matching the ST price because he doesn't want to, or because he wants to make more profit, that is his right.
I don't know anything about owning an LDS or an online store, so this is just a question, not a statment of anything.
In my head I keep relating to to something I do know about, and that is the computer business. A long time ago you could make some money off of selling computer hardware, and you could get a machine worked on for about 25-30 bucks an hour where I live. Now, because the margins on hardware are so low, almost no one makes any money on hardware, esp. since companies like Dell took over. It is impossible for the little guy to build a computer and make a profit in the sale, and still sell the computer for less than Dell can. Cause Dell has the buying power to get better pricing on parts. So what happened (at least in my town)? Pretty much everywhere that tried to make their business survive on hardware sales went under. The places that survived made money on service, and by increasing their services rates to 90-150 bucks an hour. So I was thinking that the time may come when the LDS's may drop their prices on hardware to compete with the online stores, but then will have to increase their service and training rates to make up the difference. BUT, and part of the point of my question is, if the LDS are restricted by an agreement with the manufacturers how can they lower their rates enough to be more competitve?
- Messages
- 3,138
- Reaction score
- 4
jasonmh,
I think the answer to your question is a bit complicated... and I don't presume to understand it completely. But here are some of the reasons that I believe allow an online authorized dealer to offer certain products for less than the typical LDS.
PhilEllis mentioned one...and a big one at that... "Clout". If a store is a big volume dealer they have "clout" in spades. Often manufacturers overlook the rule violations by some of these bigger players. They do what they want when they want...and the manufacturer looks the other way.
Sometimes a big store will just go ahead and sell a particular item for less than the manufacturer allows until they get caught. Then they simply switch to a different item...maybe from the same manufacturer or maybe from a different one.
Also, often they will sell an item that is not on the manufacturers MAP list for a killer price. They use this as a loss leader...counting on the fact that most buyers will buy other products from them that will make up or even exceed the loss. For instance, they might sell a reg that isn't on the MAP at a very low price but then, knowing that you'll need an octo, offer that product at full markup or more.
Here's another one...most folks will look long and hard at the big purchase items carefully comparing prices but they don't take the time to check out prices on the little stuff. So...they buy their reg at a screaming price but then buy a whistle, a retractor and some no-fog at full markup or more.
Geographic and local economics also play a huge role. Imagine a small store in California having to compete against a huge store in Tucson where the cost of living and the cost of doing business is so much lower. Just look at the price of real estate, alone.
I suppose the list could go on and on but these are some reasons why some authorized dealers can sell some items for less. None of these are bad things necessarily...just things that most small shops can't afford to do. Heck, most shops can't even afford to have an online store of any significance. I suppose the old saying, "ya gotta have money to make money" applies as much to scuba as it does to anything else.
I think the answer to your question is a bit complicated... and I don't presume to understand it completely. But here are some of the reasons that I believe allow an online authorized dealer to offer certain products for less than the typical LDS.
PhilEllis mentioned one...and a big one at that... "Clout". If a store is a big volume dealer they have "clout" in spades. Often manufacturers overlook the rule violations by some of these bigger players. They do what they want when they want...and the manufacturer looks the other way.
Sometimes a big store will just go ahead and sell a particular item for less than the manufacturer allows until they get caught. Then they simply switch to a different item...maybe from the same manufacturer or maybe from a different one.
Also, often they will sell an item that is not on the manufacturers MAP list for a killer price. They use this as a loss leader...counting on the fact that most buyers will buy other products from them that will make up or even exceed the loss. For instance, they might sell a reg that isn't on the MAP at a very low price but then, knowing that you'll need an octo, offer that product at full markup or more.
Here's another one...most folks will look long and hard at the big purchase items carefully comparing prices but they don't take the time to check out prices on the little stuff. So...they buy their reg at a screaming price but then buy a whistle, a retractor and some no-fog at full markup or more.
Geographic and local economics also play a huge role. Imagine a small store in California having to compete against a huge store in Tucson where the cost of living and the cost of doing business is so much lower. Just look at the price of real estate, alone.
I suppose the list could go on and on but these are some reasons why some authorized dealers can sell some items for less. None of these are bad things necessarily...just things that most small shops can't afford to do. Heck, most shops can't even afford to have an online store of any significance. I suppose the old saying, "ya gotta have money to make money" applies as much to scuba as it does to anything else.
TyTy
Contributor
Here is the bottom line on online vs. LDS...
Business is business and LDS will have to learn to compete in an environment where there are online shops. Loyalty, guilting and all these wishful thinking tactics... LETS BAND TOGETHER AND SUPPORT OUR LDS!! YEAH MAN!! Will never work. Americans are driven heavily by price and thus LDS's if not willing or able to compete on price for the gear, will have to learn to survive in another way. Period.
Beyond that there is no discussion to LDS vs Online, do what you want because it wont matter, whats going to happen will happen. If that means LDS stop offering equipment or we get a Wal Mart of scuba gear then that will happen. The market will survive as long as there are customers and the customers will always buy from the provider with the most value to them. Price is obviously a huge factor in placement of value for most Americans.
Business is business and LDS will have to learn to compete in an environment where there are online shops. Loyalty, guilting and all these wishful thinking tactics... LETS BAND TOGETHER AND SUPPORT OUR LDS!! YEAH MAN!! Will never work. Americans are driven heavily by price and thus LDS's if not willing or able to compete on price for the gear, will have to learn to survive in another way. Period.
Beyond that there is no discussion to LDS vs Online, do what you want because it wont matter, whats going to happen will happen. If that means LDS stop offering equipment or we get a Wal Mart of scuba gear then that will happen. The market will survive as long as there are customers and the customers will always buy from the provider with the most value to them. Price is obviously a huge factor in placement of value for most Americans.
- Messages
- 3,138
- Reaction score
- 4
TyTy:
While there may be some truth to what you say, reality is that there are MANY shops that could care less about the internet and have no desire to target internet shoppers...and they're doing just fine!
Stephen Ash:
Stephen, there is some truth to what you are saying. Our "clout" only applies to our purchase price. We have to abide by exactly the same rules as any other dealer. What is sometimes misleading is which manufacturers have the most restrictive rules. With the exception of Aqua Lung and Scuba Pro, most manufacturers have ADVERTISING restrictions, but do not have restrictions on the actual sale price. Many manufacturers have no restrictions at all. You might want to review a document I prepared a couple of years ago that describe these restrictions. Please remember I have not updated this document in a couple of years, so some of the information may be slightly dated. Here is a link to that document.
Retail Restrictions By Scuba Manufacturers
I hope this helps. I think it is good when discussions like this take place. There are CLEARLY changes coming to the scuba industry. Some of those changes will be made by local scuba stores who suffer from stagnant sales but ever increasing costs of operation....some of these changes will be by the manufacturers themselves. Their policies are designed to protect the local dive store (mostly margin protection), but that business model has problems and, unfortunately, the manufacturers don't realize the problem. Again, just my opinion. Thanks.
Phil Ellis
Dive Sports Online
www.divesports.com
(800) 601-DIVE
Stephen Ash:
Stephen, there is some truth to what you are saying. Our "clout" only applies to our purchase price. We have to abide by exactly the same rules as any other dealer. What is sometimes misleading is which manufacturers have the most restrictive rules. With the exception of Aqua Lung and Scuba Pro, who attempt to restrict both Retail Price and Advertising (these two have the most restrictive advertising policies I have ever experienced) most manufacturers have ADVERTISING price only restrictions, but do not have restrictions on the actual sale price. Many manufacturers have no restrictions at all. You might want to review a document I prepared a couple of years ago that describe these restrictions. Please remember I have not updated this document in a couple of years, so some of the information may be slightly dated. If there are errors with regard to any manufacturer, i apologize in advance for the errors. Here is a link to that document.
Retail Restrictions By Scuba Manufacturers
I hope this helps. I think it is good when discussions like this take place. There are CLEARLY changes coming to the scuba industry. These changes will benefit almost everyone (especially consumers), except those unfortunate merchants that can't change or simply refuse to change. Some of those changes will be made by local scuba stores who suffer from stagnant sales resulting from a limited potential base, but ever increasing costs of operation....some of these changes will be by the manufacturers themselves. Their policies are designed to protect the local dive store (mostly margin protection) who suffers from a number of built in problems associated with market and competitive ability, but that business model has problems, Unfortunately, the manufacturers don't realize that they can't "protect" marginal dealers forever. They think price competition will go away. They are wrong on both accounts. Again, just my opinion. Thanks.
P.S. I could write a book on this subject. In fact, I might!
Phil Ellis
Dive Sports Online
www.divesports.com
(800) 601-DIVE
Similar threads
