ReefMongoose:
I agree with you about the fact that online buying options are directly affecting LDS sales. It stands to reason, online shops are direct competitors to LDS', and what makes them even more competitive to stay in business is that they have much less overheads to cover to maintain their presence than your average LDS.
This simply is not the case. Operating a properly merchandised and stocked online store required a gigantic investment. The typical merchandise inventory of a LDS is somewhere between $35,000 and $65,000. Some considerably more and some considerably less. A typical, successful online store will have a merchandise inventory in excess of $300,000. The larger ones could easily have an inventory that exceeds $1,000,000. So it certainly isn't cheaper than a local scuba store. Online stores also have the same type of business expenses as the LDS In fact, most of the online stores are actually LDSs. They have all of the expenses associated with your local dive store, and then more. Online dive stores often do considerable advertising, something the local store doesn't do. Online stores have toll-free telephone numbers, the cost of which often exceeds $1500 per month. You cannot make the argument that the difference in retail prices between local and online stores is expense based. You cannot also assume that the online store is getting a much lower cost of good from the manufacturer. With few exceptions, the online store will not get much better wholesale prices from the manufacturers. Again, it is a totally different business model based on market saturation and the ability to accept a lower gross profit margin.
Just think of how much money needs to be hauled out of the bank account to put that demo BCD or reg on the LDS shelf as opposed to having a simple picture of the same thing posted on the web site.
Behind every picture of a BC that you find on an online website, you will find DOZENS AND DOZENS of actual BCDs in stock. Again, the difference in price is not about inventory, it is about a different business model.
Additional note: I am a local dive store. I also am an internet dive store. If the local dive store thinks the solution to their problem is to reduce the inventory and operate an "ordered as sold" retail operation, they are terribly mistaken. The secret to a successful local dive store is a large and expansive inventory, combined with a business plan to turn that inventory often enough so you can be profitable. You must have the stuff the customer wants, when they want it. You also cannot compensate for high, uncompetitive prices with better service. Customers expect good service, not matter what the price. In fact, much of the move to online buying is driven by the fact that online stores often give MUCH BETTER support and customer service than local stores. This must be corrected if the local stores intends to survive. This move on behalf of local stores to stock less is simply an indication of the end times. I have never known of ANY BUSINESS that got bigger and stronger by retrenching and downsizing. It can't work in the long term. Anyway, my opinion. Thanks.
Phil Ellis
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