Regulator Cost Analysis

[fireflock]

This message is for everyone...

Be honest with your LDS and you will get farther. AWAP has a point that they prob will not match LP's price but they will make an effort. Dealers are bound by Minimum Advertised Price. Your LDS will be penalized for showing you a price lower than MAP, you can haggle the price down but the sticker must read MAP. Punishment for violating MAP policy can beas harsh as losing the line. LP and other internet suppliers refuse to play fair, but b/c of their high sales manufacturers won't serve any real punishment.

I think you're right about the be honest part. A good shop will try to make something work and still respect you (and welcome you in the shop) if you give them a fair shot and still decide to buy elsewhere.

Think for a minute - how did we get here - where buying a regulator is more like buying a car than a pleasant experience? The dive industry has more to do with this perception than the customers do. Customers don't like the buying experience you have to offer and are migrating to places where they do like the experience. As a dealer you have to realize when your suppliers are not doing you any favors - and you can vote with your wallet too.

I understand it's not an easy thing to do - but what choice do you have? Continue down the path you're headed on and you can see where you'll end up.

Rich

 

[Stu S.]

Economics:

I bought a regulator on sale at Diver's Direct. Used it 18 months or 70 dives without service. Took real good care of it. Annual service would have been $38. Sold that reg on eBay for $24 less than I paid for it. Took the proceeds and bought another one on sale at Diver's Direct.

It appears to be the economical way to go. I may well do that again.

 

[Nemrod]

You can extend the second stage LP seat life by unscrewing the seat holder section at the LP hose. I usually only run this hand tight anyways. Not having the orifice against the LP seat extends it's life greatly. This is the main wear area for most simple second stages, if kept clean and stored correctly with the seat backed off you should be able to go several years with no service. N

 

[superstar]

Stu S has a very good system. I like the way he thinks.

 

[tc]

Note to AWAP- No, I don't work for a shop, I teach DAN courses for a couple of local shops but my dive instruction is independent. I do agree that most regs would have no ill effects going a couple of years between service but thought 5 years a bit much with no work. I'm sure no manufacturer would recommend such a long interval but in my experience 2 years is a pretty safe interval. I do Public Safety Diving so we have to do annual maintenance and twice a year tests on all our stuff.

/rant on

I've said this before so apologies to those who have had to listen twice.

Most dive shops seem to use courses and air fills as loss leaders in order to bring in customers and count on gear sales to survive.

Those also happen to be two of the main spots where the internet stores can not compete with them.

There probably needs to be a basic restructuring of their business model for long term survival. Not nearly as simple in practice since any shop raising their air fill and class pricing much over the surrounding stores will likely have a rough go of it unless the other stores catch on to the plan. Of course if all the stores in an area did this they would have a much better chance of success. And even for price fixing! j/k

No easy answers for the guys that own the local dive shops- and thank god they're around for us!

/rant off

 

[agilulfo]

I am not an expert nor a dive shop owner but I have a question for those who keep saying that LP has an advantage over other LDS. No one here has mentioned the fact that LP is not simply an online retailer with a warehouse in the middle of some remote and cheap rural area but a full fledged dive shop in the heart of Manhattan. I've actually visited the shop to try on a wet suit before buying it as I live close by and they have a fairly sized show room, plus the servicing and warehouse. All in all it's a pretty big piece of prime real estate. I am not sure if LP owns or rents the space but it's not a cheap place to be regardless.

As other posters mentioned, LP does not offer training so, my question is, why is LP generating so much business that other LDS can't seem to be able to match? Once again, the brick and mortar argument vs. online retailers is not a valid one given what I've said above. The warranty argument also doesn't seem to be valid since LP matches the manufacturer's warranty with their own. I've read before that LP deals with gray market items and that may be the answer to my question but this fact seems to highlight what seems to be the crux of the matter, imo. That LP is not willing to abide to the price fixing required by some manufacturers and that because of the volume of sales it generates they can live without the "authorized retailer" blessing.

One other myth that I've encountered about the "authorized retailer" preferred status is that it seems that some LDS will not service gear that they have not serviced before, regardless of where it was bought. One LDS personally told me that they would not service gear that was services elsewhere because of liability issues: that if something went wrong with some piece of gear they were the last one to service they would be liable even though the problem might have been caused by a prior servicing. Once again, I am not an expert and I am not sure if this makes any sense but this is what I've been told by an LDS.

This seems to make buying from an authorized retailer a moot point since if I have to always go to my LDS for servicing I might as well take it to LP. Of course this is not as simple for those who do not live in the area but since I do, for me LP is just my own LDS when it comes to buying gear. As far as instruction goes, I usually do that while I'm on vacation anyway since I have no interest in diving in cold water, but that's just me. I understand that people who like to dive on a regular basis need something more than LP has to offer and this brings me back to my original point: that LDS that offer instruction seem to have an advantage over LP and that their misfortunes originate from the manufacturer's anti competitive policies rather than from LP or consumers. If LDS would stop carrying those manufacturers maybe such manufacturers would change their tune once their market share starts shrinking. I know it's easier said than done but I am wondering what others think in this regard.

 

[redacted]

Note to AWAP- No, I don't work for a shop, I teach DAN courses for a couple of local shops but my dive instruction is independent. I do agree that most regs would have no ill effects going a couple of years between service but thought 5 years a bit much with no work. I'm sure no manufacturer would recommend such a long interval but in my experience 2 years is a pretty safe interval. I do Public Safety Diving so we have to do annual maintenance and twice a year tests on all our stuff.

/rant on

I've said this before so apologies to those who have had to listen twice.

Most dive shops seem to use courses and air fills as loss leaders in order to bring in customers and count on gear sales to survive.

Those also happen to be two of the main spots where the internet stores can not compete with them.

There probably needs to be a basic restructuring of their business model for long term survival. Not nearly as simple in practice since any shop raising their air fill and class pricing much over the surrounding stores will likely have a rough go of it unless the other stores catch on to the plan. Of course if all the stores in an area did this they would have a much better chance of success. And even for price fixing! j/k

No easy answers for the guys that own the local dive shops- and thank god they're around for us!

/rant off

Sorry - I'm not sure whether it was your dive qualifications or stated occupation that threw me off.

I agree that the business model needs to change in that the shops need to figure out how to succeed with lower margins on major gear sales to compete with the online, high volume, low markup dealers. Reasonable prices for gas, service and training are a good start. But I really believe the key will be the elimination of weaker shops that can't or won't compete. My area used to have 4 struggling shops but it is now down to 1 fairly healthy shop that is somewhat competetive and another shop that seems to be in trouble. And in those cases where a good shop does not survive, a club can fill the void if the local diving community is strong.

 

[DA Aquamaster]

I am not an expert nor a dive shop owner but I have a question for those who keep saying that LP has an advantage over other LDS. No one here has mentioned the fact that LP is not simply an online retailer with a warehouse in the middle of some remote and cheap rural area but a full fledged dive shop in the heart of Manhattan.

I you look at the percentage on online versus brick and mortar sales with LP, they are probably 99% on-line sales.

And unlike brick and mortar dive shops that are often limited to working within dealer agreements that restrict anything other than face to face over the counter sales, LP does not suffer from that restriction. They buy in volume from off store sources which is a luxury that small LDS's do not have. The average LDS has to stay within the lines of the agreement or their source of equipment gets cut off. LP on the other hand does not really care if they are a legitimate dealer or not as they can still get enough product to sell.

Companies like Scubapro and Aqualung are largely to blame for not controlling grey market sales which they clearly could as they make the stuff and if they so choose could may an LP purcahse now adn then and track it via serial number back to who ever sold it to LP in the first place and cut them off.

But...I also suspect that those companies probably do about 30% of their gross sales through online retailers like LP - in spite of the dealer agreements they subject local dive shops to in the name of "restricting" on-line sales. The end result is that this two faced and corporately self serving policy both creates and protects what is a very lucrative market for LP. What happens if a smaller legitamate dealer tries to compete? Ask Larry at Scubatoys what Scubapro's response was.

That would be why LP has a very unfair advantage over other shops.

 

[ReefHound]

I you look at the percentage on online versus brick and mortar sales with LP, they are probably 99% on-line sales.

That doesn't change the overhead of rent and utilities.

You mentioned the mfgr restrictions that burden the dealer and mentioned what SP/AL did to Larry/Scubatoys. Now let's mention Larry's response to SP/AL and see which of them ended up hurt the most in the process. Scubatoys is thriving, selling tons of gear and none of it is Scubapro. If more dealers followed this example and told SP/AL to stick it up their coral reef we would have more equitable mfgr policies.

 

[redacted]

That doesn't change the overhead of rent and utilities.

You mentioned the mfgr restrictions that burden the dealer and mentioned what SP/AL did to Larry/Scubatoys. Now let's mention Larry's response to SP/AL and see which of them ended up hurt the most in the process. Scubatoys is thriving, selling tons of gear and none of it is Scubapro. If more dealers followed this example and told SP/AL to stick it up their coral reef we would have more equitable mfgr policies.

I believe that many if not most SP & AL dealers see the price restrictions not as a burden but as an enabler. Those restrictions enable them to maintain high markups with little fear of price competition. All they really have to do with the customer who is shopping for one of those very popular brands is convince them that they will regret it if they buy from Leisurepro. These dealers are not hard to find and recognise. They push the SP/AL brand. They will make little to no price concessions. They will explain that their hands are tied by the dealer agreement. And they will be death on Leisurepro and the internet.

But there are also dealers for these brands that are not fans of the priice restrictions. They will often employ rather interesting and beneficial techniques to make the value of purchases from them more competetive without violating any dealer agreements.

If most dealers did not want these restrictions, the manufacturers would have a hard time sustaining them.