Manufacturer question & not about LDS..

Now, we've had the discussion about why LDS need to charge a ton more than online shops. The manufacturers have agreements with the LDS's in which they must sell above a certain price. It guarantees a certain level of profit for each piece of gear sold at the LDS, and they don't need to get into price wars with shops nearby, but on the other hand, they're losing piles of students who notice the 1/2 cost of buying online.

I understand how the LDS's are in a fairly tough bind. I would like to know however why the manufacturers do not open up their pricing structure. I don't see how these pricing rules help them out much. Everyone involved in the business wants to see the LDS's stay around. You need air fills, you need gear maintenance, and I'm sure you'd like to have a shop there to buy a quick mouthpiece replacement before the dive you're doing that afternoon.

So why doesn't one of the manufacturers just cancel their pricing wavers? The dive shops won't get nearly as much profit from the items (since they would need to compete with each other), but on the other hand, they could compete with the online shops. If I saw the gear being sold at the LDS was the same cost as the online shops (or close), I would certainly buy from the LDS for the maintenance they can perform.

What am I missing? I don't know much, inform me.

Ceberon once bubbled...

What am I missing? I don't know much, inform me.

Click to expand...

What you're missing is the cost difference between running a store in a (mostly) small town and running a website. This isn't a tough concept to grasp and I can't figure out why people keep whining about it.

And, novel concept, why not inform yourself by taking a business class or reading about running a business.

Simply go into business for yourself doing whatever. Call your
local Chamber and inquire as to what insurance coverage is going to be MANDATORY. Call your favorite agent and get a quote.

Crystal.

I am well aware of the cost differences in running a shop vs a website. That is not the point. As I said, they would need to charge above what the website charges. However, right now, a website may charge $150 for a piece of gear, while the LDS charges $300. This is beyond what should be required to cover the difference.

I'm simply trying to think of how this problem could be fixed that seems to be damaging LDS's. They're not compensating for online sales, and like many other industries, they will need to change their business practices, or lose out.

My point is this. Perhaps they should drop their gear prices, increase the fill prices a few dollars, increase training costs, perhaps find other revenue sources (charging for a DM escorted dive in the local dive spot?). They can charge more for things that online shops cannot do.

Since LDS's are getting most of their costs from selling gear, and online shops can beat them easily, they need to get their profit in another way.

So instead of being cynical, try saying something halfway intelligent please.

Ceberon once bubbled...
Now, we've had the discussion about why LDS need to charge a ton more than online shops. The manufacturers have agreements with the LDS's in which they must sell above a certain price. It guarantees a certain level of profit for each piece of gear sold at the LDS, and they don't need to get into price wars with shops nearby, but on the other hand, they're losing piles of students who notice the 1/2 cost of buying online.

I understand how the LDS's are in a fairly tough bind. I would like to know however why the manufacturers do not open up their pricing structure. I don't see how these pricing rules help them out much. Everyone involved in the business wants to see the LDS's stay around. You need air fills, you need gear maintenance, and I'm sure you'd like to have a shop there to buy a quick mouthpiece replacement before the dive you're doing that afternoon.

So why doesn't one of the manufacturers just cancel their pricing wavers? The dive shops won't get nearly as much profit from the items (since they would need to compete with each other), but on the other hand, they could compete with the online shops. If I saw the gear being sold at the LDS was the same cost as the online shops (or close), I would certainly buy from the LDS for the maintenance they can perform.

What am I missing? I don't know much, inform me.

Click to expand...

In a word, "training". What does your LDS really sell?..... what does the manufacturer need? Training leads to equipment sales. does web surfing? If all of those web-buyers were not trained would they buy your products? Can the web train people?

You can probably fill in the rest now.....

R..

Well, this is exactly my point. The manufacturers are watching as online shops are taking away the sales of the LDS's. LDS's train people, trained people buy gear. You would think the manufacturers would be upset at the idea of LDS's going out of business simply because they cannot sell anywhere near the prices of an online shop.

I was hoping to understand the viewpoint of the manufacturers. When they have board meetings and report that more LDS's are going out of business than are being started, do they have problems with this, or from their point of view is this a fine situation? Perhaps there were too many LDS's before?

Ceberon once bubbled...

So instead of being cynical, try saying something halfway intelligent please.

Click to expand...

I did. The fact that you refuse to listen is not my problem.

Nice attitude! Did you work in customer service at a LDS? Just a little hostile. :doctor:

To Ceberon,

Although practices vary from country to country I will try to give you an overview of my experience with regard to this problem.

In most countries the local dive store will have to deal with the distributor of the product ( The U.S. could be an exception since many manufacturers make their home here ) Your distributor will have a certain price to give to the dealers ( LDS ) and then a suggested price to give to the customer. It is actually up to the local dive store what price they may sell it at ( subject to dealer arrangements with the distributor ).

Of course the price differences as against online shops are explained by overhead and the like ( but you already know this ). However, if you would go around you will also notice that there are significant price differences among local dive stores themselves. As one thread pointed out a BCD that was sold to him for 300 Euro was found to cost 200 Euro at a shop not much further away.

It is complicated but in theory dive shops may offer their gear at a price range that can be competitive. By competitive I don't mean at a lower price but at prices where the value added services of the dive store would be advantageous to the prospective customer ( eg. no waiting time, easy service and parts ). As shown by the example of the BCD sold it is possible to sell at a cheaper price that is not too far away from internet prices.

As to whether your local dive store will follow the approach of making equipment a little more affordable for the consumer it would depend upon the owner and his business practices. The market will decide ultimately if the business practices have succeeded or not.

Hope this has helped a little and not been surplusage

but not in the US.

The difference is that in the EU price-maintenance policies are per-se violations of the law, irrespective of the "tricks" used to accomplish them.

In the US, they are both common and there is often a "look the other way" attitude by regulators.

In the US, if you go to an authorized dealer, you will always get the same price, with a maximum difference of approximately 10%. The reason for this is that the manufacturer threatens to revoke the dealership if they don't price this way!

Now there are indeed some dealers who will ignore this, but they do so at their peril, as if they get "caught" then they risk losing their dealership.