Comparison of the buying online vs local LDS argument

[2airishuman]

Dont get me wrong I'm not knocking any of the online retailers. In many cases they have done a better job of supplying the market.

I'm placing some of the responsibility on the manufacturers .
I completely understand that is a big online company is going to order 1 million worth of equipment from a manufacturer then they are going to get a significantly better discount then the mom and pop shop.
But when that discount allows the big online shop to sell below mom and pops cost somthing is wrong.

A few manufacturers have a strict map pricing policy. This levels the playing field and allows the little guy to compete.

The way I see it, it artificially inflates prices and gives the retail purchaser an incentive to deal with other brands that don't have such a policy.

But the grand fallacy here is that there is such a thing as a SCUBA manufacturer that sells stuff to dealers. That's not how it works. There are brands. They purchase product from a wide variety of manufacturers, mark them up, and sell them to dealers. This is because there is zero overlap in the manufacturing process between: wetsuits, regulators, DCs, and hoses. There is no (e.g.) ScubaPro factory that makes these things, indeed there is no network of "ScubaPro" factories because (many if not most, perhaps all) the places that make product for ScubaPro make product for other brands and other (non-scuba) markets.

 

[KevinNM]

As others have pointed out, you've got DRIS locally so it's not a fair comparison. I bet you don't fully realize what that means. There's only like 4 online stores, maybe 5 that I'd shop at. DRIS is one of those, and happens to be your LDS. I bet the folks who have scuba.com as their LDS don't understand why other people shop online either. I'd shop at dris, scuba, leisurepro, and amazon for dive gear.

I was in Dallas last weekend and stopped by ScubaToys. I was pretty shocked at how much their stock had shrunk from a few years ago. Other than wet suits and BCDs they really didn’t carry a big selection of anything.

 

[fullytek]

Like I said, I shop all over the place. Yesterday I called both an LDS and Best Buy about a GoPro Micro SD card, and learned the 32GB was $70+ at LDS, while the 128GB extreme plus was $55, (on sale from $270 at Best Buy, plus Best Buy explained that when I upgrade to Gopro7 this card is 4k compatible, with a high speed rate of V30. ) Granted this is not scuba gear, just used underwater. This is the same LDS that upsold me the collection bag by letting me try it in the store.
But to answer your question directly, if I felt I received good enough information from the online shop, why would I need to go to the LDS shop? If I felt that I needed to see it in person to trust I can buy, why would I do that, then turn around go home and buy online to save a few bucks? Ultimately, I buy from the person that convinced me to buy.

Good for you and thanks for supporting your local dive shop.
Let's assume the lds has a 30% margin on that 70 item that means the shop is paying 49 before shipping well best buy is retailing a superior product for 55.

The LDS needs to apply pressure to the manufacturer or wholesaler pointing out the price from the big box and ask hey why should I buy it from you when my customers can buy from the big box for less than I'm paying.

Selling a product at cost is actually a loss.
Shops with limited exception do not make any money on air fills.

I will be at dema this year and in the past have looked at dealer price lists and politely handed them back to the vendor as the online price is often so close to dealer cost that bringing in a brand simply donst make any sense

 

[kelemvor]

Good for you and thanks for supporting your local dive shop.
Let's assume the lds has a 30% margin on that 70 item that means the shop is paying 49 before shipping well best buy is retailing a superior product for 55.

The LDS needs to apply pressure to the manufacturer or wholesaler pointing out the price from the big box and ask hey why should I buy it from you when my customers can buy from the big box for less than I'm paying.

Selling a product at cost is actually a loss.
Shops with limited exception do not make any money on air fills.

I will be at dema this year and in the past have looked at dealer price lists and politely handed them back to the vendor as the online price is often so close to dealer cost that bringing in a brand simply donst make any sense

I think you're way to fixated on price. You're concerned that you can't compete on price. So compete on other factors.

Also, none of the online scuba stores I have seen would I consider "excellent" online stores. Even the best current scuba store is far from great. Existing stores are workable, but if I'm not looking for one specific item the browse capabilities of every store I've used are kind of lame. That means there's room for someone to come in and make a better store. If you did that you'd increase your sales volume, perhaps even beyond those other stores you currently can't compete with. There's probably millions of web designers itching to make you an online store. Some could have it done before lunchtime today, and probably for well under $100. Alternatively, you could go to your local high school waving a $100 and ask for some kid to set you up a store. Anything is better than nothing. Online is the way most people shop (nothing scuba specific in that). Online shopping has been around for what.. 20 years.. maybe 30? Get on the bandwagon or get run over by it.

 

[Bubblesong]

Let's assume the lds has a 30% margin on that 70 item that means the shop is paying 49 before shipping well best buy is retailing a superior product for 55.

In this case, I think the shop was selling old stock at the old price, but with tech products the improved tech often has lower prices as manufacturing and distribution efficiency goes up.

 

[Bubblesong]

Ooh! That online sale is a sizzler!

Cant let my friends think I’m a chiseler

No try-on for fit

So buy and return it

Now that online cash flow is a DRIS-ler!

 

[2airishuman]

Not sure I understand. I'm assuming that by "small mom and pop cost", you mean THEIR cost, as in, what the LDS pays their supplier for an item. Of course the online store is going to have a lower customer price for the item than the LDS.

If an online store sells a product for LESS than the LDS is paying their supplier, then why wouldn't the LDS buy it from the online store?

For example. DGX sells an AL80 for $169. Ground shipping is $26. So total cost is $195.

If LDS cost (that is, what they pay for the tank) is $210 from Luxfer, and they sell it for $240, why wouldn't they just buy it from DGX?

First of all, that isn't how it works. Luxfer won't sell cylinders to an LDS. They sell cylinders to people who are prepared to deal in much larger volumes. I don't know the rules at Luxfer in particular but typically to get a direct account with an actual manufacturer, a dealer has to maintain annual volumes of at least $25,000 or so.

The LDS is going to buy its cylinders from a distributor who also distributes other stuff. To maintain their relationship with the distributor, they again must maintain a certain annual volume. The higher the volume, the more of a discount the LDS gets. As a typical example, an LDS running $10,000 annual volume might get at 50% discount off MSRP, and an LDS running $25,000 volume might get a 60% discount off MSRP (I'm simplifying; it varies depending on whether it's a stocking order or a fill-in order or a special order and myriad other details). If the LDS drives cylinder purchases to a retailer like DGX, then they run the risk of missing a volume target.

The waters are muddied further by exclusivity requirements (e.g. an LDS cannot qualify for a certain discount level without promising not to obtain certain products from other sources) and by line-specific volume requirements (e.g. an LDS cannot qualify for a certain discount level unless they maintain annual volume of $5000 in wetsuits and rubber goods, $10000 in regulators and BCs, and $5000 in tanks, hardware, and accessories).

It's not just badly run LDSs that are the problem. The whole distribution system contributes to it.

 

[tridacna]

The way I see it, it artificially inflates prices and gives the retail purchaser an incentive to deal with other brands that don't have such a policy.

But the grand fallacy here is that there is such a thing as a SCUBA manufacturer that sells stuff to dealers. That's not how it works. There are brands. They purchase product from a wide variety of manufacturers, mark them up, and sell them to dealers. This is because there is zero overlap in the manufacturing process between: wetsuits, regulators, DCs, and hoses. There is no (e.g.) ScubaPro factory that makes these things, indeed there is no network of "ScubaPro" factories because (many if not most, perhaps all) the places that make product for ScubaPro make product for other brands and other (non-scuba) markets.

Mostly true. There are still companies that have zero overlap. Henderson is one. They do it all themselves. I’ve been there. There are others. But you make a good point.

 

[fullytek]

Price today is everything.

We offer high quality equipment at a competitive price. We work extra hard to try to elimanate overhead. The majority of our gear ships to a warehouse in the us and we broker it our selves saving over all cost at a significant investment of our time.

I have on more than 1 occasion hand delivered my personal light or computer to a customer well the equipment I had sold them is down for repair.

We get the extra value idea.

Map pricing is a double edged sword. In a case like halcyon they have decided to sell a small volume at a higher margin instead of a larger volume at a low margin.
And it's worked for them . Halcyon gear is expensive and I beleave its worth it.
At the same time those busness practices have left them open to competition. Salvo thrived due to the markets apatite for similar products at a more attractive price (as well as low start up cost)
I bought my first salvo light on price but bought others because of the high level of service.

 

[Dogbowl]

I will be at dema this year and in the past have looked at dealer price lists and politely handed them back to the vendor as the online price is often so close to dealer cost that bringing in a brand simply donst make any sense

I’m sorry but this was the same spiel I got from the LDS I was referring to that is following this exact business model. It’s not working for them.

I’m just telling you how I see it as a customer.

Just in case you’re wondering, I buy local. Spent several thousand dollars in the past year at mainly one local shop, just not the one I was referring to above, mainly because they literally had nothing I wanted to buy, and wouldn’t bring things in for me even after specifically asking for it because they did not carry the brands.