Comparison of the buying online vs local LDS argument

[2airishuman]

I agree that it would be smart for every shop to also sell online. However, the costs of doing so are not nearly as cheap as some people seem to think. [...]

It has nothing to do with costs.

Most franchise agreements don't allow the local shop to sell on-line. If you were a ScubaPro or Atomic or Aqua-Lung dealer, and you sold those products on-line, you would not remain a ScubaPro or Atomic or Aqua-Lung dealer for very much longer.

The few places that sell a wide variety of gear online either have negotiated special agreements with their suppliers, or are selling greymarket goods (intended for export), or are getting their inventory on the Q.T. through another dealer, or a combination of these things.

 

[Roger Hobden]

The problem with LDS is that they are not stores like we think of them that stock products they owner thinks are best or whatever their business model.

In fact they are just showrooms for 1-2 manufacturers. This limits their selection and it gives away their intent.

Its the manufacturers' rules that are killing the LDS. Your charity to them by paying higher prices won't save this business model.

Let’s not forget that it would be pretty much impossible for a LDS to have in inventory all the brands that exist for every type of dive equipment. Necessarily, they have to make choices, no matter what. And they will always receive criticisms, based on the inevitable choices they have to make. So they have to find a balance between selling optimal stuff that costs a lot, versus selling products that are « good enough », and that get the job done, that most consumers can afford.

 

[stuartv]

They weren't computerized before or didn't bother to do a conversion from their previous inventory management software? That's a pain in the butt for sure, but I can't imagine running any business without having computerized inventory. It would be a mess. If you had to re-inventory everything, it would probably be a good time to get some barcode or rfid stickers and a reader.

Sure, they have it computerized. But, that doesn't mean they have the expertise to extract the data from the existing system that is used for the brick-and-mortar (which may be proprietary) and then import it into whatever online, Cloud-based store's database they are using for that. Besides, the current system probably doesn't have all the necessary data. For example, the in-store system probably does not have pictures of every item. Why would it?

The problem with LDS is that they are not stores like we think of them that stock products they owner thinks are best or whatever their business model.

In fact they are just showrooms for 1-2 manufacturers. This limits their selection and it gives away their intent.

Its the manufacturers' rules that are killing the LDS. Your charity to them by paying higher prices won't save this business model.

The shop I teach for has just about every brand I can think of. The only brand I can think of that we DON'T have is Sherwood. We are authorized, non-grey market, dealers for ScubaPro, Fourth Element, Shearwater, rEvo, Aqualung, Henderson, Bare, Waterproof, Hollis, Oceanic, Tusa, Apeks, Atomic, Dive Rite, Mares, Zeagle, Mobby's, DUI, Big Blue, Oxycheq (I think - at least, we used to be), Luxfer, Catalina, Faber, XS Scuba, and I'm sure there are others I'm not thinking of.

It has nothing to do with costs.

Most franchise agreements don't allow the local shop to sell on-line. If you were a ScubaPro or Atomic or Aqua-Lung dealer, and you sold those products on-line, you would not remain a ScubaPro or Atomic or Aqua-Lung dealer for very much longer.

The few places that sell a wide variety of gear online either have negotiated special agreements with their suppliers, or are selling greymarket goods (intended for export), or are getting their inventory on the Q.T. through another dealer, or a combination of these things.

I don't know about all that. I know the shop I teach for does have an online store (that is kinda sucky in the way that it works, but you CAN buy stuff online) and they sell pretty much everything online that we have in the showroom. I don't know why any manufacturer would care as long as the online prices are MAP or higher.

 

[BRT]

I had a discussion this week regarding tanks .
I provided what I thought was a reasonable turn key price including assembly vip sticker and the first o2 fill.
His reply to that price was "I can get it from dive gear express for that much"

So a few points
A Lds should be able to buy Faber tanks for significantly less than Joe public can online. That's up to Faber to correct this behaviour

An online order entering Canada is subject to significantly higher shipping cost, some shipping companies are know to charge hundreds of dollars for brokerage and sales taxes are also added at the border. When you use a Canadian credit card to pay in us dollars a less then favorable exchange rate is used to convert the currency.
Today people are drawn in by the online sticker price but fail to consider the actual landed cost.

I hope the guy orders the tanks from dgx and also hope the ups guy shows up with a handful of sand.

I am not an LDS but I am in the retail and service business. So long as Faber makes it so volume buyers can buy so much cheaper than small retailers your profit needs to be in something else. I am going to stop selling Echo power equipment after many years for the same reason. The last time we needed Echo bar oil we bought it from Home Depot. The people who buy their Echo saws from Home Depot or Ebay bring them to us when they won't run and Echo doesn't want to warrantee them so we are the bad guys. Retailers need to stop trying to compete in areas they cannot and they need to compete in services that online retailers and big box stores cannot compete in. In other words the price of air fills needs to be much higher rather than a loss leader. I do a few air fills because there is no one else within 40 miles. I charge $12. People react with a thank you, not a complaint.

We often have people bring in tires they bought online for mounting. We do it, and charge enough to be happy doing it. Often all the people saved was the sales tax, 8.2%. That is changing.

 

[BRT]

I don't understand. Isn't that the whole point of a volume discount? That you pay less per unit when you order a lot of them.

I mean, it's not possible for the online shop to sell below the LDS cost, because in that case the LDS would just buy from the online shop. Presumably, the LDS offers some value add to make up for the price differential. That could be local service, general diving advice, the ability to see gear in person and possibly even try it out before buying, etc...

Very likely if the LDS buys from the online store then the LDS cannot warrantee the product because the LDS is the original purchaser.

 

[gcarter]

They weren't computerized before or didn't bother to do a conversion from their previous inventory management software? That's a pain in the butt for sure, but I can't imagine running any business without having computerized inventory. It would be a mess. If you had to re-inventory everything, it would probably be a good time to get some barcode or rfid stickers and a reader.

My first reaction as well.

I would suggest that any LDS that does not have some sort of computerized record keeping is already probably a lost cause.

 

[BRT]

I still don't get it.

You have a shop. Amazon is selling a computer for $749 with free shipping.

You buy one for $749 and sell it to me for $800. If you provide some sort of value-add to make the extra $51 worth it to me, I'll buy it from you and recognize that you are not ripping me off, despite charging more than Amazon. You make $51 in profit, which you use to run your store.

If you sell the same computer for $1000, then I will think that you ARE ripping me off, because your value add isn't worth $251, and I won't buy it from you and you will make no profit.

If your response to the second scenario is that your cost for the computer is $950 and that Amazon is selling below your cost, then I would tell you to buy your stock from Amazon and not whatever middle man is ripping you and your store off.

How do you give your customer a warrantee on the item if the warrantee is only to the original purchaser?

 

[doctormike]

How do you give your customer a warrantee on the item if the warrantee is only to the original purchaser?

Good point!

 

[stuartv]

Well, if the dealer is an authorized dealer and the customer has a receipt from that dealer, I would expect the manufacturer to honor the warranty, whether the dealer sourced the item directly from the manufacturer or from another authorized dealer.

 

[runsongas]

Well I agree map pricing not necessarily good for the consumer I gota ask how does a small dive shop offer equipment for the same price when dealer list is more than some online deals

offer value adds to be competitive on total cost of ownership. the LDS i get fills at offers an account credit rebate for free fills if you buy a tank. another will O2 clean for a reduced fee if you buy a tank from them. Makes them competitive with online pricing.