First Post! First BC purchase, a mistake?

[Humuhumunukunukuapua'a]

I just caught back up with this thread, and some of the posts really confuse me. Especially Scott from Zeagle's explanations of how LP gets their gear.

On this board, you can find any number of explanations for how LP gets gear, from the diabolical ("they rob LDS's in the middle of the night!!") to the implausible ("they manufacture dozens of brands of knockoffs"). However, I have yet to see an answer that makes any sense at all, including Scott's.

Scott's explanation is that LP buys from LDS's. But at the same time, we all know LDS's have trouble competing with LP. Soooooo, how does a LDS buy from the manufacturer and then sell to LP and still make money, when they can't manage to sell to the consumer at rates competitive with LP's?

There's only one answer I can think of, if indeed Scott is right and LP purchases from LDS's. The LDS's are able to get gear from the manufacturers at prices that would allow them to match LP's prices and still be profitable, but they are prohibited from selling at low prices by the manufacturers. That's why you have to call Larry to get the LP price, right? Because he isn't allowed by Zeagle to post a price equal to LP's?

If this explanation is correct, then I have to agree with the conclusion many on this board have expressed: The manufacturers are to blame. Zeagle is to blame for LDS's inability to sell Zeagle equipment at rates competitive with LPs. If it is profitable for a LDS to sell to LP (as Scott says they do), and LP is marking up the equipment from what they pay the LDS (obviously), then it is clear that the LDS's could choose to make less profit and compete with LP, IF THEY WERE ALLOWED TO PRICE GEAR AS THEY SEE FIT.

To me, it's annoying when manufacturers give dire warnings about warantees and such as a way of strong arming you into paying a LOT more from authorized dealers. Why in the world do manufacturers insist on setting minimum prices?? Is it simply to increase the "perceived" value of their goods? What a scam! To me a lot of dive gear seems ridiculously overpriced, and BCDs are at the top of that list. Why a BCD should cost $700+ is beyond me.

In a way, LP may actually be *saving* the LDS system by giving the finger to the manufacturers and all their stupid pricing rules, and proving that it is profitable to provide your own waranty, sell at a slimmer profit margin, but in greater volume. Maybe their actions will force the manufacturers to rethink their policies to the benefit of LDS's and all of us.

If LDS's weren't being strangled by the manufacturers, maybe some of them could make money this way, too. Larry obviously can, but policies of manufacturers like Zeagle make it inconvenient for his customers to get the lower prices (you have to call), thus losing him sales, as some have stated in this thread. If I were Larry, I'd be pretty ticked off at the manufacturers setting my retail prices and decreasing my sales.

LP and operations like it aren't going anywhere is my guess. It's a shame that the manufacturers have such a tyrannical hold on the process, and I for one welcome any attempts to shake it up, including LP. If manufacturers would just set wholesale prices, sell to retailers, and let the retailers set the prices from there, LDS's would truly be able to compete with LP.

So, don't blame LP. They're just working around a ridiculous system in the only way they can if they want to set their own prices. Basically, they feel like they can offer all the services a manufacturer can for less than the manufacturer wants to sell their goods. And they do so. They'd probably be even cheaper if they didn't have to do the manufacturer's job of providing a warranty.

Can't get a Zeagle BC from your LDS for LP prices? Can't get LP price from ScubaToys without calling them up first? Don't blame your LDS or ScubaToys. Blame Zeagle.

I welcome any thoughts or corrections to my line of thinking.

Gregg

PS - I use Zeagle only as an example because the original post was about Zeagle products. This problem is widespread in the industry. Not a personal attack on Zeagle or Scott (who always posts very interesting information and gives us an "inside scoop" Thanks Scott!

PPS - I think ScubaToys just rocks. Larry clearly bends over backwards to work within an absurdly confining system, offers manufacturers warantees, AND offers prices competitive with LP's. Also, his presence on this board benefits us all greatly. Thanks, Larry! I'll be making my first purchase from ScubaToys of a computer and odds and ends very soon.

 

[jonnythan]

I agree on all counts. LP is not to blame for anything, they provide a service we all want and need. ScubaToys does an absolutely amazing job of defining the role of an online LDS. And the manufacturers (including Zeagle.. sorry Scott) are the result of much misery for LDS owners as well as divers.

 

[zboss]

Just like the illicit drug trade there is one reason why grey market products will never disappear - the market is consumer driven and they want products for the cheapest price they can get them: legal, grey market, or straight up.

The average consumer is used to products being consumables... and most everything you have now will wear away and you'll want to get a new one. As soon as someone comes out with extremely cheap and disposable dive gear - it'll sell like hotcakes to cattle boats.

Scott,

Glad you're here. Got a question.

If Zeagle is not selling to LP, and LP is buying from dive shops, *how hard* can it be to track down the stores supplying LP and cut them loose? Do your BCs have serial numbers? Do you record serial numbers in shipments sold to dive shops? If Zeagle was genuine about not wanting grey market sales of Zeagle gear, how simple would it be to play the customer, buy a BC from LP, and then look up the serial number and go after the store that was originally shipped that BC?

Or is it purely a monetary thing - as long as someone is buying Zeagle BCs, regardless of the end recipient, you don't mind that end consumers potentially get screwed over in cases like this where they're not aware the manufacturer is not going to warranty an effectively "brand new" piece of gear simply because the retailer bought it through back channels?

regards.

 

[ShakaZulu]

You guys have only but hi-jacked this thread, dang................

 

[zboss]

... Then I'm chasing around the world with a briefcase of cash ...

when is your next trip?

 

[The Kraken]

. . . and also as importantly, WHERE ??

 

[zboss]

On this board, you can find any number of explanations for how LP gets gear, from the diabolical ("they rob LDS's in the middle of the night!!") to the implausible ("they manufacture dozens of brands of knockoffs"). However, I have yet to see an answer that makes any sense at all, including Scott's.
.

Well - I know that my brother's toy store (which doesn't sell online BTW) marks their toys up 100% from what they buy them for... so if a BC's MSRP of $450 is bought from the manufacturer for $225 by the store and then sold to LP for $275 and then LP sells it to the public for $325 there is still profit being made across the board... and the consumer is still getting the product for less cash AND the store makes money from a sale it would have lost.

That's smart supply-chain economics.

 

[jonnythan]

"Larry, your shop rocks. Good job. I'm going to mug you and steal all your money, now."

 

[ScottZeagle]

Let me see if I can put this in a way that you will understand.

Dive Shop X sells Best-In-Biz dive equipment.

Dive Shop X spends $3500 per year with Best-In-Biz and is on "Dealer level 1". This entitles him to standard dealer pricing.

"Big Internet Retailer" contacts the owner of Dive Shop X and offers to buy $20,000 worth of Best-In-Biz gear, since he can't buy directly from Best-In-Biz.

Dive Shop X sees this as an opportunity to increas his purchases with Best-In-Biz, and get a much better discount level (let's say level 3 - which is 10% below level 1 pricing), due to the fact that he is spending more $$$ with them.

Big Internet Retailer agrees to pay 8% to Dive Shop X - CASH UP FRONT - to get the Best-In-Biz gear.

Dive Shop X makes 2% on anything he orders for Big Internet Retailer, PLUS he now gets a 10% discount on anything he orders from Best-In-Biz!!!

For Dive Shop X it is a win-win situation. (until he loses online sales to Big Internet Retailer)

Big Internet Retailer isn't banking on Best-In-Biz gear to pay his bills - he is banking on people who are lured to the site to purchase Best-In-Biz gear at a super low price to also buy mask defogger, masks, fins, lights, snorkels, etc. which he makes his margins on.

Like I said before, manufacturers can cut off the dealers that they find selling to Big Internet Retailer, but this will not stop Big Internet Retailer from getting their goods.

This is MY theory on how it works, but I, too could be wrong...

It is very easy to play Monday Morning Quarterback when you have nothing at stake, however, the real world is not quite as simple as some of you folks make it seem. (and I mean that in the nicest possible way)

Scott

 

[The Kraken]

Yep, Scott, that's how it works.
And don't forget the old power play, "Hey, I'm going to buy it from someone, it may as well be you."