LDS Bashers

[PerroneFord]

Interesting replies in some of the posts - where to begin:

Automobiles - ok genius, I was the general manager of a Porsche Audi store: Your statement about surviving on 8% margins, why can't the LDS. Well let's compare apples to apples - first of all the car manufacturers bear a large portion of the "flooring cost" for cars i.e. the dealer doesn't have to pay much to keep it in inventory for the first 30-45 days. I highly dounbt the local LDS has such generous credit terms. Secondly the manufacturers pay the dealers a "holdback" allowance that can be greater than 5% of the invoice cost. Thirdly, the 8% margin on a $30,000 purchase sure is alot more money in their pocket than an 8% on a $200 regulator. Finally, the largest portion of a dealer's profit comes from service and warranty repair. At many dealerships, this is the only profit they make. Kinda hard for the LDS to scratch out a living on service and warranty repair.

Ohhh.. Im a genius! Please quote where I said dive shops can survive on 8% margins. Do that and I'll shut up. Yes, dealer holdbacks and costs to get new product to dealers are subsidized. That's awesome. The dive shop enjoys no such advantage. However, I see VERY few people take out their visa, and buy a Porsche or Audi. And especially not Chevy's or Fords. That prodcut at the auto dealer will have a signifcantly longer sit time than a regulator, fins, snorkel, mask, or dive light. At least if the dive shop has a decent customer base and is doing well. As I stated, I would be HAPPY to find a dive shop working with a 50-75% margin. Is that unreasonable? You seem to know all about running a dive shop. So you tell me what kind of margin is reasonable.

Oh, let's not forget the grand-daddy of them all - GM/FORD getting their butts kicked. Last time I looked, you couldn't buy your new car from the factory direct. The domestics' problems are deep, but failing to sell direct on the internet is not one of them. Oh, by the way Mr. Rocket scientist, in a service-heavy business model i.e. local service centers are REQUIRED, you can't jsut be a virtual retailer. How would you like to have to ship that car back to tokyo for that warranty work?

As a matter of fact, I CAN order my car factory direct. But that's beside the point. Local service centers are required? Says who? How many Lexus dealers are there in the country? How many Land Rover dealers. Lexus will dispatch a flatbed to get your car, service it, and deliver it back as part of their warranty service. I never had it so good with my Range Rover. I had to flat-bed it 200+ miles for repair work, and it needed repairs often enough for me to outfit my own garage (specialty tools and all) and do it myself. In much the same fashion, someone can simply drop a regulator or some other item in a box, send it out for service, and have in back in a few days time. Works great. Some manufacturers even offer this service. I've owned products by two diving companies that I can think of that offer this. So while shipping costs make it prohibitive to do this with a car, it's standard fare with regulators, computers, and other dive gear. How many dry suits you think get sent out a year for service?

All this boils down to the fact that without numerous LDS's, diving is a dying sport. No one is going to be around to fill tanks, answer the questions of beginners or interested parties, provide training and certification (back to one of the other genius' comments that training will be provided on a "ad-hoc" market demand basis

No one is going to be around to fill tanks? Where do you dive? I've never been to a dive destination and had trouble finding someone nearby to fill tanks. Admittedly, I haven't done a lot of diving, but STILL. As for answering beginner's questions, by the sounds of things here on SB, LDS's aren't doing so hot on that as it is!

 

[JeffG]

No one is going to be around to fill tanks? Where do you dive? I've never been to a dive destination and had trouble finding someone nearby to fill tanks. Admittedly, I haven't done a lot of diving, but STILL.

I live in the middle of the Prairies and even if the 6 dive shops in Edmonton went bye bye, I can still get fills. (Actually, I haven't used an LDS for over a year.)

As for answering beginner's questions, by the sounds of things here on SB, LDS's aren't doing so hot on that as it is!

Quite frankly, the skill/knowledge level that I have seen in diveshops leave lots to be desired. There is usually only 1 guy who actually has a clue, but some newbie would have no idea who was who. The shop monkeys tend to do more damage than good.

 

[JonAustin]

xiSkiGuy--

No hard feelings. I assure you that there is absolutely nothing that you could do or say that would upset me. That being said, I meant nothing personal by my comments. That being said, REI undercuts the prices of other niche sports equipment distributors. They also tend to employ experts that far outstrip the average guy at the bike shop. I anticipate that's the direction that scuba equipment retail is heading in.


"'Adjust or die.'"
"How dramatic."

That doesn't make it untrue. We're talking about business, here, not Candyland.

Look, I think that some folks might believe I'm accusing LDSs of being lazy or predatory. Nothing of the sort. I once had a similar conversation with a friend whose dad owned a small ranch, but was going to have to sell it. The reason? That guy could bust his butt all day long, 365 days per year, but that didn't change the fact that he simply could not operate on the margins that the larger ranches could afford. That wasn't his fault. He's a good, hardworking, smart guy. The market had simply changed.

As I touched-on before, the Internet has disrupted the businesses of just about every business. Look at travel agents, stock brokers, realtors, bookstores, music shops, and, yes, even lawyers like me. LDS owners should be ecstatic that their type of business has done as well as it has for as long as it has. The fact is that the good, hardworking people who work at LDSs need to take a good, hard look at their business model, because times are changing, and consumers have a lot more power now, thanks to the web.

 

[Vtdiver2]

I know the owner of the LDS I frequent most. And you're right, he's not living like a king at all. He's a small business owner trying to pay his bills like the next guy. And I try to make a point of spending a few bucks whenever I visit if I can. A magaizine here, some webbing there, maybe I'll splurge sometimes and get a pelican case, or a bag, or a light. Most of their customers seem to be similar. We like the store, and we like the owner. I know there are others around the country who do not have an LDS that is interested in servicing the customer. And I think this is the crux of the LDS vs Online issue.

It's not all about price. If nothing else, these threads show that divers are more than willing to support a LDS that gives fair prices, and good service. That is just not too much to ask for. The diver who simply is looking for the cheapest prices all the time is not a "customer" so much as they are a leech. They do not help the LDS or anyone else for that matter. If LDS's want to remain viable, they must find a niche, provide some value to the customer, and avoid getting into pricing wars with each other, and the internet stores. It's not about the price, it's about the value.

Perrone
I didn't think so before, but we're on the same page.

The problem I see with this whole thread is it's perpetuating the same ole "us versus them" thing. You have many on this board that have an "all dive shops are evil" mentality and do all their purchases from Larry or whatever internet site they want. They enjoy inciting those that still do business "the old fashioned way" by bashing them. What good is that?
OTOH, those that do business the old fashioned way are no better. They think "all that buy online are evil". They also like to bash those who don't do business with an LDS. The bottomline is there are some unscrupulous people running some LDSs, just as some run gas stations ( and charge $3.00/gallon), run retail stores ( and charge $ 600 for a pair of "designer" jeans) and many other types of businesses. Just because you had a bad experience with one LDS doesn't mean they all are bad and you should do your business online. When people use that mentality in other ways, they are considered racist, sexist or bigoted, yet here on Scubaboard, that type of mentality is tolerated when discussing this topic. I don't understand it. If you don't like your LDS because he's greedy of whatever, find another, but don't ball all LDSs into one and call them evil, because they aren't.
I am one of those part timers that work at an LDS that you mentioned in your post. I feel privledged that I work at a place that has a good reputation. Our prices are competitive with those I see on the 'net. It also has a social aspect to it, and we have lots of people just come in to talk diving. It's one of the things that attracted me to it when I moved here. With the job, I get to see what happens behind the scenes, and see what things cost, and where all the profits go. It really is surprising and there are a lot of hidden costs that I had no idea existed. Things that I thought were money makers ( classes, airfills)were instead loss leaders.
The bottomline is the industry is changing, in some ways for the good, in others for the worse. It's only a matter of time before the dive equipment manufacturers realize they have to allow online sales, and drop the ban they now have. The way things are now is not a level playing field. Once they level it, prices will drop which will make a lot of people happy. Small shops in rural areas won't be able to sustain themselves with their small profit margin and close up. Those of us that want to dive in those areas will have to travel with enough tanks to last the entire trips, as airfills will no longer be available. Owning or renting and paying for the extra gas to carry those tanks will cost us more than it used to when we could rent at that local shop. Either way, if we want to play, we get to pay. Pick your poison.
I think it's funny that people are always looking to change things, thinking it's for the better. But, ask someone that's been around awhile, and they talk about "the good ole' days".
In closing, to those on both sides of the issue, can we just keep it civil and get along. The bashing is childish and gets old.
Just my 2psi,
C-Dawg

 

[crlavoie]

Interesting replies in some of the posts - where to begin:

Automobiles - ok genius, I was the general manager of a Porsche Audi store: Your statement about surviving on 8% margins, why can't the LDS. Well let's compare apples to apples - first of all the car manufacturers bear a large portion of the "flooring cost" for cars i.e. the dealer doesn't have to pay much to keep it in inventory for the first 30-45 days. I highly doubt the local LDS has such generous credit terms. Secondly the manufacturers pay the dealers a "holdback" allowance that can be greater than 5% of the invoice cost. Thirdly, the 8% margin on a $30,000 purchase sure is alot more money in their pocket than an 8% margin on a $200 regulator. Finally, the largest portion of a dealer's profit comes from service and warranty repair. At many dealerships, this is the only profit they make. Kinda hard for the LDS to scratch out a living on service and warranty repair.

What's next - oh yeah, the adapt to the new market or die crowd. Hmmmm...1st point - the ones who are doing it are the ones making the money - everyone should do it. Ok geniuses, let's live in your fantasy world and say that every LDS on the planet a. had the money to build an internet retail site, sales and customer support center and b. had the money to inventory all of the items that would be required to provide adequate product selection and delivery times (warehousing and inventory carrying costs), Your theory is that they would all prosper. Last time I looked the internet has lost the vast majority of e-tailers from the dot-com period, and the vast majority of purchasing is from the mega e-tailers or the portals that control who is on their sites (pricegrabber etc.). We could all hope to buy "manufacturer direct"? Maybe they'll give you a free trial period (you pay for the return shipping)since you can't actually see-touch-feel the product in person, and maybe they'll answer the phone right away when you call with questions/complaints - uh-oh I forgot I was calling the service center in Pakistan, and they can't return calls, so I guess I'll have to wait on hold forever. So I guess that this portion of the "new market" fantasy is a little flawed.

Let's examine the next portion of your fantasy world - one of your professors posted that market forces would prevail - the LDS that doesn't adapt will die, and the remaining LDS will be able to charge more for services, therefore increase profit margins, and survive. So, if I understand your logic, the same guy who will buy a mask on-line to save 15%, will pay me 100% more than I used to charge just because the competition has gone out of business. Gosh Wally, I haven't seen that trick ever work in the real world.

Yet another part of this "new economics" fantasy: They can lower prices on products and make it up by charging more for technical training and services. OK, let's start charging $1000 for OW certification and give away the equipment. Wow, there will be so many new divers signing up, I bet there will be a shortage on registration forms around the world. Oh, I forgot you're already certified, so who cares? How about the same $1000 for your Advanced/Rescue/DM etc training?
Oh- you want to charge me $100 for a regulator overhaul? Maybe you'll also spring for that $250 per person local dive boat that the LDS had to charter? (wow Wally, when the LDS doesn't sell all the spots, they still have to pay the skipper for the full charter fee - but that's not a risk/reward profit motive that we should have to pay for, is it?)

Oh, let's not forget the grand-daddy of them all - GM/FORD getting their butts kicked. Last time I looked, you couldn't buy your new car direct from the factory. The domestics' problems are deep, but failing to sell direct on the internet is not one of them. Oh, by the way Mr. Rocket scientist, in a service-heavy business model i.e. local service centers are REQUIRED, you can't jsut be a virtual retailer. How would you like to have to ship that car back to Tokyo for that warranty work?

All this boils down to the fact that without numerous LDS's, diving is a dying sport. No one is going to be around to fill tanks, answer the questions of beginners or interested parties, provide training and certification (back to one of the other genius' comments that training will be provided on a "ad-hoc" market demand basis - I guess Guido is going to see all the people who are lined up for OW certification based on internet exposure, buy a bunch of wetsuits, BC's, regulators, masks, snorkles, fins, a compressor, tanks, weights ad nauseum, stack them up in his garage, and start training on the weekend - NOT GOING TO HAPPEN) (or maybe, the "new new economic model" is that newbies, before ever diving, will buy all their own equipment from the e-tailers?). Do you really think someone is going to buy a compressor to fill tanks and make a living - based on your demand side economics of course ? And how active will most of our diving be, when you have to drive 250 miles or more to the nearest "I survived by being a Mega LDS e-tailer"? And how many diving boat operators are giong to stay in business by internet marketing? Too many holes in all of the naysayers' arguments.

Finally, for the incredible Mr. Limpett who questioned my economic background and called me a bleeding heart liberal. I happen to be a fairly conservative Republican that received a nomination to West Point, have been a manager of union trucking terminals, specialized in turn-around management during the early to mid nineties (can you say "real world" economics), Founded a fiber-optics technology company in 1998 with the Sr. VP of Technology and Engineering from Qwest Communications, and the Head of Agilent's wireless division, have two pending patents, and currently own a real estate and development company specializing in retail shopping centers.

As for my diving equipment:

Dive-rite Transpac with rec-wing (made in usa)
Steel tank - made in usa
Atomic B2 and SS1 - made in usa
Apollo BC/XT Pro
Old style Dacor mask - made in italy
Pinnacle Polar wetsuit
Mares titanium nemo - made in italy
California Diving Company Dive Box - made in USA

If at all possible, I will buy USA, and will always try to avoid buying "made in China". Why, maybe because my 25+ years of "real world" economics experience has taught me that America cannot thrive in the long term without a strong manufacturing sector.

Those of you who think that the USA will thrive and be prosperous by being a financial services, consumption based economy with offshore manufacturing, customer service, and r&d, just keep spending that home equity line. In the next 20 years, there will not be a buyer for your house that will pay you what you owe.

Hey FastCat, I don't get it. What's with all of the inflamatory name calling? How is this advancing your position? Don't blame it on the responses. It's how you started the thread.

Now, I'm guessing that you are a bright guy (only because you told us so yourself)but your tone is really unbecoming. Chill out a bit and your point will come across.

 

[daniel f aleman]

Yep. Nothing more maddening than going down to my LDS and seeing 500% mark-ups on those OMS, Halcyon, and DiveRite BP/W systems. Pulease, $599 for a backplate, strap, some buckles and nylon wing that cost, what, $95 to manufacture? Obscene.


:10:

 

[xiSkiGuy]

Perrone
I didn't think so before, but we're on the same page.

The problem I see with this whole thread is it's perpetuating the same ole "us versus them" thing. You have many on this board that have an "all dive shops are evil" mentality and do all their purchases from Larry or whatever internet site they want. They enjoy inciting those that still do business "the old fashioned way" by bashing them. What good is that?
OTOH, those that do business the old fashioned way are no better. They think "all that buy online are evil". They also like to bash those who don't do business with an LDS. The bottomline is there are some unscrupulous people running some LDSs, just as some run gas stations ( and charge $3.00/gallon), run retail stores ( and charge $ 600 for a pair of "designer" jeans) and many other types of businesses. Just because you had a bad experience with one LDS doesn't mean they all are bad and you should do your business online. When people use that mentality in other ways, they are considered racist, sexist or bigoted, yet here on Scubaboard, that type of mentality is tolerated when discussing this topic. I don't understand it. If you don't like your LDS because he's greedy of whatever, find another, but don't ball all LDSs into one and call them evil, because they aren't.
I am one of those part timers that work at an LDS that you mentioned in your post. I feel privledged that I work at a place that has a good reputation. Our prices are competitive with those I see on the 'net. It also has a social aspect to it, and we have lots of people just come in to talk diving. It's one of the things that attracted me to it when I moved here. With the job, I get to see what happens behind the scenes, and see what things cost, and where all the profits go. It really is surprising and there are a lot of hidden costs that I had no idea existed. Things that I thought were money makers ( classes, airfills)were instead loss leaders.
The bottomline is the industry is changing, in some ways for the good, in others for the worse. It's only a matter of time before the dive equipment manufacturers realize they have to allow online sales, and drop the ban they now have. The way things are now is not a level playing field. Once they level it, prices will drop which will make a lot of people happy. Small shops in rural areas won't be able to sustain themselves with their small profit margin and close up. Those of us that want to dive in those areas will have to travel with enough tanks to last the entire trips, as airfills will no longer be available. Owning or renting and paying for the extra gas to carry those tanks will cost us more than it used to when we could rent at that local shop. Either way, if we want to play, we get to pay. Pick your poison.
I think it's funny that people are always looking to change things, thinking it's for the better. But, ask someone that's been around awhile, and they talk about "the good ole' days".
In closing, to those on both sides of the issue, can we just keep it civil and get along. The bashing is childish and gets old.
Just my 2psi,
C-Dawg

Ditto. Well put.

 

[WaterDawg]

I've never been to a dive destination and had trouble finding someone nearby to fill tanks. Admittedly, I haven't done a lot of diving, but STILL.

Until Cave Adventurers opened up in Marianna people had to bring all their as w/ them for the weekend or drive to Dothan. Thats one example thats only 1hr away from here.

And its not just about fills but training and setting up dives and such which help people meet other dive buddys. The forums do a good job of the that but not everyone is online yet. I must admit some advice I hear on SB is BS other is good but behind the keyboard anyone can be an expert.

Yep. Nothing more maddening than going down to my LDS and seeing 500% mark-ups on those OMS, Halcyon, and DiveRite BP/W systems. Pulease, $599 for a backplate, strap, some buckles and nylon wing that cost, what, $95 to manufacture? Obscene.


:10:

Well the LDS isnt the ones who mark it up "500%" as you say Hey everyone is given the opportunity to make their own gear.

 

[JonAustin]

Oh, let's not forget the grand-daddy of them all - GM/FORD getting their butts kicked. Last time I looked, you couldn't buy your new car direct from the factory. The domestics' problems are deep, but failing to sell direct on the internet is not one of them. Oh, by the way Mr. Rocket scientist, in a service-heavy business model i.e. local service centers are REQUIRED, you can't jsut be a virtual retailer. How would you like to have to ship that car back to Tokyo for that warranty work?

See, now I thought American cars were losing out because a) they have a relatively poor product, and b) they have high costs of production. Do you not see the parallels for many LDSs?

 

[JonAustin]

Until Cave Adventurers opened up in Marianna people had to bring all their as w/ them for the weekend or drive to Dothan. Thats one example thats only 1hr away from here.

Precisely my point. A niche was filled! If there is a demand, it will be satisfied by the free market.