LDS Bashers

[Adobo]

LDS basher basher!!!

Having lurked around the site for the past few months, I continue to be amazed at the absolute ignorance in economic principles of the LDS bashers on this site.

Let me see if I have this correct - a store owner who has retail rent, retail commercial insurance, employee wages, taxes and benefits, retail inventory carrying costs should sell his products for the lowest price available on the internet.

And you, Mr. internet only shopper, should be able to waste his employees' time and use his store to see-touch-feel the products before you order on-line. In essence he is the free showroom for the internet providers.

Now, you economic geniuses, help me with the math - if I have retail overhead, and sell at a margin that is too low to substain my overhead expenses, I guess I'll just lose money to stay open for your window shopping convenience.

Don't blame your LDS for trying -heaven forbid- "TO MAKE ENOUGH OF A PROFIT TO MAKE A DECENT LIVING". I guess it is ok for you to make a good wage/salary that allows you extra money to buy diving equipment and support your diving expenses, but it is not ok for the LDS owner or employees to be able to pay rent/food/utilities and maybe have a little bit extra to spend?

Those of you who indicate that you got "ripped off" by your LDS - Did you bother to ask if they offer a discount for buying a substantial amount of items, or an expensive item? If you didn't, then shame on you.

I know that there are some "slam em" LDS shops out there, but the vast majority that I have shopped at are owned by diving enthusiasts, who quite frankly, are sacrificing their optimum earning potential by continuing to operate a retail storefront.

Those of you on this site constantly preaching to newbies and others to abandon the LDS in favor of your "great internet buying experience" are doing a disservice to all divers. Oh, and I'm sure, because of your total disdain for the LDS, that you send your tank via UPS to your "amazing internet dive speciallist" for filling. Oh, what's that you say Mr. Genius - you fill your tanks at the LDS, geeze thanks for paying the bills.

When the LDS's are out of business, I'll make sure to come over to your house and use your $20,000 compressor. Oh, and make sure that you have a nitrox system as well. And don't expect me to pay for the maintenance, repair and eventual replacement cost. Oh, and please make sure you are a certified diving instructor and are willing to OW certify all the new divers in your area at a break even cost or even a small loss (by the way I want to see your $2,000,000 liability policy before you train me).

Next time you read about more companies closing down plants/offices to open in Mexico, India, Pakistan etc. realize that you - even in you infantile "I have to pay the cheapest amount for everything" mentality, are fueling offshoring.

And perhaps, your employer will come to you and tell you that you can either cut your wages/salary by 40% or lose your job, because "everyone has become so cheap that we can no longer make a profit".

Am I an LDS owner, no. Just someone schooled enough in economics to understand the principles behind retail economics, and smart enough to realize that WITHOUT THE LDS, DIVING IS A DYING SPORT (I'm sure that so many of our newbies were inspired to begin diving by surfing the internet, seeing a dive site, and taking their online OW certification course).

There is a vast difference between being a smart buyer, and being cheap.

 

[WaterDawg]

I found the item online from a brick and mortar store that had a web presence for $485, which was FULL MSRP. My LDS wanted $555 for the exact same item. After looking around, I discovered that the new 2006 MSRP price for that item as $555. So, my LDS was going to charge me the 2006 price even though THEY paid the 2005 price for the item from the vendor.

Actually that price went into effect 1 July 2005 and all the inventory was bought after that, the other shop had old stock that they probably DID purchase at the old price.

trust me if that was the case I'd be buying certain gear BEFORE the new year!!!

 

[friscuba]

No, you are going to have to elaborate here for me. Are you saying that the likes of Toyota, Honda, Lowes, etc., are just "putting out products"? Last I checked they were doing EVERYTHING. And I have YET to see a car manufacturer refuse to service something their company made just because the customer bought it from a non-branded dealer. Why would they throw the repair dollar out the window because they didn't get the sales dollar? Anyone stupid enough to do that SHOULD go out of business. This is my argument againt this whole SP crap. SP made the product. It sold it to a dealer or wholesaler for what it felt was a fair price. WHO CARES what that wholesaler or retail then sells it for. If they want to GIVE them away, SP has it's money already. As for not giving a warranty, you BUILT it, SOLD it for a fair price. If you won't offer a warranty, it smells like fraud in my book.

The dealer margin at GM, used to be 16% if they sold at MSRP. If a global giant like GM could make marginal products, and give dealers 16% of the pie, and have dealers not only survive but thrive, then something is GROSSLY wrong in the dive industry if retaliers cannot survive with the 50-100% profits they are currently getting.

Somebody else has probably commented on this... but....

You are comparing a 200 percent markup on a 12 buck item, or an 100 % markup on a 50-200 dollar item with a 16 % markup on a 25,000 dollar item and you can't figure out how a dive shop can struggle?

It takes a lot of sales of those little items to make as much profit as one sale of a vehicle.

Retail dive stores make at best a 50-60% margin on their overall sales. Out of that comes everything, before the owner gets paid. This is typical, or even at the low end, of all specialty retailers.

Compare margins on clothing, gift, furniture and other specialty retailers. Compare food costs at a restaurant. Go to Starbucks for your 3-4 buck coffee - the most expensive item you are purchasing is THE CUP.

Comparing the dive retailer with the Auto or Big Box home improvement industry is not a reasonable comparison.

 

[friscuba]

ALL brick and mortar shops face these same costs. So I did not factor them into my example.

Then why not compare the dive retailer with typical brick and mortar specialty retail shops. The dive industry is on the low to average end when it comes to markups.

 

[friscuba]

A couple of points here.

I have never worked niche market retail, but have owned 2 businesses in a services only industry where no true tangible goods changed hands. You think selling dive gear is hard. Try selling services, especially intellectual services.

I don't know where anyone said a 15% markup was reasonable or expected. I'd be happy to find a shop that sold for 50-75% markup consistently and had the products in stock I wanted to buy.

Your points about diving being a small, low-volume venture are well taken. But that highlights a problem. Why, if this is such a low volume business, do well meaning divers think they can order in a few thousands dollars worth of product, hang a shingle, and think they are a dive shop? In many areas, there are just too many shops. Many run by people who know nothing about running a business, and then we are expected to lament their demise. If some joker sets up a resturant, serves average food, has poor customer service, and charges more than the competition, we don't wonder why they went out of business. We wonder why they GOT into business to begin with.

I must agree with you about the whole touch-feel-buy online thing. It has to be infuriating as retailer. Whenever I buy new goods online (which is rare) I go to my LDS, tell them what I am looking for, inform them of the price online, and give them a chance to compete. If that price is "reasonable", I will buy locally. What is reasonable is up for interpretation, but I don't want to be taken and I don't want the shop guy to feel like he's been cheated either.

I find it odd that you have owned businesses which have had little to no expenses in the costs of goods sold, and then can complain about the margins a scuba retailer asks for. I seem tp be picking on your posts, but your posts seem to be the ones picking on markups. I feel the markup is well justified when compared to comparable industries.

Griping about attitudes, service and other areas where a scuba retailer may be doing a poor job is legit, but griping about margin of tangible items sold when you yourself have profited on items with little to no tangible cost to you ( I'm not chastising you for attempting to make a living off intellectual property, but you should apply the same standards to those who have to pay for the product they sell) shouldn't seems a little out there.

later,

 

[PerroneFord]

Somebody else has probably commented on this... but....

You are comparing a 200 percent markup on a 12 buck item, or an 100 % markup on a 50-200 dollar item with a 16 % markup on a 25,000 dollar item and you can't figure out how a dive shop can struggle?

It takes a lot of sales of those little items to make as much profit as one sale of a vehicle.

Retail dive stores make at best a 50-60% margin on their overall sales. Out of that comes everything, before the owner gets paid. This is typical, or even at the low end, of all specialty retailers.

Compare margins on clothing, gift, furniture and other specialty retailers. Compare food costs at a restaurant. Go to Starbucks for your 3-4 buck coffee - the most expensive item you are purchasing is THE CUP.

Comparing the dive retailer with the Auto or Big Box home improvement industry is not a reasonable comparison.

I think it's comparable in terms of income to expense. Running an auto dealer is an expensive proposition. I tried to highlight this in my example, but it appears people simply got caught up in the percentages. Oh well.

 

[PerroneFord]

I find it odd that you have owned businesses which have had little to no expenses in the costs of goods sold, and then can complain about the margins a scuba retailer asks for. I seem tp be picking on your posts, but your posts seem to be the ones picking on markups. I feel the markup is well justified when compared to comparable industries.

Griping about attitudes, service and other areas where a scuba retailer may be doing a poor job is legit, but griping about margin of tangible items sold when you yourself have profited on items with little to no tangible cost to you ( I'm not chastising you for attempting to make a living off intellectual property, but you should apply the same standards to those who have to pay for the product they sell) shouldn't seems a little out there.

later,

What say you about the $25k cost to simply set UP that business? Costs that took me nearly 5 years to recoup? Working at a personal deficit is certainly a different model, but when you make your living trying to convince people to use your services, it's not as easy. Of course, that's just my opinion.

Perhaps the 100-400% margins are realistic in boutique retail industries. I know it seems to be in women's clothes. Oh well... this has been a fascinating look into the other side of the dive counter.

 

[MikeFerrara]

Having lurked around the site for the past few months, I continue to be amazed at the absolute ignorance in economic principles of the LDS bashers on this site.

Let me see if I have this correct - a store owner who has retail rent, retail commercial insurance, employee wages, taxes and benefits, retail inventory carrying costs should sell his products for the lowest price available on the internet.

And you, Mr. internet only shopper, should be able to waste his employees' time and use his store to see-touch-feel the products before you order on-line. In essence he is the free showroom for the internet providers.

Now, you economic geniuses, help me with the math - if I have retail overhead, and sell at a margin that is too low to substain my overhead expenses, I guess I'll just lose money to stay open for your window shopping convenience.

Don't blame your LDS for trying -heaven forbid- "TO MAKE ENOUGH OF A PROFIT TO MAKE A DECENT LIVING". I guess it is ok for you to make a good wage/salary that allows you extra money to buy diving equipment and support your diving expenses, but it is not ok for the LDS owner or employees to be able to pay rent/food/utilities and maybe have a little bit extra to spend?

Those of you who indicate that you got "ripped off" by your LDS - Did you bother to ask if they offer a discount for buying a substantial amount of items, or an expensive item? If you didn't, then shame on you.

I know that there are some "slam em" LDS shops out there, but the vast majority that I have shopped at are owned by diving enthusiasts, who quite frankly, are sacrificing their optimum earning potential by continuing to operate a retail storefront.

Those of you on this site constantly preaching to newbies and others to abandon the LDS in favor of your "great internet buying experience" are doing a disservice to all divers. Oh, and I'm sure, because of your total disdain for the LDS, that you send your tank via UPS to your "amazing internet dive speciallist" for filling. Oh, what's that you say Mr. Genius - you fill your tanks at the LDS, geeze thanks for paying the bills.

When the LDS's are out of business, I'll make sure to come over to your house and use your $20,000 compressor. Oh, and make sure that you have a nitrox system as well. And don't expect me to pay for the maintenance, repair and eventual replacement cost. Oh, and please make sure you are a certified diving instructor and are willing to OW certify all the new divers in your area at a break even cost or even a small loss (by the way I want to see your $2,000,000 liability policy before you train me).

Next time you read about more companies closing down plants/offices to open in Mexico, India, Pakistan etc. realize that you - even in you infantile "I have to pay the cheapest amount for everything" mentality, are fueling offshoring.

And perhaps, your employer will come to you and tell you that you can either cut your wages/salary by 40% or lose your job, because "everyone has become so cheap that we can no longer make a profit".

Am I an LDS owner, no. Just someone schooled enough in economics to understand the principles behind retail economics, and smart enough to realize that WITHOUT THE LDS, DIVING IS A DYING SPORT (I'm sure that so many of our newbies were inspired to begin diving by surfing the internet, seeing a dive site, and taking their online OW certification course).

There is a vast difference between being a smart buyer, and being cheap.

As a matter of fact I was an LDS owner and the manufacturers and shops are living in a situation of their own making.

My one and only responsibility when I go to buy something is to get the best bang for my buck in the interest of myself, my family and the econemy in general. It really is up to the shop owners and employees to support their own families in the best way they see fir.. If I willingly pay more than I need to just to see to it for them, it falls in the catagory of charity and there are lots of other in line in front of the dive shop folks. Certainly any time a shop owner want to toos me out for wasting his time, he can, and that's one of the thousand or so judgement calls he'll have to make in the course of a day.

BTW, you can get a dandy home compressor for between 3K and 6K depending on how fancy you want to get. Nitrox and trimix is not problem and if you want it in many areas you'll have to blend it yourself.

Now you help me with some matj ok? If shops are in so much pain why do they insist on just about giving away training? Do the math. Figure out what it costs to put on a good entry level class and figure out how they do it. Hey do't bother, I'll tell you. They use equipment sales to sybsidize training and sometimes things like gas fills. When I buy a reg, I don't want to be buying a class for some one at the same time.

Then to make matters worse, as often as not, you go into a dive shop and get bombarded by BS from the mouth of non-diving idgits. You want me to pay extra for that?

It's my job to stretch my own dollars the best I can and it's a shops owner to come up with a model for his business that works.

Not to keep correcting you but what fuels offshoring is not cheap consumers. It's screwd up business models and incompetant management who can't come up with a better idea because they just don't know how and they don't listen to people who do. Of course, with some products and processes it makes all the sense in the world to take advantage of cheap labor. I may not be an economic genious but after moving three companies to Mexico, I have some experience in that too.

Oh well, next thread.

 

[friscuba]

Another scenario would be Scubatoys outlets in every state. You can go in and try the gear, fit the gear, get your air fills, talk shop, and buy minor items. For the big items you would have to log on to their website and order direct. The sales from the common website would subsidise the "LDS".

Then the website would have to increase prices to pay for the LDS. Maybe a waste of time then.

That's an interesting thought, but I'd bet it wouldn't work.

Right now, Scubatoys has traditional retail presence and an internet presence. Both have thier expenses. Once they started having the expense of 49 additional retail shops, they'd need the proportionate increase in profits in their online business just to maintain the status quo... would they get it? I'm not so sure.

 

[WarmWaterDiver]

Well, something works for Divers Supply and Divers Direct - multiple brick & mortar stores and internet presence. Divers Supply was the first good alternative to Leisurepro I found when I started diving, when mail order goods were the big deal of the time in scuba sales. The Internet existed, but scuba hadn't made the inroads it has today at that time.

I have to agree with MikeFerrara's viewpoint on charity. I work in the energy industry - how many LDS owners buy their gasoline and get their oil changed and buy their auto batteries etc. at a traditional service station versus doing these same things at Wal-Mart or Sam's Club or other big box discounters who offer these items? I might even put up a poll on that, but I doubt I could get a statistically representatve sample. One could argue full serve gasoline fills are safer as the untrained customer isn't exposed to the process. The 'full service station" still exists, but the ones that do have to compete with the rest of the market, not because they expect their customers to shun the other market avenues for their goods and services. There was a fundamental shift that went into high gear with the energy crunches of the 1970's, and it is far from temporary. The shift to 'convenience stores' from full service stations then is today again changed with the shift to 'one stop shopping' hypermarket spots (groceries/gasoline/services).

I like the fact that when I fill my vehicle's fuel tank no one asks me where I bought my battery, or engine oil, or - well, you get the idea. My freedom as a customer is well reflected.

I guess we could surmise everyone would be forced to drill for their own oil and refine it themselves if they didn't want to keep the full service station as the point of distribution 30 years ago, but I don't think that would have really gone anywhere.

Those who did not adapt to the changing market exited the market. This continues as we speak (or type).