Major Industry Change re: Online Scuba Sales....

[PhilEllis]

As you all know, I have consistently written on this board, and other places, about my views on the future of the retail dive industry and the progression from the "brick and mortar only" retail model to a combination model that involves onlines sales and maintenance of a brick and mortar store for local sales, training, and service. This change has been considerably slowed by the dogged resistance of several large players in the scuba industry.......Aqua Lung USA, Scubapro, Dive Training Magazine, PADI, and several others that have always insisted that the "local store", "face to face sales" business model is the only one that will work for our industry. This business model allows for the isolation of the consumer to a single store and the maintenance of high prices, which result in a "high margin of profit on low volume". They have consistently rejected internet sales as a "bad thing" for the industy, as the realm of "unauthorized distributors" and as purely a "grey market" for the distribution of scuba equipment. The bottom line from this group has always seemed to be simple..........the sale of scuba equipment on the internet is a bad thing.

This morning, I opened my email and found another frequent mailing from the Dive News Wire ( www.divenewswire.com ), an industry public relations and press release operation. They released the following press release from PADI Worldwide....

Embracing the Internet: PADI’s Position on eCommerce

DEMA Booth #1319
PADI to present pro-active approach to new technology through a "Click and Mortar" strategy.

Rancho Santa Margarita, CA – 12 October 2006 - (DNW) PADI Worldwide is initiating a proactive role in supporting and advocating the internet for selling training, providing information and generating sales for PADI Dive Centers and Resorts. To stabilize and increase dive business, and compete effectively with other recreations, PADI Worldwide encourages PADI Members to embrace the internet by developing effective websites, selling dive gear over the web, using email marketing, and using the internet as an extension of their existing business model.

Based on current trends, US online retail sales are forecast to grow to $105 billion in 2006, up 21 percent over 2005. (1) With more than one billion people worldwide surfing the internet for information, the opportunity to bring new customers into scuba diving has never been greater, and it continues to grow.

Ecommerce - doing business online - has made the internet one of the most powerful sales and marketing forces in existence. The proliferation of internet-based businesses is growing and eating into the revenue of “brick and mortar” retail stores that have difficulty competing because they lack an online presence. On the other hand, businesses that have both an internet presence and a conventional store reach the broadest customer range.

Some PADI Dive Center and Resort Members may not be prepared to adapt and integrate ecommerce to function as an extension of their retail facility. PADI will assist members through seminars, programs and other services that will help them build and grow their ecommerce business.

As part of the PADI’s commitment to assist the membership in evolving into a “click and mortar” business model, PADI is making several recommendations, referred to as internet imperatives, which include but are not limited to the following:

1. Avoid Obsolescence: Business models must capitalize on internet technology by positioning PADI Dive Centers and Resorts as the dive training facilities and fulfillment centers for internet based businesses. Retailers who have already adopted this position are experiencing substantial growth in sales and new customers.


2. Embrace the Net: The modern retailer is not likely to survive trying to pretend the internet isn’t there. Adapt and change the existing ‘brick and mortar” business model to capitalize on the internet technology by positioning the retail outlet as the dive training facility and fulfillment center for an internet based business. Assistance in developing a website with online shopping cart and transaction capabilities is readily available.

3. Develop a “Click and Mortar” Business Model: Maintain a competitive edge by intertwining online offerings with the touch and feel of a store, keeping technology personal. This gives a retailer a significant advantage amid the perception that ecommerce is cold, impersonal and lacks service. The retail facility must position itself as a hub that anchors the online business, providing real life experience complete with friendly, informative, knowledgeable staff committed to delivering quality customer service face-to-face, by phone and over the internet.

PADI plans to further outline its’ commitment to the online process and the plan to get more divers through dive retailer’s doors by helping extend their business reach at the upcoming DEMA Show 2006. PADI Members are invited to attend a special seminar entitled The Future of Diving which will be presented by PADI Worldwide President and Chief Operating Officer, Drew Richardson, on Friday, 10 November 2006 at 8:30 A.M. and again at 1:30 P.M. in meeting room S1 at the Orange County Convention Center. New programs in development will assist retailers in entering the world of internet sales of equipment, experience and education and help those who are already there to stay on the cutting edge of this evolving medium.

Harnessing the power of the internet, by joining the digital age of retail sales, will help traditional dive businesses prosper. PADI will offer its support to all dive retailers and resorts committed to business success by integrating this powerful tool into their business model.

PADI, the Professional Association of Diving Instructors, is the world's largest recreational diving organization, with more than 5300 dive centers and resorts and 130,000 dive professionals worldwide. For 40 years, PADI has set the standard for quality, fun and excellence in diver education. More divers participate in PADI programs than any other; making a PADI certification the most recognized and respected in the world.

This is the first recognition I have seen, from one of the major internet "detractors", that recognizes that the internet is now possibly the best answer to the problem facing the local dive store. It appears that PADI is actually advising that the local dive store could/should become the "training, service and fullfillment center" for a combined business model that depends upon the internet for equipment sales and the "brick and mortar" store for the training, service, and internet fullfillment operations.

Is this possibly the first "crack" in the hard-line resistance to on-line sales from that small industry group of large and vocal detractors of internet sales? Is this the beginning of a mass business model change for the local scuba store? Will this change in corporate position from PADI result in change in those companies that are the sole purveyors of the "hold the high price at any cost" mentality? No matter what we individually think of PADI, we must admit that they are a major moving force in our industry. Given PADI's considerable influence in the scuba industry and it's amazing influence in the operations of the local scuba store, I personally think this is quite an amazing press release. It appears to be the first public pronouncement by the "hold-outs" that the internet is the future for local scuba stores. PADI has an amazing track record in it's ability to influence how the local store operates. Will their influence change your local scuba store?

Comments?

Phil Ellis

 

[fire_diver]

I certainly hope that this is the first step down the right road. The problem however, is the manufacturers who demand that retailers "tow the line" or lose their ability to order products.

I guess we will just have to wait and see

FD

 

[PhilEllis]

I certainly hope that this is the first step down the right road. The problem however, is the manufacturers who demand that retailers "tow the line" or lose their ability to order products.

I guess we will just have to wait and see

FD

I fully agree with you, but the suggestive influence PADI has over the entire industry may result in a change in the postion of those manufacturers.

Phil Ellis

 

[Divin'Papaw]

Wow! Thanks for sharing Phil. I tend to agree with your assessment. Given PADI's immense influence with the LDS, I think this change in position very well may cause significant change over time. We'll know that it's making an impact when we finally see Scubapro or Aqua Lung change their position on eCommerce.

 

[jeraldjcook]

I certainly hope that this is the first step down the right road. The problem however, is the manufacturers who demand that retailers "tow the line" or lose their ability to order products.
FD

I've never understood this mentality. It's the manufacturers who are shooting themselves in the foot. If enough retailers sell online, what are the manufacturers going to do about it? Not allow and LDS to sell their product. Leisurepro, Scuba.com, Scubatoys (although I believe I remember hearing Larry's situation is a bit different) already sell online and the manufacturers must still be supplying products to them. It's about time the diving industry joined the rest of the world and embrace the internet.

 

[Stormbringer]

Phil, thanks for the info. I agree it looks like the first sign of a break through with the old guard holdouts against online sales models for the LDS. I can't believe that these idiotic practices remain in place in the 21st Century and that the LDS can't re-evaluate and modify their own business model to meet the newer and changing demands of the marketplace within thier own right. Hopefully things will begin to change and that the LDS will be given the support it needs from the industry in order to compete effectiviely and survive in the end.

 

[Web Monkey]

As beginning of a mass business model change for the local scuba store? Will this change in corporate position from PADI result in change in those companies that are the sole purveyors of the "hold the high price at any cost" mentality? No matter what we individually think of PADI, we must admit that they are a major moving force in our industry. Given PADI's considerable influence in the scuba industry and

I'm not surprised at all. Their position has no potential to cause them any harm, since they don't sell equipment.

I suspect SCUBA shops will gradually move towards charging reasonable (non-subsidised) prices for training, service and air and only sell equipment as a favor to their training/service/air customers.

Most equipment will ultimately end up coming from a few large internet vendors, since the small vendors can't compete either in person or online.

This will probably mean that instead of a $500 OW class and $2000 in equipment, it will be a $1000 OW class and $1500 in equipment. The people who will really get hurt will be the DSs that don't do a lot of training.

Air fills and service will probably go up quite a bit, since the cost will no longer be subsidised by equipment sales.

Ultimately, it's going to be terrible for the manufacturers, since a few large vendors or a buying group can dictate terms that the manufacturers can't refuse, but also can't live with. IE. If they sell at the price demanded, they lose money and go out of business in a few years. If they don't sell, they lose almost all their sales and go out of business now.

I'm not just pulling this out of my *****. I've been in retail and manufacturing for a long time, and have seen this cycle repeat several times in different product areas.

Terry

PS. "*****" above was originally an "a" followed by two asterisks and was changed by vBulletin.

 

[Ber Rabbit]

Wow! It's nice to see someone finally picked up one of the clues that have been falling all around them. I would not be surprised if PADI embracing the internet helped change the minds of manufacturers. Shops that try on the new ecommerce business model might look for other brands of gear to sell if their manufacturer doesn't support the new business model. Playing devil's advocate here, what would happen if every PADI shop decided to give up their Aqua Lung dealership in favor of a manufactuer that is more internet sales friendly. That would leave Aqua Lung with a very small dealer population and since those dealers couldn't sell over the internet Aqua Lung's sales would plummet. They aren't stupid, eventually they will rearrange whatever needs to be taken care of to fit into PADI's new business profile.

This is a huge stride in the right direction for the dive industry.
Ber :lilbunny:

 

[RJTY]

It is such a shame the world is coming to this money for nothing and cheaper is better attitude. Do you buy your groceries on line? Lets all start doing that and push the local grocery stores out too. What started out as a good information source has turned into a beast for get rich people for nothing that are not willing to put in a little old fashon hard work and the cheap consumers have fallen for the bait.

 

[in_cavediver]

It is such a shame the world is coming to this money for nothing and cheaper is better attitude. Do you buy your groceries on line? Lets all start doing that and push the local grocery stores out too. What started out as a good information source has turned into a beast for get rich people for nothing that are not willing to put in a little old fashon hard work and the cheap consumers have fallen for the bait.

First, what PADI was doing is simply acknowleding what is already happening. I personally think its a major move in the right direction.

Now, for the differences between groceries and scuba: 1) one is perishable with a short shelf life that everyone needs, the other is purely a luxury item and has no shelf life (OK, very long compared to produce) 2) Groceries are item only, Scuba is a service and item industry. 3) One has a sustainable model, the other uses loss-leaders with hopes of makeup on others. 4) one has evolved to compete with the sprawl-marts the other is just now learning they have to as well

As for the cheap consumers, well that's simply market forces. Its the same story for all of the wal-mart competitors. Adapt, change or die. Like it or not, its capitalism and the way things work.

The LDS as it was in the 80's and 90's must change or it will die. Hopefully, a new, sustainable model will emerge. Any idea's?