I am reading this discussion and much of it is amazing. The side discussions about what might, or would, or could happen is great reading. But, we should instead concentrate of the possible GOOD outcome of a mass business model change in the scuba industry.
Our wonderful sport, scuba diving, has managed to attract FAR LESS THAN 1% of the adult population as participants. Viewing the scuba market as a FIXED and LIMITED market makes no sense when you consider this small population penetration. Try a little experiement...............
At your next dinner party or social gathering, start a discussion about scuba diving with people that have never had the pleasure to participate. You will get responses like..."god, I have always wanted to try that", "that sounds like so much fun", "we went snorkeling two years ago on our Bahamas cruise....I would love to try diving".
There must be a simple reason why so many people would love to try scuba diving, but so few actually do it. Here is my idea, based on my learnings about economics and markets, and my understanding of the growing value of time to the average person.
ANYONE who has taken Economics 101 will remember a simple adage...........as the cost of participation goes down, participation will go up. Put in purely economic terms, at $100 per widget, sales will be x.....cut the price by 50% and sales will increase MUCH higher than 50%. I think the extremely high entry cost of our sport keeps millions and millions of people out of scuba diving. Since we changed our business model and lowered the price of everything in our store, we have seen gigantic increases in the number of people coming in to learn to scuba dive. We offer a $99 open water tuition certificate at Christmas every year. It can be used anytime, for any scheduled class in the next year. We nearly pre-sale EVERY AVAILABLE SPOT in our classes for the following year. We benefit greatly from the increased equipment sales that come naturally with more new divers. At the standard tutition of $200, we could not do that. If you lower the cost of participation, sales will increase. We have also lowered the price of all of the necessary scuba equipment. Prior to our business model change, the entry cost for personal equipment (mask, fins, boot, snorkel, and weights) was $400 to $500. Now it averages around $250. More people will take lessions because the lower prices allows more people to participate. Simple economics.
We also charge a much too high price in terms of our customers time. Time is valuable to them. Most people (not those of us on these boards......we are mostly die hard divers) simply want to learn the skills necessary to dive safely, with a dive master, on the annual trip to Cancun. If the training cost in terms of time is several evenings a week for several weeks, people with think it "too expensive". If it can be learned in a weekend, they are more willing to give it a try, because the "cost" in terms of time is lower. (now, let's not let this degenerate into how much time you or I think should be devoted to good training. That doesn't matter. What matters is what the customer thinks is appropriate). As the cost goes down (this time cost is time), participation goes up.
Our industry has two MAJOR economic problems.......the equipment is too expensive and the time it takes to learn to dive is too long. Very simple. (these aren't our only problems, just two big ones). Simple, elementary economics education will prescribe what will happen if you correct these two problems. Sales (participation) will go up and the market will expand. ANYTHING that corrects these two problems will result in more participation. More participation will result in more sales. More sales will result in lower prices again. And the cycle continues.
Now, we have one more major problem. Our retail stores (if this doesn't apply to your store, just ignore the paragraph) look like junk piles. They are full of last years merchandise, poorly displayed, poorly maintained, and the whole operation runs more like a yard sale than a retail store. I know this sounds strong, but take a look around. Compare it to the cell phone store, or the local department store, or (closer to home) the local ski pro shop. The new customers that finally get up the nerve to come in are mostly shocked to death. They weren't expecting this. We also treat the scuba retail store like a clubhouse. We have made our sport too much of an "insiders game". While this might be great for those of us who love hanging around the scuba store for a chat, it may not look so good to the new customer entering the store for the first time.
So, what does the internet and PADI's "new" stance have to do with this? It's really simple. To run an internet store and a brick and mortar operation, you must get fairly organized. This alone will do a lot to "spiff" up the image of the local scuba store. Prices will surely go down when you start an internet store. After all, one of the cornerstones of the business model is lower prices and larger volume. Improving the image of the local scuba store, lowering prices and streamlining the training process will give us an opportunity to expand the market. Remember, ALMOST ALL of the population has not yet tried scuba diving! There is a lot of room for expansion of this market.
Concentrate on more than one thing at a time. Don't only view the internet as something that lowers your markup. You must also view it as something the expands your market and levels your cash flow (a MAJOR problem for the average scuba store). IT IS POSSIBLE to do both at once. Will this save all of the local dive stores? NOT A CHANCE. But unfortunately, many of them are already dead men walking. If ever there was a herd that needed a little thinning, this certainly is one. The trick is to be ONE OF THE SURVIVORS!
Remember, this CANNOT be viewed as a fixed, finate market. There is lots of room for expansion. Anyway, just my opinion.
Phil Ellis
