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

[Web Monkey]

So manufacturers should not sell to businesses like LP or Scuba.com who sell below manufacturer pricing guidelines in order to keep pricing level?

That pretty much covers it.

Those manufacturers that let the dealers cut prices have started down the slippery-slope of each big dealer demanding a better price so they can get business away from the other big dealers.

Every time a manufacturer gives a dealer a better price, they're just setting themselves up for another round of price cuts when the other big dealers demand the same.

It's not possible to stop, it's just sad to watch.

Terry

 

[jeraldjcook]

I have always wondered why manufactures sell to LP and others who violate their pricing policy. I assume it is because the need the additional sales in order to keep the production volume up at a more efficient level. If this is true, if they stop selling to LP and others like them, prices could go up even further. Not sure this would help the problem.

 

[Web Monkey]

I have always wondered why manufactures sell to LP and others who violate their pricing policy. I assume it is because the need the additional sales in order to keep the production volume up at a more efficient level. If this is true, if they stop selling to LP and others like them, prices could go up even further. Not sure this would help the problem.

Selling to LP is great for the manufacturers because they get to dump products that they'll never see again (no warranty). This brings up their volume, lowers production costs, reduces liabilities and takes sales away from their competitors.

The problem starts when you get several LP-type operations, and they're all demanding better pricing than the others, and then start wanting warranty coverage.

Terry

 

[The Chairman]

I do a agree with you that SCUBA would benefit from a better marketing approach to attract non-divers to this great sport, but cutting the price ain't gonna do it.

Take a look at www.GanderMountain.com. They have just opened a store here in Lake Mary and they are on to this. Traditionally, they are a hunting and fishing store with camping thrown in. Now they have 6,000 square feet LOADED with gear, tanks, paraphenalia and spear guns. I do belive that THEY will convert more people who had never considered diving than a traditional Dive Store. How did they do it? They PARTNERED with Divers Direct to make it happen. While I know some of the particulars about their contract, I do not feel it appropriate for me to divulge any of that here.

 

[jeraldjcook]

Why don't the manufacturers have two different pricing schemes: full price w/ full warranty and discounted price for no warranty. Give everyone, including LDSs, the option of selling within either, or both, guidelines. The consumer can determine what the warranty is worth and if they want to pay for it. Why force people to pay extra for the warranty if you are allowing others to sell without it.

 

[Hollywoodivers]

In nature.....the Rules are ...adapt or die....If you adapt quick enough you live well. The price fixers in this industry who don't want to adapt are claiming their products are only sold online by grey market retailers and no warranty will be given. They have restricted free trade of those who want to adapt like Hollywoodivers does. Or the others...Larry from ST in Houston stood up to them...But I am sure it cost him as well. Just because PADI does this does not mean the others will. the playing field must be level.
If the LDS must provide all the warranty service and training and airfills then the LDS should be allowed to compete in TODAYS MARKET. Why do the price fixing manufacturers allow one company to unfairly sell at 'GREY MARKET PRICES" I think the grey market guys have had some kind of unfair advantage over all the LDS guys for about 15years now. Remember mail order ? They had a catalog....LDS did not....Grey market guys had name brands during the mail order period when mail order was not allowed....hmmmm curious...very curious...who is in bed with who....Now I am sure I must keep my mouth shut since I sell the merchandise in question.....ONLY IN STORE SALES THOUGH GUYS...Except for the manufacturers who allow free trade....thanks to those folks.These manufacturers let me sell online through our very expensive website..Tusa, Mares, Sherwood, Halcyon, Ikelite, and especially DIVE RITE ...who calls a spade a spade every time....thats my rant...I do one evry six months and then I shut up again...it's a pattern for me !
If you don't sell online you die...Todays environment dictates it....Why did it take PADI so long is my question....? Yeeeeeeeeeeeeeeeeeeeeeeeeehaw....

 

[mike_s]

Why don't the manufacturers have two different pricing schemes: full price w/ full warranty and discounted price for no warranty. Give everyone, including LDSs, the option of selling within either, or both, guidelines. The consumer can determine what the warranty is worth and if they want to pay for it. Why force people to pay extra for the warranty if you are allowing others to sell without it.

Manufacturers already have two different pricing schemes.

One is your local dive shop, typically list price and full warranty.

The other is Leisure Pro or some other high-volume mover that the manufacturers sell direct to and don't admit that they do.

 

[jeffrey-c]

When I consider the many posts and threads on this topic, it often seems that the thoughts compress to either a retail pricing discussion focused on manufacturers’ restrictions or a discussion on air fill availability. But I don’t think that it addresses the fundamental changes and issues at stake in this industry. The grocery store analogy brought up earlier in this thread is very applicable as it shows the immature state of the dive industry and the approach taken.

During the internet bubble, there were a number of very ambitious internet-based grocery operations started, such as WebVan. While they offered much convenience, a fundamental flaw is that they were established as a web business that happened to sell groceries. This was a major disconnect in early web businesses: the internet is NOT a business model – it is a communications mechanism. A web business that sells groceries cannot succeed due to limitations in establishing their distribution channel. However, a grocery business with an established distribution channel that uses the web to expand its scope and reach can be a successful business model, and we are now starting to see some major grocery chains recognize this opportunity and exploit web-based sales and advertising.

It is possible that the state of the scuba business is in a similar state. It is a largely disassociated group of retailers that are trying to balance localized service and retail margins. There are no large retailers with established national or global presence, driving scale and innovation. It feels that most dive retailers are divers first and are trying to learn business skills second. When was the last time that you really saw effective marketing efforts by a local dive shop? Advertising to entice new divers? Using the press effectively to drive traffic to their shop? (I am certain that there are many that are effective business people, so please don’t take insult at my comments – I’m focusing on the aggregated industry, and you’re more the exception).

Many dive consumers are currently crying out for better service and lower prices, and will not be satisfied with one out of two. Hence, I believe that at the retail level the dive industry is not sustainable as currently managed and will see fundamental changes which will ultimately result in better service, lower pricing, increased quality control, and greater innovation. There will be many LDS go out of business, consolidation by other LDS, and the emergence of a small number of chain-type operations. These operations will have greater scale for driving better pricing from manufacturers, and will also evolve to have a stronger influence in the development of products. And they’ll bring more creative thought to how to use all the available communications mechanisms at their disposal, internet included.

These same issues have been faced in a number of other industries such as consumer electronics, bicycles, etc., and those businesses have followed such a migration. It seems to be inevitable for the dive industry. And those that jump on this early will have the best chance of success.

 

[cerich]

Selling to LP is great for the manufacturers because they get to dump products that they'll never see again (no warranty). This brings up their volume, lowers production costsreduces liabilities and takes sales away from their competitors.

The problem starts when you get several LP-type operations, and they're all demanding better pricing than the others, and then start wanting warranty coverage.

Terry

Let stop cutting bait and fish shall we?

First off all there is really only one grey market force in the US that is even worth mentioning, LP.

A couple from overseas have had some limited in-roads to the US market (diveinn) but nothing that great.

Traditionally the LDS did everything at cost or loss to sell gear as their entire profit center. That isn't going to work anymore.

Certain forces in the industry when the internet sale of goods did everything they could to allay the LDS fears by coming up with "policies" that would "protect" the dealers from competition. Dealers, being unfamiliar and apprehensive of the internet and its effect on margins embraced the anti-internet rhetoric. This soon turned to many LDS's treating costumers badly whenever the internet came up.

During this same period consumers were turning more and more to the internet for information prior to any purchase of significance and also shopping more and more there, a trend which continues. We have also been conditioned by the Big Box retailers that we shop at everyday to the "lowest price" and "price match" psychology.

So now an industry has "disconnected" from their costumers and retailers are being told if they continue to "hold the line" profitability will remain/return.

There is the additional issue of the grey market, I and others in the industry that post here have talked about that before, suffice it to say the actions of a few vendors have made things additionally difficult for the LDS, these same vendors also were among the biggest proponents of the "hold the line" approach while enjoying great success in sales of product that ended sold in the grey market at prices that the "Authorized Dealer" wasn't permitted to match.

Guess what? When you have one profit center and you forget the consumer you are dead in business.

 

[Sam Miller III]

Very interesting!

Marketing...

Intitially diving was confined to SoCal a few US sunshine states and population centers. So cal had the majority of the manufactures, the only organized instruction, the only dive magazine (Skin Diver) and the majority of the US Diving population.

It was US Divers (Aqua Lung) who opened up diving in the hinterlands in the Spring 1956 Sears catalog (see Page 961), Wards followed in the 1957 Spring and Summer Catalog (Healthways) and finally Penny's in 1974 (Voit page 579) Equipment was marketed sans training other than a small brochure; It was suggested that Tanks could be filled at the local fire station or medical supply company.

Ten years later John Culley, the new sales Manager of US Divers placed US Divers equipment in the then new discount stores that were sprouting up all over the US, Gemco etc...(like Cosco & Walmart.) The LDS rebelled refused to assemble, fill, repair or in any way service US Divers equipment. John was dismissed from USD and the US divers equipment was removed from discount stores..

the late Gus Della Valle & Dick Bonin established SCUBA PRO about the same time frame. They were professionals and Scuba Pro was "professional equipment" which gave rise to the "professional store" and a fixed price with no discounting or mail order sales. Scuba Pro had a un offical training branch, the NASDS program and stores headed by the late John Gaffney

A few years later the late John Cronin became the top gun in US Divers. John was not a diver like the others, Della Valle, Bonin, Recigno ( sea tec) Jehle (Voit) etc but rather a master marketer with a capital M. He Bob Chow, and Ralph Erickerson had created PADI--John used it as a marketing tool for US Divers products --US Divers and PADI were one and the same.

Remember the "Aqua Lung stores?"

John retired from US Divers and devoted his remaining years to developing PADI and the dive training orgaization that it is today. (Few know that John tried to promote the same thing for horse training--the horse people told him to stick his POHT in his ear)

PADI is marketing --it was founded on and is based on marketing and will only survive on marketing. Not equipment, but progressive dive training from neophite to supper dupper pooper instructor/trainer/God of underwater, and concurrently market its attendant items for each step, the certifications manuals, books, recordings, clothes, insurance and patches, especially the patches, etc etc.

It is only a natural progression that PADI expand it horizons and enter in to an area that would create the need for more training therefore generate even greater income world wide. Only time will tell of they are correct or become another John Culley of the diving world