MARP Price Fixing Update - Consumers Win!

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Something is very wrong with the industry as a whole, (unhappy shop owners, increasingly beligerent and militant customers) and it probably needs a complete rethink. Too many players in a small market? I don't know.

I think you are quite correct in your assumptions. From my experience the small LDS is heavily underfinanced because the cost of entry into the sport is very low indeed, so this immediately cuts them out of stocking 5 major brands of BCs, which would mean roughly a minimum of 20 models (probably more) in four sizes totalling 80 -100 Bcs in stock - not possible for most small independants.

So, again only the big retailers, who are well financed can do this, and because they can carry so much stock, they can negotiate price and ride "rouge" over any MAP and MARP agreements.

Its a bit like the "chicken and the egg" I guess,......... but I agree, the scuba market has already dug its grave and is presently laying in the hole, .............if something dos not change, the sand will start covering in.!

 

[offthewall1]

Wholesale pricing is the issue yet to be raised in this very popular thread.

Any legislation will not affect the wholesale price charged. The "big guys"
are buying in pallet and container loads, purchasing, in most cases, at huge discounts,
discounts not ever published.

If the MAP price is eliminated the prices will fall fast. The big will prevail. They will still
have a good margin. The smaller Retailer will, if they choose to match prices, be underbid
every time.

We do have a MAP policy. We have no MARP, no restrictions on e-commerce, we sell parts direct to divers,
our price list is clean and fair. It is simpler that way. We want all our Dealers to do well.

Your MAP pricing isn't what got you thrown out of our store... it was your random enforcement of it.

At the time I could find your product on numerous "larger" websites for below MAP... Yet I (the little guy) was the one getting the call about advertising below MAP. I argue that this is the big unseen (and now being investigated) collusion in the industry.

The big accounts, those already buying in high volume are allowed to sell below MAP without repercussion. When a smaller account such as myself does it, the big guy complains about the newcomer taking a cut of his pie. So you squash the little guys to make the big guys happy... it is afterall... the big guys buying the pallets as you suggest... not someone smaller like me. MAP stunts the growth of smaller dealers and there is no other way to look at it.

I think you've assisted in proving my point as to why MAP is also killing the industry... because MAP is not enforced equally. It is at the very essence a collusion between big accounts and the manufacturers... colluding against the smaller accounts.

I'll take my chances against the big accounts any day on a level playing field. The point is that MAP and MARP and these combined with unequal enforcement keep small business from growing and succeeding. It is the classical 1% vs. 99%. If the manufacturers truly wanted to be fair, they would do away with tiered wholesale pricing and sell to all retailers at the same price... thus allowing the smaller accounts to thrive and succeed. This in effect makes more sense for manufacturers than tiered pricing.

I would contend that a much larger number of mid-size stores all doing well... is better than a few giants with a bunch of tiny dealers struggling to stay alive amid unevenly enforceed MAP and MARP pricing with tiered pricing.

I also want to thank you for pointing out the fact that the prices the really big accounts pay isn't even published. Further evidence of collusion (hiding prices from the smaller accounts.) While I knew that already - it is nice to hear it from a manufacturer. Most small LDS's think that everyone at least pays one of the tiered prices... when in fact they do not. Even at the best pricing level, I still pay more than the big internet accounts. I wonder if myself and the rest of the LDS's might want that kind of price structure so that we could make better margins and grow our businesses.

There are so many reasons MAP, MARP and the entire tiered wholesale pricing structure is BAD BUSINESS, that I could write volumes on it. For now, I'll let you all continue to rty and sort it out. The bottom line... the cat is getting more and more out of the bag...

 

[mdb]

Your MAP pricing isn't what got you thrown out of our store... it was your random enforcement of it.

At the time I could find your product on numerous "larger" websites for below MAP... Yet I (the little guy) was the one getting the call about advertising below MAP. I argue that this is the big unseen (and now being investigated) collusion in the industry.

The big accounts, those already buying in high volume are allowed to sell below MAP without repercussion. When a smaller account such as myself does it, the big guy complains about the newcomer taking a cut of his pie. So you squash the little guys to make the big guys happy... it is afterall... the big guys buying the pallets as you suggest... not someone smaller like me. MAP stunts the growth of smaller dealers and there is no other way to look at it.

I think you've assisted in proving my point as to why MAP is also killing the industry... because MAP is not enforced equally. It is at the very essence a collusion between big accounts and the manufacturers... colluding against the smaller accounts.

I'll take my chances against the big accounts any day on a level playing field. The point is that MAP and MARP and these combined with unequal enforcement keep small business from growing and succeeding. It is the classical 1% vs. 99%.

Not true at all. Check any of our authorized dealers. We have a clean and fair price list. Some manufacturers do not.

You will never be on a level playing field. The big accounts will be buying 20-40% less, all day long.

Any of our Dealers can buy at the best price. Our published price list is THE price. We do not play any phony games.

You did not throw anyone out. We just choose not to do any business with you.

 

[offthewall1]

You did not throw anyone out. We just choose not to do any business with you.

Keep telling yourself that... you might actually convince yourself
The only point I'll make is that your strongarm tactics were rebuffed and you didn't like it. It's time to support your dealers with something other than MAP and threats.

Being told how to run my business is not support. If you want to run a retail business - run a retail business... otherwise sell us your goods and shut up.

If I want to run a snowball stand I buy ice, the flavors and go sell snowballs. The flavor company doesn't tell me how much to sell them for or advertise them for.

If I want to sell virtually anything, I can buy it wholesale, open a store and resell it without interference from big daddy.

There are a few exceptions of course... many in the scuba industry.

In all cases where MAP and MARP pricing is in effect, it is outright collusion (albiet for different reasons.) MAP is an agreement between parties not to advertise sale or discounted pricing for the product.

Well if you can't put it on sale in the paper or on your website - you can't drive customers to your store. It is true that a customer can still get a deal if they happen to walk into the store and the owner is in a good mood or maybe even has the item on sale in his store... but the chance of the customer ever walking in is greatly diminished if he/she hasn't been given a reason to go shopping

Most people grab the Sunday paper to see the advertisements - what's on sale... what coupons's are inside... we'll this doesn't happen for Scuba diving consumers because of MAP pricing.

I've done this before... and I'll do it again for you now... take this example. MAP in conjunction with MARP is KILLING scuba and robbing the consumer.

I buy a BCD from my manufacturer for $170.00. I can survive as a thriving retailer with a 40% mark-up... selling the BCD for $238.00. I'd like to advertise it for that because I know that any diver who sees it is going to think it's a great deal and come in to my store. When they come in for that - they also are likely to buy some other items as well... the trick is getting them in the door.

On the internet the item is always available online for close to this $238 price... but my MAP price is $399. shoppers see it online and buy it online because they didn't know they could get it at my store for the same price... with a full warranty. They just expect to pay more locally and don't even bother to get in the car.... but

If they saw my ad in the paper on Sunday... or if they saw the item on my website for that price.... they'd have bought from me.

MAP is not enforced evenly - period. Things always appear cheaper online - even when they're not - because shops like mine can not advertise the same price as the bigger online retailers - if we do, we get called out and threatened that if we don't change out internet price... we'll be cut off. That is collusion between manfacturers and big dollar online sellers.

I can give you countless stories of consumers who told me "I would have bought it from you if I'd have know you could give me that price."

The history of the LDS and MAP pricing is killing the LDS as much as MAP pricing itself. An educated budget minded consumer always looks for a deal. That is why people clip coupons, read the sale ad's etc... When is the last time you were lured into your local dive shop by a sale advertisement or coupon?

You haven't been... because manufacturers even threaten you if you offer a non-specific coupon that could in theory be used to purchase their items below MAP or MARP.

It is disturbing... should definately be illegal... and morally wrong. MAP and MARP both hurt business and consumers.

The one big online retailer that everyone likes to say has the best prices doesn't come close to touching our prices. We beat them everyday in our store. We could beat them online too if we weren't being held back by MAP. Most LDS's and other online sellers have to play games and cirvumvent MAP and MARP by advertising things as "a gift" or "used once" or "display model"... all kinds of BS to get around bad business rules.

Open up the playing field...level it... and let the games be played fairly. The reason you don't want to do that continues to escape me. Sales for every manufacturer would sky rocket if MAP and MARP were abolished.

 

[Jupiter31]

Offthe Wall, I tend to agree with much of what you have posted; in fact, it led me to a discussion w/ an LDS I do a lot of business with - basically, his attitude (He is a ScubaPro dealer) was, I'd rather sell 2 BC's, Reg's, et al at close to full price vs 5 at a discount. "Why work 5 times as hard"

He will discount on a package but on a one off sale, not so much. He is busy, does not look like he is going out of business anytime soon, provides excellent service and is a great guy - made an interesting comment te ScubaPro and AL - said these are perceivced as top of the line and people are willing to pay for them - basically, he did not have a problem w/ MAP or MSP. I'm sure there are others who feel the same way.

I point this out only to give the "other side" - personally, I tend to agree with you - w/ perhaps one small exception -

If I'm purchasing 5, or 10, or 20 times more widgets than someone else, I expect a better price. My value to the manufacturer is greater, and that should reflect in the price.

I lay out $650+ for a 10 trip card, nmy cost per dive trip is less than the guy who walks us and purchases a trip for that day (significantly less; he's paying $65, and I'm paying $48 b/c some free trips are included if you buy 10)

And I don't have a single problem with that.

 

[vladimir]

Quotes from earlier in this thread, from folks who mistakenly believe that being a libertarian should allow entire industries to abuse citizens, and then hide behind armies of white-collar crime lawyers who justify all actions within their entirely self-regulated industry

You think that I am mistaken on the libertarian view on anti-trust law. Here, from the Cato Institute's Handbook for Congress:

http://www.cato.org/pubs/handbook/hb105-39.html

Congress should

repeal the Sherman Antitrust Act of 1890, especially section 2, and eliminate the Federal Trade Commission's power to act against ill-defined ``unfair competition'';

repeal the Clayton Act of 1914, especially sections 2 and 7; and

repeal the Robinson-Patman Act of 1936.

The handbook goes on to say:

Antitrust laws allow the federal government to regulate and curtail basic business activities, including pricing, production, product lines, and mergers, usually in the name of preventing monopolies and fostering competition. The irony is that the laws in fact impose arbitrary government limitations on competition, keep prices for consumers high, and weaken American industries. Massachusetts Institute of Technology economist Lester Thurow wrote in his 1980 book The Zero-Sum Society that "the time has come to recognize that the antitrust approach has been a failure. The costs it imposes far exceed any benefits it brings.''

American industries, in today's more integrated global economy with low trade barriers, do not lack competition. Imports, which were valued at 3.9 percent of America's gross domestic product in 1970, are 9.6 percent today. Exports were 4.1 percent of GDP in that year and are currently 7.2 percent. That new situation makes the rationale for antitrust laws even more absurd than in the past.

Since you're giving civics lessons, I assume you know that the Cato Institute is widely acknowledged as the most authoritative voice on current libertarian thought (although the term "libertarian" is unfortunately broad). Libertarians do not believe that industries should hide behind armies of lawyers; they believe industries shouldn't have to, because the laws shouldn't exist.

By the way, if you read carefully you will notice that when I presented the libertarian point of view I did not endorse it. I just pointed out the flawed logic in equating further government regulation with greater freedom. If you would like to argue that the Maryand law makes things fairer, that would be defensible. To argue that it makes us freer betrays a misunderstanding of the word "free."

You go on to present some highly debatable economic viewpoints using terms like "irrefutable" and "inevitable" in a screed that could easily be described by the pretentious as "cunning sophistry." Clearly you have a stake in this debate and have put a lot of time into it. Perhaps you should put some thought into it as well.

 

[jpsexton]

Offthe Wall, I tend to agree with much of what you have posted; in fact, it led me to a discussion w/ an LDS I do a lot of business with - basically, his attitude (He is a ScubaPro dealer) was, I'd rather sell 2 BC's, Reg's, et al at close to full price vs 5 at a discount. "Why work 5 times as hard"

He will discount on a package but on a one off sale, not so much. He is busy, does not look like he is going out of business anytime soon, provides excellent service and is a great guy - made an interesting comment te ScubaPro and AL - said these are perceivced as top of the line and people are willing to pay for them - basically, he did not have a problem w/ MAP or MSP. I'm sure there are others who feel the same way.

You just described the four (yes four!) LDS's in my land locked community. They are all doing pretty well it seems. At least they have all been in business for quite a few years. I just don't get the "Why work 5 times as hard" statement though. I've got four divers in my family that I buy gear for and while everyone has all of their gear, I'm constantly needing to replace something. I know exactly what it is and the only assistance I need is for someone to take my money at the register. How's that working harder? I leave for the springs tomorrow and my daughter needs a new wetsuit right now. I'm not going to waste my time locally, I'll stop at one of the major internet retailers on the way down...

 

[CDNScubaMoose]

Sorry for the delay in replying - I was out diving yesterday.

It's lose, not loose. You have made this mistake at least a half a dozen times in this thread, so it's not a typo. I cannot take anything you say seriously when you cannot spell the words in your favorite phrase correctly.

I see you have made some assumptions in concluding that my spelling was not a mistake. I appreciate the point and I consider it something that I have now learned.

However, besides your obvious assumptions that it wasn't a typo, you assumed that English is my first language, that I haven't had to struggle to overcome a mild learning disability my entire life, and that grammar/spelling was my favorite subject in school.

So my return assumption is that you disagreed with my POV but since you couldn't argue logic you decided to take the low road. If you would like to go that route then I have no problem having that type of discussion via PM but so far I feel this thread has been very constructive with a lot of different opinions and strong arguments on both sides. If you disagree with me, that is fine but if I present a logical argument then argue it on logic.

Sorry for the hijack.

 

[offthewall1]

Offthe Wall, I tend to agree with much of what you have posted; in fact, it led me to a discussion w/ an LDS I do a lot of business with - basically, his attitude (He is a ScubaPro dealer) was, I'd rather sell 2 BC's, Reg's, et al at close to full price vs 5 at a discount. "Why work 5 times as hard"

He will discount on a package but on a one off sale, not so much. He is busy, does not look like he is going out of business anytime soon, provides excellent service and is a great guy - made an interesting comment te ScubaPro and AL - said these are perceivced as top of the line and people are willing to pay for them - basically, he did not have a problem w/ MAP or MSP. I'm sure there are others who feel the same way.

I point this out only to give the "other side" - personally, I tend to agree with you - w/ perhaps one small exception -

If I'm purchasing 5, or 10, or 20 times more widgets than someone else, I expect a better price. My value to the manufacturer is greater, and that should reflect in the price.

I lay out $650+ for a 10 trip card, nmy cost per dive trip is less than the guy who walks us and purchases a trip for that day (significantly less; he's paying $65, and I'm paying $48 b/c some free trips are included if you buy 10)

And I don't have a single problem with that.

I thanked you for this post... and now I've got a minute to explain why...

There are certainly LDS's doing well with the MAP/MARP scheme in place. They're not doing well however because they're good or smart business men - they're doing well because the products they sell are price-fixed and for some uncanny reason deemed (more) desirable by the uneducated public.

The price controls put in place by manufacturers do level the playing field for these dealers. Dealers by the way who are in fact lazy and don't want to work hard for your dollar. You said it yourself... he'd rather sell two overpriced items than five. He can only do this because of the mafia style protection he receives. This is a collusion between the manufacturer and dealer under written agreement to "rip off" an un-knowing public.

Now granted, through threads like this one, many buyers are becoming educated and will no longer support these dealers and these shops, but there are still amazingly a number of consumers who just don't know what is going on.

Some will say too bad... they should take more time to educate themselves. Big daddy government is not there to protect each and every one of us. I typically would agree, however this isn't just about protecting a consumer... it is about prosecuting a violation of the law. Big companies should not be allowed to violate the law. Under Sherman, the law could have been enforced. Leegin was an illegal decision made by what is supposed to be our Supreme Court, and Maryland has now basically overturned Leegin and is leading the charge to make it irrelevent.

On your other point, of course I (as a rather large dealer for a few brands) appreciate the fact that I can buy items at better prices than much of my competition. You could say I sit in the middle of dealers. I generally get the best pricing (available to LDS's) on much of what I sell - but I don't get the unlisted back-room deals the large internet dealers get. I also must play by different rules. They can list things for less than MAP - I can't... and this is where the disconnect comes in for me.

It is obvious to anyone with common sense that internet sellers are able to do something most local LDS's cant do. Not everyone understands what that is. You think they advertise and sell for less because they have lower costs... and indeed they do. But that isn't the primary reason. The primary reason is that LDS owners are duped into signing agreements the big internet sellers (may or may not sign,) but get a backroom wink-wink / nod-nod on what they advertise product for.

Even given the fact that my margins would be lower, I could compete with internet sellers if the playing field were level. I don't mind selling 5 instead of 2. I believe in working to earn my money... not having the mafia stuff overpriced goods down my customers throats.

Another big educational point for the consumer is the nonsense spewed about how certain brands are so superior to others and the misleading (paid for) advertising in print publications that test the items and pick "best buys."

Modern scuba equipment all does what it is designed to do. The name on the box has little to do with how it performs. I can take an IST, Genesis, XSScuba etc... regulator and do the same dives the guy wearing the Scubapro, Apeks etc... regulator can do and I'll do it with 100% confidence... and a much heavier wallet.

I used to say that buying a SP or Apeks regulator was like buying a Lexus or BMW and a Genesis or IST was the Kia or Hyundai. That was in the day when I worked for the man and didn't know any better.

The reality is that the bigger names in diving are not the same as the bigger names in the auto industry. There's actually a difference in overall quality in the auto industry... not so much in the scuba industry. Many companies regulators, computers etc... are all churned out of the same factories, stamped with different names and placed in different boxes.

The more educated I've become the madder as hell I get... and I suspect that many of you will do the same if you take the time to educate yourselves. Dig deep, ask harder questions. Challenge the dog and pony show the reps, your local LDS and the manufacturers give you.

What I'm fighting for is a healthier more inviting industry that can grow. What we all currently have is a stagnant shrinking industry that has a foul odor about it. I want to make it better for the consumer, the LDS's and the manufacturers. My ideas will achieve that... but the old schoolers don't want to change. They'd rather sit back, sell their 2 instead of 5 and all the while moan and groan about the internet. I've had enough of that... how about you?

 

[ScubaSarus]

Its my opinion that the big guys (internet sellers) have mainly one service to provide and thats selling gear. They don't offer classes, air fills, book trips, give you a local orientation to diving, provide a dive master for a fun dive free of charge with an O2 tank, give advice on gear, fix something for free occasionally, give advice on dive sites, give free Dive Training Mags, have picnics ets. All they do is sell and their overhead in much less.

So its unfair they get lower prices on goods when they are not really promoting diving but actually exploiting it for the sole purpose of selling of goods and making a profit. I speak this way because the shop I do business with here in Essex, CT is quite the opposite and has made diving fun and pleasureful for me.

I don't buy a lot of new gear as I do take care of mine very well and they have been so nice to me in spite of that fact. I do promote their shop and give out their business cards and recommend them for repairs etc in hopes they will appreciate that in stead of me purchasing a lot from them.