Mfr's selling directly to the public

[SeaLevelScuba]

Curious to find out how you'd react if you found out one of your manufacturers was selling directly to independent instructors? We have identified a case where a manufacturer is selling directly to instructors and trying to get a feel on what the general consensus would be from others. I'm thinking if they are doing it here in Florida, there doing it elsewhere as well. Anyone care to share???

 

[oly5050user]

Curious to find out how you'd react if you found out one of your manufacturers was selling directly to independent instructors? We have identified a case where a manufacturer is selling directly to instructors and trying to get a feel on what the general consensus would be from others. I'm thinking if they are doing it here in Florida, there doing it elsewhere as well. Anyone care to share???

probably tell them that we know what they are doing and to explain themselves...then if we do not like the answer ,drop them from the line.
We did that to Dacor years ago when we discovered they had been selling direct to LP,after they denied it and we found the truth by getting friendly with their staff in CT office.

 

[Trixxie]

Does that independent instructor run a business?

I know of a Scuba business here in Ga that is really a one guy op plus a contracted instructor. He does not have a store front but does sell dive gear to his students. He buys from the Manufacturer and resells to his students

do you see that as the same situation you're describing?

 

[oly5050user]

Does that independent instructor run a business?

I know of a Scuba business here in Ga that is really a one guy op plus a contracted instructor. He does not have a store front but does sell dive gear to his students. He buys from the Manufacturer and resells to his students

do you see that as the same situation you're describing?

If the indie instr does not have a store front,offers training and services during what is considered to be standard business hours,does not have a compressor,does not have any necessary business licenses, then he is just an indie instr and should not be selling equip from a manufacturer.Does he charge necessary sales tax on sales?

 

[PhilEllis]

Curious to find out how you'd react if you found out one of your manufacturers was selling directly to independent instructors? We have identified a case where a manufacturer is selling directly to instructors and trying to get a feel on what the general consensus would be from others. I'm thinking if they are doing it here in Florida, there doing it elsewhere as well. Anyone care to share???

You are a store owner and you need to do what is right for your store. There are a couple of manufacturers that sell directly to the public on various websites and several have "instructor and divemaster" programs. It is PERFECTLY within their rights to do so. In my view, you have to decide if you are willing to compete directly with the same company you purchase from....knowing full well that he has a gigantic cost over you and a cost advantage almost always results in a competitive advantage of sorts.

It is my view that IN THE SCUBA BUSINESS, with the current business models used, an entity must decide to be a retailer or a wholesaler. Doing both does not work well in this industry. So, vote with your money. There is NO PRODUCT in the scuba industry that you can not do without. With all of the people calling you everyday trying to get you to carry their lines, why buy from a competitor?

Note: It is my view that "instructor" programs leave the door WIDE open for the manufacturer to sell to anyone they choose. If retail stores are required to have regular hours, general liability insurance, address in a zoned business district, run a training and travel program, do complete equipment repairs and service, operate a fill station, purchase a business license, have a resell permit, and all of the other stuff.....why allow some to do less? Oh well.

Phil Ellis
Discount Scuba Gear at DiveSports.com - Buy Scuba Diving Equipment & Snorkeling Equipment

 

[Trixxie]

If the indie instr does not have a store front,offers training and services during what is considered to be standard business hours,does not have a compressor,does not have any necessary business licenses, then he is just an indie instr and should not be selling equip from a manufacturer.Does he charge necessary sales tax on sales?

Don't know, he is a friend of a friend. I think he may have a business license but really have no clue. I think he does have a compressor though but again not 100% sure.

 

[SeaLevelScuba]

Yeah the instructor only does teaching partime usually at cost, the biggest problem is they are reselling the equipment at cost + shipping so it definitely prohibits the movement of the product in the retail establishment. Problem we have is the instructors friends are quite often on the same boat as divers from the other shops around here wearing the same equipment, when they talk it appears we're ripping them off. We've have ceased buying anything from the manufacturer since they seem to want to continue to sell directly to instructors as well we've alerted others in the area of the practice.

To answer other questions, yes the instructor has a business license, however we all know they give them out. They dont have a store front they work out of their home, dont do air fills, or repairs, no store front to hold regular hours, the home is not in a business zoned area, and they dont run a training or travel program.

Knowing the attitude given from the owner of the manufaturer, probably not surprised if he's selling it to instructors all over, they openly admitted an example in Texas someplace.

Thanks for your replies.

 

[oly5050user]

Yeah the instructor only does teaching partime usually at cost, the biggest problem is they are reselling the equipment at cost + shipping so it definitely prohibits the movement of the product in the retail establishment. Problem we have is the instructors friends are quite often on the same boat as divers from the other shops around here wearing the same equipment, when they talk it appears we're ripping them off. We've have ceased buying anything from the manufacturer since they seem to want to continue to sell directly to instructors as well we've alerted others in the area of the practice.

To answer other questions, yes the instructor has a business license, however we all know they give them out. They dont have a store front they work out of their home, dont do air fills, or repairs, no store front to hold regular hours, the home is not in a business zoned area, and they dont run a training or travel program.

Knowing the attitude given from the owner of the manufaturer, probably not surprised if he's selling it to instructors all over, they openly admitted an example in Texas someplace.

Thanks for your replies.

if this instructor does not have a compressor ,when he shows up conviently tell them that your compressor is down..no air fills..same goes for his customers /students that purchase all gear from him..air fills will not pay the rent anyway so if they just want to use you for something that you provide at a loss don't supply it..
Find out if he is legal to do this out of his home in a residential area..If he is reselling at cost he still has to pay sales tax on it ,so he is selling at a loss.How does that work? Who is/or what gear does this manufacturer supply?If I knew the manufacturer I would look into who they are and if in this area (NY) I would talk to the rep for the line and investigate their pratices .If all is the same here as your locale I would drop them fast and treat the instr's doing this pratice as I advised. All the LDS in the area would also be advised of the manufacturers pratices..

 

[SeaLevelScuba]

Thanks Oly, I sent you a pm.

One of the frustrating pieces to this puzzle is that the Florida rep for this company tells us he's not for this practice, however as I've learned he also reps a couple of other companies, one other that does the same thing, so either his message isn't getting across to whom he works for, for 1 reason or another or he's ok with it. Sad thing is I really dont know him outside of a couple of phone calls and 1 visit a couple years ago. I hope its just a case where his bosses just arent listening simply because he seems like a genuine person.

We have started contacting other manufacturers to get their policy, notifying other dive shops of their policies and have requested a binding opinion from the States Dept of Revenue regarding this very practice, since as Oly as pointed out, sales tax is required to be paid at the first sale without a tax certificate. Once we get the binding opinion, then we can go from there. It appears from a sales tax perspective, this problem is huge in Florida since it also applies to the materials being bought by instructors directly from training agencies.

All we're asking for is that if a mnufacturer is going set guidelines to do business with them that they follow the guidelines as well. If instructors wanna play business, then do everything above board and meet all the requirements for being a business in the arena they wanna play in.

Since there isnt really a way for SB to ensure the ligetimacy of the businesses that are granted access to the B2B forums, we will refrain using the instructors or manufacturers name here. We will certainly pm you the names if we can verify you actually have a stake in this issue.

Schott

 

[PhilEllis]

...........We have started contacting other manufacturers to get their policy, notifying other dive shops of their policies and have requested a binding opinion from the States Dept of Revenue regarding this very practice, since as Oly as pointed out, sales tax is required to be paid at the first sale without a tax certificate. Once we get the binding opinion, then we can go from there. It appears from a sales tax perspective, this problem is huge in Florida since it also applies to the materials being bought by instructors directly from training agencies..........

Man, you are willing to open a can of worms, aren't you? Hey, you and I have had private PM messages back and forth. This problem of independents in the scuba industry selling training materials (or "giving" them with class tuition) has always been a sales tax violation in EVERY state. Most independents don't possess a proper business license from the city, county, and state because they don't meet many of the basic requirements for getting them. That being said, it is what it is. Want the best way to stop this? Beat them in the marketplace! With a store, advertising, phone listings, and a natural draw for customers, you should be able to overcome this bit of competition easily. Remember, the same thing has been going on on Ebay for years. You will just have to live with it. Now, as to the supplier, like I told you privately, don't buy from anyone you have to compete with directly unless there is a DISTINCT ADVANTAGE for you to do so.

Turning them into the sales tax people? Wow, brutal!

Phil Ellis
Discount Scuba Gear at DiveSports.com - Buy Scuba Diving Equipment & Snorkeling Equipment