Online Sales - The importance of buying from local businesses

[UnderSeaBumbleBee]

This sounds like an experience at K-Mart, not Wal-Mart.

Yes, sounds more like K-mart. I shop at Wal-Mart and check out in the garden center. Kay is the cashier and she knows me by name. It is nice out there with lots of fresh air and it much quieter without all the long lines. I would switch out tanks there!

FYI if Wal-Mart was as bad as you say, they wouldn't be doing so much business. People wouldn't put up with it. People would be walking out of the store left and right.

 

[froggs]

Unfortunately, simply supporting your local economy will not help many dive stores. There are so many local dive stores in markets that are so small, all of the local support in the world will not help. Furthermore, almost all local, regional, and national "support your local community" program fail miserably. We are all consumers in a national or worldwide market. We will support local merchants when it is painless. We will not pay a premium to support a local merchant.

Important Note: If you don't believe this, how do you explain leisurepro, scuba.com, divers-direct, divers-supply, scubatoys, etc. It is simple. We will completely abandon a local merchant to save money.

Anyway, just my opinion.

Phil Ellis

Phil,

I actually agree with some of what you say. My definition of "local" may be different than most. I actually equate it more to mom and pop shops than shops that are in my backyard. I've been highly involved in the rock climbing/mountaineering community for a number of years. I have no idea on actual numbers, but I'd venture a guess that there are similar numbers of people involved in scuba as in rock climbing...and due to the relative cost of equipment, there should be more money to be made in scuba. Now there may be a smaller number of climbing shops, but I will say that in the climbing community, there is a strong grass roots effort to support these small shops. I believe it's because of this "community loyalty", that keeps these shops in business. Perhaps this doesn't exist in the scuba world, at least to the same extent.

It's obviously tempting to buy online, or head over to one of the larger shops, like REI or EMS (and I shop all of these when I feel it's the best choice for me), but these climbing shops are run by climbers, and that's important to many of us bound tightly to that community. If a new climbing rope is going for $200 online, then maybe it costs slightly more at the small shop, but it's often a difference that doesn't turn loyal climbers away..perhaps 10% tops. I've noticed price differences when comparing my local dive shop to online of around 50% at times. Perhaps the scuba to climbing analogy doesn't translate well, but assuming it does on some level, the one difference between the two is that although the local climbing shops may at times charge more than online or larger stores, what lends to their survival is that they don't completely "gouge" their customers, while offering that "one of the group comradery" that many of us seek out. Perhaps the profit margins are different in scuba, but I think this is a largely contributing factor to the failure of these "local dive shops".

 

[froggs]

That will not happen, except MAYBE in the central part of California and the maybe south Florida. You CANNOT operate a commercial air compressor at a profit unless you are located in a VERY high density diving area. Fill Express is succesful because of where he is, combined with the friendly policies. Further, it simply isn't worth the preceived liability for the small amount revenue for most big box stores.

Phil Ellis

Even if I assume your profit statement is true, it doesn't really matter. These super-stores often take a hit on certain products/services that will draw a specific consumer base, which will likely in turn, purchase higher profit items while they are in the store. It's one of the many factors that make WalMart, Target, etc. so successful. Perhaps there is credence to your perceived liability statement.

 

[PhilEllis]

Phil,

I actually agree with some of what you say. My definition of "local" may be different than most. I actually equate it more to mom and pop shops than shops that are in my backyard. I've been highly involved in the rock climbing/mountaineering community for a number of years. I have no idea on actual numbers, but I'd venture a guess that there are similar numbers of people involved in scuba as in rock climbing...and due to the relative cost of equipment, there should be more money to be made in scuba. Now there may be a smaller number of climbing shops, but I will say that in the climbing community, there is a strong grass roots effort to support these small shops. I believe it's because of this "community loyalty", that keeps these shops in business. Perhaps this doesn't exist in the scuba world, at least to the same extent.

It's obviously tempting to buy online, or head over to one of the larger shops, like REI or EMS (and I shop all of these when I feel it's the best choice for me), but these climbing shops are run by climbers, and that's important to many of us bound tightly to that community. If a new climbing rope is going for $200 online, then maybe it costs slightly more at the small shop, but it's often a difference that doesn't turn loyal climbers away..perhaps 10% tops. I've noticed price differences when comparing my local dive shop to online of around 50% at times. Perhaps the scuba to climbing analogy doesn't translate well, but assuming it does on some level, the one difference between the two is that although the local climbing shops may at times charge more than online or larger stores, what lends to their survival is that they don't completely "gouge" their customers, while offering that "one of the group comradery" that many of us seek out. Perhaps the profit margins are different in scuba, but I think this is a largely contributing factor to the failure of these "local dive shops".

Well, climbing and mountaineering in the United States will do more dollar volume (Leisure Trends data) in retail sales in 2008 than scuba diving will do in the United States from now until 2012.....it is about 5 times larger than scuba diving. The distribution system for climbing and mountaineering gear is completely different from scuba......the former uses distributors or brokers; scuba is "direct from the manufacturer" distribution. This is very expensive for scuba.

Climbing and mountaineering retail shops have an opportunity to make sales to "casual" participants because of the very low entry cost. Scuba has no such opportunity. The entry cost is very high.

Most interesting. According to Leisure Trends, average retail gross profit margin for climbing and mountaineering supplies is about 64%.....for scuba the average is 41%.

Note on the Issue of Loyality: There may be some loyality in climbing and mountaineering gear to retailers. Any mass loyality that existed for scuba retailers is fast doing a nose dive. I guess we have brought it on ourselves. In the end, price ALWAYS wins out, assuming a comparable quality, service, and delivery. The very few exceptions to that involve extremely expensive, niche markets by companies with big bucks for advertising. Scuba spends next to nothing advertising.

Phil Ellis

 

[jimdiverman]

Most interesting. According to Leisure Trends, average retail gross profit margin for climbing and mountaineering supplies is about 64%.....for scuba the average is 41%.

Phil Ellis

But to your point, Phil, if the entry cost is low, 64% at $200 in mountaineering is a lot less painful than 41% at $2000 in scuba.

 

[mike_s]

Yes, sounds more like K-mart. I shop at Wal-Mart and check out in the garden center. Kay is the cashier and she knows me by name. It is nice out there with lots of fresh air and it much quieter without all the long lines. I would switch out tanks there!

FYI if Wal-Mart was as bad as you say, they wouldn't be doing so much business. People wouldn't put up with it. People would be walking out of the store left and right.

You guys must be luckier than we are with your walmart.

Last year the weekend after Thanksgiving they only had 2 full service registers open for example. You can never find an employee to give customer service.


I do agree though that K-mart is worse.

Most interesting. According to Leisure Trends, average retail gross profit margin for climbing and mountaineering supplies is about 64%.....for scuba the average is 41%.

Are they including clothing (pants, jackets, shirts, boots, etc) in that spending for climbing?

Just curious for comparison purposes because scuba apparell the market is not as big as it's mostly t-shirts.

However, for climbing, people often have to buy other apparel. I've got some North Face jackets for example and they aren't cheap. To replace my NF parka and it's zip in Denali liner would easily cost $500 bucks.

If climbing sales include clothing sales then it's not an apple-to-apple comparison.

especially when you go to the mall now days and every teenager has on a North Face Denali fleece jacket. You're looking at millions more in annual sales. (And to think I bought mine 10 years ago when they "weren't cool yet". Go figure... heh.).

 

[PhilEllis]

But to your point, Phil, if the entry cost is low, 64% at $200 in mountaineering is a lot less painful than 41% at $2000 in scuba.

Well, I didn't try to address "consumer pain" as measured by dollars spent. If a mountaineering merchant makes a $1280 gross profit on a $2000 sale, why is it "gouging" when a scuba merchant makes $820 on a $2000 sale? I have said this over and over on this and other chat boards.....the so-called "keystone" markup (double cost) in scuba stores is smaller than the markup on almost all other consumer purchases you make. There are a few exceptions, electronic, automobiles, but the exceptions almost always involve pretty high volume.

The real problem is......local scuba stores have done so much to p*ss off the customer that ANY profit they make is begrudged. Let's face it.....that is the real truth. It has been said over and over on this board.....when scuba consumers spend money at a dive shop, they feel like they are "paying for the owner's" recreation and travel. They don't view him as a citizen, deserving of the same salary that a computer programmer or engineer deserves. I am not complaining. Remember, I think the shop owners did this to themselves.

Phil Ellis

 

[captain]

A large chain like Wal Mart could contract a commercial gas supplier like Air Gas to supply banked air and nitrox to it's stores. What a fill would cost I couldn't say. Grade D breathing air is available from Air Gas.

 

[cool_hardware52]

The distribution system for climbing and mountaineering gear is completely different from scuba......the former uses distributors or brokers; scuba is "direct from the manufacturer" distribution. This is very expensive for scuba.

Phil Ellis

Manufacturer direct has the potential to be less expensive than traditional distributors. The fewer the number of hands the goods pass through between the manufacturer and the consumer the few the number of "profits" that need to be realized.

This may not in practice be working, but there's nothing about the model that prevents it from being more efficient.

Tobin

 

[TravisD]

However, for climbing, people often have to buy other apparel. I've got some North Face jackets for example and they aren't cheap. To replace my NF parka and it's zip in Denali liner would easily cost $500 bucks.

If climbing sales include clothing sales then it's not an apple-to-apple comparison.

One thing that immediately came to mind after reading this is how many purchases are made that are mis-counted? Especially in clothing, I can certainly see more non-climbers/hikers/etc buying stuff from a climbing/hiking retailer than I can see non-divers buying from a dive store. Worse, how many divers end up in a hiking store buying things that they use for diving -- PolyPro underwear, kayaks, neoprene socks, ...

On the other hand, there's very few things that I can think of in a dive shop where a non-diver/snorkeler would need that aren't available (usually more inexpensively) elsewhere. Surfers and wetsuits? They're probably getting cheaper ones at surf shops.

There's probably a graduate thesis in there somewhere on the economic crossovers of various outdoor activities and who actually benefits from the gear sales.