The Aqualung Discussion [ Moved ]

[WJL]

... here's the document I posted just before the thread was yanked.

Let's get this thing edited into a final form, and get it out to the local shops.. Betcha Aqualung won't like this one bit.

Someone please offer criticism / suggetions if anything in my letter isn't truthful / accurate.

I sympathise with the sentiment that prompted the drafting of this letter, but I disagree with the proposed solution it suggests.

The letter demands that AquaLung vigorously police its distribution chain to eliminate grey-marketers. The letter implies that this will benefit smaller LDSs, presumably by keeping retail prices high on AquaLung equipment.

The unspoken corollary to this view is that we divers are perfectly willing to pay higher prices for AquaLung products in order to support our LDS. I don't believe this is true. Not everyone is willing to pay higher prices for AquaLung products, just to support an LDS.

Not even Phil Ellis wanted that to happen. Phil wanted to sell AquaLung products for lower prices, not higher prices.

I believe, like Phil, that the best solution is to let the market decide where retail prices should be. Consumers and retailers should have maximum choice about where and how they want to trade. If a consumer wants to buy a product based solely on paying the lowest price, that choice should be available. If a dealer wants to sell a product at the lowest price of all its competitors, that choice should be available.

In other words, low prices are not evil. "Grey marketers" are not evil. Grey marketers exist and prosper because they are serving a need.

Some people, misguided and selfish though they may be, just want the lowest price, and don't care about service, warranties, or anything else except getting the product at the lowest price. Some dealers, callous and cynical though they may be, just want to sell a high volume, and don't offer individual attention and extra services to their customers.

There is a place in the world for low price bottom feeders, and their existence keeps prices lower for everyone in the market. This is how a free market economy works, folks.

So, I don't agree with the letter.

However, I do agree that AquaLung appears to be mismanaging its distribution chain, and its alleged mistreatment of Phil seems to be a symptom of that.

I can think of several ways for AquaLung to support LDSs and still sell to high-volume low-price outlets, without selective enforcement of a fictional minimum resale price policy. One way is for AL to bear the actual cost of warranty repairs regardless of where the product was purchased. AL could pay its certified dealers for both parts and labor for warranty repairs on its products regardless of where the product was purchased, much as the auto manufacturers do for warranty repairs on their products.

Several contributors to this thread and the prior thread have stated that AquaLung violated U.S. anti-trust laws in its treatment of Phil's shop. This point remains unproven. A manufacturer's unilateral enforcement of a minimum resal price policy is generally not a violation of U.S. anti-trust laws. Accusing someone (even AquaLung) of a crime is, however, a potentially defamatory statement. This may be what lead Phil to agree to having the prior thread pulled.

 

[homo maris]

I am not calling for a boycott of Aqualung, which is a desire, I am boycotting Aqualung which is a fact. That will not harm my LDS. They sell Oceanic, Dive Rite and Posseidon. My LDS (Splash Dive Center) is great. I am boycotting a brand, not a retail channel.

For the record, it is Phil that got me to buy into Aqua Lung via Apeks. I was otherwise set to buy a Posseidon setup. It is NOT Phil or the postings here who got me to boycott Aqua Lung. It is Dan Badgley, Pro Dive Division Manager at Aqua Lung who did it by ignoring my safety concerns (Phill will no longer be able to service my setup and I have no "authorized" safe alternative).through private correspondence. He sent me a list of the same dealers I interviewed before buying, the same that did not know to setup a long hose, or who tried to switch me off buying Apeks the same list I can get from their website at anytime. So it is Aqua Lung who caused me to boycott Aqua Lung.

That said, what Phil did with his posting is an efficient way to tell us why he will no longer recommend Aqua Lung. What the rest of the discussion did is to enlighten me about the diving equipment industry.

Nothing has convinced me that the LDS should not be the place where to buy gear if they have it at a competitive price.

JL

Please don't. I posted in the last thread(the closed one) near the end that a boycott would only hurt the LDS who is simply playing by the rules. The vast majority of shops truly love this sport and want more than anything to share that love while being able to provide for their families.

The industry has changed, policies need to change with it. These dealers have been placed in a horrible situation where they find themself by design unable to compete. This has fostered the attitude of the "LDS Sucks" which has been so common when you gather together as divers (you know like on Scubaboard )

What really needs to occur is for certain manufs. to truly understand that the LDS is the backbone of diving.

Right now the LDS needs to be supported and divers need to express that they want to support the LDS but need the LDS to be allowed to compete.

The big issue(as I understand it) with AL and Phil is that Phil matched prices to get the sale. If the product he matched prices on wasn't commonly sold at the prices Phil had to match this whole issue would never had happened. This is an essential truth that exists in a market based economy.

PS- If AL has indeed threatened legal action againts Divesports (Phil), then calls for a boycott will only increase their percieved damages, making Phil's life that much more complicated.

 

[jagfish]

In other words, low prices are not evil. "Grey marketers" are not evil. Grey marketers exist and prosper because they are serving a need.. So, I don't agree with the letter. .

I don't think Phil was necessarily for low prices just for the sake of low prices. He was interested in being price competitive. AL policies would not allow him to do be market competitive, while at the same time allegedly turning a blind eye to operations like LP, allowing them to out compete Phil and other authorized dealers.

Accusing someone (even AquaLung) of a crime is, however, a potentially defamatory statement. This may be what lead Phil to agree to having the prior thread pulled.

My understanding, this is not why the thread was put in safe storage (as alluded to toward the beginning of this thread.)

 

[jwdiverdude]

Good points WJL:

But take a look at the wiki link I provided about price fixing.

If a deal purchases a product from a manufacturer, what business does that manufacture have telling the dealer what price they can and cannot sell that product for?
And that is a fact from the previous thread.
AL slammed PE for Selling below their "approved" lowwest price.
reReading the definition of price fixing I am getting that looks like a duck, walks like a duck, talk like a duck feeling.

So maybe it is better to say AL is "alleggedly" price fixing with evidence to support said claim.

 

[Dave in PA]

OK, if I can direct your attention to the Aqualung Website, do a Dealer search for dealers near ZIP 10003, the closest dealer is called Paragon Sporting Goods Co LTD. They are at 871 Broadway, which is pretty darn close to an unauthorized dealer located VERY near them. Now, if you Google Paragon Sporting Goods, you will find a website called paragonsports.com. Everyone there? Now, if you look at their address, you will see it is next door to the AL authorized dealer, as a matter of fact they are at 867 Broadway. Now, scroll down to the bottom and click on the word "brands", listed in alphabetical order, online products include Aqualung. I am checking to see if they can get me a Legend series reg.......

 

[H2Andy]

but by buying from an unauthorized dealer, you're just hurting the authorized dealer

Aqualung still moves product

or am i missing something?

 

[cerich]

OK, if I can direct your attention to the Aqualung Website, do a Dealer search for dealers near ZIP 10003, the closest dealer is called Paragon Sporting Goods Co LTD. They are at 871 Broadway, which is pretty darn close to an unauthorized dealer located VERY near them. Now, if you Google Paragon Sporting Goods, you will find a website called paragonsports.com. Everyone there? Now, if you look at their address, you will see it is next door to the AL authorized dealer, as a matter of fact they are at 867 Broadway. Now, scroll down to the bottom and click on the word "brands", listed in alphabetical order, online products include Aqualung. I am checking to see if they can get me a Legend series reg.......

Paragon is NOT LeisurePro.

 

[mike_s]

Besides.... Leisure Pro doesn't get all their Aqualung product from "one' dive shop.

They get it from several dive shops. Some of them "way" across the country in sunny California.

 

[Brandon]

but by buying from an unauthorized dealer, you're just hurting the authorized dealer

Aqualung still moves product

or am i missing something?

No, you hit it on the nail Andy, and it's the same point I was trying to make in my letter:

Aqualung is trying to have it both ways.

By failing to act to stop the gray market economy (which we've proven they -can- do by tracking serial numbers), Aqualung continues to profit by the increased amount of their product being moved by the gray market merchants.

At the same time, they're not allowing their local shops to compete with the online merchants by their use of the MRPP. The 10% max discount required by the MRPP does little to compete with the 20-30% (on Regulators / BCDs, etc) to 50-70% (Mask, Fin, Snorkel) discounts available online.

The gray market receives their supply from Aqualung authorized dealers, and in theory Aqualung is selling the product for the same amount, no matter where it ends up. The regulators that enter the gray market have less future cost for Aqualung, as they will never be eligible for Aqualung's warranty service.

It is actually more profitable for Aqualung to allow their products to enter the gray market, which I why I (and many others) suspect strong action has not been taken to stop it.

Of course, Aqualung could come out with a public statement debunking these speculations, or deliver a strong blow to the gray market...

Doesn't seem like that's going to happen though... Aqualung is happy with things the way they are. They have shareholders to be accountable to, and if they did take such action, their 3rd Quarter sales figures would be much lower , and the stock would fall. No one wants to be accountable for that.

-Brandon.

 

[dridril]

I believe their 3rd quarter sale record is going to drop and hopefully so will the price of the shares
Then and only then would they take notice