The Great local dive shop vs. online debate

Please register or login

Welcome to ScubaBoard, the world's largest scuba diving community. Registration is not required to read the forums, but we encourage you to join. Joining has its benefits and enables you to participate in the discussions.

Benefits of registering include

  • Ability to post and comment on topics and discussions.
  • A Free photo gallery to share your dive photos with the world.
  • You can make this box go away

Joining is quick and easy. Log in or Register now!

KrisB once bubbled...


Other businesses do... what makes a dive shop so special?

Look at the computer industry -- if they can make $10 on a $300 item it's a bloody miracle.

No bloody miracle at all. Until this year most of the manufacturers refused to let us sell online or mail order so.....


The problem is volume. How many regulators do you think are sold to walk in customers? Now days every one has at least one computer. How many people have a regulator? How many of those live in my area and how many of those are going to buy another one today? Not to mention that we are limited in the number of brands we can carry so the question then becomes, how many of those, who are going to buy in my town, want the brand that I sell?

The volume is extremely small so the markup is big. At an inland dive shop 90% of the equipment you sell is to students. We create our equipment market by certifying divers. To put this in perspective, before I started selling mail order I probably only sold about 6 regs to non-students. All the rest were sold to students or former students. You know how in a grocery store or a computer store customers walk in that you don't know? In a dive shop it's different. 98% of the people who walk in are either people I know (usually I trained them) or they're comming it to look into classes and are not yet divers (therefore not there to buy a reg).

In fact, around here, a good way to estimate the number of regs a shop will sell in a year is to take about 20% of the number of OW students the shop certifies. Less than 20% of OW students buy equipment but some from last year will buy equipment this year and a couple of students taking other classes will buy but the 20% of OW students works out pretty close.

Therefore if I train 100 students I will sell 20 regs in a year. The fact is that I don't train 100 OW divers in a year so I will sell less than 20 regs. The same goes for bc's. Wet suits sell a little better because even divers who don't buy equipment sometimes want their own wet suit and skiers use them too. The volume of tanks is a little higher because the paintball people buy them.

Now here's the kicker. Lowering the price doesn't effect volume very much at all. We don't loose many sales to students because of price and that's our entire market for the most part. Now, if you go online then the potential market is bigger and a lower price will mean higher sales. Just this year some of the manufacturers have decided to allow online and mail order sales but there's still a problem. They restrict the price so the minute I put a price online that's below what they allow, I'm out of business. There's even language in some contracts that prevent using the wording "call for price". So great! Now we can go online but we must do it with a price that no one will pay.
 
Mike.............Thus the reason for so many LDS going OOB. It's the obvious economic model of supply and demand. MOST LDS's supply, at their price, does not provide the essential demand. You mentioned volume, lowering the price SHOULD move demand higher but it does not so even if it moved a little, your margins are smaller and you might actually move more product but make less profit. This economic model is doomed. The on-line sellers have a huge captive audience that the LDS's don't enjoy. They lower their price and volume rachets up.

The dive industry is so specialized and quite expensive. You are dealing with disposable income here and with the economy in it's funk, many don't enjoy the excess spendable income they once enjoyed. This is an expensive hobby. It's not something that you just jump into and people who have the desire to try it want to make sure they don't spend dollars they don't need to spend. Prime example was another thread about a guy wanting to know if he got riped off on his gear from the LDS who is providing him wiht OW training. You made several posts there so I know you know which one I'm talking about. Those things don't make a good showing for the LDSs.
 
medical1 once bubbled...


There is a HUGE difference between MSRP and an actual sticker price. Circuit City has a TV with a MSRP of $300 but a sticker price of $200. I'll pay the $200(unless I can get a better price further). Not much haggeling but also not paying MSRP.

I don't know or care how LP does it as I'm not in that business but if I was I would be sure as hell finding out. I'd be worried about my livelyhood which is a powerful incentive.

I haven't been able to find out. I'm not worried about my livelyhood because my dive shop has never come close to supporting me. Get real.
Not like it would be a National Security Secret. They have a loading dock (Look at the trucks) and a store (Walk in and ask) so it can't be that hard to find out. Plant someone at LP & Divers Direct while your at it but stop pawning it off as they buy "grey market goods" as the supply is too consistant for that.

Like we could afford a trip to NY. Do they have a Dock? We don't. When stuff comes in from the manufacturer, it's delivered through the front door by UPS or FedEx.
Amazing I've had some item back ordered for a week before they were sent- did they have to call "Jimmy No Thumbs" to have him hijack a spicific truck that had the item I ordered? No - there getting it from manufacturers! MAYBE they just negotiated a better deal as they buy in bulk.

It is indeed amazing. I shouldn't respond because it sounds like you're calling me a liar but, if the manufacturers are selling to the they flat out deny it. In the case of multinational companies they might buy some overseas but not all the manufacturers have distributors over seas. If you can prove that LP gets equipment directly from Zeagle I WILL PAY FOR THE PROOF. PM me and we'll talk about how much the info is worth.
Rememner the suggestion of cooperative buying. Has anyone gone to DEMA, formed a trade group and/or try to hook a few shops together to leverage buying power? Don't cry about lost sales or the industry if you don't get off your butt and do something about it. The squeaky wheel is the one that gets attention!

DEMA! You are clueless. DEMA is the manufacturers. I'm not crying about anything. I just try to explain to some of you people how the industry works so you have a source if info other than your own imagination. I do it to help folks understand in the hopes that they'll tell the manufacturers what they want. If you want affordable equipment from a local shop you need to tell the manufacturer and stop whimpering about LDS owners.
You said the same thing yesterday about MSRP till I brought up Trident. Then you had to admit that they don't have a MSRP on there products. They are also one of the largest suppliers of scuba gear in the country.

Trident sells trinkets not dive gear. They don't have a MSRP and they don't care what you sell their stuff for. I didn't have to admit anything. I never said different.
Don't just blame the manufactures for the markup by stating "They won't let us sell the equipment for less" while LP not only survives but thrives.

Lots of Hokie Pokie going on.....................

I do blame the manufacturer because they do regulate prices. If you want to continue to call me a liar you should do it in person.

God am I glad I'm out of this business.
 
5615mike once bubbled...
Mike.............Thus the reason for so many LDS going OOB. It's the obvious economic model of supply and demand. MOST LDS's supply, at their price, does not provide the essential demand. You mentioned volume, lowering the price SHOULD move demand higher but it does not so even if it moved a little, your margins are smaller and you might actually move more product but make less profit. This economic model is doomed. The on-line sellers have a huge captive audience that the LDS's don't enjoy. They lower their price and volume rachets up.


You're right. We were forced to price gear at a price divers would pay this spring just to get cash to pay the bills. The risk of loosing dealerships doesn't matter if the building owner throughs you out first. We sold more equipment but we still only broke even and just got the bills paid. The end result was no money to replace stock so we had an empty building with the rent paid up. We took what was left and put it in the garage. LOL
 
MikeFerrara once bubbled...


The current economics of the dive industry is funny. Divers are running aroung complaining about LDS prices and bragging about the deals they get on line but what I see in the water tells the rest of the story. They may be getting their equipment cheap but their getting cheated because they're not learning to dive. I see several hundred divers a month in the water and it's so VERY VERY rare to see some one with even the most basic skill set. Divers are for the most part getting a great deal on mostly junk equipment that they'll likely never learn how to use. Such a deal. You get certified by a non-diving fool for a couple hundred bucks. Then you get a bunch of junk cheap from LP that you will through in the garbage if you ever stumble your way to learning to dive. You'll likely respend the training money also.

I just finished reading thru this entire thread and although I've pretty much stopped paying attention to these threads preaching the propagation of the 'isms so contrary to what the USA was originally founded in, I sympathize with your situation, and that of most LDS's across the continent. I'd like to try to reword the situation, perhaps see it from a different perspective.

If I understand the situation, the LDS offers low cost training as a loss leader to create a retail customer base. The newly certified diver hopefully becomes a loyal customer of said LDS. The LDS hasn't the clout to dictate to the suppliers as he doesn't generate the volume to make demands, and has no choice but to toe the company line(s) when it comes to sales and marketing.

The problem is that there has been a proliferation of low overhead marketers like LP who invest little if anything in customer service showrooms and local service facilities, and seem able to function outside the rules imposed on the legit LDS's. They leave it up to the LDS's to offer the products for the consumers to get sized and generally to shop around, then to do the required service at the local level post-sale. This leaves the LDS with no source of income except whatever service he can get and the air fills which may or may not be a profit source. I'm not sure how much revenue service can generate, but I suspect that warranty service costs may be fairly rigidly controlled by the manufacturer, and not necessarily to the benefit of the local service guy. I doubt that most inland compressors pump enough air to be profitable at $5/fill after figuring in time and maintenance.

So the result is a lack of incentive for the local shops to offer quality training. I don't think it's realistic to blame the wannabe divers for not understanding the dangers of lousy or bargain-priced training. After all, they're coming to learn what they need to know. If they already knew what they need to know, they wouldn't need the training, right?

This brings us to the dive cert orgs and the question of what responsibility they have to monitor the quality of dive instruction. The course content generally, if one goes by the manuals supplied, is probably comprehensive enough in scope to let them off the hook content-wise. This puts the pressure on the orgs and the instructors to keep the standards of the teaching high. This filters down ultimately to the final instruction really being only as good as the instructor. Most instructors can't nor should be expected to do this for the love of the game alone. They spend a lot of time and money to become instructors and are entitled to something in compensation besides the satisfaction of a job well done. Satisfaction doesn't put bread on the table or pay the mortgage.

What's the solution? Somehow we need some of these self-appointed activists to get behind the LDS's and work to make things better for them instead of beating up on them. For the most part they're just little guys, often inexperienced in business,who jump in with both feet and get beat up from the top and the bottom. We all want the convenience of a local dive shop, but we don't want the poor bugger to make a dime off us. The problem with a short-sided attitude like that is that eventually we'll break all the LDS's, and the instructors, and then what will happen to what some already see as an abysmally low standard of dive training and diver skill?

If I understand you correctly Mike, the fees to offer quality training would have to be significantly increased to make it worthwhile for the instructors to offer the training without the added income of the retail business. That may be prohibitively expensive for the wannabe divers as well as divers wishing to improve their skills and knowledge with further training. This isn't conducive to better divers.

The alternative is to find a way to make the local retail dive business viable in today's business environment. Simply steering potential customers to the online retailers doesn't help the situation generally. It's a bandaid solution to a communicable disease. Treating the disease this way is only staving off the inevitable death of the industry, and the sport without gear to support it. Do we all really want a sport supported only be faceless warehouser/shippers, or do we want some faces and personalities on those folks we rely on for our life-support apparatus.

Naturally the changes needed can't be effected overnight, but I fail to see how beating the life out of our LDS's is going to improve the situation ultimately for any of us. In fact I think this crusade to bury the LDS's is ill-conceived and perhaps even mean-spirited. I'm not suggesting a handout to the LDS's, rather encouragement for them to work to sort out the industry from within so that we can all have the benefit of a local dive shop to train, equip and service us in this passion so many have for diving. Turning our backs on the LDS's is non-productive. If anything we perhaps need to find ways to put pressure on the manufacturer/distributors to work with the LDS's to help them become more viable in the dive economy. Perhaps there's a median point where the combined revenue from training, air, retail sales and service will be satisfactory to the LDS and make it worthwhile to stay in business to offer the consumer the benefits of real time shopping and on site service. The bonus to the consumer will be the availability of enthusiastic instruction, info and advice from a knowledgeable "real person" not constantly worried about how to make payroll this Thursday, not to mention a place to drop in and hang out to share stories with other divers, much like we do on the internet.

Respectfully
JohnF
 
medical1,

Here is my answer to the dive industry BS. I closed the shop but...

I still take some students and several manufacturers (not the big ones) let us stay on as dealers. I have freinds who are non-LDS owners who are dealers for other brands. I can still sell to students which I am now free to choose (I don't have to take just any one off the street) since I have no overhead. I can get virtually any equipment I need at dealer prices, as well as service parts and manuals. I have a truely butt kicking fill station right outside my back door. I don't need LP, DEMA, the big manufacturers, diveshops or divers like yourself. I enjoy truly BS free diving and now I may even make a little profit. I don't have to fix the industry cuz I don't need the industry.

I WIN!


However, if you (the average diver) don't send the manufacturers a clear message (instead of crying about dive shops) you likely are limited to LP and having some starving LDS owner try to screw you whenever you walk in the door for a little air or service.
 
I understand why you got out of the dive shop business, but haven't you just become exactly what put you under?
 
JohnF,

I think you pretty much have it. My goal of course in writting the hundreds of pages of posts I've made on the subject is to educate a few divers in the hopes of generating some pressure on the decission makers in the industry. In the short term Scubapro and Aqualung make the same amount whether you buy from LP or your local shop. For now they still have the shops to create the market by training divers and showing off all the new equipment at the quarry every weekend. If divers don't want to subsidise training with their equipment dollars (the current model) they'll have to make theselves clear about it. In the end it's the consumer who suffers the most. As owning a LDS becomes less and less attractive there will simply be less people who want to do it. It's divers who have to deal with poor training, bad LDS attitudes or whatever else results from a screwed up model.
 
Diversauras once bubbled...
I understand why you got out of the dive shop business, but haven't you just become exactly what put you under?

I'm not sure I understand the question.

I found a way to enjoy diving and teaching.

I don't have to cheapen instruction so I can pay the bills. My students will continue to benefit.

I don't have to trick people to sell enough junk equipment to stop the manufacturer from threatening me.

I fixed it so that I (and the training/services I provide) are no longer influenced by those I see as the archetects of this mess.

Restate your question please.

PS, and then there's the little matter of trying to get back some of the $50K+ and thousands of hours of labor that I'm down so far.
 
Look, I understand Mike's point - the pressure has to be put on the manufacturers. He's right.

However, as consumers, we have no means to do that directly. We don't deal with them directly. The shops do.

So, the only means we have to put that pressure on is to do so through the shops.

Mike also says that shops won't band together to stop the lunacy. That makes them active co-conspirators - which just underlines the point that we, as divers, should aim at the shops - not only because they are the interface to the manufacturers, but also because they are direct co-conspirators in the problem!
 

Back
Top Bottom