Where do the deals come from?

[MikeFerrara]

I would like to ask for your opinion. There have been many discussions on the board debating lds vs online. In some of these threads questions have been asked as to how online stores can set prices as low as they do. There have been references to gray market merchandise and where it comes from. Even as an lds I have had more questions than answers.

Someone contacted me today wanting to negotiate an extremely large order of a particular manufacturer’s merchandise. There hasn’t been any detailed discussion yet but it seems clear that the merchandise is meant for online resale. I won’t say who the manufacturer is but their products sell for near msrp even online. So in this case, if I sold cheap enough, it could be sold above my cost but below everyone else. I could conceivably make a considerable sum (without doing much) Just because I have a dealership and this person does not. Now come my questions. Should I sell to this person/company? Do you think this company can support the product like a real dealer can? Would I be doing the dive community a service or disservice?

Some things to consider… If this company obtained a dealership they could get the merchandise cheaper, especially with such large volumes, and have more support available to them and their customers. Why should they come to me?

I was approved as a dealer because I offer, among other things, air fills, instruction, equipment rental and service. Specifically, I would be considered qualified to instruct divers in the use of the equipment in question. So you see I had to do more than sign a contract and write a check to become a dealer. I had to become an instructor, equipment technician and invest in many other things just to be considered for the dealership. Also keep in mind that each of these other services represents additional risk exposure. This company clearly intends to skip all that and go straight to where the profit is without the work or risks. What about the other legitimate dealers who will lose sales to this company? When you buy from this outfit online and have trouble, who will provide support? Should I care? Is ethics an issue here at all? Everyone likes a bargain. This is where they come from.

 

[MikeS]

Mike,

Based on your post it seems to me you know what is morally “right.” The question is can you afford it? At the end of the day you have to eat and still live with yourself.

This sounds like the same moral dilemma we consumers face with every purchase, multiplied by a factor of 100. Do I buy from an LDS or online? While the answer may be different for different people I believe that the moral choice is to buy major items requiring service from an LDS. Not only is it morally “right”, I think doing so is in my own long-term self interest, helping to ensure that an LDS is around in the future.

Morals sure can be expensive!

Mike

 

[SpyderTek]

Personally? No You shouldn't care. You should be doing it yourself.

You should be purchasing large volumes of items at 50% cost from online stores (2 for the price of one as it were). Marking them up 10%-20% from what you paid for them online and selling in house extended warrenties.

This way you have more of a brand selection than the 3 companies that make you jump through hoops just to sell their merchandice and look down their nose at you as nothing more than a funnel for their money. (As soon as you can't make their monthly sales quota dump you as an "Authorized Dealer" )

Selling of in-house extended warrenties is a practice going back a very long time in electronics and other merchandise that serves many a "Wiz", Sears and Circuit City profitably. Plus now you aren't doing the Serf / peasant work for the manufactures' warrenty for free. You've made some money on that deal.

You can compete and still offer the advanced service and support that we can't get from online shops.

If you care and try to "buck the system" as it were you only have a handful of ideals to warm your hearth when you die in the poor house. Sad but true.

SpyderTek

 

[Lost Yooper]

I don't think I have a particular problem with it. I don't hold any loyalty to any LDS because they don't have anything I want. I research everything exhaustively, buy quality, and forget about the warranties. The money saved is worth it.

I see things a bit differently. I am supporting someone, somewhere. Someone is feeding their kids with my money. How they go about doing it doesn't matter to me as long as it's legal (which is optional -- kidding!). I support several shops, but they aren't my LDS is all.

Business is business. If you can make money doing less work, then go for it. This is what's it's all about. If you see it as a moral thing, then you have to do what you feel is right.

It's your call.

Mike

 

[zodiacred]

One question you should ask yourself is in making that deal are you jeopardizing your position with the manufacturer,
.All dealerships are subject to certain standards.

 

[WetDane]

position with the deealer ship is a good point - I'm pretty sure they track serial#by the dealer - now if your stuff is coming back for work, but being sold from someone else... there may be questions.

Low prices are obviously a question of volume and most dealers are not going to sell 200 high end regs per month - and those who does - magically does nto carry certain brands like SP or Apeks (I know they do in Spain - but I think the rules are different there - why is that).

I would consider the options and the money to be made - is it worth the $$, would you loose sleep, would it be a deal that you could do once every couple of months and add to the income?

I think like LY - that is you focus on your business - ethics someties come in second place - however - if you focus on Customer lyalty - you would have to live by your own principles and that may include not undercutting yourself.

Good luck,
Big T

 

[jetblast00]

As long as you won't get into trouble with the manufacturer, I don't see a problem.

If this is a no no as stated by the Manufacturer, then I wouldn't to it; you'd be taking the sole risk (of losing your authorized dealer affiliation) if caught, while 2 parters stood to make a profit (you and the man on the phone with the online store). In that case, it's win-win for him (what does he care if you lose your affiliation, he makes money either way.) and win-lose for you (they might catch you, they might not).

But, if it's ok with the Manufaturer, I see no problem. If, as an individual, I have more choices in my gear, that's a good thing.
I can pay $100 for reg X and get it "as is" with no warrenty
or
I can pay $200 for reg X and get a warrenty and know that it can be serviced in the future from the same shop.
Whichever I choose, I have more options as a consumer, and to me, that's a good thing.

 

[waterdogs]

All the post regarding "purchase's online" vs. "LDS" and the troubles that LDS have in competing against the "online" "wholesalers" is something that has been in the business I'm currently in for the last 4 years or so.

Big Box Retailers will always have the advantage, i.e. Walmart, Cosco, BJ's, vs. the local grocery stores, or in my case "Conveinence Stores". My distributors cannot compete in the marketplace against those "Hypermarketers" when it comes to merchandise and are feeling significant effects since the incorporation of those facilities with "gasoline". What I have witnessed and we (as consumers) will further see, is the reduction of conveinent stores and your favorite gasoline facilities right around the corner will not be there in 3-5 years. They simply can not compete. Smaller operations simply can not be as efficient as the BIG BOX OPERATORS as well as "buy" on the same playing field.

This will eventually get to the LDS, we have already seen it and it will continue, very quickly.

But there is hope, and with that there is a cost! Just like conveinence stores, they have their place, consumers still need both to survive. Our gasoline facilities will look for other profit centers and services to provide our consumers at competitive prices: i.e. car washes, atm's, co-branding with fast food. The LDS will have to look for other opportunities to service divers with the loss of revenue's from "gear sales" to the online wholesalers.

Options: Servicing, Warranty Programs, Travel (trips,etc), Classes, and a host of creative marketing ideas inorder to remain in business.

I know very little about the operations of the LDS, but i do see parallels with mine and other business' out there in the marketplace.

Will the LDS survive? YES, the good and the efficient ones will survive.

My thoughts, they don't mean much but i can relate.

waterdogs.

 

[Bob3]

WetDane said:

...(I know they do in Spain - but I think the rules are different there - why is that).

Answer is: Some countries have laws against price fixing.
Some dealership agreements are right on the edge of being violations of the Sherman act (interfering with interstate commerce).
I don't sell stuff unless I have the freedom to set my own prices, and I get lectured by some of my suppliers from time to time, but they do it over their shoulder on the way to the bank. Nothing in our agreements about selling below dealer cost when the mood strikes me.
:mean:
Your mileage may no doubt vary.

 

[alexeames]

Just a quick thought.

If it is against your contract with the manufacturer, us it possible that they are running a check on you?

i.e. can you verify that the person at the end of the phone represents the company that (s)he says?

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Just because you're paranoid, doesn't mean they aren't out to get you