Pick up any Skin Diver magazine and ads by Leisure Pro
and similar firms will tout products
from Scubapro, U.S. Divers,
Dacor, and other manufacturers.
Yet these companies deny that
they sell their goods to mail-order
discount firms and refuse to
honor warranties on equipment
they sell. In fact, U.S. Divers'
shops now have a placard to
display saying if the customer
bought the equipment from a
mail order or web firm, U.S.
Divers won't stand behind it. So
the discount firms offer their own
warranties.
Just how do these companies
get new Scubapro BCs or Dacor
regulators? To protect their retail
prices, these manufacturers sell
only to retail dive stores that will
accept their pricing guidelines.
Often one hears that the
discount companies get their
inventory from dive stores that
have gone out of business. But
that's not enough for the big mail
order firms to stock marketable
quantities.
Dive shops have relationships
with manufacturers that often
require them to maintain a
specific volume of business to
keep the product line. However, if
a dive shop decides to discontinue
a product line or even go out of
business, the mail order houses
are quick to make an offer.
Eugene Mendelorts, President
of Leisure Pro, told us that "there
are dive shops that need money or
are going out of business and they
contact me. I make a deal with
them for equipment. I know they don't want to lose their primary
line, like Scubapro, for example. I
am not out to hurt the shop guy's
business. But we both know that it
is a cat-and-mouse game with the
manufacturers. If they trace the
serial numbers back, then the
shop will be cut off.
"There is enough margin in
the markup allowed by manufacturers
to allow both the shop and
my company to make a profit and
still sell at a price that is good for
the consumer. The shop guy is
getting nickels right now instead
of maybe quarters -- if he can sell
all the stock from his shop."
A dive retailer playing the
game may even go to the representative
of a company that he
doesn't carry or one that he does
carry and doesn't care if he loses.
He places a $50,000 order. When
it comes in, he doesn't even open
the box. He slaps a label provided
by the mail-order firm on the box
and ships it to them. The mail
order company then sends a
check to the retailer to cover the
bill, plus ten percent.
The mail order house sits on
equipment, while the dealer
places several more orders. Using
this method a dealer can buy and
sell as much as $250,000 of
equipment before the manufacturer
figures out what's happening
and cuts him off. An
unscrupulous dealer might then
just pick up another line and do
the same thing again.
So the dive store has made
$25,000, and, depending upon his
credit, may have never put up a
nickel. The manufacturer's rep
makes his cut by selling it to the
dive store. The manufacturer sells
a quarter of a million dollars of
inventory. And the mail order
house sells brand-name merchandise
at a discount.
The only loser in this scheme
is the nonparticipating dive store
who must compete with mail
order and web sales, especially
since mail-order buyers often
bring in their equipment for
repair under warranty. Many dive
shops have tightened their
warranty procedures, so that unless the diver can prove he
bought the gear from a shop, he
doesn't get the service. That
tosses warranty service back to the
mail order firm -- a story we'll
perhaps tell another day.
--Ben Davison