Re: Liberty Optics and PST's
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LibertyOptics</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: jasonk</div><div class="ubbcode-body">Not to get off track too much, but MAP has its merits. If it wasn't for MAP then guys like LO probably wouldn't be in business. Big shops (think Cabelas, Bass Pro, Dicks, etc) could buy in such large quantities and demand such high discounts that without MAP they could sell the scopes for less than smaller guys could buy them from the manufacturer for. Then, next thing you know, no small dealers who provide better CS than the big boxes.
MAP protects the little guys as much as anyone else. Choosing to pay MAP is your own business, but I always call the dealers for best pricing. </div></div>
Jasonk,
I could not disagree more. MAP crushes the little guys. Here's why.
MAP covers all advertising, including the net. People shop. People shop online. When somebody wants something, they look around for the best price. What happens when all pricing is the same in a vigorously enforced MAP policy? People buy from the familiar, the comfortable, the places you mention. Why take a chance on some little guy you never heard of? People will take risks for money, but if no reward, they play it safe. Then, big budget, big marketing, big recognition wins everytime. The little guys sit around with unsold product on the shelf.
While your premise is correct, big buying power equates with lower per item costs and potentially bigger discounts, the reality is that the margins aren't there to support such a stratey for long. Ever study a Cabela's quarterly balance sheet? Their net profit margin after costs is like 3 cents on the dollar, IIRC. They just do a billion dollars a year or thereabouts.
If left to our own devices, we got a pretty good thing going. My costs are low, the items we stock are in demand and sell, and my cash needs are relatively low. But doing the MAP hula wastes time and energy, and ultimately costs. It's a burden, but even more so when you are a small outfit.
The other angle is politics. I assure you MAP didn't derive from a bunch of little guys screaming to the manufacturers that Cabelas or Natchess or BassPro where selling products online below their costs. It was the big boys complaining about the little guys under-cutting them. They are right. They can't compete. But money talks.
Ironically, the big boys are better equipped to get around MAP. Massive email and snail mail coupons, special web codes, instant sophisticated shopping cart discounts, giving away lots of free goodies that the little guys can't afford, when you are big, you play the game better. But the fact that this is going on tells me MAP doesn't work.
Sadly, free enterprise, or more succinctly, free market economics, seems to be dying. Recent court cases have affirmed the right of manufacturers to exert more control on how, and what, their products are sold, so I'm told.
The flip side is, it's possible for some yahoo without MAP in place to figure out a way to just flip scopes for pennies on the dollar, but fortunately in this business, most customers have questions, comments, needs for info and they will pay for it. Decent scopes just aren't being sold on every street corner. So I wouldn't sweat it too much.
When it comes to Vortex, we are are the smallest of the bigs, but frankly we stand to gain lots of margin if MAP becomers inviolate. But that's not what its about. It's about building relationships, serving customers, conducting business with honor and having fun. It's about hooking brothers up, for the long term. I guess I'm in the minority with that thinking.
To summarize, all else being equal (price), people stick with the tried and true, with the name brand recognition, which means the big boys. We can compete by luring them in with price, and keeping them with service. But MAP makes getting the foot in the door tougher, and rewards the cleverest and best-heeled system breakers with the most sales.
Scott
</div></div>
Exactly.
To say that MAP helps the little guy is the equivalent of breaking someone's leg (by making them pay higher prices for a product that has the same input costs) and then handing them a crutch (in this case MAP) and telling them you've helped them out.
By enforcing strict MAP policies, manufacturers deprive the smaller shops of one the fundamental mechanisms needed to become larger shops, discounting.
This ultimately ensures the anti-competitive success of the Big-Box retailer by making the smaller shop pay more for product with one hand and then restricting his ability to move that product with the other hand.
SC
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LibertyOptics</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: jasonk</div><div class="ubbcode-body">Not to get off track too much, but MAP has its merits. If it wasn't for MAP then guys like LO probably wouldn't be in business. Big shops (think Cabelas, Bass Pro, Dicks, etc) could buy in such large quantities and demand such high discounts that without MAP they could sell the scopes for less than smaller guys could buy them from the manufacturer for. Then, next thing you know, no small dealers who provide better CS than the big boxes.
MAP protects the little guys as much as anyone else. Choosing to pay MAP is your own business, but I always call the dealers for best pricing. </div></div>
Jasonk,
I could not disagree more. MAP crushes the little guys. Here's why.
MAP covers all advertising, including the net. People shop. People shop online. When somebody wants something, they look around for the best price. What happens when all pricing is the same in a vigorously enforced MAP policy? People buy from the familiar, the comfortable, the places you mention. Why take a chance on some little guy you never heard of? People will take risks for money, but if no reward, they play it safe. Then, big budget, big marketing, big recognition wins everytime. The little guys sit around with unsold product on the shelf.
While your premise is correct, big buying power equates with lower per item costs and potentially bigger discounts, the reality is that the margins aren't there to support such a stratey for long. Ever study a Cabela's quarterly balance sheet? Their net profit margin after costs is like 3 cents on the dollar, IIRC. They just do a billion dollars a year or thereabouts.
If left to our own devices, we got a pretty good thing going. My costs are low, the items we stock are in demand and sell, and my cash needs are relatively low. But doing the MAP hula wastes time and energy, and ultimately costs. It's a burden, but even more so when you are a small outfit.
The other angle is politics. I assure you MAP didn't derive from a bunch of little guys screaming to the manufacturers that Cabelas or Natchess or BassPro where selling products online below their costs. It was the big boys complaining about the little guys under-cutting them. They are right. They can't compete. But money talks.
Ironically, the big boys are better equipped to get around MAP. Massive email and snail mail coupons, special web codes, instant sophisticated shopping cart discounts, giving away lots of free goodies that the little guys can't afford, when you are big, you play the game better. But the fact that this is going on tells me MAP doesn't work.
Sadly, free enterprise, or more succinctly, free market economics, seems to be dying. Recent court cases have affirmed the right of manufacturers to exert more control on how, and what, their products are sold, so I'm told.
The flip side is, it's possible for some yahoo without MAP in place to figure out a way to just flip scopes for pennies on the dollar, but fortunately in this business, most customers have questions, comments, needs for info and they will pay for it. Decent scopes just aren't being sold on every street corner. So I wouldn't sweat it too much.
When it comes to Vortex, we are are the smallest of the bigs, but frankly we stand to gain lots of margin if MAP becomers inviolate. But that's not what its about. It's about building relationships, serving customers, conducting business with honor and having fun. It's about hooking brothers up, for the long term. I guess I'm in the minority with that thinking.
To summarize, all else being equal (price), people stick with the tried and true, with the name brand recognition, which means the big boys. We can compete by luring them in with price, and keeping them with service. But MAP makes getting the foot in the door tougher, and rewards the cleverest and best-heeled system breakers with the most sales.
Scott
</div></div>
Exactly.
To say that MAP helps the little guy is the equivalent of breaking someone's leg (by making them pay higher prices for a product that has the same input costs) and then handing them a crutch (in this case MAP) and telling them you've helped them out.
By enforcing strict MAP policies, manufacturers deprive the smaller shops of one the fundamental mechanisms needed to become larger shops, discounting.
This ultimately ensures the anti-competitive success of the Big-Box retailer by making the smaller shop pay more for product with one hand and then restricting his ability to move that product with the other hand.
SC
