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It’s no secret that customers are increasingly turning to the Internet for their everyday shopping needs. According to the Commerce Department, web sales totaled $304.91 billion in 2014, up 15.4 percent from 2013. And those numbers are only expected to climb in the coming years. For pool and spa dealers, the rise of Internet retailing is one of the most pressing issues of our time. As customers flock to the Internet to buy APCs, pumps and chemicals at cheaper prices born of lower overhead, long-established stores lose vital sales. To learn more about each side of this issue, we turned to two people directly affected by it: Dan Harrison, president of PoolAndSpa.com; and Scott Long, a longtime brick-and-mortar retailer. We asked them both the same question: Does e-commerce help or threaten the pool and spa industry? On Tuesday, Harrison shared his thoughts about online retailers; below, we get the brick-and-mortar perspective.
I am a professional pool and spa builder, retailer and servicer with more than 25 years of experience. In all that time, I've never been at my wit's end like I am right now.
Each day, my team and I spend countless hours in the store, on the phone and in the field educating consumers about water chemistry, installation procedures, building codes, warranty support and service issues. We have always been willing and proud to be resourceful and helpful. And we did it because there was a payoff in the form of sales.
Today, we're still spending the countless hours educating customers, but now we're doing it for free. We are essentially unpaid employees of Amazon.
You see, the problem isn't online sales versus in-store sales — the problem is the lack of profit margin protection for professional pool and spa dealers. Before the Internet age, we signed yearly authorized dealer contracts with many manufacturers that ensured we were the only place consumers could purchase a given product. Now, these contracts are long gone and anyone is free to buy and re-sell the products. Manufacturers no longer set professional expectations or requirements. This sends a clear message: It means very little to be a professional pool and spa dealer.
This is incredibly painful because it's the industry itself that's allowing this to happen. We're allowing Amazon to represent our professional products and ruin the viability to our industry.
Some people say we need to price our products differently to better compete with Amazon and other online retailers. And for a while, my company did lower prices and matched online prices while still paying the bills — but that doesn't work anymore. Over the last 10 years in particular, retailing has turned into a cruel game of "name that tune" — in other words, whoever can sell a product for the lowest cost wins. And because the "competitive retail price level" is being established by the Internet, big box stores, catalogs, professional retailers, etc., profit margins are continuing to drop. Razor-thin margins don't matter to Amazon and other large e-tailers because they're high-volume companies, but I, as a small, independent company, cannot compete.
This stings even more because Amazon doesn't get its hands dirty, educate customers, advertise locally and provide showrooms or community involvement. They don't invest back into our industry, and instead leave all of the "work" to us pool and spa professionals. It's a lose-lose situation.
The truth is, today's consumers have immediate access to thousands of businesses competing to sell the same commodity. And we as pool and spa professionals are kidding ourselves if we think we can consistently convince clients to pay more money for an identical commodity they can find online for less. As a result, we're losing more and more of our customer base every day. We've invested in our customers by building their pools, training them, advising them when issues arise, establishing a rapport with them. But obviously, our customers are going to go elsewhere to buy the professional products we carry if it's cheaper. Sometimes, they can even buy at wholesale rates! We've always strived to be fair and ethical with our customers, but it's mortifying when a longtime customer takes out their smartphone and asks us why we're not even close to "competitive retail pricing levels."
Distributors also play a role in these issues, as they're fulfilling large e-tailer orders and shipping directly to customers. To help cover the cost of supplying to e-tailers, they're raising the cost to professional dealers.
In the past, our wholesale pricing was more consistent. We were given manufacturer catalogs that listed MSRP, and the distributors would provide a discount multiplier so we could work backwards from the MSRP to establish our wholesale cost. Today, they're using wholesale price matrices that set the pricing much higher and much less consistently. Many manufacturers no longer publish MSRP, which adds to our confusion.
It's obvious that distributors are selling product to e-tailers for less than they are selling to professional pool dealers. Personally, we have patronized many of these distributors and manufacturers for 42 years. It is aggravating to know that they are supplying anyone and everyone with professional pool products. Even more insultingly, they're putting us at a competitive disadvantage by pricing us out of the market.
As far as ways to compete, some suggest we need to focus on our service business to stay afloat, but the same problems plague the service side. More and more often during service calls we diagnose the clients problem, price the replacement parts and leave the job without a sale because the client says they can buy the repair item at wholesale pricing online. Even specialty and commercial products are now available online below wholesale-level pricing.
All of the above problems stem from one fact: We are not in control of our industry. Manufacturers aren't controlling who sells their products and distributors aren't controlling their prices — and as a result, we as professional pool and spa dealers can't control much of anything! No one is looking out for us, and we're slowly but surely getting squeezed out of the market.
I love this industry, and I have 25 years of experience to prove it. But if things continue this way, I don't know how much longer I'll be a part of it.
Scott Long is the owner of Wet & Wild Pools & Spas, New Philadelphia, Ohio.
The National Retail Federation is renewing its efforts in Congress to require online sellers to collect sales tax the same as local stores.
“With more states passing sales tax laws or going to court, pressure is building on Congress to finally address this issue,” says NRF Senior Vice President for Government Affairs David French. “The states know they can’t fix this on their own, but they agree with retailers that Congress has stalled for far too long. Online sellers should not...
It’s no secret that customers are increasingly turning to the Internet for their everyday shopping needs. According to the Commerce Department, web sales totaled $304.91 billion in 2014, up 15.4 percent from 2013. And those numbers are only expected to climb in the coming years.
For pool and spa dealers, the rise of Internet retailing is one of the most pressing issues of our time. As customers flock to the Internet to buy APCs, pumps and chemicals at cheaper prices...
Over the past year, the Manufacturers Council has focused on the industry's inability to attract and retain good employees at the dealer level. Listening to these discussions led me to a moment of pause. After reflecting upon the dealers with whom I have enjoyed long-standing relationships, it occurred to me that they were now, or would soon be, entering the twilight of their careers. A look in the mirror further revealed that I no longer had a full head of hair, and that which remained...
Editor's Note: As of this article's online publication, the KFC Hot Tub campaign has closed. It surpassed its campaign goal of $46,683 to raise a total of $53,909. The hot tub is available to purchase (so far, only three are available) at $13,311 and is expected to ship in August 2019.