Consumer vs. Local Dive Center vs. Internet

Is diving going down the toilet?

Is the internet really pushing the diving industry into the toilet? Or is it really a crappy topic from either side of the argument?

This debate has been raging for well over a decade now.  Between dive store owners (I am one) and manufacturing companies (I have run a couple) and inevitably, of course, the diving consumer (I am one).  The most surprising part about the debate is that there seems to be a continuing disconnect with reality.  So I think it is appropriate to start with a reality check.  Stand by for an amazing revelation:  since Al Gore invented the Internet, people have discovered it is a good thing and it is probably not going to go away.  At least not until the next grand technology comes along to replace it.  So, dive store owners have a typical Darwinian question to ask themselves.  Should they evolve or become extinct?  Manufacturers also have some key questions to ask themselves – guess what, it is the same one.  Diving consumers also have a question to ask themselves, but alas it is an easier one to enact once you have made a decision.  We will come back to that later. 

Is the internet really pushing the diving industry into the toilet?

Diving is somewhat unique because a large percentage of the “businesses” in diving are owned and operated by hobbyists in the sport; they do not rely necessarily upon the income provided by the sport and many of them have full-time jobs in much less fun occupations.  But diving is none the less a multi-million dollar business in the US.  And, surprise, surprise, manufacturers and many dive store owners are making decisions that are business decisions.  Every dive store owner knows the manufacturers rep that has made this promise or that promise about how his company will restrict Internet sales, yada, yada, yada.  Here is the reality.  These manufacturers are not restricting Internet sales because they like their dealers or because Fred of Fred’s proverbial dive shop is their best bud.  This may not sound like rocket science, but the reality is that I hear comments from dive store owners routinely that indicate that they have no clue about this reality of business.  Here are the brass tacks, hard, cold, facts.  If a manufacturer is restricting Internet sales, and some do, it is because he feels it is his best business model.  Here is another hard, cold fact.  Many manufacturers are not restricting Internet sales for at least some of their customers no matter what they may claim.  It is basically a two model business strategy with some gray area in between.  Either you want to be a volume dealer expanding the quantity of products you sale through every means necessary or you are willing to forego volume to increase quality, especially the quality of the vendor that delivers the product to your customer.  This of course means that the mfg has to increase the margins he makes on his products.  This ultimately means that the customer will pay for the lower volume but they will hopefully get better quality.

Here is the problem – most companies want to pursue both strategies, but with the current mentality in the market place, these seem to be positions that are at odds with one another.  No matter how much you sell, you always have a tendency to want to sell more and generally speaking, most manufacturers fall into this camp.  It seems that even the hard core manufactures that have religiously preached the necessity for a high quality dealer network are shifting more and more to internet sales in order to increase market share.  Some of them do it above board and honestly, laying their cards on the table, and some of them do it more surreptitiously through third parties with plausible deniability.  (For those – here is a hint – your deniability becomes less plausible annually and some store owners really do have an IQ larger than double digits, so grow a spine, state your decision and live with the fallout pro or con.)  The reality is that most manufacturers are somewhere in between – attempting to support both the traditional brick and mortar dive store and those stores or other companies that choose to sell on the internet.  Unlike what many believe, the internet is not the panacea of salvation for the struggling retailer nor is it always the greatest deal for the diving consumer.  In fact, there have been several large dive stores that have jumped into the internet market only to jump back out again after loosing substantial sums of money.  Internet sales are plagued with unrealized cost factors for the seller, like the cost of loses for fraud, the higher cost of credit card processing, the cost of advertising, and promoting the site, etc.  These costs prevent the online retailer from selling as cheaply as many of them initially envisioned.  Therefore, truly hot deals for consumers are fewer and farther between as the sellers get more educated about dwindling bottom lines every year. 

Consumers beware of hidden cost:  Consumers should also note that this is a business and the internet sellers have to make up their losses or boost their profits.  Either they do this with up front pricing or they do it with back end costs like handling charges, and earning a percentage of profit on the actual shipping cost.  So increasingly real differences are measured in minor percentage points – not huge savings or huge profits and that is another reality check.

Market players beware of long term consequences:  Beyond the decisions of the manufacturers, the industry is faced with some decisions and a need for some reality checks.  For the manufacturers adopting a sole mass market mentality a slow realization has begun to rear its ugly head.  Whether he is independent or affiliated with a store, the diving instructor holds a lot of the keys for successful selling of any brand.  New divers typically know nothing about our sport.  As a result, they take their cues and advice on equipment purchases from instructors and dive store owners have recognized this strong selling tool for decades.  The reality is that if your brand is void of instructor influence, you will also be void of any significant market share.  Until we flash back to the 60s and manufacturers are willing to accept the liability of selling to untrained divers OR automation allows divers to be completely internet trained including water skills this will continue to be the case.  Effective brands understand this and use it. 

Retailers & instructors should get clue: The problem for the mass merchandiser is that they lose dive stores if they feel they cannot compete with the internet sellers and this flows down hill.  Therefore, the mfg eventually loses touch with the instructor base and therefore the market share tends to decline, especially with new divers.  Since there is a tendency for brand loyalty this also affects the replacement gear sales market.  In theory, this should give the dive store owner a leg up in negotiations with manufacturers.  However, it is only a leg up if the retailers are smart enough to realize it and organized enough to use it.  Unfortunately, the marketplace demonstrates that these are not the cases.  It should also put independent instructors in a position to negotiate directly for purchase access from manufacturers.  But once again, the market demonstrates this as an opportunity lost because manufacturers typically lack an appreciation for the number of divers trained by independents and independents lack the organization to demonstrate the realities that exist. 

Evolve capitalize on the technology because you cannot fight it:  The Internet itself gives both retailers and independent instructors some opportunities if they choose to capitalize on them.  For example, many regulator manufacturers require final adjustments to be made by the retailer when he delivers the final product.  Online sellers may or may not provide this service.  As an instructor, who operates in areas remote from my dive shop, a shop owner, and a former charter operator, I have seen a significant number of divers come to a dive site with a new “internet regulator” that fails to properly function.  The issues are usually solved by minor adjustments.  The adjustments which should have been made by the dealer.  However, a failure is still a failure and these problems can result in accidents at worse or throw a potentially costly cloud over your dive trip at best.  We also see a significant number of consumers walk in the door with boxes of equipment and no idea how to assemble the pieces.  The retailer can benefit here by offering testing and assembly services for internet customers at a fair fee.  The internet consumers can benefit from this service by taking advantage of the great deals sometimes found on the Internet without sacrificing the safety of a checked, assembled and tested product.  Unfortunately, many retailers take a hard line stance that they will never service an internet product.  While they wait for the Internet to go away, I’ll direct the rest of us back to the Darwinian questions at the beginning of the blog. 

Retailers should not try to compete head to head; they should seize the unfair advantage: Retailers can also benefit from the Internet by simply filling the void the internet retailers cannot effectively fill, customer service.  Filling this void requires education, diligent attention to keeping up with the latest in innovations and spending time with your consumer.  If you understand which product is best for various applications, and you can effectively articulate that to your customer, you can provide a service that many people are willing to pay for.  If you can help, your customer get properly fitted so that their BCD or exposure suit is both safe and comfortable when they start diving with it, that is also a service that many consumers are willing to pay for.  So for the retailer willing to put in the effort, there is a market that may actually be expanding because of internet sales.

Opportunity or deficit you decide:  Dive instruction can provide a good paying job for an enterprising independent instructor and the internet can assist with this.  For the first time the independent instructor has the ability to operate completely without real strings to any facility except for access to air fills.  Gear purchased on the internet can fill the rental gear role and you have a store in your computer to refer all of your students too as the need for gear arises.  Additionally the internet is creating a whole group of new customers that have no affiliation to a dive store, and who need instruction.  If you are an instructor willing to invest 7 or 8 thousand in a good compressor and spend the dollars to keep it maintained and inspected, as local laws (and common safety sense) require you may be ready to open a business.  Add about $8000 for gear plus the cost of sending it to a repair clearing-house annually for service and you are ready to become independent instructor extraordinaire!  You probably will not make a million but the fringe benefits are worth something and if you work really hard (and smart) at it – you can make 50k or so a year in profit. 

Consumer reality check:  Consumers also have a question to ask themselves here.  When you purchase a diving related product, is price the only issue?  Is quality service the only issue?  Or, as for most of us, does the answer lie somewhere in between.  You can save dollars on the internet, but be sure you look at the final tally and add up all the cost when you compare what you are getting to what you can get from your local dive store.  Most retailers accept that you may buy some things from the internet, but there is a proper etiquette here.  It is not appropriate to expect your local retailer to give you all the information necessary to make your internet selection.  If you are going to buy from an online retailer, get that information from the online retailer.  The local store is a business and as a business they have to make money on the time they invest in their customers.  Just like you expect your employer to pay you when you go to work, you should expect to pay the retailer when he is working for you.  Many divers are surprised when they find they are no longer welcomed in the local dive shop and blame it on the fact that they bought it on the internet – in most cases, they need to wake up.  The problem is not where they bought the wetsuit, it is the fact that they spent an hour and a half of the retailer’s time getting fitted so that they would know what size to order.  Under those circumstances, can you really blame the retailer for firing you as customer?   What would you do if your boss asked you to come in for a few hours next week without pay?  However, this knife cuts both ways, if your customer buys something on line, man up and accept that you lost the sale then you can focus on earning your customer’s business next time or in some cases just accept that everyone is not your customer.  If your focus is price only and you buy your gear exclusively on line – I am not going to turn you away from my classes or trips.  But I am also not going to assemble your new “net” gear free or provide you with the free advice on what to buy.  I will of course consult with you for my normal consulting fee and service your gear for our regular tech rates! 

Know before you buy:  Before buying a piece of life support equipment on line, be sure you check three things:  will it have a warranty; does the online seller have a qualified and certified technician who will check that product and make any final adjustments before delivery; and know the final cost.  Many divers are amazed to find that they actually paid as much for a disassembled, untested product as they would have paid for a fully checked and serviced product at the local dive store when the total bill is tallied.  Also, keep in mind that if you are buying multiple components like a regulator, octopus and gauge that these products need to be assembled.  In most cases, the online seller is going to deliver the components separately in their original packaging (raising the question – has it been tested and tuned before delivery?), so once you receive it you have to be either prepared and qualified to assemble it yourself or willing to pay someone else to do it for you.  Just like on every dive, you need to weigh the cost vs. the benefits, do an analysis and decide where you want to do your business.  Where it is a close decision, I would encourage you to also include the factor of supporting that local dive center.  Even if you are buying your gear from the internet, they are probably still providing you with vital local services – access to air fills, qualified instructors and perhaps social activities with other divers.  Like every thing in life – these services are not free and where the cost are close or the dive shops services may make up the difference shouldn’t you tip the scales a bit in the local guys favor?  How much is having a post dive beer at the local quarry with 20 other local divers on a stay at home Saturday afternoon really worth?  That is something that only you can decide!  If your shop is not providing that type of interaction then obviously it is worth nothing so evaluate it accordingly!

Now I have one final suggestion: instead of sitting in front of our computers and pontificating on this kind of crap, why don’t we go fill our tanks and go diving.  For those that do not agree – beware of carpal tunnel as for me I am off to Pinellas Park to teach a Cis Lunar CCR class in the morning and Eagles Nest Again on Thursday!