Waterbox 0% financing hurting my LFS.

[Westside Guy]

I’m all for giving local places a go. But an example would be when I went into a store near me. Asked him to quote me for $2000 worth of equipment and I said he needed to be close to online. He just laughed at me!

My LFS didn't hesitate and matched the online prices from BRS ad MD on all of my accessories.

 

[ShaggyRS6]

My LFS didn't hesitate and matched the online prices from BRS ad MD on all of my accessories.

And that’s a good thing! I think we can all forget that companies like WB and RedSea are in the business to make money! It’s what pays their mortgages like you and I. They are not in it to make LFS’s or anyone else happy , and I say this with the utmost respect. I think we all like to think that we should get a better deal or a cheaper price just because we are invested in the hobby , I know I can sometimes think that. But in reality everyone is just trying to make a living and those that don’t change with the times will be left behind.

Once again, said with the utmost respect!

 

[Westside Guy]

And that’s a good thing! I think we can all forget that companies like WB and RedSea are in the business to make money! It’s what pays their mortgages like you and I. They are not in it to make LFS’s or anyone else happy , and I say this with the utmost respect. I think we all like to think that we should get a better deal or a cheaper price just because we are invested in the hobby , I know I can sometimes think that. But in reality everyone is just trying to make a living and those that don’t change with the times will be left behind.

Once again, said with the utmost respect!

IIRC, Waterbox once had a promotion where they were giving away a free skimmer with the purchase of their tanks. This was not only offered on the WB website but it was also available through the LFS that carried their line. By doing so, they did not cause an issue with the sales in the LFS that represented them. WB should have offered this financing deal to all of the LFS that “featured” their line.

 

[MnFish1]

If you read my opening post I said, "Waterbox is advertising up to 0% financing".

Which should have no impact on your LFS - (or little impact) - because your LFS can provide the same 0% through a secondary lender. I.e. the person signs up for the tank - applies for the loan at the store - and if approved - the LFS gets paid - and the lender is on the hook for whatever interest rate, etc they decided to change

 

[Sisterlimonpot]

I agree, I shouldn't be surprised, but it never occurred to me that there are those out there

And that’s a good thing! I think we can all forget that companies like WB and RedSea are in the business to make money! It’s what pays their mortgages like you and I. They are not in it to make LFS’s or anyone else happy , and I say this with the utmost respect. I think we all like to think that we should get a better deal or a cheaper price just because we are invested in the hobby , I know I can sometimes think that. But in reality everyone is just trying to make a living and those that don’t change with the times will be left behind.

Once again, said with the utmost respect!

Let's take a step back and think about that for a minute. The business model for companies like WB and RS is to make and sell tanks to the LFS at a profit for them. (Just to toss out numbers) Let's say it cost WB $1000 to manufacture a tank (That's to cover everything that goes into making it and delivering it to the store), they sell it to the LFS for $2000 and maybe slap a MAP of $3000.

In this scenario WB is making 100% return, and the LFS is seeing 50%. If WB decides to cut out the middle man and continue to sell the tanks at $3000 directly to the customer, who loses out? The LFS lose, the customer get's a 0% finance (if they qualify) and WB is doubling their profit margin.

I don't know about you but I would think that WB should offer a better price if I purchase directly from them.

 

[melanotaenia]

Have not been much of a fan of any of the things WB has done; they have turned me off to ever buying their aquariums. I would rather spend the extra money on Elos or something similar.

 

[MnFish1]

I agree, I shouldn't be surprised, but it never occurred to me that there are those out there

Let's take a step back and think about that for a minute. The business model for companies like WB and RS is to make and sell tanks to the LFS at a profit for them. (Just to toss out numbers) Let's say it cost WB $1000 to manufacture a tank (That's to cover everything that goes into making it and delivering it to the store), they sell it to the LFS for $2000 and maybe slap a MAP of $3000.

In this scenario WB is making 100% return, and the LFS is seeing 50%. If WB decides to cut out the middle man and continue to sell the tanks at $3000 directly to the customer, who loses out? The LFS lose, the customer get's a 0% finance (if they qualify) and WB is doubling their profit margin.

I don't know about you but I would think that WB should offer a better price if I purchase directly from them.

I would think that Waterbox 'could' offer a better price - but not that they 'should'. But - for example - when I bought my RedSea tank from my LFS - its not like they have a stack of tanks in their store just waiting to be sold - they just order it from RedSea - to their store. Whats interesting - If you have your tank shipped directly from RedSea to your house the shipping is quite a bit higher than if its shipped to an LFS first.

 

[ShaggyRS6]

I agree, I shouldn't be surprised, but it never occurred to me that there are those out there

Let's take a step back and think about that for a minute. The business model for companies like WB and RS is to make and sell tanks to the LFS at a profit for them. (Just to toss out numbers) Let's say it cost WB $1000 to manufacture a tank (That's to cover everything that goes into making it and delivering it to the store), they sell it to the LFS for $2000 and maybe slap a MAP of $3000.

In this scenario WB is making 100% return, and the LFS is seeing 50%. If WB decides to cut out the middle man and continue to sell the tanks at $3000 directly to the customer, who loses out? The LFS lose, the customer get's a 0% finance (if they qualify) and WB is doubling their profit margin.

I don't know about you but I would think that WB should offer a better price if I purchase directly from them.

I get this. But from my perspective WB Are just doing what they feel they can charge and still sell stock. I don’t have any feeling about what they should or shouldn’t do. It’s their business model!

If you can afford it you will buy it! If you can’t or you don’t agree with the model you probably won’t !

 

[KStatefan]

Which should have no impact on your LFS - (or little impact) - because your LFS can provide the same 0% through a secondary lender. I.e. the person signs up for the tank - applies for the loan at the store - and if approved - the LFS gets paid - and the lender is on the hook for whatever interest rate, etc they decided to change

The LFS would also to be able to add other items in addition to the tank.

 

[MnFish1]

The LFS would also to be able to add other items in addition to the tank.

Yes right - thanks - even if they sold the tank at break even - or a small margin - it keeps people in their store

 

[vangvace]

Tha is the point, Waterbox is biting the hand that feeds them.

I for one try to support and purchase everything from my LFS as long as the price is within reason.

Honestly, it is short sited of the LFS. The tank has to be filled at some point and if they are acting like a punk when a customer asks about the tanks... that customer might just go elsewhere for livestock.

Perhaps the store should state they can have it dropped shipped straight to the customer... just like if they bought it online.

 

[Ed Hutchings]

As a small business retailer, it's in your best interest to stock and sell products from manufacturers or distributors that support you as opposed to competing with you. Things like minimum advertised pricing (MAP) policies, as well as dealer locators and referrals to steer potential customers to them are what you need to look for.

Most retailers have to "buy-in" to a line or product manufacturer. So, to stock WB, chances are your LFS had to pony up 20 grand or more just to be able to stock and sell their stuff.

Hopefully their dealership contact was written in such a way they can recoup some of their investment seeing as their supplier is now their competition.

 

[Jon Fishman]

Buying things online is hurting brick and mortar businesses? That’s new......

Seriously though...... direct sales is almost always the best way to go which is unfortunate if you’re a small business owner

 

[Westside Guy]

Most retailers have to "buy-in" to a line or product manufacturer. So, to stock WB, chances are your LFS had to pony up 20 grand or more just to be able to stock and sell their stuff.

My LFS has several WB tanks displayed on their floor and I am sure they weren't freebies from the manufacturer.

 

[MnFish1]

My LFS has several WB tanks displayed on their floor and I am sure they weren't freebies from the manufacturer.

It would be interesting to know - since your LFS was comfortable enough to tell you about the offer, etc - whether they have to pay for the display tanks - and why they haven't taken any of the steps recommended here to fix it without discontinuing the tanks?

 

[Westside Guy]

They were upset and said they had already decided to move over to Red Sea. If I have a chance and see the manager I will ask him.

 

[Montiman]

As someone who worked at an LFS for years what the community needs to understand is that we as experienced hobbyists are the least profitable customers for the LFS. The best customers are new hobbyists and maintenance clients. When I was at the LFS I completely ignored what the experienced hobbyist wanted. This would mean trend chasing and a race to the bottom for price. Instead show someone a beautiful tank say they can have it in their home today and take their money. If the Customer wants to check online for a quick BS test, fine. I would sell everything at MAP. They can leave with it today at a fair price and know I can help them if they need anything.

This requires tanks and equipment on the floor ready to go. It requires creating a store specific method for setting up tanks and committing to it for years. It requires an educated staff that all know the method. This almost never exists. The people who order a water box tank online know what they want. The LFS is best selling to people who don't know what they want. These showrooming customers already had an idea of what they wanted before entering the store.

 

[MnFish1]

As someone who worked at an LFS for years what the community needs to understand is that we as experienced hobbyists are the least profitable customers for the LFS. The best customers are new hobbyists and maintenance clients. When I was at the LFS I completely ignored what the experienced hobbyist wanted. This would mean trend chasing and a race to the bottom for price. Instead show someone a beautiful tank say they can have it in their home today and take their money. If the Customer wants to check online for a quick crap test, fine. I would sell everything at MAP. They can leave with it today at a fair price and know I can help them if they need anything.

This requires tanks and equipment on the floor ready to go. It requires creating a store specific method for setting up tanks and committing to it for years. It requires and educated staff that all know the method. This almost never exists. The people who order a water box tank online know what they want. The LFS is best selling to people who don't know what they want. These showrooming customers already had an idea of what they wanted before entering the store.

I bought my large redsea tank at my LFS - after looking online - because - the shipping was far less than ordering it directly to my house. They then set up the stand and got it into position - for a minimal price.

 

[Montiman]

I bought my large redsea tank at my LFS - after looking online - because - the shipping was far less than ordering it directly to my house. They then set up the stand and got it into position - for a minimal price.

Sure this happens but if a store builds a business model around this they are done. There aren't enough people like you to keep an LFS in business. The new customer who purchased the same tank will likely spend multiple thousands of dollars over the next year in equipment consumables and livestock. The service customer who purchased the tank will lead to even more sales because in addition to the dry goods and live stock. They will pay even more in service fees.

The experienced hobbyist has their own dry goods they like so while they may get some from you, some you won't stock so they will order online. The experienced hobbyist is also trying to keep costs down so they will buy bulk additives online and use eCommerce rewards programs. The experienced hobbyist has specific livestock they want and unless you have that exact crazy named frag you won't get the sale. O and if their buddy has some they might trade for it. Pretty hard to compete against free. Not to mention if you have a healthy tank you won't come in as much. New Hobbyists come in to solve algae problems, disease problems, nutrient problems. Experienced hobbyists don't come in. Their tank looks good. If it is doing well enough they will stop buying livestock since it is full.

Experienced hobbyists are not very lucrative customers for the LFS.

 

[mrpizzaface]

Sure this happens but if a store builds a business model around this they are done. There aren't enough people like you to keep an LFS in business. The new customer who purchased the same tank will likely spend multiple thousands of dollars over the next year in equipment consumables and livestock. The service customer who purchased the tank will lead to even more sales because in addition to the dry goods and live stock. They will pay even more in service fees.

The experienced hobbyist has their own dry goods they like so while they may get some from you, some you won't stock so they will order online. The experienced hobbyist is also trying to keep costs down so they will buy bulk additives online and use eCommerce rewards programs. The experienced hobbyist has specific livestock they want and unless you have that exact crazy named frag you won't get the sale. O and if their buddy has someone they might trade for it. Pretty hard to compete against free. Not to mention if you have a healthy tank you won't come in as much. New Hobbyists come in to solve algae problems, disease problems, nutrient problems. Experienced hobbyists don't come in. Their tank looks good. If it is doing well enough they will stop buying livestock since it is full.

Experienced hobbyists are not very lucrative customers for the LFS.

I totally agree with you. I buy very little in my LFS. I sell them lots of fish for store credit, and use that money for frozen food and small aquariums (probably $200 per month). I like to see the livestock as well. Besides those things the LFS has very little to offer me (besides an outlet to sell fish and get food). I don't see the reason to get a Red Sea from them vs BRS.
FWIW I don't see any problem with people choosing to use financing to fund whatever purchases they want.