Written By: Connie Lasco
Every archery store front dealer is all too familiar with the yearly process of meeting with their various bow and archery gear representatives to view, discuss, negotiate and order their store’s inventory for the new year at the best possible wholesale prices. Question: If even one of those reps told you that immediately after closing the deal with you, he was on his way to sell the same product to your competitors down the road for 15% less, how long would it take before you tore up that order contract and kicked that rep to the curb? Not very long at all I would suspect. What if 75% of your reps did that same? Would a “going out of business” sign plastered across your store front flash before your eyes? You bet it would! Although it is highly unlikely that any rep would ever be so bold, that is exactly what is happening, and I am about to prove it.
Every well run archery manufacturer understands the importance and necessity of establishing a minimum advertised price policy otherwise known as MAP. MAP is what maintains the value and demand of their product; promotes the necessity and importance for dealers to compete in the establishment of superior customer service, bow tech and product knowledge and experience, and eliminates the “get rich quick” dealers from the serious ones. MAP has proven to be enforceable and accomplish the purposes for which it was intended throughout the times when the only competition dealers had to worry about were the ones located within the same state, county or city as yours. Those “good ol’ days” have long since passed resulting in a whole new era of archery dealer competition where MAP is not being enforced by archery manufacturers. This new competition is located in almost every household throughout the country and is competing with you under the business name of eBay and e–commerce just to name a few.
According to the U.S. Census Bureau of the Department of Commerce “he estimate of U.S. retail e–commerce sales for the first quarter of 2011 was $46.0 billion, an increase of 3.4 percent from the fourth quarter of 2010”. Why are archery consumers purchasing online instead of at their local archery pro–shop store? One legitimate answer is that some consumers simply prefer the convenience of shopping in the comfort of their home. But the most significant reason is because consumers are quickly figuring out that they can purchase their archery equipment needs at significantly lower costs thanks to the devastating lack of MAP enforcement. If you are a legitimate and serious archery retailer, you are losing sales to eBay and e–commerce sellers who couldn’t care less about playing fair or following MAP. If you have not already experienced the frustration of your local customers walking into your store with a new bow and/or archery accessory that they purchased online requesting that you now do the labor, you will be very soon. Take a look.
In an effort to compete and partake in the multibillion dollar and climbing archery retail industry, I rolled up my sleeves and pursued the endeavor of expanding my successful store front business onto the internet. After two years of hard work, my internet website and eBay store was created only to quickly realize that I never really stood a chance. It is not the big box store archery dealers that are the main culprit. It is eBay.
Millions of consumers log onto eBay every day looking to find great deals without ever leaving the comfort of their home. eBay offers shoppers the opportunity to compare prices for specific products sold by several eBay sellers all within the same page. Therefore, before I list a product on eBay, I must research my competition. You will not believe what I discovered!
Example: I received my first shipment of a brand new 2011 sight from a manufacturer I will call ABC Sights. I know that I paid the lowest wholesale price that ABC Sights affords to their top rated dealers at $43.00. ABC Sights has an MAP of $79.99. Before I can determine what to sell this sight for on eBay to ensure a profit, I must do some math first. eBay charges an average insertion cost of $1.20 just to list this sight with a product image. Even at a “top rated” eBay seller status which affords sellers the lowest eBay final value fee, eBay takes 10% of the sale. Because the majority of eBay consumers use PayPal to pay for their purchases, PayPal also deducts 3% of the sights final value fee. Lastly, I must factor in the cost of shipping the sight to the buyer as well as expenses for packaging. When all of the above is calculated to ensure a reasonable profit, it looks like this:
Wholesale Cost: $43.00
eBay Final Value Fee @ 10%: $7.41
eBay Insertion Fee: $1.20
PayPal Fee: $2.40
Approx. Shipping Cost to Buyer: $8.00
Total Cost: $62.01
Therefore, just to break even, I must sell this sight for $62.01. If I were to sell this sight at ABC Sight’s MAP of $79.99, my profit after expenses would be $17.98 which is $19.01 less of a profit if I sell it in my store front. However, after researching my eBay competition, I discover that this same- just released 2011 sight is being sold for $59.99 including shipping – $20.00 under ABC Sight’s MAP. As a consumer, if you have the same brand new, unopened 2011 sight offered to you at $59.99 vs. $79.99, it is most likely you would purchase the sight that is being sold for $59.99 vs. the sight that is being sold for MAP at $79.99. So when your customers come to you to install a sight, rest, etc. on their bow that you know they did not purchase from you, you now know why. They bought it on eBay or the internet for less than what you paid for it wholesale.
This discovery influences me to investigate further. After researching a voluminous amount of different archery products by several different archery manufacturers listed on eBay that I know have MAP requirements, I am shocked and appalled to determine that every newly released 2011 archery product that I researched is being sold under the manufacturer’s MAP policy. Further, not only are archery products being sold under MAP, but they are also being sold for less than what it costs to list the product on eBay. Finally, it is determined that it is mostly the same eBay sellers that are the culprit. This reality leads to two priority and inevitable questions. (1) How can this dealer profit from selling this sight for less than it costs him after factoring in all of eBay and PayPal’s expenses, and (2) why isn’t ABC Sights enforcing MAP?
Profit after Cost
How is it possible for the dealer selling ABC’s sight to profit from selling the sight for less than what I know he at least should have paid for it? According to my conversation with ABC Sight’s national sales rep, it is because individuals are successfully opening up distributor accounts with top archery manufacturer giants thus allowing them to purchase archery products at significantly lower costs to sell on e–commerce vs. archery dealers enabling them to sell these products for much less than legitimate dealers and still profit. Further, although ABC Sights was completely aware of the issue, they are unable to determine which distributor is the culprit of this scam because they are hiding behind an untraceable eBay username and false contact information. Because these professional scam artists focus their archery inventory purchases and consumer sales with the archery manufacturers who contribute to the majority of archery dealer’s inventory, honest archery dealers are wiped out from any opportunity to compete both locally and on e–commerce. To further aggravate the situation, ABC Sights made it very clear to me that they were either unable or unwilling to determine who this eBay seller is in order to cut them off from any further purchases. At this juncture of the conversation with one of the largest archery manufacturers subject to this problem, I made a few suggestions to catch the one main eBay seller who is responsible for approximately 99,000 archery product sales under MAP. Have an undercover individual make a purchase to see what the return address is to compare with your distributor records; have an undercover individual contact him via his eBay “contact seller”e; link in an effort to gain more information of who he actually is; contact eBay to apprise them of the problem and respectfully demand this eBay seller to either be shut down or be given this eBay seller’s name and contact information; and most importantly, compare your distributor’s product purchasing patterns to compare with this eBay seller’s inventory in an effort to narrow it down. To my knowledge, none of the above–mentioned efforts were made to date. The conclusion is that I can no longer afford to invest in ABC Sights – period.
If I cannot count on ABC Sights to enforce MAP both within the store fronts of archery dealers as well as eBay and e–commerce on a regular basis, I cannot justify the risk of investing in their products leaving me no other choice but to find another who will.
The bottom line is that regardless of whether you directly sell your inventory on the internet or not, you are losing profits to eBay and e–commerce sales as a direct result of manufacturer’s failure to enforce MAP and manufacturer’s failure to even have one at all. The sooner dealers become empowered with the knowledge of this very real crisis, the sooner we can become part of the solution.
What Can Be Done
The proposed solution that I am about to convey achieves several important goals. First, it will stomp out the e–commerce sellers who are the most responsible for eliminating the competing check and balance system. Secondly, the archery manufactures – both big and small – will have a new competing edge to be recognized for consistently monitoring, enforcing and resolving e–commerce MAP prices, and likely enjoy an increase in sales. Thirdly, it will give archery manufacturers the incentive to instill policies and procedures to quickly and accurately locate which dealer/distributor is responsible for MAP breaches. Lastly, archery dealers throughout the country will once again be able to profit, pay their bills, thus ensuring and protecting the overall growth and success of the archery industry in its entirety.
This archery industry crisis is simply way too widespread and out of control for a few dealers to conquer. We need thee archery industry giant to “step–up–to–the-plate” on this one.
The Archery Trade Association (otherwise known as the ATA) – is an organization that was founded for the sole purpose of growing, protecting, and supporting the long term success of the archery industry. The ATA is the most efficient, dedicated, capable and qualified entity to tackle this long overdue and growing epidemic with the support of archery dealer’s memberships, attendance and contributions.
As an archery dealer, if you knew that by attending the yearly ATA show you would quickly and easily know which manufacturers were not enforcing MAP, wouldn’t you be more likely to not only attend but to concentrate your inventory orders with those manufacturers who are enforcing MAP? Every attendee of the ATA show is required to where a name badge that provides the name of the attendee; whether the attendee is a manufacturer/exhibitor, buyer, dealer, or media; and the name of the business for which the attendee represents. If you could glance at every and any archery manufacturer’s name badge to reveal the status of their MAP enforcement such as platinum, gold or bronze, it is likely that you would stay clear of any manufacturer with less than a platinum MAP enforcement status. That in itself already accomplishes every goal mentioned above except for one. How can the ATA fairly, accurately and consistently reprimand those archery manufacturers who fail to enforce e–commerce MAP? Obviously, initially every archery manufacturer ATA show attendee is and should be afforded a platinum MAP enforcement badge. All that they need to do is keep it by enforcing e–commerce MAP policies. If the manufacture is wise, it will catch the culprits before the ATA does.
Based on research, the main culprits will not be found on website stores. They will be found on giant e–commerce “newspapers” that unknowingly house and enable sellers to go undetected and untraceable such as eBay and Craig’s list. Because one already knows where to look, all that is needed is a few ATA employed “MAP police offers” to do the looking on a regular basis. There are normally only a hand–full of sellers who are selling thousands of archery products for significantly less than what honest dealers pay cost for. However, it only takes one to cut every other competition off giving these crooks the red carpet to continue his scam. Upon detection of these eBay sellers by the MAP police, the manufacturer would be advised accordingly and requested to resolve it within a reasonable period of time. If it is not resolved, the consequence is a fair and reasonable demotion in MAP enforcement status.
The above written solution is intended to serve as a starting point to regain control of a check and balance system that every manufacturer, dealer, distributor and consumer can gain from. If you are not part of the solution, you are part of the problem. If you are not already a member of the ATA and/or attending the yearly ATA shows, now is the time. You are losing your archery retail store every single day. Unless and until e–commerce archery sellers who are selling under MAP are stopped, we will all be looking for jobs sooner than you think.