Economic Side of Our Hobby

[Bobbofin]

The brick and mortar, mom and pop LFS are gonig out of business very quickly. Ecommerce, Petco and PetSmart are putting them out of business. As hobbyist we can't expect them to stay in business if we buy everything from Marine Depot, Petco and PetSmart and only buy random livestock and speciality items from them. In a conversation with a local LFS owner he told me that if his wife didn't have a good consulting job he could not survive on what he makes at the store. Also mail order/internet livestock companies get to cherry pick a lot of the shipments that come into LAX (LA Airport) so the top 25% of the premium stuff is online and not at your LFS. Another shop manager states the the problem is far deeper. Importers, distributors and online companies are now teaming up, further hurting the ability of shop onwers to compete. Then we come to Central Garden and Pet who has been buying up aquatics companies left and right and cater more to Ecommerce, Petco and PetSmart than the LFS. Ecommerce, Petco and PetSmart can buy 500 AquaClear filters and make $3.00 a each profit on them, the LFS has to make 30-40% just to survive. There's an article by outgoing president of the ADMA on their website that describes this situation in great detail. Here's the link >> http://www.amdareef.com/ I recommend everyone read it. It will shine light on the commercial state of our hobby. My general rule of thumb about buying mail order is this: If a mail order item costs $100 + 10 shipping, $110.00 total, I am willing to pay 25% more or $137.50 to purchase it from a LFS to keep them in business so they'll be there in time of emergency, and be a place to look at the live stock I am buying. I have purchased stuff online and I admit it but about 80% of the stuff I have has come from a LFS. Recently I bought SeaChem 1000g amounts of Advantage Calcium, Magnesium, Reef Builder and Sea Gel. Why? Because at the LFS they would cost over $100 and with shipping it was only $55 from Marine Depot hence the 25% rule of thumb I go by.
I used to build and run radio control airplanes, boats and cars. This also is a very expensive hobby, so much so that I had to choose between that and the reef hobby. I see the same thing happening to this hobby that occured in the r/c hobby. Great Planes Inc has bought up a lot of the distrbutors, manufactorers and undercut the local hobby stores via their www.towerhobbies.com website. They also supply these very hobby stores as a distributor as they stab them in the back. What has been the result? About 75% of the r/c hobby stores have gone out of business. Is that the future of our hobby also?

 

[TomD]

Well, the bottom line is that e-shops are cheaper. It is unfortunate, and I feel for the people that own shops but that is life in a changing business. I would like to support LFS more but for one not to many have nice corals and it is a drive for me to go up north or way south to find a decent coral. For the ones near me a 3-4 head acan lord that is browned is like $100 Forget about a nice bleached out acro for $120.

I have seen equipment marked up a lot more than 25% and not only that, I barely can find what I am looking for at a lot of LFS. I don't think I have ever used Petco or those places, maybe once for er salt.

There is only 2 stores from RI to NH that I know of that sell decent coral. Am I wrong and missing them?

This is a far bigger issue than the hobby. Whichever route can get the product to the consumer faster is the route people will take. Local LFS are going to have to find a way to get creative. Sorry to put it so straight.

 

[APISTOBORELLI]

I worked for a friend for a long time who is barely making ends meet now. Wholesalers seem to be raising the prices and he can't buy the quantity to get the discounts. IMO, it plain sucks because you get better service in the mom and pop shops than in the Petcos.

 

[RayD]

This discussion had been posted here before. It's a sad state of affairs. At least at the LFS you know the guys, you can ask direct questions and hang and chat about a problem ar whatever for as long as you want. The owner Bob speaks of always tries to help you out with problems or just shoot the breeze. Never an attitude! You always leave there with an idea or two. Great guy with a great store.

So how would I do it differently if I were the shop owner? Well I say if you can't beat em join em. Easy for me to say right I don't own a shop and I have that similar "great consulting job" Bob speaks of!.

But I would try and break away from just being a cash and carry mom and pop store. On slow days I'd be looking for the deals online annd flipping the product right back online. I'd have an ecommerce website and sell my goods online as well. I'd buy from my distributors but I would also buy from as many sources as I could get a deal from. Anyone who knows me knows I'm all about getting the lowest price. I would buy and sell product whenever/wherever I could and would work it constantly. I now it's hard work but it pays off.

I'd have a section of the store for frags. All kinds of inexpensive pieces the I either fragged myself or broke off or whatever. Customers would look forward to coming in just to see what's new each week! I'd hold events at the shop. I don't know a frag cookout or a swap or whatever I could. Bring em in and they'll buy. It's just the nature of the beast.

So here's a another comment I have on the LFS situation. There's been many times that by the time I got to the store on the weekend (mostly Sundays) most of the order that came in earlier in the week was picked through and there wasn't much in stock to choose from. My buddy would call and say "anything new in at so and so's?" and I'd have to say respond to the negative. So if I had a place I would put in two orders a week and have a freshly stocked store for the weekend crowds especially with the summer coming to a close and reefing season upon us.

One of the local stores always has tons of stock and every time I go there it's busy. So another major key is to be stocked all the time. I KNOW reefers will come in if they know you have tons of stuff in the tanks. This hobby is an impulse buyers hobby. How many times have you gone in just to look and walked out dropping $100 or more?

Are the local stores getting beat up by big business Ecommerce? Yes. Does it suck? Yes. But can the local store owner do something about it by thinking beyond the cash register and getting creative? YOU BETCHA!

Whew! Have I rambled on enough?

Seacrest OUT!

 

[Behrmon]

IMO one of the difficulties I see for the LFS's is that they have for the most part - ethics & a true passion for the hobby. It seems to me that for them dealing with some of the big player importers of fish and corals is kind of like sleeping with the enemy. Although obviously they need a source for their goods I think it's pretty difficult to try and work with a source that is most likely undercutting you at the same time. Let's not forget that dealing with us isn't easy either.

Ray is right, this subject has come up a lot in the short time I've been here and there a lot's of different circumstances for each of us, travel, time etc. While this has been broken down many times into business models, supply & Demand etc., I know for me at least there is NO substitute for a good relationship with a LFS - face to face answers or chat about problems or questions I may have about my reef.

 

[dedfish]

I know after driving 25 mins 1 way to find out that a LFS doesn't have 2 common types of snails in stock and having to walk out empty handed really makes me consider doing more business online.

 

[Behrmon]

I know after driving 25 mins 1 way to find out that a LFS doesn't have 2 common types of snails in stock and having to walk out empty handed really makes me consider doing more business online.

Understandable but hopefully nothing a two minute phone call would help prevent that from happening.

 

[Alex]

Yup this one has been beaten to death. To me the reality of this is that stores need to find ways to be innovative if they want to stay in business. You either need to find ways to get people in the door or you need to find alternative ways to generate revenue.

 

[Qwank]

maybe its becuase of where i'm located, but i'm within 15 mins of 3 awesome LFS and they always have great coral and livestock and resonable prices. i hardly buy anything online anymore.

 

[RichConley]

Yup this one has been beaten to death. To me the reality of this is that stores need to find ways to be innovative if they want to stay in business. You either need to find ways to get people in the door or you need to find alternative ways to generate revenue.

Bingo.


Which is why I'm flabbergasted that I keep hearing that stores are paying $60 to get Mag5s from their distributors, when marine depot will sell them to you for $45.


Theres a million little things that stores could be making money on, that hobbiests would love, and they're not doing them. I'm of the feeling that the reason thats the walmarts of the world are killing the mom and pops, isnt just because of price, its because the mom and pops arent doing anything better than walmart.

As to advice, and mom and pops, have any of you guys talked to guys like Jeremy at Premium aquatics, etc? They know their stuff, and better than a lot of LFS employees (Certainly more than the non-B, non-Jeremy, non-Mike, etc employees).



I buy a lot of stuff online, and its not just price. Its warantee. If I buy a fish online, I know I'm getting my money back if it dies.

 

[dz6t]

If I invest in a petshop, I would do cat and dog service as the main cash income and fish and coral on the side. A fish/coral only store is not a viable business these days.

 

[RichConley]

A fish/coral only store is not a viable business these days.

I dont know if thats necessarily the case. I do know that, in the way most mom and pops are running, you're absolutely correct.

I think a lot of places need to realize they own a business, and not a fish tank. Everything needs to be thought about with energy costs, efficiency, etc. You ALWAYS need to be looking for ways to find new sources of revenue, and ways to reduce cost.

For example, theres absolutely no reason stores should be running VHO or PC. Theyre significantly more expensive to run, with no real benefits. They shouldn't be running large mag-drive style pumps, but instead should be using stream style pumps.

 

[agent6473]

I agree with Rich. There are very few shops which operate under good economic principles.

 

[dz6t]

Regardless how people feel about it, research on business models (or something like that) shows that there is no future for mon and pop fish store if it is not supplimented with other high profit income. The reson is very clear and already been talked about earlier in this thread.

Passion for croal and fish is one thing but make a living as well as generate profit for invenstors is another thing.

 

[RichConley]

Dong, that research is based on mom and pops operating as they are, and I agree, if they keep it up, theyre doomed.

They, like you said, need to find new ways to make, and save, money. I just don't see any of them making any changes so far.

I think the LFS can survive, but not as we know it today. Theyre going to need to make drastic changes.

 

[dz6t]

Yes, Rich, you are right.

Also, efforts from consumers alone such as buying from LFS and forget about saving from online source will not save LFS. LFS need to find a way to save themselves.

 

[RayD]

Here here!! Well put Dong!

I'm not saying you're going to get rich owning an LFS but I bet with some creative ideas and a new mindset you can be reasonably successful.

Show of hands ... How many reefers here have bought corals or fish on total impulse? (I already know the answer!) Can't do that online!!

 

[RichConley]

I dunno, one of the LFS owners around here is driving a Carrera 4.

 

[dz6t]

I dunno, one of the LFS owners around here is driving a Carrera 4.

No kidding.

Helping someone to survive is one thing, helping someone so that he can drive a Carrera is a totally different thing.

 

[RayD]

Hey if you're good enough and savy enough to afford a Carrera then more power to ya! I'll support him if he has good product at a good price. I don't care how rich he is as long as I'm getting a deal.