Nobody Asked Me, But … (Part II)

In my September/October column I addressed several industry issues that I thought deserved either “Darts” or “Laurels.” Sadly, some of these issues have refused to go away. So it’s Dart and Laurel time again. To those receiving Darts, they are not hazardous to your health … but if you continue these practices, dealers could eventually cause them to be harmful to the health of your businesses.
Dart – to the packaging concept. It has gotten out of hand. I hear complaints about packaging from many dealers who want to go back to the days when they bought boats and outboards direct, and did their own packaging. Ken Cope, Cope Marine, O’Fallon, Ill., a large, successful dealer I have known for years, is an example.
“Packaging has just killed our profitability,” Ken says. “Before packaging we were very successful in acquiring boats from boat builders, trailers from trailer builders and outboard motors direct from manufacturers. We custom rigged our own packages that were very viable for our market and provided good prices for our customers and respectable profits for Cope Marine.
“Today we are all reduced to the same level because every dealer in the country can buy the same package from the same manufacturer at the same price. There is nothing unique about the package. So the customer gets on the Internet and shops all around for the best price on a boat package because he knows it will be identical wherever he looks. He buys it from whoever is cheapest.
“We used to customize rigs the way we wanted for our market, and customers could only get it that way from us. Today we deal with packages that are universal and priced virtually the same for everyone. I have two dealerships with lots of overhead. That makes it hard to compete with a guy who works out of his garage and is set up by a boat builder for two or three boats! He’ll sell them for $50 over cost.
“Packaging, in my opinion, is really a euphemism for selling cheap, and selling outside logical and what used to be normal distribution channels that were more profitable for more segments of the food chain.”
Dart – again to the packaging concept. It makes the playing field that already is unbalanced even more tilted! Larger boat builders use their buying power to squeeze better prices on outboard motors than smaller builders are able to negotiate. It also appears that many boat builders focus more on maximizing discount and profit opportunities on outboard motors than on building boats more efficiently and offering products with improved quality and features. The sale of outboard motors has become a major profit center for many builders at the expense of profits for dealers and outboard manufacturers.
A lot of this problem stems from the fact that there are too many outboard motor manufacturers for the size of the market. As I have reported before, there used to be 500,000 to 600,000 outboards sold per year in the U.S. This large market was basically split between Mercury, Johnson and Evinrude. Now there are only about 300,000 units sold per year. And, in addition to Mercury, Johnson and Evinrude, there are now at least five import brands — all trying to cut a slice of this smaller pie. The market can’t support eight brands!
Laurel – to the Water Works Wonders ads like the one I saw recently in Popular Science. It was a great ad showing a small boy in the bow of a boat with grandpa at the stern with a fishing pole. The ad read, “Take me fishing so I’ll always remember you. Take me fishing because you’re the best grandpa ever. Take me fishing so you can tell me stories about my dad. Take me fishing and show me how to drive the boat. Take me fishing so I’ll always remember you.”
I’ve taught five grandsons how to fish, so it really touched me. This industry needs more ads like this. It works for the RV industry. So a laurel to the Recreational Boating and Fishing Foundation for this ad campaign.
Laurel & Dart – Laurel to Genmar for announcing a fall model introduction and fall dealer meetings. However, a Dart goes to Genmar for backing off of the fall introduction. And a Dart to the boat builders who didn’t support Genmar’s concept of fall dealer meetings and model year introductions.
As John Sima, Marine Retailers Association of America chairman said, “The announcement by Jacobs that Genmar is returning to an earlier model year introduction because of a lack of support by other boat builders is a sad commentary on the ability of the manufacturing community to unite and move forward on making vital decisions that would benefit the dealer and the consumer.” Well put, John!
Laurel – to the MRAA for continuing to push for dealer agreements from all boat builders. Every boat builder should have formal dealer agreements that are fair to both parties. The days of a handshake agreement are long past.