Interview with John Benchimol, Harborside Yacht Sales

This interview with John Benchimol of Harborside Marina took place in mid December 2007.

Boating Industry: We were impressed by the inventory share program that you wrote up and submitted with your Top 100 Dealers application. We’re working on a series of articles for our February issue regarding the topic of inventory management. We want to develop some ideas on how to help the industry deal with the problem because obviously we have a lot of inventory that has been building up out there and sitting on dealer lots. Certainly the manufacturers are seeing it, as well. So this document here stretches across both parts of the supply chain, and it’s something we’d really like to highlight and talk a little bit about in this article. Can you give us a little background on how you developed the idea?

John Benchimol: Well, basically … I’m in a Spader 20 group, and in our meeting in July, a big topic of ours was obviously that with the downturn in this industry, handling inventory is the key to whether you’re going to be successful or not — if you’re going to take one single component of all the things that we deal with. So I kind of figured what I would do is, going down to the Chris Craft dealer meeting in August, I approached Channel Blade, who we do our Web site through, and asked them if they would pilot this program if we wrote it up and got a couple people on board. So I talked to the guys down there and they said that they would help us and put this whole thing together.

I pretty much sat down and wrote out all the issues, which currently nobody really talks about, on a piece of paper. I spoke to a couple other dealers and kind of made something that I consider a win-win for everyone. I know the manufacturers are a little wary to do this because it’s a policy that I consider A dealers should adopt, meaning that a dealer that knows what they’re doing realizes that some (retail customer) calling from Florida isn’t going to be buying a boat from us, and if they do want to buy a boat from us, they’re not going to be taken care of the right away. No one wins in a situation like that. But, if from a manufacturer’s standpoint some of these guys, a good majority of these guys, really don’t care. They kind of turn a blind eye to it because at the end of the day, they just want to know that the boat sold. So the way this philosophy works is that the boat gets sold, it comes out of inventory. It’s a win. There is no downtime. I cannot think of any reason why anyone would not want to adopt this or put this plan into action. I mean, from the way I wrote it up, I really couldn’t.

I mean from every aspect — from the floor plan turns, to the better interest rates. It’s a matter of these manufacturers, they don’t think state of the art, they don’t think outside of the box. They think, well, we’ve been doing it this way … forever, and this is just the way it is. And if you want to find out what somebody has in stock, call on the factory, and they can call around and find out where it is. You know what, that doesn’t work. It needs to be like a car dealership. It’s got to be like you pull into a car lot on Saturday and say I want this Yukon Denali and I want it in black but you only have it in white, and the dealer says, “No problem. I’ll get it for you in black, and it will be here on Tuesday.” It’s so easy to do that nowadays; it’s just someone has got to take it and go.

I pitched it to Chris Craft. They looked at it and kind of said, “Well, we’re going to put our own inventory system together where you can order boats online.” Well, I don’t care about ordering boats online. That does nothing for me. I can make a phone call as quickly as I can order online. I think we should be able to order online. That’s great news. But to me, that isn’t something that’s a real benefit to anybody.

So my next thing to do is to get with Channel Blade and have them pilot it. And if I have to part with some money to do it, even then I think it could be a nice little profit center for somebody who wants. Whoever is going to do it first is going to make money.

Boating Industry: Are you aware of any other programs in the industry that are similar to this?

John Benchimol: I know that we use Dealers Circle for our warranty and registration and stuff like that for Chris Craft, and I believe that there is a component on there that allows you to manage your inventory, meaning that you can report your inventory to the manufacturer. The manufacturer should already know what I have. I bought it from them. If they want to know, they can call my floor plan company. It’s not my job to report my inventory, in my opinion.

What I’m talking about doing is this is a retail sales program. What that means is that ultimately, instead of worrying about the guys who get the awards for being the biggest dealer per manufacturer — you’re the guy who buys the most stuff, who cares? — the guy who sold the most stuff or the guy who makes the most profit should be the guy who wins.

I don’t know. I just think they’re so far behind the times. It is so easy the way Web sites are being run now.

Boating Industry: So, let’s talk a little bit more about this before we go into the rest of it. Why is that you feel the industry or maybe your 20 Group feels like the industry needs something like this so badly.

John Benchimol: We don’t have anything. The way it works now, when you buy a boat from a manufacturer, you’re hung out to dry. It’s your boat. You bought it. There is no guarantee you’re going to sell it. There’s nothing. There are no tools at all for this.

I honestly don’t know how people don’t do this. We do it anyway. And when I say that I mean with Chris Craft, when I need a boat, I call other dealers and I’ll find them. And I’ve bought many boats from other dealers before. And I’ve sold boats to dealers before. I’ve had customers call me from California, for example, and say, “Hey, I’m looking at this 22-foot boat you have for sale,” and I say, “well, I know so-and-so out in California, and I’m absolutely selling the boat. Call him up and he’ll put a deal together any time.”

And I look at the big picture. Like I’d rather move the boat off my lot and let him sell the boat. I’ll reorder another one, and I’m still going to get the back-end money on it. And you know what, I had six months to sell that boat, and I didn’t. But that’s my fault.

The old school thought on that is, the dealers from the 80s all sit there and say, “Well, you gotta add 10 percent to your wholesale price.” It won’t work that way. Because if you put 10 points on a dealer net boat, the boat’s been sitting around so it’s probably a leftover or something else or you would have sold it and then there’s not enough margin on it. It’s not worth it for the guy to do it.

Boating Industry: Certainly, there’s not really ever one time where something like this is needed more than at other times, but do you feel like there’s more of an opportunity now than there has ever been, considering the inventory issues out there, to push something like this through?

John Benchimol: Absolutely. I’ll give you a great example. Right now, we’re getting 10 inches of snow here in Connecticut. In Florida, they’re getting ready for their prime boating season. I mean, my stuff that’s sitting in the showroom that somebody might not look at or call on for two weeks straight, could be marketed to their territory. And when they start running out of product, we have it, and we have plenty of time reorder some new stuff.

Boating Industry: One of the things that we’ve discovered in exploring this is that there is a program out there that is nearly identical to the one you’re writing up. Regal Boats has something almost identical to this. As soon as the boat is shipped to a dealer, it’s posted to the site, and as soon as Regal receives the warranty registration, it’s marked as “sold” on the site. And dealers can go in and change a boat’s status to “pending” to keep it current. There’s also another company out there by the name of Marine Dealer Trader that has a system already in place that mirrors that and what you’re proposing. Have you seen or heard anything about those programs?

John Benchimol: I don’t have any experience with them. I wish I did. I mean I don’t need to reinvent the wheel.

Boating Industry: OK, you said you haven’t pitched the concept to anyone else yet. Do you see it in the future to do that, or do you think the Channel Blade plan is going to help move it along.

John Benchimol: I don’t know yet. I haven’t given that part of it much thought. The issues that I ran into were the question of when a boat is on floor plan and a dealer switches inventory, the manufacturer has to re-invoice that boat. And in order to do that, the manufacturer has to create another purchase agreement for the floor plan company in the other dealer’s name. They were reluctant a little bit about doing that. I don’t think that’s the biggest obstacle, but the other issue they had was with the warranty. So if they go to pick that boat up and there’s a bunch of warranty problems on it that were caused by this dealer’s lack of taking care of the boat, the manufacturer didn’t feel like they should end up caught in the middle of that … which I completely understand, but you could look at the negative side of anything.

Boating Industry: What hurdles do you perceive there are to implementing a system like this?

John Benchimol: You know what the biggest hurdle is? It’s something new. And in this industry, anytime you try to do something new or different, you’re going to have to fight it all the way to the end. And I mean every single thing you try, anything you do that’s different from the norm.

Boating Industry: What are the parameters you’d like to put on my use of this document?

John Benchimol: I don’t really care one way or the other. I think it’s going to help the industry in general. If somebody else wants to get on board with this, and needs some help with my thought process, I’d love to help.

Boating Industry: Couple other questions here. First, you say in this report that it’s becoming increasingly difficult to operate a profitable dealership and that inventory management has been the single biggest contributor to this problem. Can you give me some examples of that or maybe quantify that for me a little bit?

John Benchimol: What is a marine dealer’s two biggest things they have to deal with? Gross margins on the boat and floor plan expense. Besides payroll, floor plan expense in a boat dealership is your second biggest expense.

Boating Industry: What kind of effect do you believe a program like this would have on your bottom line?

John Benchimol: For me, I’m a smaller dealer, so for me, it could be huge. If I could cut $50,000 out of my floor plan expense because I manage my inventory better, then $50,000 goes to my bottom line. That’s huge. So, for some of the bigger companies, a couple of my friends own companies that their floor plan is $50,000 a month. That’s huge, and if you could take 20 percent of that and save it because you’re being efficient … because quite honestly the problem is that it all comes down to the fact that we don’t manage our customers. This industry does not manage its customers. Our customers buy when they’re good and ready to buy and they buy what they want when they want.

And basically what happens is you go down to the dealer meetings at the end of the summer and order 15, 20, 30 boats based on what we think … it’s all speculation. Who knows what the next great model is. I’ve been doing this for 10 years just with Chris Craft, and I can tell you I’m wrong every year on some stuff. Some stuff you get it right. Some stuff you don’t.

You know what this [document] is? This is just a solution for us losing control of our customers. Because there are a lot of other customers… well, let me give you an example … Windy Boats in Norway. Their biggest dealer in Norway delivers all his boats in one week. If you want his boats, you go to his show, you order the boat and then he does one delivery. And it’s 16-18 boats, whatever it is and he makes an event out of it. All at one time. He controls the customer.