News: SeeDealerCost site meets a consumer need, says Taylor
By Mike Davin, online editor, Boating Industry — SeeDealerCost.com, which went live today, caused a stir in the marine industry before it was officially announced in January.
The site was created to be a consumer information resource — comparable to auto industry sites such as Edmunds.com or Kelley Blue Book — for boats and motors as well as motorcycles, ATVs, snowmobiles, PWCs, and soon RVs.
The controversial aspect of the site is the inclusion of dealer invoice pricing in addition to MSRP and product specifications. Groups such as the Marine Retailers Association of America contend the prices do not accurately reflect what dealers are paying and could exert downward pressure on razor-thin margins, potentially driving dealers out of business.
Representatives of the site have heard those criticisms, but believe that their site will actually improve the boat-buying experience.
“It really has stemmed from a consumer need,” said Dave Taylor, a former marine industry executive who now works for the site, in a recent interview with Boating Industry magazine. “If you think about it, we as consumers in the past 10 or 15 years — things have changed a lot in regards to how we shop and how we make purchasing decisions.”
As proof of the consumer demand, Taylor said Edmunds.com has polled its users, and the number four most frequently asked question is when and where similar information can be found on boats, RVs, ATVs and snowmobiles.
SeeDealerCost.com from the inside
Initial reports cited Taylor and another former industry executive, Jack Malone, as founders and owners of the site, but Taylor said they are actually employees who became involved with the site around the time of the Ft. Lauderdale Boat Show in late October. The name of the privately owned company behind the site remains confidential at this point.
The founders started working on the concept about two years ago and today the site has about 25 employees, with plans to grow significantly, according to Taylor. He said the site’s technology is proprietary and has been developed from the ground up.
The site is needed, said Taylor, because consumers have come to expect easy access and transparency of information and pricing, and the recreational products industries haven’t kept up with those expectations.
“We have easy access to information with the Internet that has really changed how we shop and how we gather information and how we make purchasing decisions,” Taylor said. “In addition to that easy access, we think the retail experience for us as consumers has vastly improved.”
Consumers have grown tired of the negotiation game, said Taylor. Instead, they want a no pressure, non-confrontational sales process based on how they buy almost everything else. Taylor said the disconnect between how the consumer wants to shop and the reality of the marine industry can cause tension.
“Having this lack of easy access and transparency of information and pricing causes what we see as consumer frustration and unfortunately some distrust of the retailers themselves,” Taylor said. “And it’s not about the retailer, it’s the process that is disconnected that causes that.”
If information is not readily available, consumers move on to the next brand or retailer, according to Taylor.
“We think (the site) will take some of that tension and distrust out of the process,” he said. “If the baseline pricing information is available from a third party, it doesn’t have to be as negotiated from the dealer, and then they can work with the dealer on finalizing pricing. And finalizing the deal. And finalizing the delivery and all those kinds of things. And we’ve heard from the car industry that it’s taken some of that craziness and distrust out of that whole process.”
Having automobile pricing information available has made it unnecessary for car buyers to shop or call 10 different dealers, said Taylor. With a baseline they feel comfortable with, consumers can concentrate on working with their local retailers, he added.
“We always hear this in the industry that consumers go home and they dial for dollars, or they e-mail 5, 8, or 10 dealers or call 5, 8, or 10 dealers to get a price,” Taylor said. “Well, yeah, they’re trying to get an understanding of what the baseline price is. And they’re trying to validate that price they’re getting from their local dealer is something that they can feel comfortable with.”
Why include invoice?
See Dealer Cost chose to include dealer invoice pricing because MSRP isn’t a reliable indicator, said Taylor.
“The problem is that not all manufacturers have an MSRP. And the MSRPs that are out there are all over the board — there’s really no consistency whatsoever with it,” Taylor said. “In a lot of cases, the MSRP is not really very closely related with what a normal or average or baseline selling price is.”
Taylor thinks inflated MSRP prices can cause confusion and drive people away, as opposed to being a guide.
“We think sometimes consumers look at a product or the MSRP and say, ‘Geez, that’s way out of our range,’” he explained. “And they go over to a used product, or they decide to buy something that’s not a boat or a recreational product at all.”
Knowing invoice price will help customers understand whether they are able to afford a particular boat and make a decision more quickly, he said.
“We think it will help qualify consumers, help them self-qualify,” Taylor said. “We also think it’s going to reduce their information gathering time, and therefore their decision-making time. The time that consumers are in the sales funnel is very, very long, and the longer in, the more opportunity for them to fall out or lose interest. So we think it will help speed that process up.”
He added that because of recent repos, liquidations and auctions, invoice pricing is already fairly readily available in the marketplace.
No guarantees
The site provides no guarantees that the information is 100 percent accurate, complete or reliable, or that there aren’t any errors or omissions, and it includes a disclaimer to that effect, said Taylor.
However, the site has a staff in place that will continuously be looking at the information on the site, according to Taylor, and they believe the information will be reliable.
The invoice price on the site is calculated to be same as the amount the dealer is invoiced by the manufacturer for the product, including any optional features the manufacturer installs. Unless otherwise indicated, it doesn’t include shipping, handing, preparation, tax, title, or any of those other fees. Retail and wholesale incentives given to the dealer are also not included in the cost. Taylor admitted that leaves out many costs incurred by the dealer.
“It doesn’t include any dealer or retailer cost associated with running their business,” Taylor said. “There are a lot of things there. They have inventory carrying cost, and insurance, and labor, and marketing, and advertising, and parts and accessories, and other overhead. And all that’s not included in invoice.”
Because of those omissions, Taylor said the invoice price is just meant to provide a baseline.
“Basically, what we’re putting out there is an invoice price that we think will serve as a baseline for consumers to understand what kind of a baseline they should be looking at,” he said. “And they need to understand the costs that aren’t included and the features they may want that aren’t included as well.”
He thinks most consumers do understand those costs.
“Having a lot of discussions with consumers — and we get on the message boards and the blogs — what we’ve found is that most consumers understand that the retailer needs to be profitable in order to offer product and run their business and give customer service that’s expected after the sale,” Taylor said.
For those who don’t understand, the site explains what is not included in the invoice cost, according to Taylor.
“In our frequently asked questions section, we also state that one thing that’s not included in the price is dealer profitability, which is important for a retailer to invest back in their business and facilities, their people, their customer service,” he said.
In terms of hurting margins, there have always been customers who won’t accept a fair deal, said Taylor.
“There’s always going to be those shoppers that will try to steal a product from the retailer, and they’ll use every means possible, and they do that today,” he said. “That happened before our site, and it will continue to happen. But the bottom line is, only the consumer can determine what they’re willing to pay for a product or service, and only the dealer can determine what they’re willing to sell a product for. And it’s been that way before our site, and it will continue to be that way once the site’s launched.”
Using the site
When consumers go to the site, they have the option to register using their contact information, which allows them to save product and pricing configurations. It also allows them to request a quote from a dealer, a feature only available to manufacturers that pay a subscription fee for those leads.
“When you look at other industries that do that, it becomes an extremely high quality lead,” Taylor said.
If users choose not to register, they still must provide their zip code, which allows the site to customize advertising to their location.
Users can search by category, by brand or by the closest dealers. They can configure models with various options, and the site will automatically calculate the total price.
In addition to new model pricing information, the site includes safety and education articles (they have a writer on staff); users can search for used product pricing through NADA; there are finance and insurance resources and a glossary of terms; and additional content will be rolled out during the coming year.
If a consumer doesn’t want to request a quote or register, they can have a PDF of the configuration and pricing they created e-mailed to them, which provides another type of lead for the lead subscription service.
Revenue model
The revenue model for See Dealer Cost is similar to that of Edmunds.com, which makes money from advertising and providing leads to manufacturers and dealers.
Advertising will be the site’s major revenue stream, according to Taylor. The display advertising on the site allows brands to get in front of consumers while they’re in the “shopping and decision-making process,” he said.
The second source of income will be the lead subscriptions, which the site can provide in real-time to manufacturer subscribers or distribute directly to those manufacturers’ dealers.
The bottom line
The industry needs change, according to Taylor, and this site is one part of that change.
“I get asked, and I know other people and manufacturers in the industry get asked, is this downturn cyclical or is it systemic? And I think the answer is yes. It’s both,” Taylor said. “It’s cyclical, yes, because you always have your downturns, and are we going to start to see some improvement – hopefully this year, but if not, the next? Yeah. Inventory dries up, that happens. Things will start to improve. But there isn’t anybody in the industry who is going out on a limb to say business will get back to where it was five, six, eight years ago. That’s a problem. That’s systemic. And there are a lot of different reasons for it. And there are a lot of things that need to be worked on to get the industry back to where it was and to what it can be. But I certainly do believe this shopping and information gathering experience is very much disconnected with consumer expectations. It’s one area that needs to be worked on.
“Something like this, although controversial, can create change and is necessary because it’s a consumer-forced need,” Taylor said.
Now that the site is finally live, he invites critics to experience it before passing final judgment.
“What I would say to those in the industry, I would say take a look at the site, and then ask some questions,” Taylor said. “And I think some questions are — will it make it easier for consumers to gather the information they’re looking for? Will it speed up that information gathering and decision-making process? Will it help consumers get an idea of a baseline price? Will it help them self-qualify? Will we be able to add credibility as a third party to pricing process? Will it lessen the tension and distrust in the sales process? We think the answer to all those questions is ‘Yes.’”
Finally, Taylor thinks that by improving the consumer experience, the site will in the end benefit the industry:
“The bottom line is, if the consumer experience is improved in any industry, it’s ultimately good for the industry.”
The consumer expects this, shame on those manufacturers that chose not to get in front and help their dealer base. This was going to happen, consumers want it and are looking for it. The manufacturers forget who the real customer is. The company that steps out and is dumb enough to go legal will telegraph to the consumer that they don’t trust the consumer with knowledge and don’t respect them and want to continue a shell game that quit working several years ago. Whats the definition of insanity? Doing the same thing over and over and expecting a different result. Sure, lots of you are going to disagree, but my customers won’t, and thats who pays my bills in my store.
Well Jim the difference is the automotive industry has a different profit model and is set up to make a profit disseminating the information to the consumer in this way. Their way is no more transparent than ours, ours just allowed the dealer to make a living. You have a fatally flawed understanding of our industry. So you show the customer your net net cost, tell them that you have 60% collectible efficiency so you need to charge 20% profit on the boat to feed your employees? Is that what you say? Have you been to a Spader 5 day Total Management workshop? What is your alternative model? I guarantee you that Messers Taylor and Malone have no such vision nor does their master who will remain nameless-talk about transparency-hah! I tell my customers the truth. They can handle it. Now this site threatens to turn them all into know it all imbeciles. Would REALLY like to know why the money person here is confidential. I smell a big rat.
OK Jim, just had a dealer friend write me:
Ok already had a customer in our showroom with a printout on one of our stock boats- stating one way or another he was going to pay invoice for the boat. We thanked him gave him a fair presentation and quote after feature / benefit review he told us he was still only paying a price that was very close to our cost.
How would your professional sales team respond to that? Now that we are in some new world order I’m sure you have a coaching session for us about how you handle this situation. You want this customer? He ain’t paying any bills I get except from GE. But perhaps we can gain insight from you. I’m all open ears baby sock it to me!
Lot’s going on here…
1) P. Keeter of MRRA is right, this is a “different animal” because of the difference between the marine and auto industries. So, there will be pains and adjustments along the way.
2) Why the current cloak-and-dagger about the company/ownership? Legitimate reasoning escapes me.(Guess we’ll find out soon enough…).
3) Did the marine industry really think this type of business would never surface? If this website were to fail, surely there will be another one that will pop up…even when having to deal with the very large number of boat manufacturers (just in the U.S). In today’s business world, this concept is actually old news.
4) Bankers: pay attention if you are not already…
5) Boating and potential boating consumers I have talked to over the years (at the marinas, at the banks, at conferences, family gatherings, boat shows, etc.) tell me they want this type of service. The marine industry needs to pay attention and figure it out.
6) Change is unsettling. But in the end, everything will likely be fine. Maybe this particular site will go away, maybe not. How the marine industry does its business has changed forever and more change is on the way.
Well, the site crashed early this morning because of too much traffic for their servers to handle. Must be some consumer interest in the site for that to happen so quickly.
The marine industry was “dog eat dog” forty years ago for the dealers and it seems to not have changed that much today. That is why we got out of selling boats and motors and concentrated on only parts and accessories where the margins were longer. The manufacturers were whores then and they seem to remain that way today.
My issue on this website is I keep hearing how the automobile industry has this type of information available and how their model has evolved. I’ve been a boat rep in the industry for 30 years and I am sick of the comparisons with the auto business. Last time I checked there were over 50 manufacturers in just the pontoon segment in our industry. Every boat show I go to there is a different pontoon maker I compete against. My dealers and I must know our product inside and out to gain the sale. The successful dealers and reps sell their lines based on features and benefits. The dealers that survived the recent debacle operate at high levels of professionalism, salesmanship, and service after the sale. The car business is populated now by retail “fleet” salespeople that do everything based on “how much over invoice”. Sites like seedealercost are to blame for that dumbing down, erosion of margins, and most importantly…. caused a complete business model overhaul to how a car manufacturer invoices their product to the dealer (holdbacks, rebates, etc…). When was the last time you had a salesperson in the auto business do a full feature benefit pitch on their product to you. They don’t. They know there are 5-10 brands they compete against. They also know that the invoice cost is listed online, and they’ve become order takers. Thats not evolving. Thats destructive. And in our industry devastating. Bottom line, if this site gets traction, our model will have to change because we all know dealers need at least 18-20% margin for the average turns they enjoy. And changing that model will take years of more pain for our dealers, manufacturers and reps. Dave Taylor, Jack Malone, and his nameless cronies should all be ashamed. Whats next……we all want the actual cost of a gallon of milk on the internet. Give me a break.
Looks like we won’t be using word pictures to describe family boating fun on the water anymore. We’ll be too busy justifying our selling price.
Let’s assume the model does have to change. What does that look like? And why does it have to take “years of pain for dealers, manufacturers and reps”? If we can be proactive and start working together to brainstorm a successful new model now, can’t we avoid much of that pain?
Unfortunately for any product to be retailed it must have distribution or dealers. Lack of distribution is the primary reason most products never make it to market. Thinking its possible to take out the distributer and still be effective is next to impossible. It certainly can work with direct sales like Amway and commodity products however no company has owned a category or top market share in a large ticket industry with this strategy. There are Boat brands now that sell direct simply because they are unable to attract distribution (dealers)……none are in the top ten and most if not all end up out of business. The primary reason this does not work for complex, large ticket sales is because there is so much more involved before, during and after a sale. A low upfront price may end up being the most expensive and regrettable purchase one could make. We have seen this firsthand many times with consumers in our dealerships, my guess is you have too. If marine products are unable to make it to market profitably they will cease to exist. I know we love our industry and its lifestyle however last I checked no one is doing this for fun. It may feel that way to many because making a profit for dealers is already a huge problem. If dealers cannot derive enough revenue to deliver an experience that will keep boaters joyfully boating, consumers will simply migrate to other recreation. Future successful brands will have the most profitable distribution that delvers exceptional experiences to each customer it serves, its simply the law of success. What I see changing is how gross profit is paid to dealers. One option is dealers pay retail with all gross profit paid on the backside…..sound familiar. Details will be worked out, costs could go up with items like flooring interest however I am CONFIDENT a way will work itself out or our industry is finished. Only an uneducated dreamer can possible believe a massive change is not around the corner to counter this website.
Taylor and gang are seeking gain at the detriment of the manufacturer and dealer.
They are hoping for a large negative impact that will force change.
Maybe Dave Taylor thinks that is the best path, I think that was a long term
mistake.
When the Business Models changes dealer and manufacture support will
go to Taylor’s competitor.
Cannot copyright the Idea.. I see it now.. “See_BD_Dealer_Cost.com”
How will the model change?
I forgot to answer Liz’s Question…
Liz , this will be the primary factor driving change for the dealer!
“The decreased margins must be accompanied by decreased risk.”
What will the new model look like?
1. Back in rebates
2. Manufacturer regional promotion
3. Fewer larger stronger dealers (by Mom&Pop)
4. improved service dollars (as in car industry)
5. quicker reimbursements on rebates, warranty, programs etc.
that stand alone on the single sale .
6. New retail financing programs with banking industry or
maybe GMAC to BCAC !
7. Dare I say it – Franchise agreements (State law controlled)
8. REQUIRED dealer inventory swap programs
9. Inventory buy-back programs
10. Higher dealer investment (with less risk)
As the manufacturer assumes more risk, the dealer
starts to lose that individual control we have enjoyed.
Dealers will not like this but that is the second punch in the face.
(1st from dave)
If we want less risk and more security we must give up some control.
Change this dramatic is hard and difficult to take.
This will be especially hard for the old guard to stomach.
The question becomes, who will leave and who will stay?
AND JUST when we thought we where coming out of the frying pan…