Share & share alike

“Welcome to my world,” says Kris Thayer, speaking for thousands of dealers around the country.

On the other end of his phone was an exasperated gentleman by the name of Brad Lemerand. As the general manager for compact pontoon boat manufacturer Apex Marine, Lemarand oversees just about everything. He monitors all sales, production schedules, marketing and product development. And just prior to this phone call with Thayer, Lemerand was desperately trying to locate a Gillgetter 715 for a consumer who had visited the company’s Web site.

Apex doesn’t currently have an internal system for monitoring its inventory in the field. So in order to track where that Gillgetter 715 could be found, Lemerand picked up the phone and started dialing his dealers to find it.

Thayer, who has been a part of his family’s 21-year-old dealership in Jackson, Mich., for the past 15 years, knows this story quite well. Despite the vast market knowledge used to order the impressive number of pontoon boats that he and his brothers Michael and Chuck showcase in their 16,000-square-foot dealership, it’s all-too-often that a customer comes calling for a model they don’t have in stock.

In fact, Kris estimates that nearly 50 times in any given year, he personally duplicates Lemarand’s task at hand, calling upwards of 10 dealers to find a specific model for a customer. Multiply that by the five sales people at Thayer Marine, and the company spends weeks on the phone trying to capture a sale.

It’s exactly that grossly inefficient use of time and resources that Thayer hopes to change with his newly launched Marine Dealer Trader, an online inventory search module. And with it, Thayer expects to create an entirely new world for marine dealers and manufacturers.

“If you don’t particularly have that one model that someone is looking for,” Thayer explains, “and you say to the customer, ‘Give me your name and number and I’ll call you back,’ … if you sell this guy and don’t capture that sale within 72 hours, the percentages are down around 20 percent that you’re ever going to talk to him again. [This] just gives you the opportunity to close that deal at the time the person is in your hands, rather than letting him walk and saying, ‘hey, let me call you.’ It’s a selling tool.”

Electronic stimulation
The concept of inventory sharing is by no means new. Thayer himself, like just about every other dealer in the marine industry, has been buying, selling and trading inventory with other dealers for years. But they’ve been doing it the old-fashioned way, spending far too much time and energy trying to move a single boat.

The automotive industry, where Thayer has his roots, trades inventory among its dealers electronically on a near-daily basis and has been doing so for years.

“This is what they do,” Thayer explains. “You go to the dealership. They don’t have exactly what you want. The sales person will locate it for you. And they can do it while you’re sitting there at the desk. Same basic principles apply, but we’ve applied it to the boating industry.”

The marine industry, in fact, has a working model of a similar system that was created in 2000 in cooperation with Connect4Business and is exclusive to Regal Boats’ dealer network (see sidebar, page 33). Other than for Regal dealers, however, the concept of electronically sharing inventory remains a pipedream.

The root problem with a dealer’s new unit inventory management system, more often than not, begins before the boats are even ordered. Dealers are asked — sometimes influenced — to order more new units than they purchased the prior year with little to no care given to how many units have yet to be sold.

Additionally, few dealers know how to predict an accurate model mix for the coming selling season. They base their orders on loose historical perspectives, manufacturer marketing pledges, and their own knowledge of market demands. And then oftentimes crack under the pressure of a manufacturer incentive program, buying more than any research would dictate, and far more than they are comfortable with, let alone capable of selling.

It’s nearly impossible for dealers to stock every new model available. So when a customer wants to purchase a unit the dealer doesn’t have in stock, the inventory problem intensifies. Currently, the only alternative to the series of calls to his dealer buddies is to call his manufacturer’s rep, who calls the factory in an effort to locate the desired unit. Those calls are often riddled with delays, swapping phone messages and waiting for return calls, above and beyond the inefficiencies it causes the builder.

“Particulary from my point of view,” says Lemerand. “I don’t have the time to be spending that much time on one single customer. It would be much easier if I could just type it in, search my dealers’ inventory, and send him that way.

“I could be doing that while I’m on the phone with him. Now, I have to call him back. And that gives him time to second guess what he’s doing and find other options.”

Parallel thoughts
Saving the deal means everybody wins — the customer, the dealer, the manufacturer and the industry at large.

There have been few times over the course of the marine industry’s history when saving deals has been such a critical issue. Higher interest rates, mounting home foreclosures, water access issues and climbing gas prices have combined to drag boat sales down to lows that the industry hasn’t experienced since the 1960s.

This slow down has turned up the heat on profit-killing, non-current units, bringing inventory issues to the immediate forefront of industry concerns, and both dealers and manufacturers alike are scrambling for solutions.

Last summer, talk around the table at a Spader 20 Group 104 meeting focused on that very issue. And it sparked a fire in John Benchimol, owner of Harborside Yacht Sales in Clinton, Conn., who has been agonizing over how the industry could improve its inventory sharing for quite some time.

“Handling inventory is the key to whether you’re going to be successful or not,” Benchimol explains. “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 are no tools at all for this.”

Benchimol returned from the meeting and began designing a potential solution. His brainstorming sessions and follow-up calls to fellow dealers culminated with a document he inked to propose an inventory-sharing concept.

“I mean from every aspect — from the floor plan turns, to the better interest rates,” he explains, “I cannot think of any reason why anyone would not want to adopt this or put this plan into action.”

Trading places
Thayer agrees. While Benchimol has written a plan and proposed it to his primary boat builder partner (he was turned away), Thayer has a functional program in place that has already attracted the interest of a number of boat builders.

In fact, Thayer has used those builders to help him design his product, soliciting input and creating a program that benefits both ends of the supply chain. His program works much the same way that Regal’s does, only it’s being made available to the entire industry, and it’s most unique function — brand restriction — has been patented.

Here’s how it works: Participating manufacturers make the program available to their dealer network. When a boat is sold to a dealer, it is uploaded to the system. Each boat’s page in the system includes nine photos, details, equipment highlights, and contact info for the dealer that is stocking it.

When a dealer (or builder in the case of Apex’s Lemerand) needs to locate a unit, in a matter of four clicks and less than 30 seconds, they can find any dealer in their like-brand network that is carrying the product. And one phone call can seal the deal.

The entire program is incredibly simple, and Thayer has used feedback from dealers and manufacturers alike to add more features to it. For instance, the program also allows dealers to search every participating dealers’ inventories for hard-to-find parts or pre-owned boat inventories. He has made it possible for boat builders to upload yard inventory to the system so dealers can search it as well. He has created a retail version of the program that allows consumers, at a single click, to search the inventory of every dealer in the network that may have the specific unit they desire. And perhaps equally as enticing as the search function itself is the online warranty registration, which literally eliminates the need for the outdated hand-written cards.

But while the parts and pre-owned boat searches are open to the entire network of participating dealers, the most unique function of the system is the brand-specific, new-inventory search module.

“I’ve run into some dealers who say, ‘This is a great idea but what happens when everybody else knows what inventory you have?’” Thayer explains, “And I say, ‘Wait a minute. Back up the wagon here. This is brand specific. If you sell Bennington, that Godfrey dealer cannot view what you have in inventory. It is not accessible. The system will not allow it, and there is no way that they can hack into it. That just doesn’t work.’”

Hurdles ahead
To be sure, there are a number of such hurdles to jump before this product is widely accepted.

For starters, many dealers — whether it’s their thought process or their technological abililty — aren’t quite sophisticated enough to take a leap of faith like this.

“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,’” Benchimol says. “It won’t work that way. Because if you put 10 points on a dealer net boat … then there’s not enough margin on it. It’s not worth it for the guy to do it.”

Lemerand, who also referenced those dealers as “old school” sees the need for the technogical transition: “To me, the only downfall to it is … A lot of these dealers don’t even use their own computers. They’re just not Web educated. They need to be brought into this century.”

Perhaps the single largest hurdle, however, will be the question of who’s going to pay for it. The dealers, of course, believe the manufacturers should provide the service for them. The manufacturers who have shown an interest are oftentimes hesitant to pass another cost on to their dealer.

Thayer has established the cost structure so that the system has a set-up fee and monthly “per dealer” fees, and it includes the new unit search function, the retail boat locator, and the pre-owned and parts locators. Manufacturers can contract their entire dealer network, dealer groups can sign up together, or individual dealers can sign up on their own.

“If you put it in perspective, a lot of these dealers are spending $300-$600 per month to have a Web site, and all that Web site does is show their local customers what inventory they have,” Thayer explains. “We’re not anywhere near that as far as cost. We feel that it’s just a tool that dictates very little expense to the dealer.”

At a ballpark figure of $50 per month, as Thayer suggested, “If you retail one boat, it pays for several years of use on this system.”

Without consideration for the cost, though, some dealers are still afraid of compromising any competitive advantage they may have through listing their inventory where others can access it. But that, Thayer says, needs to change.

“A progressive dealer is going to really love the idea, where virtually every model is in stock,” Thayer says. “The guy who has closed doors, and there are a few of them out there, the old-style guy who doesn’t even own a computer, is going to kind of snub his nose at it and say, ‘you know what, that doesn’t make sense. Why would I want my competitor to know what I have?’

“Well in this industry, you have to be a little forward thinking. I feel strongly about the competition is not — NOT — the like brand dealers that we have in the market, you know a 50-mile dealer that has the same product line. He’s not my competition. That guy’s my help.”

In tougher times like this industry has had of late, while dealers and builders alike try to move non-current units while battling against the downward trend of new unit sales, a tool like this could make a major difference. In fact, such a tool could make a difference at any time says Benchimol.

“I honestly don’t know how people don’t do this,” he says. “I’m a smaller dealer, so … 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. 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 in the current climate where dealers are fighting and clawing to make every sale, Marine Dealer Trader may be hitting the market at precisely the right time.