Why are LFS prices so high?

[boodwah]

Toto,
If someone pecked my brain, ordered online, then came to me for support I would not like it. But don't get me wrong, I don't pretend to know what it is like to be a LFS owner/operator. I have owned a couple of small businesses that have failed so I do know what failure is like. And both failures were MY fault. But they were not comparable businesses to LFS's. One business was an electrical contracting business and the other was a tube amp repair and customizing business. But that's beside the point.
The first time I asked for advice at the LFS was for the pump to put in my sump. He reccomended a Mag Model 3 for my 90 gallon tank with a 30 gallon sump down below. It had a difficult time pushing the water up the pipe. I took it back and traded it for other items and ordered a Mag 750GPH pump for less than they sold me the model 3. Since then I have used this forum almost exclusively for advice. I use my LFS for advice on livestock, consumables, and items I need quickly and I buy there.
BTW, all I ordered online was my heater, skimmers, lights, test kit, and pumps. I bought my tank, stand, canopy, live rock, sump, plumbing, power strips, timers, hydrometer, bio-balls, filter media, food, supplements, and everything else local. BTW, my LFS is the one who reccomended bio-balls. I'm going to phase them out after reading about them being nitrate factories here on RC.
I did order a claening crew online but that was because my LFS did not have any snails and only 6 big hermit crabs and did not expect to get another bunch until next month.
And I bought my first skimmer at the LFS, a Red Sea Prizm. That is what the LFS reccomended and it was what they had on the shelf. I found out here that it was not enough. My Won Brothers WU-200 is pulling much more crap out of my water.
I have spent much more money locally than online, but a majority of the useful information I got was online.

[Slickdonkey]

Toto,

Yes, I can definately understand your perspective. This is in fact the same problem that has been going on all over America for the last decade. I work in software, my company is firing engineers and hiring people in India at 1/5 the cost. I'm probably next. Walmart (=evil) hires slave labor in China, makes shirts for $0.10 and sells them for $15 here with a "Made in the USA" label. And runs the local stores out of town to boot.

The point I'm trying to make is that everyone is being squeezed by the big guys. I have a family to support like everyone else, and I do anything I can to save a buck.

As I said, I like my LFS and I do buy from them on occasion. I buy all livestock locally. I don't abuse them in the manner you mentioned (in fact I often find their advice conflicting and questionable unless talking to the store manager). Usually I will have them make the case for a piece of equipment and buy it from them. But not always, depending on the cost. I understand they have to pay their overhead and still make a profit. But sometimes the markup is just absurd.

The internet has aggravated this problem somewhat due to the ease of ordering online. I suspect in another 20 years people will be ordering their Euroreef skimmer knockoffs directly from China. Who can compete with this? It's not just LFSs that will suffer, my friends! Everyone will pay the price somehow.

[DeeJayQuest]

IMO the best way for an LFS to stay competitive with online retailers is to catch up woth the times and start their own online store.

Not only does this promote their shop, it also gives customers who can't necessarily get there the oppurtunity to purchase from them.

It will at least broaden the LFS customer base.

My LFS is fantastic, but I buy my equipment from a store across the country which has its own online site. If I have any problems, I can ring them, and because they are in a store they have the expertise and equipment there to hand.

Same with eletrical equipment. The best online sites as those that sell from their own shop...

Just my opinion.

[poppin_fresh]

I blame the manufacturers and distributors for a lot of what happens to the LFSs. Heres a little research I did..

I have an employee who owns a small pet food/supply business out of her home. She has virtually no overhead, so she can sell stuff pretty low. I asked her to get me a price for a 50 gallon mix bag of Instant Ocean. She gave me a price of $32.00 of which she told me $29.00 was her cost! As most of you know, many online places sell the same bag for about $12.

If the manufacturers and distributors have such huge price breaks based on volume, how could a small business compete? This happens with all dry goods, not just salt.

I dont see why some stores dont buy from online vendors. They could buy the $12 bag, add their $3 profit and sell it for $15. They would be making the same profit, but would be way more competitive. People would look past a $3 difference faster than a $17!

[MarkD40]

Case in point. I went to my LFS yesterday to make some purchases. I was feeling a little guilty after reading all the pro-LFS posts. I bought a Max-Jet 1200 for $47.99. I was going to buy a mag7 pump but the $129.99 price made me think twice. When I got home I checked prices online. MJ 1200 $16.99 and Mag7 pump $49.99!
$48 vs $17 for a powerhead? I truly feel RIPPED OFF. Anyone who says that you should pay the inflated prices at the LFS to support them has more money than brains. I would pay 50% over online prices but 200 %, no way!

[firefish2020]

Max-Jet 1200 for $47.99. I was going to buy a mag7 pump but the $129.99

If it's a small mom and pop shop competing with a mega pets across the street I might understand some higher prices but then again I dont understand at all in your situation, those items were at least 75% above cost. As for maxi-jets though, I can tell you no LFS I know of can compete with online prices, we stopped trying a year ago.

[Slickdonkey]

I have an employee who owns a small pet food/supply business out of her home. She has virtually no overhead, so she can sell stuff pretty low. I asked her to get me a price for a 50 gallon mix bag of Instant Ocean. She gave me a price of $32.00 of which she told me $29.00 was her cost! As most of you know, many online places sell the same bag for about $12.

This is a good point. In effect, the distributors are no longer acting only as distributors, they're double-dipping by playing the role of merchant and undercutting the people they sell to.

[GPB]

This is a complicated issue. I think most folks need to understand that most LFS owners are hobbyists trying to make a living from something that they have a pasionate interest in.

They are not savvy business people.

Large retailers generally have the ability to buy direct from the manufacturer. Most small dealers have to rely on distributors because they don't have the volume to get a direct shipment from the manufacturer. This can increase a dealers cost of goods by 25% over the large retailers.

The LFS store is local. It draws customers from a limited geographic radius of only 30 miles or so. An internet based company has a virtually unlimited market. Their access to high potential customer's is much greater than the LFS. Think how many reefers (high spending customers) an internet company has access to compared to any LFS store. Even in a large metro area the potential number of Skimmer, & sump buyers is pretty small.

Add up these two issues and that explains why LFS's can't compete in the high end hard goods item categories. They don't have enough customer's willing to purchase high end hard goods (skimmers, reactors and such) that allow them to turn the inventory at any price. Since products don't turn, they have to charge an incredibly high margin on the couple that they do sell to get a decent retun on investment. Keep in mind they are probably starting at a 25% cost disadvantage to the internet company.

It's no wonder most LFS store's focus on consumables. The problem here is that these products generate good margins but the average transaction size is very small. Without the volume from hardgoods it's tough to float a business on just the consumables.

Being a LFS is a tough business. I shop both on-line and from the LFS and don't feel bad about buying on-line. The LFS store owner makes a choice to be in business. He needs to understand the market and formulate a business plan to succeed in the market.

If you rely on your LFS owner to help you out with great advice and supply you with stuff in an emergency, don't cry when he goes out of business because great customers like you bought most everything online. You can' have your cake and eat it too.

If you don't use the LFS for service , advice and such, he probably isn't really a factor and nobody will miss him if he goes out of business.

Just a thought...

[Chads29]

I see both side of the issue and believe that if the lfs would offer products at a competative price more people would buy from them.

I myself buy most of my equitpment and corals online because the lfs in the area either want way to much money for them or the products they sell are not the quality of what i can order online.

Chad

[Amphiprion]

Most LFS have an enormous overhead. Relying on customers to come for lowered prices isn't realistic. There isn't much of a choice when you must not only pay for what you bought, upkeep, rent, etc., but hope to at least make some profit as well. This is why LFS must charge so much. This is the way that everyone in the business has explained it to me and it does make sense, especially when you see all the "numbers" involved. I makes it very understandable.

[dhnguyen]

A simple solution as mentioned before by others would be for the LFS to start their own online stores as well. Personally I don't even take any business or company seriously unless they have their own web presence (professionally done). Heck I don't even use the phone book anymore unless I have no choice as everything can be found online nowadays. If you don't catch up with the time, TIME will have you for lunch. It may seem harsh, but that IS how the real world works.

Hobbiests thinking they can start their own stores and be successful without a serious business plan are at best dillusional.
An frankly speaking, if you don't have a mind for business then you have no business owning and running a business so to speak.


D.

[boodwah]

When I was an electrical contractor I did some work for a man who owned an IGA grocery store. I asked him what IGA stood for and it was Independent Grocers Association. He told me that independent grocers were being handed their lunch by the chain stores because they had more buying power and could negotiate lower prices from the manufacturers and eliminate the wholesalers. So a bunch of independent grocers formed an association so they could buy in bulk as a bloc directly from the manufacturers allowing the independent guys to compete with the Krogers and other large chain grocers. Maybe the LFS's ought to investigate this concept and put the double dipping distributors on the run. I know I would support my LFS's 100% if they could come within 50% of online prices on the items I now order.

[Recife]

I'm setting up my tank now and while I appreciate all the support and enthusiasm the guys in my LFS are offering, I had to turn to online retailers to by the bulk of my stuff.

The difference in price is just too much to ignore and my credit card is very appreciative of that decision :-)

[nemo g]

dhnguyen 2 things.

1. agree with you about the web presence. if nothing else, they should have phone numbers, addresses, directions, and maybe a list of products they carry.

2. your idea that they should have online store fronts really isnt feasible. without the ability to by in bulk, not just 3 filters at a time, there is no way they can compete with online retailers.

in fact, it could actually kill their business. for example, many who see prices listed on their web site will realize they can get it elsewhere much cheaper. but if they just hit the site for the aforementioned reasons (location, operating times) they will head to the store and possibly make an impuse buy. spending 75% more for a toy i can have right away makes many happy.

so, web site definitely. online retailing for lfs just not a viable option.

ng

[hotredjag]

I think that TOTO hit it right on the head. I just ran through this whole thread and am astounded at the ignorance of the posts as far as business in general. The funny thing is, the first poster, inflated the cost of those lights to make LFS sound even greedier. TSK TSK TSK.
First, and not to sound nasty, but if you are very price conscious, check the online prices first. The poster who said that Dr Foster and Smith never saw the product was right on. If you don't own it, you can sell it for $5 above cost and make money. No one else in online land gets that do they? And yes, they are selling to the whole country. What LFS can stock enough to compete against that?
Also seems like LFS can't win. Either they ask to help you, or you are ****ed because you are ignored?
If a LFS could get customers to buy a dead fish, or dead coral, that would help a LFS lower their prices too. They have to pay for them too you know. What happens when the airline decides to keep your fish for 3 days in Detroit at 20 degrees for no reason? If you notice Dr F & S are in LA. It is MUCH easier to sell things in LA, cheaper on livestock if your store isn't in the middle of the country, most of the wholesalers are on the coast. SO add in the cost of shipping WATER to your LFS. How about you all calling ANY airline and asking what their price is for shipping live ROCK by the pound?
And lastly, agreeing with TOTO, over and over people come in and waste hours of time asking about products just to come in and ask how to work it when they buy it online. What other business can you do that too? "I bought a car on ebay, but can't figure out the controls" to your local car dealer?
I have nothing against dyi'ers. I do have something against all these posters on reef clubs that have less than zero idea about the overhead of running a business. The government taxes the hell out of us, our insurance is insane, utililities have gone through the roof and on every order there is a "fuel surcharge", and if you add in things like yellow page advertising, replacing things that do break and that alusive thing called rent, I think that all the people on here owe LFS a giant apology. Do you see LFS people living in mansions? We love this hobby too and the very idea that we are perceived as rip offs ****es me off.

[BarryF]

Originally posted by firefish2020
Just think before you respond some of us are not trying to pry your hard earned dollars from your hand, some of us may just want to talk to you about your success in the hobby.

Fair enough, although I'm still going to stick to my guns on this one. If I unfairly label one or two to avoid the "You owe me something for my time" attitude, then so be it.

Someone else in this thread said that people probe LFS workers for information and then go and buy the product for $20 cheaper and then have the gall to go back and ask the LFS worker for advice on how to use the item. Now, I can honestly say I've never asked any LFS worker for advice. Ever. I was lucky enough to find RC BEFORE I thought about starting my first reef tank and there is a wealth of information here. You can learn more about any product by doing a search here than any LFS worker could possibly divulge, not because they are not knowledgeable, but because I can get 40 different opinions on something in less than 10 seconds. The trick is sorting out the nonsense from the meat and potatoes, but it's easily done. You can't beat that.

I can understand people being angry at selfish individuals who probe for information, purchase online, and then go BACK to the LFS for advice. It's probably why I don't own a retail business - I wouldn't do well in that regard.

If it were a case of $20 difference on something like a skimmer or light system, I would be more apt to purchase from my LFS. However, it's more like a $20 difference on a powerhead or bucket of salt. I once purchased 5 buckets of Instant Ocean and the price, including shipping, came to less than purchasing 3 buckets locally. There's something not right about that. I purchased 2 diamond hole-saws at a total of $75, shipped to my door. The LFS wanted to charge me $30 per hole for 5 holes. I saved myself $75. Now, you add up all those savings and little by little they add up to a VERY significant amount of money. $400 on a light system, $60 on salt, $75 on drilling, $60 on a pump... it all adds up.

I think this entire argument is moot for the most part. I doubt anyone's mind is going to be changed by a few good LFS workers posting on a hobbyist board. Part of the problem is that you guys are preaching to the choir here. Most people on these boards thoroughly research every aspect of their system and are very knowledgeable. They wouldn't take advantage of an LFS owner by wasting their time. At least, that's the impression I get. The general public, on the other hand... well, that's why working any form of retail sucks and you're not going to change it by bashing DIYers and hobbyists on a hobbyist board. (not you specifically firefish2020)

Good luck.

[BarryF]

Originally posted by hotredjag
I think that TOTO hit it right on the head. I just ran through this whole thread and am astounded at the ignorance of the posts as far as business in general. The funny thing is, the first poster, inflated the cost of those lights to make LFS sound even greedier. TSK TSK TSK.
First, and not to sound nasty, but if you are very price conscious, check the online prices first. The poster who said that Dr Foster and Smith never saw the product was right on. If you don't own it, you can sell it for $5 above cost and make money. No one else in online land gets that do they? And yes, they are selling to the whole country. What LFS can stock enough to compete against that?
Also seems like LFS can't win. Either they ask to help you, or you are ****ed because you are ignored?
If a LFS could get customers to buy a dead fish, or dead coral, that would help a LFS lower their prices too. They have to pay for them too you know. What happens when the airline decides to keep your fish for 3 days in Detroit at 20 degrees for no reason? If you notice Dr F & S are in LA. It is MUCH easier to sell things in LA, cheaper on livestock if your store isn't in the middle of the country, most of the wholesalers are on the coast. SO add in the cost of shipping WATER to your LFS. How about you all calling ANY airline and asking what their price is for shipping live ROCK by the pound?
And lastly, agreeing with TOTO, over and over people come in and waste hours of time asking about products just to come in and ask how to work it when they buy it online. What other business can you do that too? "I bought a car on ebay, but can't figure out the controls" to your local car dealer?
I have nothing against dyi'ers. I do have something against all these posters on reef clubs that have less than zero idea about the overhead of running a business. The government taxes the hell out of us, our insurance is insane, utililities have gone through the roof and on every order there is a "fuel surcharge", and if you add in things like yellow page advertising, replacing things that do break and that alusive thing called rent, I think that all the people on here owe LFS a giant apology. Do you see LFS people living in mansions? We love this hobby too and the very idea that we are perceived as rip offs ****es me off.

None of this is the consumers' problem. Sounds like you're just angry at the government and the distributors.

I'll say it again - none of this is the consumers' problem.

And to address the issue of consumers taking advantage of your time - ANY and ALL retail stores have this problem. It's just as easy for that person who ebay'd a car to go down to a dealership and ask questions (or take a very similar model on a test drive) than it is for someone who bought a pump to come and ask you how to take it apart. This is not exclusive to the aquarium hobby.

I'm sorry you're angry that people perceive the LFS as a rip-off, but that's pretty much what I think when I see something for $1200+ that I can get for $800 shipped to my door.

I know retail wouldn't agree with me and that's why I don't own a retail business. Service is slightly more profitable.

[hotredjag]

Barry, what do you think is a fair markup for something you can buy on line for $800. The normal rule of thumb for retail is 100% markup. That would mean it should be $1600 and because of the higher price the LFS is actually charging less than their normal markup. That is what I just don't understand, what DO people think you can charge to keep your doors open? Does no one understand the trickle down of this online thinking?
How did you start in the hobby? Read online about fish?
I will tell you how I started. I threw a ping pong ball in a gold fish bowl at a fair 38 years ago. Love at first sight.
Have you noticed there are fewer and fewer LFS? Who in their right mind would invest money in this? Things eat, poop, and die.
If things go like the trend, in 10 years, the only fish stores around will be in a small dept of Petsmart etc next to your dog food.

[BlackOnyx]

Another problem is an LFS has to pay for a store front and high insurance for flood damage too. Which an online place pays zero for space cuz its all industrial and if a tank where to break they're so big they wouldnt notice 50 gals on the floor.

[boodwah]

It seems like there are decent people on both ends of the transaction that are being labeled by the few bad apples on both ends. Most hobbyists I know are decent people. Same goes for the few LFS owners and employees I know. There is one LFS in town that is the exception to the rule. And I have seen some rude and uncouth hobbyists at the stores. We can't automatically reduce the LFS's to greedy entities based on that, and neither can hobbyists be reduced to inconsiderate nincompoops that peck the LFS's brains to buy online and expect LFS to provide technical support. Most of us know that is wrong, there are a few who don't, and even fewer still who just don't care. What it boils down to is this: Reefkeeping is a hobby. We spend what little disposable income we have on this. There are more important things in life like homes, medical bills, braces, car repairs, daughter's weddings, anniversary gifts, etc... Reefkeeping will always get what's left over, not vice versa. The problem is, LFS's have the same expenses outside their business and hobby and depend on our purchases to meet those obligations. And for that reason I spend what I can locally, but I will not dig into my family's budget to support someone else's family. I'll do what I can but no more. And I think a lot of us try to do that. But I really think the change has to come from the industry, not the consumers. The burden of keeping you in business is not on us, it is on you. It sucks but that is life in a free market economy. If you all keep trying to make us feel guilty for not spending enough in your stores without getting creative and making it worthwhile to do so then the writing is on the wall. A business that blames it's customers for it's lack of success is a business that has no plan to survive. But I really think that some of you, the better ones, will survive and thrive. Heck, I hope all of you do. I do stop in a couple of LFS's weekly and spend money on needed items and I really count on them for that. I don't want to have to plan ahead and order everything in advance. And I hope Wal-Mart is not reading this thread or we are all in trouble

[hotredjag]

and I forgot to mention, we ALL better be more aware of our government. Everyone on here should be mad. I would love to see how many people who can afford this hobby that in some way isn't related to the government. If they outsource, if you work for the post office and they go totally online.. the possibilitys are endless... keep it in mind when you like cutting out someone or some business that offers in person service. Do you like scanning your own grocerys? That was someones job that is now not coming into the LFS because they are out of work. Hence goes Western Union.

[boodwah]

Originally posted by hotredjag
and I forgot to mention, we ALL better be more aware of our government. Everyone on here should be mad. I would love to see how many people who can afford this hobby that in some way isn't related to the government. If they outsource, if you work for the post office and they go totally online.. the possibilitys are endless... keep it in mind when you like cutting out someone or some business that offers in person service. Do you like scanning your own grocerys? That was someones job that is now not coming into the LFS because they are out of work. Hence goes Western Union.

There is the common ground we have been looking for. Our beloved Federal Government with it's NAFTA, CAFTA, GATT, Chinese Most Favored Nation Trade Status, excessive taxing of domestic businesses to make up for lost import tariffs, etc. is out of control. But this is a hobby board and not a political board so I'll hush and get off my soapbox before I blow a releif valve.

[BarryF]

Originally posted by boodwah
But I really think the change has to come from the industry, not the consumers. The burden of keeping you in business is not on us, it is on you. It sucks but that is life in a free market economy. If you all keep trying to make us feel guilty for not spending enough in your stores without getting creative and making it worthwhile to do so then the writing is on the wall. A business that blames it's customers for it's lack of success is a business that has no plan to survive.

This pretty much sums it all up.

This global economy that we're all merging toward is going to kill off a lot of excessive discretionary spending. Couple that with free market capitalism, which automatically ends up with large conglomerates controlling the markets, and who knows how much longer this hobby will be sustained. Enjoy it while we can.

[boodwah]

Barry, call me a romantic, a dreamer, or whatever but I don't think it has to end. It has to change and adapt. Throughout history markets have changed and businesses have thrived and dived. Most businesses and entire industries have come to an end sooner or later but there are a few that seem to defy all odds and not only survive, but thrive. But they are the ones that recognize that the market is changing and they change their business plan to meet the changing market.
In fact, I am doing some research right now because I see a void in the industry that needs to be filled. And if it can be done profitably I am going to take the plunge. If I fail it will be my fault and mine alone. But if I succeed then some LFS's will be able to get some of their products of a higher quality for cheaper and move them faster. There is an old saying in business, "Better, cheaper, faster: Pick any two." I hope to defy that principle.

[BurntOutReefer]

ahmen!