MARS Bulk Purchases

[Brian Prestwood]

I've been discussing this with a few members. I thought we should open it up to all the membership.

In the past, members used their own funds to pay for bulk purchases then collected payment from the members who participated. Obviously, this practice limits both the size and number of group buys.

I'm proposing the board start using club funds to pay for bulk purchases and keep a small inventory of our most commonly used items. Individual members would still run the group buys. Some of the arguements against using club funds for bulk purchases are...

1) Collecting sales tax is a pain.

My Response: We are not reselling. We always pay the appropriate sales tax when we purchase the goods from the vendor. We do not have to collect sales tax again when we collect payment from the members.

2) Using club funds will draw the attention of the State Board of Equalization.

My Response: Again, we're not doing anything illegal.

3a) The financial benefit we gain from doing bulk purchases is not cost justified when compared to the loss of the discounts and donations from the LFSs.

My Response...
I know this is a taboo subject for some and some even believe the boogie man will reign fire down on MARS because I brought it up. I appologize if ahead of time if this issue scares you.

First of all, let me say for the record that I both like and respect all of the LFS business owners I know.

It seems obvious to me that our members benefit more finacially from bulk purchases than from discounts and raffle items. Rather than get into the details of that here I'll take questions offline. Please PM me if want me to explain my cost justification. If I don't convince you feel free to say so here.

3b) The financial benefit we gain from doing bulk purchases is not cost justified when compared to the loss of the LFSs as a knowledge source.

A variant of 3a with an apples (finances) and oranges (knowledge) comparison thrown in to confuse. You can't quantifiably compare financial benefits to knowledge benefits.

Any more arguements against using club funds to pay for bulk buys?

So, what do you think? Should we use club funds to pay for bulk buys?

Keep in mind, the club will keep all uncollected merchandise and either let another member pay for it or raffle it off on the raffle table.

Also, if you're a club member whose income comes from the aquarium trade please disclose that bias.

Finally, stating the obvious, no matter what I think, if a majority of the board doesn't agree it won't happen. I love my checks and balances.

[jtarmitage]

I think it's a great idea as it will take the stress off of the member and spread it to the club. Also, pickup would be easier if done at the meetings (another benefit with the MARS Mobile). I say do it.

[CaptiveReefSystems]

I think this is a question better answered by the owners of our LFS. See how they like the club sponsoring group buys. If they don't have a problem with it, then I would guess it would be okay.

I remember a discussion on this that the club would only support group buys of things out of the ordinary and not commonly found at our LFS.

[pbetito]

I am in and out. I like to support the lfs whenever possible. On some items such as salt and bulbs there is virtually no profit for the stores so I am more apt to join a group buy that is club sponsored on those items than say rose anems ect... When any of us does a group buy as an individual that is completely different than one that is club sponsored. We need to remember that we are also sponsored by our LFS and that they are mostly hobbyists just like ourselves, only their mortgage depends on this hobby.

I would be most likely to vote against group buys that are club sponsored if I feel that they hurt the LFS. I know the old mentality was we are not a group that can easily be supported by LFS as we propogate our own frags but we are actually supporting them greatly. We spend TONS of money in their stores and I would be really bummed if several of them went out of buisness and I only had one or two options. Half the fun of buying stuff is seeing all the things I can't buy and if that pleasure adds a few bucks to my prices, I will deal with it gladly. I guess what my ramblings are supposed to mean is that sometimes there are greater costs to saving a few bucks than what is on the surface. If you went to your FAVORITE LFS tomorrow and the sign said closed....for good, wouldn't that be a really bad day? It would be for me... Just my $ .02

[petes97]

I do not have a problem with this for items that cannot be obtained at the LFS. Those items include, 2/3 part, GFO, Lights of America (Costco) at the very least. While one could argue that there are retail versions of these products that the LFS can and do carry, our members will buy these items through a group by regardless of who runs it.

[pbetito]

Originally posted by CaptiveReefSystems


I remember a discussion on this that the club would only support group buys of things out of the ordinary and not commonly found at our LFS.

I was in the middle of my ramblings while Bruce wrote this but that is it in a nut shell for me. I truly hope the MARS sponsored group buys are " things out of the ordinary and not commonly found at our LFS."

[Marko9]

Originally posted by pbetito
I was in the middle of my ramblings while Bruce wrote this but that is it in a nut shell for me. I truly hope the MARS sponsored group buys are " things out of the ordinary and not commonly found at our LFS."

I do not want to start a war, but if it to save a buck or support our local resources, I will support our LFS. Without them, especially one in general, many of the nice corals that we have in Sacramento would not be here.

I like the fact that everyone is getting "more into" certain aspects of this hobby. Tonight I saw a thread on controllers, SPS newb questions, bulkhead question and even mention of a new swap.

To me, as a MARS memeber this excites me. I like the idea of group buys for mag flake and Calcium carbonate, but group buys scare me. Anyone remember how fast they can go south? I am not trying to compare this to that, all I am saying is that we are really lucky to have great stores and great hobbyist in our area; I just get hestitant when it is just to save a buck.

I know I will reread this after I pushed Submit reply and wish I did not post this because it will probably get taken the wrong way, but I only want to proceed with caution. I would support, "Hey John, we were thinking of a group buy of phosar since it is the best media out there (my opinion ), can we get a break if we order a case"? Something along those lines.

BTW, I could use some more magflake

[robertloop]

I like the idea alot. Most bulk items, that I've seen in threads, cannot be purchased at a LFS. For many reasons such as simple store floor space. (extremely valuable)

One thing to note.... The group buys have been going on for years and years yet better stores seem to keep popping up. Will haveing the added convenience of MARS heading it up change that? Just some thoughts. Great thread. I hope this thread can combine ideas and make the club even better.

Robert

[Marko9]

I agree Robert. And the thing about our market being saturated with new stores popping up; well, I don't know how well they are actually doing. The fish business is a tough business and our whole valley is feeling an economic crunch with the price of gas, electricty and the housing market.

[airinhere]

Seems to me that using the club as a financial front to help make group buys has the distinct flavor of a small scale business venture. In principal it is very similar to what an individual might do when they buy corals or drygoods from a wholesale venue and then distribute those items to individual reefers. The end result of how much money is earned is not the point, the point is that a single entity is used to provide 'lower than retail' prices for the end buyers. That infered predisposition might make retail outlets very concerned about dealing with the club as they would see it as a very real form of direct competition. Because of this I would have to argue against such a move. Even further, I would distance myself from such activity as an individual because I would not want the local stores looking at me as a part of that sort of ativity.

Simply put, the club is an organization providing information and experience for local reefkeepers. It should not become a tool for any financial gain or loss outside of the fund-raising raffles. Once that distinction becomes blurred, we would all be treading down a slippery slope.

That having been said, I do not feel that any member of the club should feel concern about sharing their resources to help provide cheaper sources of drygoods or livestock. This is the basis for all of the group buys in the past and it is because the financial responsibility is placed onto an individual (and not the club as a whole) that I believe the group buys in the past have been appropriate.

Now, if part of the issue at hand is an excess of available funds in the club coffers, I would like to ask for a public forum for brainstorming ideas in a general meeting. Or maybe even in the MARS website forum (open to members only).

I could come up with several things I would like to see happen.

[airinhere]

The Marine Aquarist Roundtable of Sacramento (MARS) is a Sacramento, CA regional club where the knowledge and materials required to keep marine aquariums are enthusiastically shared. Our goal is to help educate our membership about the saltwater aquarium hobby.

This is our clubs mission statement.

It says very clearly that we can share: "knowledge and materials required to keep marine aquariums".

Sharing is the key word here.

And to further clarify: "Our goal is to help educate our membership about the saltwater aquarium hobby".

So we can make our own materials and expertise available to each other. We should always make efforts to help provide new methods of reef related learning.

But nowhere is there any indication that club funds should be used to help save people money.

I think that would be called MASCS (Marine Aquarist Savings Club of Sacramento).

[dots]

Though I havn't read all of the replies, the impact on the LFS seems to be the most prevalent, which is my thought as well.

As a suggestion, forgive me if it has been mentioned, what about showing some patronage in return for the donations we have recieved and rotate between the stores who have and do donate through these "group" buys. Not only would this further help stregthen local ties, but perhaps, with larger orders, they can get better deals and in return pass them along in a fashion everyone can win?

Though my initial thought, I think it is again, an excellent proposition......keep them comming please!!!!

However, arinhere does make a valid point, and whenever money is spoke of, it eludes to the "evil" of money and the bad things that come about it and is immediatly the first thought for most. I have to admit, I can not disagree as there are unscruplous people out there.

To be quite honest, this is NOT a poor man's hobby, if I can break even sometimes I am happy. I look at things of this nature as oppurtunites based on our common interests and goals as hobbiest, and how we might not only reach those goals toghether......but surpass them........sometimes, to accomplish that you need to explore new options...............but it does bring up a good point of making the motivations of doing so clear to all, both as a club and individually.

I look at things in this nature as a team building exercises and for the greater good, and to make the club more of a "resource" per se, but never a replacement.......mearly another avenue for each of us to succeed and provide another benifit to being a MARS member.

Because lets get honest.........its easier for all of us to do ALL of our ordering online, people shouldn't be doing this to really try to save or make a buck...........you can do it easier other ways than that which is proposed. No?

[MrMikeB]

First of all, I would like to thank Brian for putting this out there in the open for debate and out of our personal PMs.

I think Aaron echoed my POV regarding the business aspect perfectly. As an individual putting together a group buy, there are inherent risks to doing so, and GBs many times do not work out as well as we hope. What happens when MARS does it and it does not work out? Given its a corporation putting it together (MARS), there could be additional liabilities and potential lawsuits given we are now acting as business and using business funds to carry out these activities. When acting as a business, we could be held to the same laws and liabilities of a business. So when a shipment of the next Rics comes in that MARS put together and dies- MARS is out a bit of $$$ or other types of damages. How would such activities affect the club's tax exempt status?

As it relates to the LFS - I think CaptiveReefSystems has a very practical POV. Lets ask them if they would be put off if the club started to buy things in bulk and resale them to the members. I am not suggesting that we only do things the LFS appreciate or agree to, because our members do come first. My point is that alienating them by not at least being mindful of their POV does a disservice to our members. I want our LFS to think of MARS as a benefit and not competition and/or a pain in the ***.

In addition, I would like to refer to the MARS mission statement which I would imagine is imprinted on our articles of incorporation somewhere:

"The purpose of the organization is to promote, create, and enlarge the hobby of keeping, propagating, appreciating and exhibiting marine organisms; to disseminate information about the above to the membership; to engage in educational activities related to our purposes; and to acquire and own such property as may be necessary for any or all of the foregoing purposes."

I do not see mention of resale of property, nor do I feel it contributes to the mission of the club. If we are looking for services to provide members, I think there are far better and less controversial ways to get back to what we are about.

For the record I would be opposed to this idea.

[CaptiveReefSystems]

tell the LFS that we no longer want any discounts, but we are going to start using the purchasing power and funds of the club to do group buys. see if that makes them fell better about the club and its members.

[airinhere]

As far as the club discount goes, I have always percieved it more as a show of goodwill on the part of the LFS than a tangible benefit. It shows me what stores I should feel good about dealing with and what stores are either oblivious to our existence or are maybe even hostile to experienced reefers. I can count on one hand the total amount of times I have asked for the club discount, but I cant even begin to explain the impact it has had on where I choose to shop.

Again, I do not feel that club funds should be used to secure anything that relates to individual purchases. That is my money too and (small though that amount might be) I do not think it fair that my protion be used for financial savings by any other members.

Now if we were to start a coral farming effort, I might find myself supporting that. Sort of a co-op for coral. This would have to remain distinct and seperate from the club itself, but could be a sister organization. I for one would be very interested in something like that.

[Justin74]

I too am opposed to the idea. Being envolved with 2 group buys now I have personally established that they are inherately riddled with potential problems, usually in an ugly nature of some sort on which end is irrelevant, but usually both. Why potentially smear our clubs good name with either slander or law suits? True the things of interest with group buys arent always catered by every LFS here, but I havent talked to one yet that wouldnt consider setting one up if the interest was truely there. Money talks bs walks, right?

MikeB does make a good point regarding the mission statement. How group buys through a hard and reaching argument could align with the mission statement, but for all acounts and purposes it is not, and would be out of context to be interpreted as such in my honest opinion. The process innitially sounds okay, but the point hits home regarding resale to other members if the original purchaser backs out... Pretty much leaving the club to look like a store front.

While shooting down that idea Id like to propose my own for target practice How bout more club'y stuff? Like posters, calendars, stickers/bumber stickers, hats, and shirts? How bout canvassing for writers, editers and the like for a monthly or annual newsletter? Nothing cooler than reaching in the mailbox and seeing some fish stuff with your name on it. I understand the newsletter would take some effort to put together and am not astranged to it at all. But if I had a dollar for everytime a member asked me "whered you get that shirt!?" "whered you get that hat??" Id be shopping at Atlantis monthly There is a very real and genuine interest for this stuff. As novel as it is It gives the members a product they can hold and show off while at the same time sporting their sponsorship and comradery on their sleeve

-Justin

[philter4]

All of you know me either personally or through my collecting talk, but I have a point that goes streight to point 3b (I am not affiliated with stores) the loss of knowledge isn't an accurate wording, it should read the use of the LFS knowledge.

How would any of us feel if you make your money selling LLL (whatever LLL is) and you sold it by explaning its use and benifits. You pay x amount of $$ to employees, rent on the space LLL takes up and all other incidental cost to keep your store open. Then after x amount of time explaining the uses and benifits of LLL and why someone should purchase LLL from you only to find out it was purchased at a discount from the club, and told thanks for the info.

If the club buys for other club members then the people who use this service should not be so quick to ask for advice from the LFS. If individuals do it together it is not so hard for a LFS to take because everyone, LFS included, looks for the best deal for themselves.

IMO individual purchers still should not go to a place and take time away from a store that they did not purchase from. This is not to say don't do bulk buys, just my opinion about etiquet if we do bulk purchases, and there are exceptions such as some people know more then others about an animal, but to take away sales of something because you can buy it direct then go to a store to find out how to use it isn't really fair to the retail business we are trying to support.

Again, I'm not saying don't do it, just do it without taking valuable time and giving the LFS a bad view of the club.

[Reefugee]

Bad idea for reason other members have already stated. I have done several group buys, and have always put my money down first. For some group buy, I require prepayment as a guarantee of interest instead of me taking the risk. Group buys are working well the way it's going. No need to get the club involved. BTW - how does group buy affect our NPO status?

[Brian Prestwood]

Its good to see an adult conversation about a touchy subject. This really is starting to feel like the old MARS again.

Additional Arguments Against...

3c) Varations on the “MARS must preserve the LFSs” theme.

The LFSs are not mentioned in the charter. The members are. Preserving the LFSs is only required when not doing so negatively affects the members.

Please keep your arguments concrete. First and foremost, establish how the LFS going away is a detriment to our members. Secondly, define how MARS prevents them from staying in business.

4) The club was not chartered to help its members acquire the goods necessary to keep marine aquariums.

From the charter...

"and to acquire and own such property as may be necessary for any or all of the foregoing purposes."

5) Group buys are problematic so we should not do them.

Let’s be specific w/o naming names.

I do know of one case where the person running the group buy did not announce up front that they were taking a small fee to cover costs. Board involvement solves this problem. We will publish our group by policy.

I know of several cases where group buy coordinators had to front their own money because members who committed wouldn't pre-pay and were holding up the group buy. Board involvement solves this problem. Club fund will cover the costs and own the uncollected product.

I know of several cases where the group buy coordinators, myself included, were stuck with more product than they needed because member committed but didn't collect. Board involvement solves this problem. We want extra product for new members and the raffle table.


Other comments of mine…

Again, when it doesn’t hinder the club I think we should make every reasonable effort to not affect profitability of the LFSs.

The convenience of walking into an LFS has a quantifiable value to me, 20%. In other words, I’ll pay 20% more than mail order or bulk pricing at LFS. I think the club should establish a similar guideline for club run bulk purchases. In other words, if we can get the product for 20% less than retail do it. If nothing else, the time to run the bulk purchase has value.

IMI - store front specialty retail for commodity products is on the way out. We can't stop that.

Got to get to work. More later.

[kevin95695]

Disclaimer: I'm currently organizing a group buy that is not MARS sactioned.

Why? Because it is for products not normally stocked at LFS. Gives us the opportunity to purchase said products below normal retail, and gives the vendor the opportunity for the GB sales they would otherwise miss out on if members purchased from mfgr., plus potential cross-selling upon pick up.

This thread has brought to mind some aspects I hadn't considered, but in general I am in favor of group buys as long as they are beneficial to the member, MARS, and LFS.

[jtarmitage]

I agree that we don't want to hurt the LFS, and I think something along the lines of the PM reactor buy are a great opportunity for both the LFS and MARS members. The members get the discount, and the LFS gets the increased traffic due solely to the group buy. How often do we go to a LFS and come out empty handed? Win-win situation.
Other group buys are great too, as long as the LFS are not hurt by it. The salt buy for example would take away some profit, but not a considerable amount. Maybe a GB of salt through a LFS could be arranged and the club could spearhead that and have everyone (or most everyone) pick up at the meeting. And as Kevin pointed out, the Neptune GB is for goods not normally stocked.

[airinhere]

With statements like
"The LFSs are not mentioned in the charter. The members are. Preserving the LFSs is only required when not doing so negatively affects the members.

Please keep your arguments concrete. First and foremost, establish how the LFS going away is a detriment to our members. Secondly, define how MARS prevents them from staying in business."

I think I can see why the club used to have major issues with the local LFS.

You are kidding right?

What would our club be without the LFS in the area to provide us with stuff to put in our tanks (and the tanks themselves?)

Mail order all the time? Not me. No way.

"and to acquire and own such property as may be necessary for any or all of the foregoing purposes."

Allow me to help clarify that statement.
(from the homepage of MARS)

"knowledge and materials required to keep marine aquariums are enthusiastically shared."

So if you want to use club resources to make group buys and they evenly distribute everything to the whole club, I guess that would be okay. You are using my money to make the group buy. Only fair that I should get part of the return. Buy in amount for the group buys dont count. End result would be even distribution.

Example.

I donated about a hundred and some frags to the last frag swap. I left with about 15. Everyone left with about 15 I am thinking. Should I have gotten a hundred frags to take home?

No. We share. Even distribution.

And lastly,

" I know of several cases where the group buy coordinators, myself included, were stuck with more product than they needed because member committed but didn't collect."

If that is a driving concern here, great, but please understand that it is also a major responsibility. I think its fairly common to see group buys turn ugly very quickly. I agree with Justin that the group as a whole should not be dragged into that kind of mess.

[pbetito]

Originally posted by Brian Prestwood

3c) Varations on the �MARS must preserve the LFSs� theme.

The LFSs are not mentioned in the charter. The members are. Preserving the LFSs is only required when not doing so negatively affects the members.

Please keep your arguments concrete. First and foremost, establish how the LFS going away is a detriment to our members. Secondly, define how MARS prevents them from staying in business.

"First and foremost, establish how the LFS going away is a detriment to our members.

Our members have clearly established in this thread that they enjoy shopping at their LFS. Shopping at a local store is a chance to view ideas and concepts that one maybe has never seen or heard of before. It is also a place where one can get an answer to a question from a knowledgeable person face to face. The fact that the members have clearly stated they would be willing to pay more to shop there is a testament to how important these stores are to the members of MARS. If these stores were to close it would be detrimental (damaging or harmful) to our members as it would take away an important pieceof the hobby they love.

"Secondly, define how MARS prevents them from staying in business."

Mars doing group buys would allow people to take money that is spent in the LFS and spend it somewhere else. The LFS would then not make a profit on those items. The more profit the club caused them to lose, the greater their chance would be of not being able to stay open. I am not saying we as a club are strong enough purchasers that we could cause the stores to close necessarily. I am saying however that I would not want the club to help or aid in that cause.

Lastly "The LFSs are not mentioned in the charter. The members are. Preserving the LFSs is only required when not doing so negatively affects the members.

The members are clearly saying that the LFS matter to them! They say so with their mouths and their wallets. The charter says "Preserving the LFSs is only required when not doing so negatively affects the members." The members are saying preserving the LFS is VERY important to them. Therefore the charter is backing the argument made of not hurting the local fish stores very implictly. I want our club to promote our hobby and strenghten it throughout our regoin. Having stores is one of the best ways that our hobby is promoted. I know that stores in our area are responsible for new hobbyists much more than MARS or Reefcentral is. People find us after they have already began in the hobby usually. They many times learn of us IN THE STORES! I feel if we are to be a responible club that benefits our hobby and members in our area, it is of the utmost importance that we try and work hand in hand with the others such as the LFS that are also promoting our hobby.

Brian, I appreciate your ideas but in this area I feel that you are not taking into consideration, or understanding just how much our LFS mean to the club and its members. They are not just a resource to some of us but more of an integral part of the hobby. I feel that by supporting us they are practically members of our club and their ability to survive should be considered when we choose what we do as a club. It is not putting them ahead of the members, it is simply looking out for our fellow reefers and the good of the overally hobby.

Respectfully
Paul

[petes97]

I was just thinking that there is an idea related to GBs that I don't think has been broached. MARS "could" act as an intermediary with the LFS community to act as a conduit to organize GBs with the LFS.

This could be a win-win. LFS gets business they might not otherwise, they can order in bulk on top of the GB strengthening their price point for in-store sales and MARS could handle the monetary collection and act as a single point for communication with the LFS.

Thoughts?

[pbetito]

Originally posted by petes97
I was just thinking that there is an idea related to GBs that I don't think has been broached. MARS "could" act as an intermediary with the LFS community to act as a conduit to organize GBs with the LFS.

This could be a win-win. LFS gets business they might not otherwise, they can order in bulk on top of the GB strengthening their price point for in-store sales and MARS could handle the monetary collection and act as a single point for communication with the LFS.

Thoughts?

Mike and I had just discussed this recently and I already know of some stores that would be happy to do this for us. I have already had offers from stores on Rod's food, bulbs and salt.. I can think of some other stores that would surely aid in this as well. IMO if they make a small profit on the order and get inventory for less, that is fine by me.