why are LFS DOOMED to Fail??

I have read many threads about how we should support LFS and or why LFS are doomed to fail if they have to compete against online retailers, (estores).

And I see and understand that LFS need to charge higher prices to cover the cost of maintaining and operating a 'Brick and Mortar' business, while estores do not.

I am not sure I understand that. Dont online stores have buildings and warehouses and employees too? They have customer support also.

So, is the difference merely in volume? The online store sells more for less markup and that way generate the same, (or more) net income?

I have a couple other ideas, *gee I bet your surprised, but would like to hear yours, along with whether or not you think lfs is needed and how they will survive on just that limited use or need.

Bill

It's not just volume but many if not most online stores are garage based and/or just a side business. If your selling out of your house and you have a real job doing something else then you dont care what your margins are. I say this out of experience not out of my rear btw so you guys with the home based sites don't get mad. I did this on a very low level before my B&M. But hey if you can't beat them join them www.ocaquatic.com shameless plug

Why.. Because manufacturers are afraid they wont get the super powered online business. So they knuckle under to them and offer lower than wholesale prices.
EXAMPLE
A new product is hitting the market. The wholesale price on a particular item is $12.15. If you buy enough to qualify for a first stage percentage discount you get an added 20% off. That makes the cost $9.72 prior to delivery/shipping charges. As a hobbyist you can purchase that same product online for $11.25. That gives the LFS a gross margin of $1.53 on the product.

So if you have a LFS employee that costs the employer $10.00/hour that employee has about 9 minutes to complete the transaction from start to finish.
• Say hello may I help you
• Listen to a cute story about the favorite fish
• Listen to the story about the 3 legged starfish
(You're losing money from this point forward)
• Listen to the customers explanation of what the problem is
• Explain a solution
• Listen to the customer explain how everyone online said he should use.....
• Ask the customer again... How may I help you today.
• Customer asks, "Do you carry XYZ brand of ...?
• Lead the customer to the product he wanted the moment he walked in.
• Ring it up and rejoice. You only lost $3.30 on that customer.
• Sit back down on your stack of salt buckets (you sold the chairs to meet rent last month) and hope no more customers come in. They always cost you money.

SteveU

The online stores (well at least the big ones) are able to rent/lease warehouse space which works in thier favor in two ways......
1. They are able to rent at a lower per sq ft price
2. With the extra space they have, they are able to buy & stock more product (if you have the capital). The more you buy, the cheaper it is.
Most of the big e-retailers also get ridiclously low shipping prices from the Major 4. This allows them to still ship at a reasonable price, yet still be cheaper then a LFS.

However, I would never buy a fish without seeing it in person. I always ask the LFS employee to feed the fish & I watch it eat, long before I even consider taking it home. LFS' (well it's a newer trend) also have corals most on line retailers don't, unless you count the guys specializing in coral, at which point, they don't carry a full line of dry goods. I like seeing my livestock before buying. And for this reason, I feel there will always be "brick & mortar" stores...............

Personally, I hate buying online because of shipping costs. Often, by the time I figure in the shipping cost, the price is the same at the LFS. And I get to physically see what I am buying. For drygoods, yes, online I might find a better deal. But livestock, I want to look at it. Probably never would buy online. So for me, I prefer to help keep the LFS in business or by from a local hobbist.

This about sums it up. Great post Steve. But if you loan your buckets to reefers what would you have to sit on? lol..

Good point Susan. Often times, unfortunately, I am an impulse buyer. When I want something, I do not want to wait for it to be shipped. The other problem is that there are not many, if any at all, LFS in my area that carry the dry goods that I am looking for. T5's, CA Reactor, ROP/DI unit, certain supplements. I therefore have to drive to Orange County or another location that is at least 30 miles from me. Do I want to drive in traffic and get the goodies? Not today, I am too tired. Do I just wait until I am in the area to pick it up? (no, because I have forgotten to stop by after a long day of work.) So I end up not getting anything at all .. damn what a predicament.
I hope the LFS never goes away. And do not think it ever will. I just wish that there was a good shop in my area such as a Pacific Reef or OC Aquatic or Seaside, or Black Coral Or Total Tropical or Crystal Cove. Not the Pet Worlds of LFS'.

I think this was the longest post I have ever done.. time for a nap.

Brock

I hear you about Pet World. But keep in mind they are one of the few that continues to open the door, day in and day out. Maybe they win by default but it's not like others haven't tried to knock them off their pedestal.


SteveU

Ditto along with Susan.. With livestock and corals I like to see what I'm getting.. I think that LFS will be around for beginners getting into the hobby.. In the long run people will need that personal contact that online services just can't provide.. Provided that the LFS are putting out the right information. I've heard some horror stories about things people have heard from their LFS and how when they first got into the hobby they were taken for a ride because they didnt know that much about the hobby as far as what equipment they needed. Myself included. Sites like these are what makes the hobby.. I've learned most of my knowledge about reefing from other members on sites.
As far as LFS being from SD we are limited in LFS.. I pretty much go to OC for livestock and corals.. They always have a better selection. Almost all drygoods I buy online. Unless it's something that I need right away.. Sometimes it's still cheaper when the shipping is tacked onto the price..

so lfs will be around for the newcomers till they learn they can get stuff from other reefers and online stores for less, (till they outgrow the need for mono y mono contact.

Agreed I have never and may never buy livestock over teh internet, although DFS is lower in price including shipping and offers a arrive alive and stay alive warranty that can not be beat.

My lfs has no warranty on livestock, none

So, maybe one day I may change over, but I think it will be becuas I have to...

LFS can not survive on livestock sales alone, so to support them, you have to conced to paying more money for drygood items from them, just so they can survive.


I am very glad we have a B&M in the discussion, cuase this is my next question, and you probably understand better and have the answer I am looking for, (surprise maybe??)

How is the basement, garage 'estore' affecting your operation, if they were not there, your competition would be against the bigger boys, the MD and DFS, so does the garage or basement estore have an affect. (I would say no) But for some reason, they may, due to thier numbers.

And the numbers are there, I am not sure about reef hobby, but upstarts and new businesses has always been 10 to 1, with a very high failure rate in the first two years.

But, I am not sure if them being the competition has as much as affect on the industry as them getting out, and or selling off their inventory for cheap, multiplied 90% over...

Or is the up and down swing in this hobby, like other hobbys or industries in that in a year time the swing revolves around xmas and school, or is there longer span swings that I dont know about cause I have only been doing this for a year...

I have spoke in some detail with two lfs, my local store, and another one that is not doing so well, actually my local one isnt doing so well either.

Keep in mind, my local store is pasadena tropical and they have NO COMPETITION locally. It is a half hour or longer drive to any other real store.

PTF claims to sell service, although I have not seen that service, almost everything they have told me is not true or not accurate, so much I can not believe anything they tell me...

They also have no warranty on livestock, and understandlby so, but still others do...

And the prices at ptf are horrendous. almost double for drygoods, especially pumps, tanks, skimmers, and teh bio ball filter sumps... effing double price..

But, they have fairly high rent, but they are family owned and they are the labor force, with the exception of one otehr worker part time to clean tanks...

But I can not imagine having a store especially lfs, and not be there myself manning the store, cause I cuold not afford labor, and ultimately not netting any income to speak of, and needing extra buckets as the ass gets wider and wider...

Well, the likes of MD are experts when it comes to drygoods. And MDL and similar big-bou etailers do a "Fair" jod with livestock.

But... when it comes to obtaining a nice pice of coral they have but one option and that's sell it quick before it dies. Where the smaller etailer comes in are the likes of FF & RM as well as some other smaller less known growers.

The hold and grow just DOES NOT FIT the model of the big etailers.

Bill, you can take this anyway you like, but guys in their 40's are not who stores are marketing to.

SteveU

I heard thru the grapevine that they,PW, will be soon moving from San Bernardino to Orange County somewhere. Supposed to be in the next month or so. Is that fact or fiction?

i dont take it the wrong way, and maybe that is it, I never felt used before... especially by marketing... not sure whta it feels like...

But, I am a consumer, so whether or not I am marketed to or not I am still buying, I just feel somewhat dirty not supporting my lfs when I know he worded harded and risked the most of all of them...

And gets the least in return for that effort...

But, I guess I can fall back onto the laws of economics and just buy where my money gets the biggest bang, and that will be that..

I haven't had a heart to heart with any of them in at least 6 months and even if I did I'd not share it here. :laugh:

They had talked several times about opening a new store somewhere but that wasn't to replace the current one. I think the expansion they did a while back was a comitment to the area.

That family is to smart to move to OC.

Maybe they just need to rename the store...

Orange County Pet World of San Bernardino. :laugh:

SteveU

if they (pet world) did move out that way, they'd be in competition with their cousin which owns a pretty big store out in FV. There are several other things that'll keep them in the area for quite awhile longer.

I'm a mix of both for dry good and live good. Im more or less sick of some LFS having nice live stock NFS. Where as most online sell what they post unless its out of stock. I like to get my live good from LFS also like others but if its always NFS why shop there?

Livestock-
In some case where I've had the chance to visit online seller warehouse I have liked their holding tanks for fish 100times more then same 6x6inch cube some LFS put 4 fish in that area (your never know with all warehouse).

Edit: I still like LFS but online is good to just depends on what I want and who has it. IF both has it LFS wins out.

Drygood-
If I don't need it "now" then whichever its cheaper. It always comes down to Tax+Gas+time(to and from LFS) vs shipping cost if the item is the same price and not an item I need now. I don't figure in time on deliever because I don't need it now and researching online price is what I normally anyways.

Edit: you can take out the time from the cost that I wrote above but I hardly ever look for drygood at LFs till im thinking about getting it.

Reasonable reasons for items being NFS. You CANNOT compare MO to a LFS when it comes to what you see. Most LFS's don't have an area to keep things for whatever reason from your view.

• Fish or coral just came in and it's health is questionable
• Same as above but the problem developed
• It's in their display which is used as a marketing tool to create desire
• It's being held for someone (this is a no-win situation, some stores do it and the next guy complains, some stores wont hold and they catch hell because they wont)
• The store just tells you it's not available because they know you'll just kill it. :laugh:

I've only been to one store locally that on a regular basis has what seems to be at least 50% of the corals on hold in what I'd call selling tanks. But in that case it just means about 5 corals aren't for sale. :laugh: They (I think) are heavy into service accounts were they keep the tanks stocked. Those are people that they really need to keep satisfied since they generate ongoing monthly revenue.

SteveU