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Re: [OM] E-620 review

Subject: Re: [OM] E-620 review
From: Ken Norton <ken@xxxxxxxxxxx>
Date: Tue, 7 Jul 2009 09:58:46 -0500
Just check your local Best Buy.  They've been doing a relatively good job of
keeping the latest/greatest E-bodies in stock.

Reminds me...

On Friday I had to buy one of my daughters a new bicycle.  I knew what I
wanted (specifications and features) and how much was reasonable to spend.
I was very specifically looking for the "sweet spot" bicycle--the one which
makes up 90% of all bike sales by volume.  I used to be a sales rep for a
bicycle company so I know this segment well. (low profit margin--maybe $50
at most, but make up for it in accessory sales).

I would have bought locally, but the bicycles in that category were
literally $150 higher than my desired price.  So, over to Iowa City we go.
Within five blocks there are like four bicycle shops, but before going
downtown we stopped in at the mall as I wanted to check out GPS units at
Scheels. (Scheels is a huge sporting goods store chain). In Scheels I found
exactly the bicycle I was looking for at exactly the price I wanted to
spend.

However, I wanted to do due diligence so downtown we went and stopped at
each and every store.  In two of them, the sales guys turned up their noses
at me and let me know in no uncertain terms that I wasn't worth their time
and "can I help you with anything else?"  Their lowest cost bicycle was OVER
$200 higher than my desired spend point.  One of the other stores, the sales
lady had the right attitude, but was just out of them because they are such
a good seller.  (Hmm, take a hint folks--if you sell out of a model, get in
more!)

After failure to acquire at the dedicated stores, we went back to Scheels
and picked the brand, model and COLOR and of bike we wanted and spent far
less than budgeted. In fact, we saved enough money that I bought the GPS
with the savings. (And no, it was NOT a Huffy).

The reason why camera shops don't like stocking lower-cost cameras is
because there is little to no money in the sale.  If they have to spend 20
minutes with a customer to make the sale, they'd rather do that with a
camera which has a $200 profit margin, not a $20 profit margin. That may
seem like good business sense--right?

Wrong!

When a sales person tries to upsell you with camera bags, straps, cleaning
products, memory cards, warranties, etc., this is actually quite important
to the survival of the business.  Most of those items are what we used to
call "Keystone Products". A keystone product has a 50% markup.  Actually,
it's a 100% markup. It's called a 50% markup because if you discount the
marked up price by 50% it's the store's purchase price. Try that logic out
on your spouse sometime.  :)  One really needs to be cognisent of the fact
that the stores make next to nothing or even lose money on some items and
they MUST sell these keystone products to make up for it.  When I know I'm
buying a low/no margin item I always try to buy something else along with
it--it's kinda like tipping at a restaurant--it's rarely what they are
hawking, but something else I need or want.

I also suggest that the reason why ignoring the $20 profit margin sales is
wrong is because each sale is the establishment or continuance of a
buyer-seller relationship. The sales people did not know that I know my way
around the bike industry a bit and that I have close to $5000 worth of bikes
at home.  I didn't have the tricked out Cannondale hanging on the Jeep.
They didn't realize that in the act of looking for my daughter's bike, I was
looking and comparing stuff for myself.  It turns out that my buyer-seller
relationship with Scheels has now trumped the local store and in eyeball
comparision--bikes of identical model, were 20-25% less.  And surprise,
surprise, they also have an outstanding selection of clothing and
accessories!

The reason why I state all this is because there is a huge parallel with the
camera industry.  The camera stores, which are specialist stores have had as
a business model prior to the digital revolution, of "the profit is in the
lab".  The cameras were always considered a "loss leader" to get the
customers in the door and keeping them coming back.  If you can get them to
keep coming back you are much more likely to have them use your lab.  But it
was critical to get and keep customers--even if all they purchased was a
disposable camera.

The camera retailer industry has imploded in recent years because with
digital, the labs have died from lack of business. Without the labs, the
camera store portion of the business has no chance of survival. To make up
for this, some remaining stores have decided to cater to a market segment
where there is huge profit margin in the equipment and have dumped brands
and models which have little margin.  Meanwhile, the "big box stores" know
exactly where the "sweet spot" is and they are willing to make $20 on a sale
because they are making up for it in volume.  LOT'S of volume.

So in essence, Best Buy has become THE camera store for us.  If Best Buy
doesn't have it, then you order from B&H.

AG
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