Recession and the Marine Industry

[JennM]

Heh, I just got off the phone with a commercial customer who was whining about late fees on her service invoice. This is the first time she's noticed... but they've been behind for months and have been incurring and paying late fees for months. I guess she finally LOOKED at an invoice for a change. I call, they mail a check for the oldest invoice (not the other one that's about to go past due or the current one!) - so I just told her that my "accountant" has been after me to clean up receivables. Takes the pressure off me, to blame that "accountant".

I've had a couple of issues with some residential customers who are resisting the pay-as-you-go policy I've been strict about for the last year+. I used to give everyone net 15... but not anymore. 15 stretches into 30, into 45... then the phone tag and other nonsense - I don't have time for that.

Maintenance keeps the cash flow sane during slower times, so keeping people on time is more important than ever these days.

I've picked up a few new accounts too - which balances out the few that have either cut back or sold their tanks - so at least for now, it's consistent (knocking on wood).

May is historically my slowest month of the year - and this year is no exception. So I'm just sitting tight and waiting for June, which usually does a bit better.

Jenn

 

[Anonymous]

The excuse we're getting is that the economy is hurting business. Duh. It amazes me that people have the cashflow to bank a $4 million restaurant and install a $250k fishtank, but it doesn't occur to them that they'll have to spend a tiny fraction of that on maintenance every month. I'm just glad I'm not in the fancy-shmancy restaurant business.

 

[JennM]

I had that sort of discussion with my service gal today. Having trouble collecting on bills etc. She said, "It's like they don't realize we are running a business too!"

She's right. I'm not sure why some folks seem to have that impression - we have a brick and mortar storefront, and operate a maintenance service in conjunction with it. Paying our own bills is difficult if our customers don't pay theirs... the same rules apply no matter what kind of business it is. I'm sure my slow-paying customer is doing the same sort of collection calls to their clients, as I am to them, if their invoices are not paid on time. Money, unfortunately, makes the world go 'round.

And, if we don't value our time and work, nobody else will. I learned that very early on. When you try to be the "nice guy", you get taken advantage of.

Things are tough all over, that's a fact - but if people can't take care of the upkeep, whether they do it themselves or pay a service to do it, then they shouldn't have a tank.

Jenn

 

[reefrash]

One way that I've found that works in collection is, since customers think we do it for fun and somehow money falls from the sky for us, is to not spend any money on their tanks. When asked why didn't you pick up frozen food, or do you think we can add a couple more corals? the response is "sorry I'm broke, everyone owes me money" then show them an empty wallet. This approach works especially well with residential accounts since you get to know people pretty well going in and out of their houses all of the time. A for commercial accounts, I don't do them they're a PITA.

 

[Raskal311]

One way to get paid is to have a portable credit card machine, everyone has a credit card so they can’t give you the BS of not having cash. If you have an Iphone there is a few app available for relatively cheap.

 

[EastCoastReefer]

Hey there - I am new here, I have a store in the Cleveland area. Times have been tight, but you have to be careful where you are getting product from. I tranship and get some stuff locally but a lot of the LA wholesalers are slowing down and not ordering stuff.Tranship is the way to go if you want to stay afloat.

 

[SlipperMan]

We'd love to do tranship but can't take the risk. We got royally screwed by a LA wholesaler recently and still haven't recovered. We're a very small store (most of you probably have stock rooms larger than our entire store...easily). So when you get HALF of what you order (not even the companies minimum order) and it's all junk, yet still have to pay the shipping charges from LA to Ohio....that hurts. That hurts bad. We thrive on low frag prices and when a coral now costs $15 more because of shipping versus $3-$5 more, that just kills. And then the coral which was supposed to be "blow your mind bright" was hardly that. So that company is forever off our list. That was the last straw. The order before there were substitutions we never agreed to and we didn't get any of the inverts we ordered. Come on, is that how you do business? I understand we don't make $2500 orders a week, week after week, but we do expect some sort of customer service. Then again when you're the lowest on the total pole, you catch crap all day long.

Customers are giving us a hard time too. They want $5 frags for $2, Yellow Tangs for $15, and so forth. Sorry but 5-10 heads of colorful zoanthids or $40 for an entire rock covered in 100+ polyps is far from unreasonable. But times are tough. What is keeping us afloat is loyal customers who aren't afraid to buy multiple pieces at a time. Tank cleanings are helping a lot as well.

Could we afford a 50% loss on tranship? No. Could we hold a 2-3 box tranship? Barely. It's a good thing we have tanks at our homes. Fish.....maybe two boxes but fish sit for weeks at a time. $15 for a tank raised clown and people yell about how expensive they are!

Call it venting, call it crying, it's just frustrating when you put 80+ hours a week into a business and can barely afford to pay your own rent at home!

 

[EastCoastReefer]

I had the same experience.

 

[JennM]

I smell a troll. It's always interesting when a brand new poster's first post comes out swinging about a particular individual or entity.

I'm not a moderator here and I don't play one on TV but I thought it might be helpful to point out a couple of things to you:

EastCoast, have you read the user agreement here? For your convenience it is stickied at the top of this forum, here: topic94369.html

RDO User Agreement Addendum: Industry Behind the Hobby Forum
Reefs.org seeks to nurture The Industry Behind the Hobby forum into a positive, constructive community. In pursuit of this goal, moderators will delete any accusatory or insulting post at their discretion. This forum is intended as a platform for hobbyist and industry insiders to share ideas with one another for the betterment of the hobby. This forum is not intended to air grievances, perpetuate grudges, nor document alleged shortcomings of individuals or institutions. While Reefs.org realizes these new moderating restrictions may impact the nature of some discussions, we believe it will make this forum more hospitable and constructive for all voices. The more voices that are able and willing to speak, the better off our hobby and industry will be.

Link to RDO User Agreement.

Thanks for your understanding -

RDO staff

IMO hiding behind a screen name and making big accusations is beyond inappropriate, and suggests another agenda.

Go troll elsewhere, this sort of thing isn't appreciated here.

Jenn

 

[Anonymous]

Airing someone else's dirty laundry is not appropriate here. I edited the offensive material from your post.

Peace,

Chip

 

[JennM]

Slipperman, if you are selling clowns for $15 and frags for $5, you would have to sell a huge volume of them to make any money. If you have a tiny space, then that's mathematically impossible. Even if you have a large space, you'd still have to do huge volume to be able to pay the increased overhead of a larger space. You can't give stuff away and expect to earn even a meager living, but too often, people entering this industry come into it as a hobbyist determined to "stop the overcharging"... IMO that's probably the biggest myth in this industry - perpetuated by the uninformed hobbyist who caught a glimpse of a tranship list once, and came to the conclusion that the LFS were making hobbyists hold their ankles when they can buy a fish for under $1 and sell it for $30 or whatnot... because that "list" doesn't make mention of the minimum order requirements, box charges, repack/re-ox charges, air freight etc., OR MORTALITY never mind the cost of rent, utilities and everything else that makes up a retail store. All they see is the tranship price vs. the retail price and they figure they can come along and do it better than anybody else and sell for a fraction of the cost. Well, it does NOT work that way.

The problem when even one retailer in an area starts selling things at or below cost, it devalues the livestock across the board and everybody suffers. I've seen this happen a number of times around my area - a new store opens and wants to be the cheapest in town and they give everything away, and they have their 15 minutes at the top of everybody's hit parade. After about the first 90 days, I hear people start complaining that their prices have "skyrocketed".... they either have to raise the prices to be in line with the local market (or a bit higher if they have now got a deficit to make up), or they don't stick around very long.

If you're spending 80+ hours a week (and I know of what you speak because I'm at my shop every open hour ... and sometimes before and/or after hours... all but a few days out of the year) and you're in a small space not able to turn the kind of volume you need to in order to pay the bills... might be time to revisit your business plan and see where you can make a change. You can't buy frags for $5, let alone sell them for that, and you can't buy a yellow tang from a wholesaler nowadays for $15 - and as such you can't sell them for that or you're paying for the privilege of owning your own business.

Jenn

 

[spawner]

The problem when even one retailer in an area starts selling things at or below cost, it devalues the livestock across the board and everybody suffers. I've seen this happen a number of times around my area - a new store opens and wants to be the cheapest in town and they give everything away, and they have their 15 minutes at the top of everybody's hit parade. After about the first 90 days, I hear people start complaining that their prices have "skyrocketed".... they either have to raise the prices to be in line with the local market (or a bit higher if they have now got a deficit to make up), or they don't stick around very long.

If you're spending 80+ hours a week (and I know of what you speak because I'm at my shop every open hour ... and sometimes before and/or after hours... all but a few days out of the year) and you're in a small space not able to turn the kind of volume you need to in order to pay the bills... might be time to revisit your business plan and see where you can make a change. You can't buy frags for $5, let alone sell them for that, and you can't buy a yellow tang from a wholesaler nowadays for $15 - and as such you can't sell them for that or you're paying for the privilege of owning your own business.

Jenn

Jenn this is the largest problem in the industry. This need to drive the prices of livestock down to the point where the consumer has no respect for properly held and maintained stock. It ripples all the way back to the collector, exporter, and importer. They are rewarded for giving you the cheapest stock they can, no matter how they are collected, maintained or shipped. This drive to get the cheapest thing going to be the death nail for the hobby.

 

[swsaltwater]

Selling at lower prices is not a problem if you do it right. If you buy from LA guys and lowball you won't make it. But if you buy in volume and pay a lot less you still make the needed markup to make it. I would recommend lowering overhead (I moved due to termites but big plus was a very cheap rent place that is pretty awesome for a fish store location.) Then getting together with 2-3 stores and forming a co-op of sorts that will allow you to pull resources and group order direct to afford the tranship mins. I go direct to scuba divers via a broker and the quality is unmatched so far. You would be shocked how much it helps to not have corals exposed to multiple holding systems. Fish is a tad more difficult on acclimation but fairly easy once you get setup for tranship acclimation. This board would be a great place to get in on a co-op and I could help any smaller stores out with info if they need it. The simple fact is you can buy a coral at 60 from a wholesaler and take the same risk on it dying or buy it from a tranship at 10-15 and lessen that risk. Also the LA guys get picked over by etailers and cherry pickers 10 mins after the coral comes in and you get leftovers or pay a route 66 type place a high dollar premium to get something good. When you get it from the source you get mostly super nice stuff as you can instruct the collector as to what you want and he avoids brown crap.......Just my 2 cents.

 

[SlipperMan]

See that is the problem with the area. We tried to do the normal markup and guess what? Absolutely nothing sold. "$23 for a clownfish! You people are nuts!" so we just sat there with an ORA shipment forever. The foot traffic is pretty good for such a small place but what else can we do? We get people in and if nothing sells, we can't afford to just sit there and have bills pile up with product eating more money up. Even though we ARE the cheapest in the area, we don't do business like other places. We won't sell you a shark for a 40g (yes, a store recently did this to TWO different people), or tell you this angel is perfectly safe with corals. Maybe we should start being shady....

We were left with a crappy situation so we're trying to get it back to how the store used to be. We tried the normal markup, lost our ass. So we've been forced to slowly lower prices down to where they are now. Finally there are some funds in the bank to actually work with and make some badly needed repairs (like the 180g on a failing stand.....).

So I'm not sure what to do. It's just an odd situation. This town is goofy, trust me.

Jenn, mind me sending you a PM later with more personal details? Any help from anyone is appreciated.

 

[Anonymous]

You have the power, it he's out of line then he's out of line..... edit his post If he is not out of line then why suggest he might be? It's black and white Chip

 

[JennM]

Well if that's the case he should edit his own too - the poster he's referring to can edit his own post, but not Chip's where he quoted him

:roll:

Slipperman - feel free to PM me if you like.

Jenn

 

[Anonymous]

Done. Did I miss anything?

Peace,

Chip

 

[JennM]

See that is the problem with the area. We tried to do the normal markup and guess what? Absolutely nothing sold. "$23 for a clownfish! You people are nuts!" so we just sat there with an ORA shipment forever. The foot traffic is pretty good for such a small place but what else can we do? We get people in and if nothing sells, we can't afford to just sit there and have bills pile up with product eating more money up. Even though we ARE the cheapest in the area, we don't do business like other places. We won't sell you a shark for a 40g (yes, a store recently did this to TWO different people), or tell you this angel is perfectly safe with corals. Maybe we should start being shady....

We were left with a crappy situation so we're trying to get it back to how the store used to be. We tried the normal markup, lost our ass. So we've been forced to slowly lower prices down to where they are now. Finally there are some funds in the bank to actually work with and make some badly needed repairs (like the 180g on a failing stand.....).

So I'm not sure what to do. It's just an odd situation. This town is goofy, trust me.

Jenn, mind me sending you a PM later with more personal details? Any help from anyone is appreciated.

The bitterness of poor quality lasts long after the sweet price is forgotten.

Is the cheaper competition selling ORA clowns for nothing, or are they cheaper wild-caught specimens? Do you take the time to educate your customers as to *why* it might be worth paying more for a quality specimen that has been acclimated?

I'm not the cheapest in the area - but I'm not the most expensive either. I don't buy crap, I don't buy "rental items" (fragile creatures doomed to fail in short order are both a misuse of wild resources, as well as stealing from the consumer, IMO). I also keep my fish for a time - I don't sell them right away when they come in but people are in the habit of coming in and laying claim to a specimen(s) and picking up when it's ready to go.

If "everybody" has the same "Nemos"... get different stuff... good, sturdy stuff that's different. Make your business stand out from the rest. I have also learned that people will *pay* for good service - but they have to get value for their "extra" money spent.

I just had a freshwater hobbyist leave here after spending $78 in my store. I stopped stocking/carrying freshwater fish at the end of last year - but I keep some basic supplies and provide testing, and troubleshooting/advice. They went to Petsmart and bought a 20g tank and 9 fish in the same day (they now have 3 left... and ammonia out the wazoo...) - I'm working with them to get their tank sorted out in spite of bad advice received elsewhere... and if I'd had some freshwater gravel they'd have probably spent $20 more than they did.

Be creative in your marketing. Money is tight everywhere but there are plenty of ways to market either for cheap or for free. Merchantcircle.com, lfslocator.com, findafishstore.com, Yahoo Local/Yahoo Shopping, Google Business, Facebook, Twitter (I need to do the Twitter thing - that's on my "to do" list). Some of those have "paid" options but most you can make good use of their free options. Have a website? Make sure your meta tags are up to date, and do some google or yahoo searches using search terms that your locals might use, and see where you place in a search. Makes a HUGE difference (I did this earlier this year... people here say, "fish aquarium" so I added that to my meta tags along with more neighboring towns and more people are visiting my website, using those sorts of search strings). Ask some of your regulars to post favorable reviews... offer an incentive even. You'd be surprised how many people take online reviews into consideration when choosing a store to shop with - I learned that just this week from a friend in KS. I don't have many reviews on my shop online but I'm going to start asking my regs to do that for me.

We started a loyalty rewards program this year that has been VERY popular. On slow days we offer "double points" (like this weekend) - we did double points for Mothers Day for Moms and we will for Dads on Fathers Day. We advertise specials and incentive days in our weekly newsletter - also free. You can start a Yahoo group for free, use HTML to use images etc. Takes me about 30 minutes to put a short newsletter together, and I send it out on Fridays and specials are good for the week. I can feature new products, advertise specials and such and keep my store in the front of people's minds.

Make sure that you are listed on the websites of the manufacturers whose brands you carry - that's another free way for people to find you. Make sure your information is accurate and current.

If there's a local club - associate yourself with them. Yes, hobbyists in clubs *can* be a stingy lot - but you're better off being on their good side. I just re-upped as a "sponsor" for a club I founded nearly 10 years ago, and I left it about 5 years ago over "political" issues, but since I rejoined, the experience has been nothing short of positive. Clubs are very loyal to the stores that are loyal to them - and at the end of the day I was tired of people referring others to stores further away, because the other store was a "sponsor" and I wasn't. Now I'm getting plenty of referrals, have my own forum (more free advertising) and loyalty equal to or even better than some of the others - because I'm also active on their general forums, helping hobbyists with their questions.

It all adds up. When I re-joined, several new and returning customers told me that I am "very highly regarded" - which is great - I've earned that, and I'm proud of it. Now it's translating into sales because I'm back in the fray.

As for the "wholesaler issue" - when you stated your disappointing experience, the wholesaler that the other person mentioned did not come to mind for me, but a couple of others I dealt with when I first opened up, sprang right to mind. I'm a small store... very small. Maybe not as small as yours (1380 square feet here - we downsized at the end of last year when we discontinued freshwater fish - we're back to the size we opened with 7 years ago). Make the space count. Make your down time count when you haven't got customers and you're caught up with the grunt work - network online.

Those of us who are creative and resourceful will be the ones left standing when the economy turns for the better. The rest won't. Where do you want to be? I know where I want to be. Those left standing will be leaner, meaner (figuratively!) and ready to see the pendulum swing the other way, back to good and bountiful times.

EDIT: One other thing I forgot to mention... join an industry group like Pet Industry Retailers (petindustryretailers.org) They are for the pet industry as a whole (lots of dog/cat boutiques, self-service dog wash etc.) but there are a handful of aquatics dealers, including myself (we could use more fish folk on there) - while a lot of the info shared won't apply to aquatics retailers, a surprising amount of info is good across the board - such as marketing ideas etc. It's free to join, $10 (one-time) to advertise your shop on their directory, and it's a great resource for all kinds of pet-related info - and now that there are more aquatics-types in the group, there's more aquatics-specific discussion going on.

Jenn

 

[reefreef]

Slipperman, if you are selling clowns for $15 and frags for $5, you would have to sell a huge volume of them to make any money. If you have a tiny space, then that's mathematically impossible. Even if you have a large space, you'd still have to do huge volume to be able to pay the increased overhead of a larger space. You can't give stuff away and expect to earn even a meager living, but too often, people entering this industry come into it as a hobbyist determined to "stop the overcharging"... IMO that's probably the biggest myth in this industry - perpetuated by the uninformed hobbyist who caught a glimpse of a tranship list once, and came to the conclusion that the LFS were making hobbyists hold their ankles when they can buy a fish for under $1 and sell it for $30 or whatnot... because that "list" doesn't make mention of the minimum order requirements, box charges, repack/re-ox charges, air freight etc., OR MORTALITY never mind the cost of rent, utilities and everything else that makes up a retail store. All they see is the tranship price vs. the retail price and they figure they can come along and do it better than anybody else and sell for a fraction of the cost. Well, it does NOT work that way.

The problem when even one retailer in an area starts selling things at or below cost, it devalues the livestock across the board and everybody suffers. I've seen this happen a number of times around my area - a new store opens and wants to be the cheapest in town and they give everything away, and they have their 15 minutes at the top of everybody's hit parade. After about the first 90 days, I hear people start complaining that their prices have "skyrocketed".... they either have to raise the prices to be in line with the local market (or a bit higher if they have now got a deficit to make up), or they don't stick around very long.

If you're spending 80+ hours a week (and I know of what you speak because I'm at my shop every open hour ... and sometimes before and/or after hours... all but a few days out of the year) and you're in a small space not able to turn the kind of volume you need to in order to pay the bills... might be time to revisit your business plan and see where you can make a change. You can't buy frags for $5, let alone sell them for that, and you can't buy a yellow tang from a wholesaler nowadays for $15 - and as such you can't sell them for that or you're paying for the privilege of owning your own business.

Jenn

Excellent post, so true, in a price war everyone is a loser. I personally think life stock is too cheap and many hobbyists treat them like disposable items.

 

[SlipperMan]

Trust me, selling stuff at those prices is NOT something we wanted to do, but it became a necessity.

It was either move product or close the store. No other real choice as the utility and rent bills were breathing down the owners neck. Thankfully the people who are buying the coral, are well educated. Got PC lights and want an Acro? Why not try this lovely Ricordia over here instead...

I do agree 100% that selling stuff too cheap does make them a "throw away" item but we try to prevent that by asking the customers their setups, their experience, blah blah blah. You get the picture.

The frags are like that just because we aren't paying for JUST the frag, but larger colonies and fragging them down. Think someone is going to drop $50 on a zoanthid colony? Not around here unless you're talking PPE, Purple Deaths, etc. Everyone wants everything for nothing, or to be told it'll do fine and then when it dies, come back and buy another at a discount (now THAT is a throw away concept, something I've seen stores do).

I have zero financial stake in this but don't want my buddy to lose what he put so much time into (and myself actually). I basically ran the store for months at a time while the owner did frankly not a damn thing. So that's where we're at.

Anyways, back on topic.....

Yes I've seen the economic downturn hurt the industry in the area. Stores are getting fewer shipments, people are posting fewer "new buys" on the local club forum, and the local forum/Craigslist is just jam packed with people selling tanks to pay bills. My friend gets calls daily for people selling tanks and trying to just get rid of it. MH's for $50, full tank setups for $200, it's sad. All this money and hard work being basically given away. Our area was hit pretty hard (huge car industry town with multiple factories supporting the industry as well). So the money just isn't there. I myself lost a job during these past few months. But thankfully there are greener pastures just down the road. :wink: So my tanks are safe for now.