tl;dr version: Peer-to-Peer (P2P) rentals allow owners of vehicles to rent directly to people that want to try them out. Fun-2-Rent is a new company that provides the technical infrastructure and the legal and liability protections to allow it to happen. This market can help salespeople at dealerships sell more units so it’s in our interest to promote Fun-2-Rent to our customers.
I like radical & disruptive ideas, especially if they have the potential to be totally symbiotic (i.e. win-win for everyone involved). I like to see people start companies or try out ideas that are contrarian, crazy, and that the established powers deem to be a failure from inception, only to be proven drastically wrong.
I think I’ve just discovered a company that has the potential to become the biggest thing to happen to our powersports industry in a very, very long time.
Hyperbole? Read on, and if you think I’m wrong, then please offer up a substantive counter-argument because I can’t find one thing about this that doesn’t make it a huge boon for our industry at a time when it needs all the help it can get.
If you think I’m right, then I’d say that it behooves you to get on board and spread the word.
The concept I’m writing about is Peer-to-Peer (or person-to-person) rentals (P2P from here on out as it’s establishing itself as the established nomenclature for this type of rental structure), and the company that’s bringing it to our industry is Fun-2-Rent.
First, a bit about the concept of P2P rentals (check out the Wikipedia or the Peer-to-Peer Foundation if you want to learn more about the concepts and check out this great write up in TechCrunch). P2P renting works like this: A person owns a bit of property they don’t or can’t use 100% of the time, which leaves some “down time.” They list their property on a P2P marketplace run by a 3rd party. Another person needs that same bit of property for a limited amount of time. They go to the P2P marketplace to find someone that has what they need at a location and a price that seems reasonable. The 3rd party marketplace facilitates the rental transaction between the owner and the renter.
If you are a salesperson (or the manager of salespeople) and you can’t see the tremendous potential to use Fun-2-Rent to close a huge percentage of business that you would never be able to close any other way, then you are really in the wrong line of work…
The owner benefits because they can generate some revenue from an otherwise inactive asset that can be used to counter things like depreciation, finance charges, etc. The renter benefits in three main ways:
the item in question is privately owned and is therefore more likely to be “taken care of” because it’s a person’s own property.
the selection and variety of rentals is likely to be much more varied and interesting as the rental pool does not need to conform to a “fleet” model that traditional rental companies use to achieve economy of scale in things like service, parts, etc.
because the owner is not trying to run a business but merely looking to generate a small amount of supplemental revenue to offset ownership costs, the rental rate is typically half to one-third the rate of rentals in the general rental market.
As the enabling technology (i.e. the internet) matures, and as the business processes and consumer expectations evolve, you’re seeing more and more P2P rental concepts pop up (and in some cases receive immense start-up funding rounds) in several markets:
Fun-2-Rent is bringing this P2P marketplace to our industry and it’s an opportunity to sell more vehicles. There are a few others like Qraft [CB Profile] dipping into this space, but they are lacking in terms of liability, legal issues, insurance, etc.
F2R is the only game in town in the powersports peer to peer market that has the technical infrastructure as well as the legal liability and insurance protection pieces (for both renter and owner) put together in a nice neat package with minimal friction. I think the idea is, on balance, not only non-threatening, but has the ability to provide a sort of internal multiplier effect in terms of vehicle interest, usage, and thus sales.
If you work at a shop I know you get people calling to ask (potentially on a regular basis): “do you rent _____?” or “where can I rent a ______?” I know that most of you say “No” or “I don’t know” because there isn’t, or you don’t know of, a place where people can rent. The good news is now you do have an answer for this question, and it’s an answer that will eventually result in more of what you care about, vehicle sales.
Now I know that vehicle dealers/retailers typically have a negative, Pavlovian response when they hear the word “rental”:
They don’t want to operate a rental program out of their shop because they have heard the horror stories of the shops that tried it and got sued for the whole ball of wax when some jackass wrapped the rented Harley around a school bus.
They fear rentals because “why would someone buy from me if they can just rent when they need it?”
I’m here to explain to you that what Fun-2-Rent is offering via the P2P rental market is not something that should occupy the same parking space in your brain as other rental concepts. Not only is P2P rental in our industry not a “bad thing”, if we in the industry play it right it can be a very, very, very good thing for us!
Here’s the two primary ways how…
The first way that a healthy P2P rental market is good for us is that it provides a tool to overcome objections and obstacles in the sales process.
If you’ve spent any time on the floor selling vehicles in the last few years you know that getting customers that require (or are considering) financing into a unit is getting more and more difficult.
Maybe they have good or decent credit but are leery of taking on any more payments because they are worried about their job security, their investments, their home value, etc. etc. etc.
Maybe they have less than stellar credit because of age, financial track record, etc. If you’re even able to get them into financing the rates and/or payments are crazy high vs. what the customer wants or is able to swing.
Whatever the reason, they are afraid of assuming the new level of risk reflected in the payment. They want the vehicle, but they are afraid. You need to offer them something that can overcome that fear. Fun-2-Rent is the only legitimate tool you can use unless you have some great stock tips or a “sure thing” down at the horse track.
You whip out Fun-2-Rent’s brochure or show the customer the website and explain to them that if they list their soon-to-be purchased vehicle on this site and rent it for 2-3 days per month via the P2P market, they will essentially be able to own the vehicle for free!
If you are a salesperson (or the manager of salespeople) and you can’t see the tremendous potential to use Fun-2-Rent to close a huge percentage of business that you would never be able to close any other way, then you are really in the wrong line of work…
Even if you are selling something like a $50,000 wake boat to someone that has no issue swinging the payments, or can just plop down the cash on the barrel head, you’re still going to deal with the hesitancy that this vehicle is going to be spending a lot of its life idle. You can demonstrate that all the customer has to do is utilize the highly efficient and effective P2P marketplace that Fun-2-Rent has set up to rent out the vehicle two or three times a month to offset a lot of the vehicle’s depreciation or financing charge.
The Second way that a P2P rental market is good for us is that it create a valuable customer referral loop (i.e. word of mouth sales).
Here’s two scenarios that illustrate how this works:
Joe lives near a body of water and owns two PWC and a trailer that he bought from Sam, his sales guy down at JimBobs Power Palace after Sam explained how Joe could offset ownership costs by renting it out a few times. Even though Joe lives close enough to the lake to use them quite often, he still likes the idea of offsetting some of the costs by using F2R’s P2P marketplace. So he rents them one weekend to Dave. Dave takes them out with his family and they LOVE it. So much so that they decide that they want to get one of their own. So of course Dave asks Joe where he got his… Next thing you know Dave is visiting Sam.
Now think about this… Dave begins with a desire to try out a PWC… Maybe from seeing other people on the lake, maybe it was a TV commercial… Whatever it was, something caused Dave to want to try it out. He jumps on Google and types something like “waverunner rental” or “jetski rental.”
In today’s market, all he’s going to find are a few rental places at marinas that may or may not be where he wants to go.
If they are too far away, he never rents, and Sam never makes the eventual sale.
If they are where he wants to go, but the rental rate is too expensive Sam never makes the eventual sale.
If Dave rents them and they are worn out pieces of shit and his wife is stranded in the middle of the lake Sam never makes the sale.
Because the rental places force Dave to assume ALL responsibility for damage to the vehicle if something should happen to it, and ALL the liability if something should happen to a rider, bystander, or other property, Dave rightly does not think that renting a waverunner is worth playing Russian roulette with his financial well-being. Ergo Sam never makes the sale.
Now in a world where P2P rentals are a viable option because of F2R, imagine that there’s four or five folks listing their PWC on the F2R site in Dave’s area. They are listed there because when Sam sold them, he told his customers about F2R. Dave rents Joe’s PWC via F2R. Joe and Dave are both covered for liability and damage by way of insurance that is a standard part of the rental process with F2R. Dave gets the recommendation to visit Sam. Sam makes the sale and there’s another PWC in F2R’s system that can lead to more sales. Rinse and repeat!
A lot of the customers in our market may only own a dirtbike, or a UTV, or a PWC, but almost all of them would like to have the opportunity to at least try some of the other forms of powersports out there. If they don’t have friends or family that own the vehicles, and their can’t (or don’t want to) try their luck with the existing rental options then there’s not much of a chance they will ever expand beyond the powersports niche they are currently in.
This is of course similar to the first scenario, except this time we’re dealing with a P2P rental transaction between two people that are already both in the powersports fraternity, just different houses.
Joe has a Jetski and wants to try a RZR out on the dunes. Dave has a RZR and wants to try a Jet Ski. The each rent though F2R and pay each other $100 day making it basically a trade. Joe likes the RZR and decides he wants one himself. Dave tries the Jet Ski and decides it’s not as much fun as he thought, but he got to try it basically for free because of F2R.
It’s “winning” all the way around!
Now, it’s possible that the above agreement could have come about through some kind of deal on craigslist, but you have to deal with non-vetted users, lack of legal and insurance coverage, etc. No thanks…
With F2R, you have renter and owner rankings (think eBay’s rating system), insurance, liability coverage, etc. all wrapped up in a single one-stop site.
To give a little more info about how Fun-2-Rent works (visit their site for all the details):
The owner and the renters both need to have accounts on the site that are linked to a real identity.
Owners, renters, and vehicles can be rated just like on sites like eBay so you know if a renter has a history of abusing vehicles or an owner has a knack for putting off maintenance so you’re running the risk of getting stuck in the woods.
Renters are required to take online safety course for the vehicle type in question (i.e. online boating safety course for watercraft).
Owners and renters are required to get liability and damage insurance through Fun-2-Rent as part of the rental process so everyone is protected.
All-in-all it’s a pretty basic matchmaking system that has efficient safety mechanisms built in that protect the owner and renter about as well as you possibly can. Fun-2-Rent has a rock-solid legal and insurance framework behind them that places them well in the lead of any other P2P outfits that may be out there or may pop up in the future.
Again, I encourage you to check out their site, give them a call, and maybe even try it out for yourself.
The concept of peer-to-peer rentals is here. It’s proving itself out in other industries and there’s a viable way for us in the powersports market to benefit from it. I’d like to think that for once our industry can actually take advantage of technology and business process improvements early on, instead of following the demonstrated mode of not getting on board for 10 years after everyone else has tried. Computerized point-of-sale and inventory control, dealer websites, and e-commerce, are just some examples of technology and practices that are still being slowly accepted in our industry despite long-standing and widespread adoption in the greater business world. Let’s not let the significant potential of peer-to-peer rentals pass us by too.
All you, as a salesperson in the powersports industry, need to do to help make this P2P marketplace the industry accelerator it could be is to:
Know it exists and understand how it works.
Tell everyone you know about it and explain how it can help them get into the vehicle they want.
That’s it! Think about it… There’s no risk for the salesperson or shop. It can help you close deals you would never be able to close any other way, and once word gets out, and it creates a positive customer referral channel right back to you.
All you gotta do is tell people about it. Not a bad deal.
[Grab yourself a cup of coffee, make yourself comfortable; this might take a while.]
Recently, a big player in the powersports industry distribution game made a point of saying that when it comes to things supply chain related, that I “don’t know what the f*** I’m talking about.
Now here’s my line of thought (if you think I’m talking out my ass, please feel free to leave a comment and let me know why. Anyone willing to leave their non-anonymous response will be posted here):
If I was just some raving lunatic that was shooting off his mouth about something that he knew nothing about, and that his points were 100% invalid, don’t you think that someone running a major distribution company would do one of the following:
1) If they were really concerned that what I had written (and I what I may write in the future) would cause product manufacturers and retailers to realize that their company’s version of distribution is a non-value-added burden on the powersports industry and start alternatives, he could have taken this as an opportunity to offer a well thought-out rebuttal to my points of view.
They could have turned this into an opportunity to offer a cogent explanation to the industry of why their sector of the industry offers value and are not really the vampire dinosaurs that I think they are.
2) The more realistic case would be to just ignore me… Seriously… Who the hell am I in the grand scheme of things in this industry? When’s the last time you saw an executive come down this hard on something if they were not trying to bury it or were not afraid of it?
I’m not some good ol’ boy industry fixture like the rest of the power players that seem content to ride this industry off the side of a mountain. I’m just a dude that in 7 years came into this industry and:
Single-handily built up a multi-million dollar e-commerce line of business for a dealership
Wrote a very well received monthly column on using internet-related technology in Dealernews for 5 years (I was writing about topics like e-commerce, social media, internet advertising, search engine optimization, etc. literally years before most people in this industry were even aware of their existence)
Presented on internet related topics at Indy for a few years (my sessions were the only ones, year after year, that were literally standing-room only…)
There’s more stuff in there but I think you get the point…
I’m bringing up some of these things not to boast, but to point out that while I’ve got a half-way decent resume in the 7 years or so I’ve been working around here.
So you gotta wonder why a rich, powerful, experienced executive would risk doing what he did… I mean if I was actually talking out my ass like they seems to think, then there’s no risk right? I’m just the lunatic wandering the streets, sign in hand, prognosticating that the end is nigh…
Here’s what I think…
They know I’m right and they doesn’t want other people to realize it too.
I think that the large distributors out there recognize that what I’ve said and what I’ve written about is pretty much the truth. Look at this column from July of 2006. 5 years ago! They’ve seen the extinction even looming closer and have no idea what to do about it!
I think they recognizes that one of two things are going to happen…
1) Massive collapse and consolidation of the retail channel which will allow the large distis to move the same amount of product to a smaller number of retailers, increasing their margins because the network complexity is drastically reduced. Where do you think some of those big, typically automotive focused e-commerce only outfits are getting their product from? However, this is going to take some time, so they need to convince manufacturers and more importantly retailers and the ol’ fashioned dealers out there that things are just fine long enough for this to come about. Mr. Motorcycle Dealer, this is your captain speaking. Please ignore that iceberg off the starboard bow.
2) A new, smart, progressive player (or group of players) are going to emerge that will finally release all of the pent up inefficiency in our supply chain through technology enabled disintermediation. Our industry is soooo phenomenally ripe for massive disintermediation that it’s not even funny…
There’s finally some movement in this area. Check out D2M for example. I have no involvement with these guys. I don’t know ‘em and have never even talked to them. But I like what it seems like they are trying to do. Leverage modern computing and communications infrastructure and things like outsourced or 3rd party logistics and connect the manufacturer directly to the retailers in as efficient a manner as possible. Only provide functions that are value-added in terms of utility. I really hope these guys can make a run of it.
If you are a manufacturer or retailer, you need to look at what D2M is doing. Look at what Dusty Moto is doing. Look at what Shopatron is doing. They are all working on these types of disintermediation steps in their own way. It’s just a matter of time before someone pops up that does it “right.” You can just smell the fear coming out of the distribution company boardrooms.
So, why should you think that I do in fact know WTF I’m talking about?
Well, for starters, I actually have a degree in supply chain management from Michigan State University. Graduated with honors. Landed an awesome job in 1992 during a recession before I had even graduated. MSU’s College of Business was one of the first colleges in the world to recognize the importance of what is now referred to as supply chain management (back then it was called Materials and Logistics Management).
Being a young man that grew up in a manufacturing centric state like Michigan, it only took me a few days in that program to recognize that the ideas behind this movement were some of the most powerful ideas to emerge in business in a long, long time. Keep in mind, this was also around the time when the USA was worried about getting our butts handed to us by the Japanese, so there was a real emphasis on things like efficiency, cost-reduction, and quality (this was the re-awakening of awareness of folks like Deming, long before anyone in business had a clue what a sigma was let alone why you’d need six of them, and a few random stories about a crazy kid named Michael Saul Dell that had an idea about how to revolutionize an industry that seems a lot like ours… Enthusiast driven but burdened with an inefficent supply chain and retail channel).
It’s also important for context to point out that I’m also a complete computer geek. I got my first computer (an Atari 800XL) way back in 1983 when I was 13. I taught myself to program in BASIC and Assembly (I was mostly in it for the graphics…). My awareness of and expertise using computer stuff would prove to be an enabling force going forward.
I graduated with a great job at AMD working on some interesting and challenging solutions for unique problems they had with their manufacturing planning processes. They had some of the most brilliant engineers in the world designing and building computer chips, but their manufacturing planning infrastructure was stuck in the days of in index cards and large Lotus 123 spreadsheets… Seriously… Millions and millions of dollars worth of manufacturing was production planned by a room full of admins using Excel and email.
Anyway, I developed a few computer programs and business processes that helped dramatically improve things like production planning efficiency and cost reductions that garnered me a special award from the then President and founder Jerry Sanders. Not bad for a guy out of college for about a year if I do say so myself!
I was also APICS/CPIM certified at a level that would have qualified me for Fellow status once I had met the publishing criteria (I never did pursue that…). I don’t think they give those out to people that don’t know WTF they are talking about in the world of supply chain management.
“Thanks for the resume bub… What in the hell does this have to do with the issue at hand?”
I’m pointing out that I have a proven track record of not only knowing what I’m talking about when it comes to topics that involve supply chain management and technology, I’ve been there, done that, still have the t-shirts, awards, certifications, and the college degree that prove it.
So yea… I do know WTF I’m talking about.
When I first started in the powersports industry a few years ago, I was absolutely blown away by how unbelievably backwards and benighted it was from a business process and technology standpoint. (Since then I’ve met many, many younger, smarter folks that have found themselves in this industry that have reached the same conclusions… Too bad that all the folks at the top running things are old-fashioned, ignorant, and comfortable enough to ride things out until they can retire… Oh well, I guess we’ll just have to hope our industry survives long enough for the Politburo to die off and get some fresh blood in at the top).
One of the most glaring issues was the absolutely out-sized amount of power and influence the middle men in our industry have. I can’t think of another industry that’s as large as ours in aggregate that has a group of middle-men that provide so little in terms of value-add, yet wield so much power and influence. They even compete with their own manufacturing customers with their house brands (actually, you can look at a few industries like the hobby industry to see a little bit of a microcosm of what may happen to us…)!
So, what do the large distributors really offer to justify their pre-cambrian existence?
Some people have told me that they offer things like financing to dealers so they can afford to stock more product. But that’s retarded. Any smart dealer should be buying anything and everything he can (especially special order product that has already been “sold”) on a low interest credit card that offers some kind of reward (miles, etc.). Dealers that are doing that all tell me that the terms are better than they get from the distributor anyway. Quibble with details if you must, but I find it hard to believe that a line of credit is worth the Faustian bargain that we get in return.
What about on the manufacturing side? Well, I’m told that there are plenty of uninformed or lazy manufactures that are pretty much selling their souls hoping for the large orders from the bigs distis. They are apparently not aware of the companies that have gone to distribution only to have their products knocked-off in China and then sold as “house brands.” Or they have also apparently not talked to companies that have done the analysis and realized that the margin they are losing to the distributors, as well as the inflexibility on product planning imposed by the distis, among other things, is more than made up for by using modern information systems, outsourced logistics (3PL’s etc.), and so on to go direct or at least semi-direct.
As I’ve said in the past, because of the widely scattered nature of the supply base and the retail channels in our industry, there is a place for a middle-man in our industry. To realize certain efficiencies it makes sense to have a nexus for demand concentration and information sharing. However, I’m positive that the solution relies on bits rather than atoms. Technology enabled disintermediation.
So by now (if you’re still reading) you gotta be wondering why in the hell I’m bothering to do this (i.e. riding down the boulevard at 120mph with a line of dirty laundry flapping behind me)…
I like this industry. I like motorcycles. I like dirtbikes and quads, and ATV’s, and UTV’s, and e-bikes, and racing, and PWC, and boats… I also like the way that somehow, in spite of all the factors conspiring against it, our industry has been able to hang on to the model of the local mom-and-pop dealership. I like that for the most part that the primary touch-points for the consumer remains a retail establishment that was most likely founded and run by a dyed-in-the-wool enthusiast with grease and oil under his fingernails, mud in his hair, or scuffs on his knee pucks.
However, when you plot a line from the recent history, through the current state, you end up with a pretty much inescapable conclusion that the current model is doomed. The entrenched powers (the OEM’s, the large distributors, the mega-online retailers) are all quite content with the way things are heading. They not only like this massive consolidation, they welcome it with open arms! They don’t need to figure out how to do business with thousands and thousands of independent shops in more flexible and efficient ways that take advantage of advances in technology and modern business practices. They can just sit tight, wait for all of the small shops to die off and sell the same volumes of products to a smaller number of retailers. Kawasaki in Costco? Motorcycle parts and gear at WalMart and on Amazon?
The only hope for our industry, if it’s to retain the enthusiast driven profile that it currently has, is for the supply chain to become more efficient, reactive and progressive. Eliminate all non-value added aspects. Embrace technology and focus on the power of bits over atoms. Information over inventory.
When you have the presidents of large distributors working so hard to silence dissident voices like mine, and considering the abysmal lack of a unifying force for the dealers/retailers to counter this power (no strong national dealer/retailer organization, a toothless and ineffective trade press) the outlook doesn’t look too bright.
If you think I’m totally wrong, please let me know. Tell me where I’m off base and I’ll consider it. Better yet, make it an open discussion. I promise to post any non-anonymous rebuttal in its entirety.
If you think I’m right, don’t tell me… Tell them. And take your business elsewhere.
I’ve been a little slow on recommending that you check out Motorcycle Industry Jobs next time you’re either looking for work, or looking to hire someone.
I’ve been meaning to write about them, and actually was planning on doing a feature on them some day in my DN column (I don’t think that will be happening now ), but never got around to it. After e-mailing the owner a few times though I decided that I wanted to write up this little recommendation and add them to the partner link section over there on the right.
I really like the idea of this site and I hope more folks in this industry will utilize it. I like the idea that there’s a dedicated, industry-specfic resource for shops to be able to tap into to find the best people for a position, not just someone who’s convienent, or happens to wander in and drop off a resume.
In this industry (especially at the retail level) a lot of what shops provide is pretty much undifferentiated commodity products and service. About the the only thing that a shop can really do to stand out above the crowd is to make sure that the people selling the products or providing the service are the best out there. And face it, often the best people are not the ones that are the easist to find.
And if you’re on the other side of the hiring equation, you need to get your resume into this system. Especially if you’re someone that thinks that you’ve got more to offer than what your current employer is willing to utilize or pay you for.
So go check out Motorcycle Industry Jobs next time you’re looking to make a hire or you’re looking for the next big thing in your career.
What is DustyMoto? A particularly harsh desert race in Arizona? A porn star from the 70’s with a predilection for motorcycle apparel? Actually, DustyMoto is one of the most innovative companies that I’ve come across in our industry and one that you should absolutely be signed up for and using.
DustyMoto is a web-based service that creates a virtual warehouse in “the cloud” that is composed of all the inventory with nine months of no sales held at its participating dealers. When a dealer has demand for a part they don’t have, rather than order it from the OEM, they order it through DustyMoto, and the part is shipped from one of the dealers in the network that has it as excess or obsolete inventory.
Let me rewind and explain what all that means. First, a virtual warehouse in the “cloud” means that all of the product that DustyMoto shows as available in their system is not sitting in a big physical warehouse somewhere (if it was, it would be pretty big as DustyMoto’s CEO Bobby Franklin told me that they currently have around $45 million in inventory). All of the inventory is being held at participating dealers around the country. “The Cloud” is the term that has been developed in the internet application space to refer to data storage and processing capability that is not housed on any one machine. It’s physically spread all over the place but the application or database appears as one unified entity (Google’s App Engine or Amazon’s S3 for example).
The inventory in the system is typically all stuff that is at least 9months old. According to DustyMoto, studies show that if a part is on your shelf with no sales activity for 9 months, odds are really, really good that it’s going to be there for a birthday or two before you finally pitch it or it ends up on eBay for pennies on the dollar. DustyMoto makes it’s money off a small commission/fee to the seller, currently 15%. Considering that most shops eventually blow out old inventory at levels much steeper than 15%, and typically after incurring carrying costs that add up to way more than that over a year or two, 15% seems reasonable.
Another nice aspect for the seller is that all parts are sold at current dealer cost (the same cost in your price files). That means that it’s possible that you may have paid $100 for a part a year ago, but the part now sells from the OEM for $125, so DustyMoto transacts it for $125. You just made (or recouped carrying costs) $25 on that part.
This is the type of brilliant idea that I’ve called for in several columns over the years. Although in my naivete I thought that it would have been driven by the distributors or OEM’s. Bobby from DustyMoto sent my thinking straight on that one. He explained that the OEM’s and Disti’s have zero interest in making the supply chain or inventory management efficient across the industry. In fact, it’s in their best interest to stuff inventory into the channel with the ferocity of a farmer cramming feed into a goose for foi gras.
When I pointed out that inventory carrying costs were one of the largest contributors to dealers having financial hard-times, and wouldn’t it be in the OEM’s interest to do what they can to make their dealers more healthy. I could sense Bobby rolling his eyes over the phone as he explained to me that if that dealer dies off, it’s an opportunity for the OEM to shove inventory into another empty parts department in the dealership that steps in to take the dead one’s place. My, what a healthy industry we have…
With those market dynamics in place, it’s imperative that dealers and retailers in our industry use all the tools available to make ourselves as self-sufficient and profitable as possible. Think of DustyMoto as a Co-Op that allows all of the dealers in the country to work together to make the entire industry more efficient, effective, and healthy.
Think about it… How much old inventory do you have on your shelves that you just know someone, somewhere, is ordering brand new from the OEM…? How many times do you order a part for an older bike that you just know has been sitting on some poor sucker’s shelf two states over for the last three years? DustyMoto is in place to solve these very real problems
I’d like to see DustyMoto’s capability built into every major DMS system out there. When you add a part to an invoice that is not in stock at your shop, it should query DustyMoto’s servers first, before that special order goes to the OEM or distributor. It should be seemless. If DustyMoto has not already begun working on an integration with folks like Ziios (see Arlo’s recent article on Ziios openness to integration and extension) they are missing the boat. If DustyMoto and Ziios offer that capability, then ADP better get on board as well.
I honestly believe that if DustyMoto plays it’s cards right, they have the ability to radically transform a major aspect of our business thus making everyone at the retail level a lot better off. And like all networks, the more nodes, or participants, the better it will all work.
I think one of the biggest risks to their success is if one of the major DMS players steps in and sets up a competing network (which is not just bad for DustyMoto, but bad for the idea as a whole because now you have inventory split into multiple exclusive networks).
I also think that DustyMoto needs to implement a type of credit system that rewards buying from the network. Sure, everyone wants to unload their old stuff, but I think there needs to be an incentive system that can help re-train the behaviors of parts managers to not just order from the OEM or distributor first without checking DustyMoto’s system (again, integration into the DMS will help alleviate this). Maybe a system that the more you buy from the network, the lower commission rate you have to pay when you need to unload your own old stuff?
After a year that had me writing a few columns and blog posts that made me sad or mad about things going on in this industry, I’m happy to be able to finish up my year with a column that is as hopeful for what may be ahead for our industry as this one.
…And he just checked in to your shop on Facebook Places. Or on Gowalla… Or FourSquare… Or Loopt… Or Yelp… Or any number of “location based social networking” clones that are popping up all over the interwebs.
What are these sites/services? How do they work? Who uses them? Why should you care? This month I’m going to make an attempt to give you a primer on the subject that makes at least a rough pass on those questions.
Basically, the core of the idea is that now that people have gotten used to the idea of social networking by using sites like Facebook and LinkedIn, and a lot of those people are using “smart phones” that have fast(ish) connection to the internet and have some method of determining where you are physically located (GPS, cell-tower triangulation, etc.) it was natural that someone would come along and make the big connection: Combine the social networking experience with location-aware features while providing opportunity for the business location to participate. Except for the creepy stalker / exhibitionist aspect of the whole thing, it’s pretty brilliant…
Here’s a (by no means exhaustive) list of sites that play in this space:
Here’s how most of these types of services work. You sign up for an account with a site like FourSquare (www.foursquare.com). When you go someplace (a restaurant, a concert, a club) you use the application on your iPhone (or whatever device you have that is supported) to “check in.” You’re basically broadcasting to your social network (or at least the part of your social network that is using the same service you are) a message that says “Hey I’m HERE!” (and when I think about it cynically, you’re also saying to any potential robbers, “My apartment is empty, go for it!”). From there, depending on the service/site, a lot of other things can happen. If you have “friends” that are on the same location-aware social network, and they have also checked in, you can basically hook up, you can earn loyalty points (which I’ll go into later) from the business, etc.
So far, the big dog in this space has been FourSquare. They were the first big player that developed a large user base, got a lot of press, and captured the hearts of the VC’s. However, now that the concept is starting to prove itself, the really big dogs in the main-stream social networking space like Facebook (with Facebook Places) are starting to roll “check-in” functionality into their service offerings. It seems to me that now that Facebook is playing in this pool, where most people already have their social graph, sites like FourSquare are going to have a lot less room to move around. That is assuming that Facebook doesn’t eventually blow itself up due to privacy concerns.
Most of these location-based social sites like FourSquare have methods to provide incentives to people that check into a location a lot. The idea works like this: Business A has an account with the location-based social service and “claims” their business. Business A provides incentives (special services, discounts, free stuff, etc.) to people that meet certain levels of participation. For example, with FourSquare a user can earn points the more they check into the same location. Earning more points leads to various “badges” that tell the world “I’m a regular.” With FourSquare folks aspire to be a location’s “mayor.” Typically a business owner will provide more perks the higher up the ladder a user goes.
By themselves these location-based social services can be thought of like a game. But where they should be interesting to you is as a means to advertise your business, participate in the various ecosystems that will develop around these growing social networks, reward loyal customers, and so on.
Sites like FourSquare, Gowalla (gowalla.com), etc. are hot right now as companies look for more effective ways to use social networking tools and sites to market their businesses and make money. At the most recent Search Engine Strategies conference I just attended in San Francisco, it was very clear that businesses are becoming more and more disenchanted with the typical paid search advertising (if you purchase Google Ad Words, you know that our industry has managed to jack up relevant keyword prices to levels that are just goofy…). Display ads and other content network ads are proving to be very costly and difficult to measure except for companies that can afford complicated advertising attribution tools and services. Advertising on social sites like Facebook is reportedly not very effective for a lot of companies. Companies see the advertising and marketing opportunities that these new social networking sites offer because they mostly hinge around actually having live customers physically in their store. These sites/services may finally be the holy grail union between local, web, and social people have been waiting for. Or they may be just another flash in the pan web sensation that caters to narcissistic exhibitionists… Who knows? Some folks thought TV was a fad.
You should already be able to envision ways that you can leverage the functionality these sites provide for your dealership. Especially if your shop has, or could be made to have, a reason for people to hang out. You could also partner with establishments in your area that are hot hang-outs for riders. Here’s something to get the ball rolling around in your head: If you live close to a track, partner with the operators by offering free oil changes or something like that to the trackday-rat “mayor” of that facility. It’s a safe bet that a lot of tracks, especially ones that sit empty quite often, don’t have owners or operators that are even bothering to “claim” their business in sites like FourSquare, Yelp, etc.. Offer to step in and do it for them! I’m sure once you start using these things, more brilliant ideas will come to you.
In closing, I recommend that you keep a close eye on this area of the social web. It’s attracting a lot of attention, companies playing in this space are raising a lot of money from VC’s, and it’s already starting to develop some technical extensions and meta-level technologies that hope to provide additional value to the participants. An example of this is TopGuest (www.topguest.com) that links “check in’s” with a user’s loyalty programs (frequent flyer program for example) allowing them to earn points.
We need to talk. All of us. Everyone in this industry needs to be talking to each other a lot more than we currently do. Sure there’s the occasional show where we all get together like DealerExpo and there’s the inevitable gripe-session that is sure to break out whenever a few dealer principals get together at an OEM show or 20 group meeting. What I’m talking about here is more of an ongoing, broad-based, industry wide series of conversations about the important issues that affect us every day.
Once again, the internet can step in to help. If there’s one thing that the internet is great at it’s providing a common, albeit virtual, meeting space where like minds can get together and discuss whatever hot issues are top of mind.
I’m sure a lot of you are part of a 20 group and recognize that quite often these gatherings are great places to share and discover new ideas that have potential to improve your business or even help grow our industry as a whole. Some of you may even have an email list where you keep those discussions going. I’d like to propose that as an industry we expand that idea and start taking advantage of some of the discussion forums that already exist.
I’m going to focus on two specific places where I recommend we all start gathering and having some lively discussions.
The first is LinkedIn. If you’re not on LinkedIn already, you really need to be. Linkedin is pretty much the best professional social networking site out there right now. In addition to it’s potential to build a network, LinkedIn has a feature called Groups. Groups are like mini-forums built right into the LinkedIn framework. A big part of these groups are the discussions and that’s what I’m really focusing on here.
There are already some great groups on LinkedIn aimed at our industry. In fact, it was the discussion from a few months ago about vendors competing with their own customers (prompted by Arlo’s blog posts at DealerNews) that really motivated me to write last month’s column. But what’s really lacking is a lot more members and a lot more active discussions of issues that really affect everyone: MAP policies, national and state legislation, general business issues, and just general brainstorming.
Here are a few of my suggestions about groups to join. These were picked because they focus on our industry and as of this writing they have the more members than some of the other groups. I don’t have any stake beyond wanting to push toward a critical mass of users to make the groups more useful.
The first is Motorcycle Industry Professionals. This group is a pretty high-level group that covers more than just dealers. It already has over 1,000 members and it has hosted a few pretty good discussions.
Next up is the Motorcycle OEM Network. This is a good group to be in if the goal is to engage in some constructive conversations between the OEM’s and their dealers.
Wrapping up LinkedIn we have the most obvious, the Motorcycle Dealers Group. Unfortunately this group only has about 100 members currently and for the sake of this month’s column, it’s the one I want to see really bloom.
Finally, we have Dealernews’ own Shop Talk. You really should be a member of this social network because you’ll also be kept informed of blog posts from the Dealernews staff as well as other important information from Dealernews.
So now that you’ve signed up, start participating! Ask questions… What impact are e-bikes going to have on our industry? What kinds of features should the ultimate DMS system have? What kinds of parking lot events are folks running that break the mold of the tired-out “open house”? If you see a question or discussion that you can provide valuable insight, jump in!
So now we’re left with the big questions of “why?” Why do I want to poke, prod, and encourage all of you to participate in these discussion forums? The answer is because I want to make sure that our industry sticks around as long as possible. I want the fundamental structure of small and medium sized dealerships to be able to compete with the growing threat of mega-online shopping sites, direct to consumer sales from PG&A manufactures and vehicle OEM’s. I’m positive that if we can start raising and answering more and more questions and addressing more and more issues that are pressing on our businesses as a collective business unit, the stronger we can be.
In the absence of a strong, nationwide, dealership-focused trade organization that has a vibrant and active membership, maybe we can build it ourselves using the amazing potential of existing social networking sites like LinkedIn and Dealernews’ ShopTalk. Fingers crossed!
This month I’m going to dive into a topic that I believe will be one of the most important factors contributing to the long-term viability of the business model that drives our industry. That topic is the retail supply chain in our industry. Specifically the issue of suppliers that sell direct to your customers.
Long before I got into the e-commerce and internet marketing racket or got professionally involved in the powersports industry I received my college degree in what’s now called (but wasn’t yet widely known as) supply chain management. Combining that education with a lifetime of being a computer geek, and being smack dab in the middle of the dot-com boom in Silicon Valley in the middle and late 90′s has provided me with a rather unique perspective with regards to how the internet and related technologies relate to doing business on the web.
Some of my first thoughts when e-commerce burst on the scene back in the dark ages of the web was that the internet was obviously going to have a tremendous disintermediation effect on pretty much every facet of the traditional supply chain. In a nutshell, disintermediation is the process of removing “links” in the supply chain.
Low and behold through a series of twists and turns in my schizophrenic career path I end up with the amazing opportunity to watch, comment on, and participate in the very phenomenon! Not only do I have this opportunity, I have it in an industry that has been so benighted, backwards, and generally late to the party when it comes to modern technology, modern business practices, and attitudes that it’s getting hit harder and faster than a lot of other industries ever were.
That post generated (relative to the majority of posts on the DN blog site) a large number of comments. I strongly suggest you go and read that post and the comments. While you’re there, take some time an offer your point of view on the subject. Our industry needs more dialog on these issues.
Arlo again touched on this issue in June with his excellent job of moving this along by offering an introduction to Shopatron, a company that allows OEM’s to sell direct, but have the actual fulfillment handled by dealers that participate in the Shopatron program.
All of this has done an excellent job of laying out who some of the players are and the techniques they are using to transform the retail supply chain for (currently only) PG&A.
I want to spend a little time looking at why the OEM’s are doing what they are doing, what you need to be thinking about and more importantly how you can prepare for how all of this is going to shape our industry in the future.
First, one has to ask: “why the manufacturers are doing this in the first place?” Why would a manufacturer that has had a retail supply chain in place decide to radically alter that by selling direct to the consumer? Based on conversations I’ve had, things that I’ve read, and my own analysis, I think it comes down to the OEM’s not believing in either the long-term vitality or maybe even the long-term survival of the powersports industry’s retail supply chain.
Put simply OEM’s don’t feel that the traditional dealers are adequately meeting the market demand for their products. That can be in terms of gross numbers, product mix, whatever. The bottom line is that for OEM’s to make this move it’s a signal that they don’t trust the established retail channel to move enough product. An OEM that’s selling direct is saying to you, “you’re not getting the job done, so we’re going to work on cutting you out.”
Quite a few of the OEM’s that want to sell direct are currently willing to use services like Shopatron (or 50 Below’s “Referral E-Commerce” affiliate program for distributors), but I think they are only doing it for two reasons: self-serving interests and political cover.
The self-serving interests has to do with Shopatron’s stated policy that fulfilling dealers must have the product in stock in order to “bid.” This has the effect of forcing inventory deeper into the supply chain, pushing it down to the retailers that want to participate. This helps the OEM’s books by allowing them to recognize the revenue and get that inventory off their books freeing cash and increasing profits. Of course this also pushes the excess and obsolete risk to the dealer/retailer, eats up their cash, and violates pretty much every tenet of progressive, modern supply chain management principals. The deeper in the supply chain a product is carried the lower its utility and the higher its cost.
Paradoxically, the more “successful” Shopatron and the OEM are in getting dealers signed up, the more competition there is for each of these orders. As the deciding factor for who gets the order from the Shopatron system is based on the combination of having the item in stock and the physical proximity of the dealer to the customer we end up with more dealers/retailers carrying more and more inventory hoping to collect more and more of the crumbs that fall from the OEM’s table.
This is great news for the OEM’s (except for those that have generous inventory rotation or send-back policies. If there’s an OEM that has a no-questions asked, unlimited return policy that is also participating in Shopatron, I would argue that they need to fire whomever is running their channel strategy). The OEM’s now have an enticing carrot to get retailers to carry more of their inventory which is something that they have always seemingly wanted more than anything, even if in this time of relatively cheap expedited logistics it’s a stupid thing to do.
Of course if the retailers/dealers balk at taking a bite at the carrot and don’t sign up for Shopatron or don’t increase their stocking levels, the OEM will make the sale anyway (most of the time at full retail!).
The OEM’s can always defend their decision to sell direct by saying, “hey, we offered the olive branch of giving you the opportunity to participate in Shopatron and make this sale. Don’t be mad at us!”
Shopatron is win-win for the manufacturer. There is no downside for them, but there’s plenty of potential downside for the dealers. I’ve already brought up the issue of inventory liability. But what about direct competition?
Take for example a prominent vehicle OEM (we’ll call them BRANDX) which sells direct from its own Shopatron powered site shop.BRANDX.com.
Let’s say that I’m a dealer that has spent considerable time and energy building an e-commerce operation selling their stuff. That includes significant investment in things like SEO to make sure my site shows up high in the search results.
I’ve managed to get ranked in the top 5 for several BRANDX related keywords. Keep in mind that several studies have shown that as you move down the search engine results pages (SERPS) the chance of getting someone to click on you drop dramatically.
Now BRANDX comes along with a naturally highly ranked domain name (BRANDX.com) that is running its store at a subdomain (store.BRANDX.com). All of a sudden my previous #5 rank in Google is #6 because BRANDX’s own site is ranked #5. Using some of my SEO tools that check search engine position, that has indeed happened. This is not a hypothetical. There are retailers/dealers that are indeed losing real online sales to their own OEM and by extension to a competing dealer that is participating in Shopatron or to the OEM themselves if it’s for a product that no one bids on in Shopatron.
Of course the situation is even more heinous if the manufacturer that’s selling direct is not using Shopatron or any other method to pass the sale on to its dealer/retail channel. If you are competing directly with a manufacturer for retail sales, you need to really question why you are doing business with them and selling their products. There may be some legitimate reasons to do so, but in our industry the way it is today, those reasons are few and far between.
Why have we gotten to this point? I believe that it comes down to the systematic failure of our industry to adequately develop a supply chain that meets the needs of the modern marketplace. That, combined with the fact that OEM’s, distributors’, and retailers’ motivations and incentives are often at best incompatible, if not downright counter-purpose. Mix in thousands and thousands of retailers/dealers that are all selling virtually undifferentiated products that are relatively low margin, high cost, and high-cube and you’ve got the situation we’re in now.
So what do we do about it? Well, the first thing you need to do is get signed up for Shopatron. That’s a 100% complete no-brainer. As long as it’s there, you need to sign up for it and monitor it for any orders that you can fulfill. Keep in mind that these are already lost sales. Only by being in Shopatron can you attempt to recapture them. Unless you have a strategic interest to really jump into Shopatron, I would not recommend increasing your inventory stocking levels until you get a feel for what the market is like for the brands and products. Just use Shopatron like a line in the water initially.
To conclude, I don’t think there’s necessarily anything overtly nefarious about Shopatron, or OEM’s trying to fulfill what they see as un-served or under-served demand in the market. OEM’s that I’ve talked to say that they have basically been pushed into this position as they have customers contacting them directly wanting to buy because they can’t find what they want in the retail channel. I just think that the current solution is at best a band-aid that still tips the playing field too far in the OEM’s and large retailer’s favor at the detriment of the rest of the dealers.
Ultimatly one of two things will happen: Better information systems and processes will be developed that allow real-time sharing of supply and demand information up and down and across the powersports supply chains to insure more efficent operations… Or… There will be less and less opportunity for the smaller dealerships and retailers that make up the current landscape.
Imagine this scenario: You’ve survived the Great Recession. However to make it through the epic national blood-letting you had to dramatically reduce your shop’s staff. However, now that riding season is here you’ve got customers coming into your shop looking to buy gear or get information on vehicles. Unfortunatly, you don’t have the staff level required to give personal attention to everyone. What can you do to help mitigate this issue until you can get staffed up again?
Well, do you have a website? One of those fancy e-commerce enabled ones that you’ve never really been able to do a whole lot with or see a dramatic ROI?
Here’s this month’s mind-bending idea… Turn your web presence inside out! Set up a few obvious, friendly, comfortable locations in your dealership where customers can access your website and get information about vehicles, parts and gear.
The formal name for these would be Internet Kiosks. They are a great way to leverage a powerful asset that you are most likely not using to it’s full potential right now. It allows customers to do a certain amount of self-directed research or shopping in a similar way that they do now with a brochure (but you never run out) or with those stacks of parts catalogs (without all the counter clutter).
Kiosks are not just a band-aid for a lack of staff. They have proven to be worthwhile enough that major retailers like REI, Staples, and Best Buy have made them part of their stores. In addition to just having customers use the kiosks on their own, they are useful as a tool to have your parts or sales staff use with the customer.
By seeing how effective your site can be in a real-world scenario maybe you can justify spending the time and money to make your website even better. Merchandise your site and create useful product groupings to help customers in your shop and you’ll automatically have a website that will perform better out in its natural habitat of the internet.
So how would you pull this off? Well, there are companies that can provide you with ready-made internet kiosks (Google “internet kiosk manufacturer”) so you can just plug-and-play. If you have access to someone with adequate technical capability you could also whip these up yourself.
Browsers like Internet Explorer, Firefox, or Chrome all have the ability to be run in a Kiosk mode. Kiosk mode basically locks down the browser so that the user is very limited in what they can do. There’s no ability to access the OS, run other programs and so on.
A basic PC from Dell or HP that would be suitable can be had for a few hundred bucks. You can even go for one of those new touch-screen based all-in-one models. A fairly stylish computer stand from Ikea will set you back like another hundred bucks.
You could even pull off this idea with one of Apple’s new iPads. Regardless of the computing device you choose you’ll of course want to make sure the entire thing is secured to avoid having it walk out of your dealership.
And speaking of security, you’ll want to either install filtering software on the PC or control access at your store’s network router to limit the sites that the kiosks can access. You don’t want customers surfing porn or, worse yet, visiting competing dealer’s or retailer’s sites!
Finally you’ll want to communicate to your staff what’s up with the kiosks. Make it clear that you don’t see the kiosks as a way to replace the humans in shop. Educate your staff that the kiosks are a tool that they can use to actually improve customer interaction when they have the bandwidth or as a way to allow customers to do a little “self help” when things are crazy. It’s better than having customers wander aimlessly around your shop twiddling their fingers waiting for someone to help them.
Don’t let the lack of staff be the only reason you try out the kiosk idea. Many top retailers have found that having shopping kiosks are a great way to flesh out a full multi-channel retail strategy. Maybe you’ll discover you’ve been sitting on a secret gold mine all this time. You just needed to look at it differently!
By now I think most of you reading this column have heeded the advice from my past columns and gotten onto the social media bandwagon in one form or another. You’ve got a Facebook fan page, a twitter account, maybe a MySpace page and if you’ve been really ambitious a blog or a forum. You’ve created a profile on Google Maps and Yelp where customers can post reviews. You’ve gotten out there in an attempt to make your business more visible. Unfortunately, that visibility can quickly turn you into a target.
Like so many things in life, there’s always the law of unintended consequences to deal with. The social media landscape is no less prone to subjecting you to this law. This month I’m going to address what happens when you get negative, harsh, or even intentionally hostile interactions on your social media channels.
In days gone by (a whopping 5 years ago or so) if a customer had a serious beef with your business, they were pretty much limited to things like the “We’re on your side” segment on the local news, a letter to the editor of your local paper or maybe a negative report to the BBB. These days it’s mind-bogglingly simple for a ticked-off person with an ax to grind to single-handily destroy, or at least seriously damage, your business’s online reputation. And a supreme irony here is that a lot of these soapboxes from which they shout were built by you!
There’s basically three variants of folks you’re going to have to deal with:
Category #1) The legitimately (at least to them) ill-treated customer that feels like they have not been able to get the resolution they want and has decided that they will “show you” and make the issue public.
Category #2) A person that is blatantly hijacking your public spaces or the web in general at the behest of a competitor.
Category #3) A common garden variety of internet troll.
I’ll give you some generally accepted methods to deal with each of these.
The first variety can be the most damaging if you deal with it badly. These are folks that have spent money with your business and feel that somehow they didn’t get the response they feel they deserved. Often these people have already talked to someone at your shop about their grievance (in person, phone, or email). That means if it gets to the point they are venting on your Facebook page or ripping you apart on Yelp your customer feedback process in the real world broke down. They left not just unsatisfied, but so pissed off that they have sworn a vendetta against you and by God they will personally see to it that not another living soul ever does business with you again (again, once upon a time there wasn’t that much one irate customer could do to you… Now all they need is a little time and know-how and this once idle threat can be alarmingly real).
There’s basically three outcomes from this kind of altercation. The first involves you taking a big step back to determine if this customer’s got a legitimate point. Not from your standpoint, but from the standpoint of a typical customer that is going to read what’s going on online. You may not like it, but customers have certain attitudes about what is and isn’t fair. Face it, you feel that way plenty of times. There’s always two sides to a story. Sure you can deny the guy’s extended warranty claim because of some small print, or sure the customer is supposed to deal with the manufacturer of that widget for repairs, but customers don’t always see it the way you want them to.
If you decide that it’s best to appease this irate individual then I recommend doing it offline and as part of the “agreement” convince them to post how the outcome was favorable and everything is just fine now.
Of course a great deal of damage can already be done because it’s probable that their Yelp review, “Crazy Harry’s MotoMall is run by a corrupt ferret!” has already been crawled by GoogleBot and indexed so that when someone Googles your business name they see the post header or page title, but never see the retraction or follow up. And no, Google (or even Yelp for that matter) will not remove that entry. Welcome to the brave new world of a permanent online record!
The second outcome is that you feel the customer is being unreasonable, you are almost 100% certain that most reasonable people would agree, so you post your side of the story calmly and clearly and wait for the general public consensus to come to your aid (i.e. your Facebook fans, Twitter followers, etc. rally behind you and essentially shout the complainer down).
The final outcome is just to ignore they guy. Let him vent, maybe let some of your forum members, Facebook fans, etc. defend you but you essentially remain above the fray. This option is probably not the best for small business. The big guys like Dell and Apple can operate this way because they are huge and the vocal minority, no matter how loud, will not make a large enough impact. You are a small business that relies on a smaller number of customers that may be swayed by the complainer’s arguments. Therefore I suggest that you engage these folks and don’t just ignore them.
Next up is something that’s gaining more wide-spread attention. Your competition, either directly or though various proxies, make a concerted effort to blow you up online. Believe it or not, there are actually companies that you can hire who’s sole purpose is to essentially nuke your online reputation. They don’t typically advertise this fact, but they are out there, often as a part of a marketing firm or SEO/SEM company.
It’s often hard to tell if what’s going on is the work of a “real” customer or a hit-job by a paid online assassin. The best indicator is if the negative online vibe is cranking up all at once, or if it’s just a onesy-twosy type thing. If you start seeing your business name all over the web in negative posts, or if you go from 3 positive reviews on Yelp to 300 Negative ones in the course of a few weeks, it’s pretty easy to figure out what’s going on.
Unfortunately if you get hit with this kind of thing, there’s really not much you can do to fight back beyond trying to overcome it with legitimate positive karma. If you have run a good business for years and you have thousands of legit and happy customers, fans on Facebook, or forum users, quite often your friends will come to your aid in denouncing the attackers. That’s the best you can hope for. A grass-roots uprising of supporters defending your honor in the court of public opinion. Of course if your business has developed a somewhat well deserved reputation as a place to get screwed and you’ve focused on how to squeeze every penny out of a deal at the risk of long-term customer loyalty, well… Karma’s a bitch.
There are companies starting up that focus on “online reputation management” that can help you out to an extent, but they are not typically cheap, nor are they fool-proof. If an attacker has created a ton of negative pages on websites like joe-bobs-moto-shack-sucks.com and avoid-joe-bobs-at-all-costs.com and they do some basic SEO so that when a person searches for your business in Google and your real site is #5 behind these assassination pages or a ton of negative reports on www.ripoffreport.com, your only recourse is to create some more sites and SEO them so that the “bad” pages fall off the first page in the SERPS (search engine results pages). Yes, it can get ugly.
The killer here is that as far as I can tell there’s nothing legally wrong with this if the pages, posts, reviews, etc. have factually accurate information. In the US at least the truth is a defense against libel and slander. So imagine that you get bad reviews from real customers on Yelp that rip you apart. An “attacker” can take the facts of those negative reviews and essentially repeat these “facts” on a few hundred websites, blogs, forums, etc.
Most of you out there do not have the luxury of really solid, defensible positions in the search engines therefore you are very vulnerable to this kind of attack. If you have not been in the top 5 or so for years for your own name, it would be really, really, really easy in a long afternoon for someone with the will and the know-how and a little bit of cash for domain registration to blow you away.
The last kind of issue you’re going to have to deal with are the internet “trolls.” Trolls are basically losers holed up in their parent’s basement basking in the relative anonymity that the internet provides and throwing grenades into online forums, Facebook, etc. just to make you look bad and to feel a power rush. Typically if they post under their own name like on Facebook, they are not a troll. If they post with a cool handle like m0T0dUde or something else anonymously they are a troll.
The primary axiom when it comes to these idiots is: “Don’t feed the trolls.” If you are positive that the poster in question is just a troll and does not fall into one of the above categories that require action or a response, just ignore them. Hopefully your loyal customers will beat these idiots back into their basement where they can go back to playing World of Warcraft or giggling like school girls at the latest LOLCATZ. But make sure that you do a good job of identifying the person as a troll. If you get it wrong and ignore them they can easily go into category #1 and if they are really pissed off at you, they can take it to category #2
The moral of this story is that today, more than ever, it’s vitally important that even marginally (in your eyes) pissed-off customers are handled before they get a chance to do real damage to your online reputation. The best defense is a good offense. Make sure you are running your business in a way that only the most unreasonable folks have cause to go screaming, pitchfork and torch in hand, through the virtual village to burn down your castle. Make sure that you have established a wide and deep social media presence and that you own site is SEO’d to the hilt so that it can’t get buried by negative decoy sites. Because now more than ever, the world is watching, and they ALL have access to the microphone.
I’m a freedom loving American. I believe in the ideals of Capitalism and the efficient workings of the free market.
Sound like this is going to be some Beckian anti-government Tea-Party rant?
Nope. This is about something important that will actually matter to your real life.
I’ve got a few things to say about a little topic called M.A.P., or Minimum Advertised Prices (click here for a primer).
This is a long one. You’re about to see what happens to me without an editor!
MAP is a policy exerted on retailers by a PG&A OEM or distributor in an effort to keep a brand’s price (and ostensibly its brand equity) artificially inflated. OEM’s can’t, or often don’t try, to limit what you actually charge for a product, but they do try to control how you communicate or advertise a price.
If OEM’s are really that concerned with maintaining exclusivity and brand equity they should just be selling directly.
My position on MAP in the past has been that I don’t like it on principal or in practice, but if it’s going to exist then it needs to be enforced 100% evenly across the board: no loop holes, no selective enforcement, no games.
I’m also on the record in several columns that I also don’t believe running a cut-rate outfit is a path to long-term success. However, business reality dictates that specials, discounts, and other promotions (when used wisely) are an important tool in the box when running a business.
As a retailer we should have the freedom to run our business how we see fit.
I have now changed my stance on MAP. I don’t like it and I’d like to see it done away with.
Not only don’t like it, I think it’s harming our industry as a whole and benefiting a select few (mostly the OEM’s that create and enforce it).
Over the years that I’ve been writing my column on e-commerce, I’ve read or heard from dealers that really want MAP policies. They think that by having draconian MAP policies that prohibit internet retailers from selling at prices that are different than what “regular” dealers sell in their store, or on their website, they are “safe.”
They are there to keep you, Mr. or Ms. Dealership, in line while they wait for the business model that currently drives this industry to turn their way.
MAP policy in the end is going to hurt small retailers much, much more than it will disrupt the large pure-play e-commerce companies.
Most OEM’s or distributors “enforce” their policy by threatening to put a dealer on a “no ship” status for a period of time or to just outright stop doing business with them. Obviously it’s the OEM’s decision to do business with whomever they want and to do so however they feel is appropriate.
The reality is that a very small number of powerful OEM’s and distributors supply popular or must-have brands. Due to their broad appeal and ability to get shopper’s attention a retailer has to carry them. The option of telling these folks, “Thanks, but we’d prefer to have control of our own business and do business with suppliers that are partners as opposed to overlords” is not a viable, realistic alternative.
The biggest problem comes down to selective enforcement or special “arrangements” between some retailers and MAP-happy OEM’s or distributors. These may be overt (i.e. the apparently special relationship between LeMans and Dennis Kirk that Arlo Redwine has detailed on the DN blog), or they may come down to the MAP enforcer choosing to just turn a blind eye on transgressions by certain retailers.
When the enforcement mechanism is to not sell to a retailer, and that retailer sells literally tens of millions of dollars of that OEM’s product, do you really think they are going to put that retailer on “no ship” if they find ways around a MAP or just decide they don’t want to follow it?
In addition to their market clout, large internet and catalog retailers in our industry have the luxury of expensive legal advice that helps them find loopholes in the MAP policies.
If smaller retailers/dealers try these same “tricks” they are often subject to a phone call or email from the OEM/distributor’s legal team (however, the person on the phone is most likely not actually a lawyer and typically doesn’t have the authority to actually clarify or discuss the actual policy).
The major e-tailer’s legal capability can discourage OEM enforcement because the OEM knows the policy that won’t stand up to the rigorous challenge a crack legal team could mount. I don’t know a lot of small dealers with access to those kinds of legal resources.
Don’t even get me started on what will happen once they start distributing directly to folks like Amazon. Considering Amazon’s potential buying power, no OEM in our industry has the balls to tell Amazon what they can sell a product for, especially if a deal with Amazon (or Wal-Mart, or Sears, etc.) means 2X, 3X, or 4X the order volumes and dramatic increases in operating efficiency and profits.
Large e-tailers also have the luxury of custom e-commerce platforms that allow them to create systematic end-arounds to the MAP policies in the forms of cash-back programs, rebates, gift-cards, loyalty programs, etc.
Instead of saying that a MAP protected helmet (from a large OEM and distributor) that normally sells for $300 is 20% off (which would explicitly violate said MAP policy) a large e-tailer can say “Buy this $300 helmet and receive 20% cash-back good on your next purchase” or “Buy this $300 helmet and get a $60 gift card.”
What’s nuts is that you can use this card or discount on a future purchase of a MAP protected product as well! And for some reason this is all OK with the folks writing and enforcing these MAP policies? So much for wanting to enforce brand equity though artificially inflated prices!
You can say “Low Price Guarantee: We won’t be under-sold! If you find [insert MAP controlled product name here] for less we’ll beat it!” Apparently this price protection is considered a private contract between the retailer and the customer and is not enforced under MAP… Lawyers… Gotta love ‘em…
If they are serious about the real purpose of MAP, why would these loopholes be OK?
If everyone on every internet forum on the face of the planet knows that they can call up or email UberMotoShoppingMegaSite.com and get a MAP protected jacket or pair of gloves that they found through a Google search on your (Mr. or Ms. rule-following, local dealership) site, but you can’t communicate to that shopper that you can and will in fact sell for the same low price that the big guys do… How does MAP help you again?
Even when the website/e-commerce platform providers in our industry have a way to enable the same promotional methods that the large e-tailers offer, thereby moving to a more level playing field, OEM/distributors drag their feet and don’t offer the necessary approvals that would be required to allow development to move forward.
In fact, as of this writing one platform provider has been waiting for several months for approval from a large OEM/distributor’s legal team regarding a promotional mechanism that would allow dealers the freedom necessary to compete with the large e-tailers while not violating MAP.
Why would the powerful OEM/distributor be so slow to enable small dealers to have the same promotional tools that large e-tailers have? No… Really… Someone please tell me why they have time and resources to track down every little dealership out there advertising products for $10 below MAP, but can’t get around to authorizing something as simple as this?
Let me put my tin-foil hat on for a moment:
Large OEM’s and distributors have recognized the writing on the wall.
Over the next ten years most (80%+?) of their business is going to come from large e-commerce retailers (even more so if the likes of Wal-Mart, Sears, and Amazon really start playing in the PG&A space as it looks like they intend to).
If they can do 80%+ of their PG&A volume with only 5-7 large retailers, they can dramatically reduce their overhead in the forms of sales expense, logistics expenses, etc. Right?
If they can get the market to look like that, don’t they have a fiduciary responsibility to their investors to do that?
By enacting draconian MAP policies that are only strongly enforced on the smaller, more legally defenseless dealerships, they can force the market into a shape that is more conducive to their bottom line.
I don’t care if Amazon, Wal-Mart, Sears, etc. all actually follow MAP. How many customers shopping for a new helmet, gloves, or jacket are going to buy from your shop over Amazon if the price is the same?
It’s not so much that they want you all to go out of business overnight… But if they can help steer our industry to a model with a more easily managed small number of retailers… I guess you can’t blame them really. It actually is a pretty good long term plan for them to become even more profitable.
What happens when more OEM’s like Scorpion start selling directly to the mega-ecommerce sites like Amazon?
Look at this. This helmet is shipping directly from Amazon. Not a merchant partner.
I don’t care if there’s an iron-clad MAP or not. Most people, shopping online, are going to buy from Amazon before they buy from anyone else if for no other reason that brand identity (and the elements of things like security, etc. that come with it).
How long before folks like Tucker Rocky or LeMans start distributing their house brands directly to Amazon, Wal-Mart, Sears?
If Scorpion et al. are able to do this, unchallenged by the dealers and retailers, and do it more profitably than the current model, simple fiduciary responsibility is going to force them to do it to maximize returns.
No amount of platitudes of “supporting the industry” are going to outweigh possibly double digit increases in income that will come with consolidated operations and the shrinking of the supply chain.
So as you can see, MAP is basically a game. Even if it was possible to enforce 100% (which it never would be), odds are that the large e-tailers would be immune through the use of their market clout, legal muscle, or systematic work-arounds.
Even if you have a MAP policy that could theoretically be enforced 100%, like all command economies, it will lead to black-market sales and other back-room deals if the MAP price is perceived as too high vs. other non-MAP products.
I’d argue that in the long run, MAP policies even hurt the OEM/Distributor because it robs them of important market signals pointing to the actual value of the product in the marketplace.
Under MSRP and MAP, some product manager builds a fancy Excel sheet to determine the best price. It then has its legal team enforce the MAP policy. What does that sound like to you?
Last time I checked a theory writ-large that looked pretty close to this failed in the ex-Soviet Union.
Even the PRC has recognized that free-market economics makes more sense than trying to a command and control economy in many instances.
Companies with MAP policies apparently are not big on history or economics.
Here’s a scenario: Helmet I sells for a MAP protected MSRP of $450 and dealer cost of $292 (profit: $158). Unfortunately at that price it just doesn’t stack up to (or sell as much as) Helmet K that retails for $500 but has a street price of $380 and a dealer cost of $300 (profit: $80).
Now as a retailer, I know my market, my customer, etc. and I know that if I could sell Helmet I at $380 I would sell the crap out of them!
I’d still be clearing more profit per unit than Helmet K and I’d move more units which would make more money for me and ironically for the OEM that wants MAP!
There’s no way that some brand manager at an OEM could envision those market dynamics when setting the MAP MSRP 6 or 8 months ahead of the market launch.
They don’t know what the economy is going to look like, they don’t know what competitors are going to do, etc.
OEM’s and distributors need to worry about setting a wholesale price that allows them to make a profit when they sell to a retailer and that’s it. Period. End of story.
The idea of using MAP as a way to “protect” a brand’s image is a joke when it’s clear that there are so many tricks and loopholes that allow the protected products to be sold at prices nowhere near the MAP.
Check out the abundance of MAP protected products that are sold on Amazon or on eBay through gray-market distribution deals as just one example of how MAP breaks down and does nothing to 1) protect the brand or 2) protect legit retailers.
In the end, here’s my take on MAP:
MAP policies hurt retailers by limiting their options and choices in how they run their business
MAP policies (either intentionally or deliberately) can never be enforced 100% across the board so it creates artificial inefficiencies in the market
The resources being used to write, monitor, and enforce MAP are 100% non-value-added. I’ve been told that some retailers have people on staff full time that do nothign but find, and report MAP violations. These are the same people that volunteered to be hall monitors in grade school I bet.
MAP policies hurt customers by forcing prices to be artificially high in the same way that price control cartels like OPEC artificially control the price of oil
MAP price controls are eventually ineffective as grey-market retailers on sites like Amazon, eBay, etc. sell out the back-door of less scrupulous dealers
And here’s my suggestion. If you get a call from a MAP enforcer, have them speak to your lawyer.
If you find cases of large e-tailers violating the same MAP policies, report them to the OEM’s legal team and verify that the offending company has made the changes to their site or advertisement within the required time. If they don’t, then have your lawyer write a letter to the OEM pointing out that it appears that they are selectively enforcing the policy.
Eventually if we drown these OEM’s legal teams in reports of MAP abuse and catch them in the act of selectively enforcing MAP they will give up on the idea of playing this game of whack-a-mole.
What’s pretty awesome about that idea is that I’m pretty sure that once the FTC gets wind of that post, and what is without doubt a clear case of collusion in our industry to keep prices artificially inflated, they will demand that it’s shut down.
Until these policies are challenged in court and eventually done away with, we are going to continue to see more and more power shift into fewer and fewer hands and that’s not going to be good for your customers, our industry, or most importantly your business.
I believe that these MAP issues are just the most evident tip of the iceberg that represents a looming challenge to the dominant business model in our industry.
However this time it’s going to be the Titantic that rams right though the iceberg. All of us, in our little boats, are going to be the ones at the bottom of the North Atlantic.