Trials & Errors #74: Marketers, Help Grow Our Small Innovators!

Hi Ron, thanks for coming back in and posting.

One comment you made reminded me of my own retail days, but it was in stereo and audio equipment. When we puchased X amount from Kenwood or Yamaha etc, we would get what is called "Coop Advertising Dollars." My guess is that an HRO or DXE catalog is the way that these large dealers use that 12-15% (or whatever) in coop ad money. They publish these books for essentially no cost, by billing expenses back to the big product names. Maybe they even charge small guys to be in the catalog? (This is a guess -- can anyone confirm?).

With regards to your loyalty disappearing after a service experience, I get your point and it has happened to me. NOTHING can ruin a dealer/customer relationship faster than lousy or over-priced service work. Dave, W7DGJ

Dave

 

Hey Pat - I got a big chuckle out of your comment above, about buying a load of ham gear and chili in the same shipment. We've all done that, and it's not going away soon, right? I wish that there was a place that sold only ham gear and that had free, fast shipping and stocked odd little Chinese gadgets. It won't happen. Dave, W7DGJ

 

Having worked for an electrical wholesale distributor in the automation business, you are exactly correct that successfull distributors need to earn around 30% gross margin to thrive.

But it was not quite clear if you said that the big Japanese manufacturers were giving the "big three" ham distributors that 30%.

I bought my 7610 from HRO, but they had an extra advantage because one of their stores is just 10 minutes from my house! . That said, I still go direct to Icom for support. They have decent support out of Seattle and are easy to reach.

I wonder if another model would work where a strong intermediate web distributor could host small manufacturers products in a ham themed site and take a small margin to host an ad and handle the transaction. It would be up to the manufacturer to ship and handle support. Somewhat like the Etsy or Reverb model.

 

Yeah I had that tuner, and that was the last straw on my end. This is the tuner many describe as the tuner that can tune a "lawn chair". This glitch was a known issue, my question was if this was known, why keep selling the tuner and worst yet, YouTube recommendations? This is where my trust in YouTube went south. Many knew of these problems, but yet kept recommending the garbage to new hams. In my opinion that did a lot of harm. Yet not long ago, one of the YouTuber's set up an antenna that needed an auto-tuner at the antenna feed point, he purchased an external MJF tuner knowing that it needed to be "fixed" prior to being put into operation. I could never figure out why someone would buy a piece of equipment, pay full retail, knowing that it has to be fixed before it can be safely used???

Today, there is still a lot of that going on on YouTube. My recommendation to a new ham is to forget YouTube, find a local club, and see what everyone is using, keep to the reliable brands, ie: Icom, Yaesu, etc and then go from there. Also, skip the "used" market. Given the prices of "used", you are not saving much, yet you are forgoing warranties just to save a minimum amount of $$$. Cheap is NEVER good, there are no deals, just headaches and compromises, all of which will most likely ruin your "on air" amateur radio experiences.

 

Hi Bruce, agree with you on the idea; I was speaking about something like that, but done by the present distributors. Wouldn't it be cool if the big three could organize a joint effort where they'd have this investment in a web-based distribution/promotion opportunity for small vendors?

Yes, I guess my writing wasn't clear enough on the topic of the big Japanese transceiver companies. While I don't know what margin they give these guys, I have heard that it is LOW, too low to be the major profit center for the dealer/distributor. It then requires everyone else to chip in big. And that kills small innovators. Dave, W7DGJ

 

Dave:

A little late to the party; sorry. Life gets in the way sometimes.

Your comment in the article about this hobby being somewhat expensive, and the price we pay can really affect our decisions on whether to get something or not...and whether we're willing to purchase from an unknown "upstart" internet company... is a key point in this topic.

I don't think a lot of people in general really understand or know what kinds of profit margins need to be added into an item's price, in order for a company/retailer to stay afloat. I've commented before that I hold a Federal Firearms License (FFL). I've had my license since 1991, but I didn't get it with the intentions of opening my own gun store; the realities of ALL the costs involved (like storefront purchase or rent, security measures, inventory purchase, utilities, labor...just to name a few) make doing so a pipe dream. No, the sole reason I got my license was to reap the savings on EVERYTHING firearms-related that I wanted for myself. The price I pay (dealer cost) from my distributors can be as much as 70% less than what you'll find at places like Cabela's/Bass Pro, Sportsmans Warehouse, etc...and sometimes even the smaller local shops are severely jacked up.

This doesn't usually apply to the guns themselves; profit margins on them is usually pretty low and reasonable. It's ALL the other stuff, the ammo, the accessories that go with it. I once ordered an item (scope rings) that my distributor listed at $29 cost, and the local chain sporting goods store (back in the PNW, a now defunct chain called G.I. Joe's) sold retail for $100! This was the driving impetus behind getting my FFL...saving money on the s#*! I need.

BIG stores, big chains have lots of costs and overhead they need to cover, and pass all of that along to the consumer; the list will boggle your mind. When I was a manager for a big-chain pizza restaurant many, MANY years ago...when I was in their management training program I learned that, once ALL the costs of doing business and keeping the corporation running are subtracted out, they average a profit of only two cents on every pizza sold (circa 1986). You gotta sell a LOT of pizzas to keep the doors open, but you also have to keep those customers happy so they'll keep coming back. The line between making enough profit to stay afloat, vs. overcharging and driving customers away, is razor thin.

If we, the ham radio operator community, want to continue to reap the benefits in innovation and design improvements, we have to look outside of the mainstream retailers and support these small businesses innovators. And if that means ordering from an unknown, untested, and possibly (probably) less glitzy website...then suck it up and do it! The reality is that a lot of these small online businesses, probably more than half, won't make it...but we owe it to ourselves to try and keep as many of them afloat as possible.

Word of mouth is the key. Dave, you do such an excellent job of highlighting new products and innovators in your columns (thank you!), but we ALL need to spread the word when we discover or stumble across a lesser known item, retailer, or website. Advertisement is expensive (did you see how much 30 second commercials were for the SuperBowl?!), and small businesses are going to rely on word of mouth more than you think. I'm sure most everyone here knows of or has heard of ZachTek and his wonderful WSPR transmitters; I know I love mine. But there was a time when he was an upstart new company, unheard of, and had to be someone we "took a chance on". And look how that turned out. Wouldn't we like to see that happen for ALL the small time ham radio innovators out there? How can we afford not to; how can we continue to grow and thrive if we pass them up?

Thanks Dave. Keep these great columns coming. 73
Brando

 

A great post, thanks Brando. You are always a great poster, even when we don't see you for a bit. I copied the two paragraphs I really love here. Good thoughts, and Zachtek is a great example. I don't think Harry spends anything on marketing . . . it's all word of mouth. And what cool products. There are a hundred companies just like that one, Brando, and you're right that we need to support them. They're the true innovators here . . . not ICOM, Yaesu, Kenwood . . . Dave W7DGJ