In defense of Real dealers....

[harry_]

Yes, great point. My warehouse has pretty "reasonable" shipping rates with UPS, but I don't think I, nor many dealers, could afford to ship a Kapex (65 lb.and OVERSIZE box) overnight  across the country, charge $4.00 shipping and not lose $$ (or make it so close to losing $$, that you'd wouldn't do it). Amazon, because of its' size and the soooooooooo many other items it sells, can afford these types and scales of "loss leaders". There are a number of dealers (myself included) who have totally free shipping on all Festool sales - no minimum size order. In a real way, on a small order, that is a "loss leader" that we offer as a way of being "competitive" and/or thanking a customer for doing business with us. But, the Kapex overnight example is something I could never match.

So how does this different from the Ebay business of the 'microsoft money'? Money saved is money saved. Getting it cheaper is still getting it cheaper. The methodology is merely semantics.

In defense of Real dealers: I see this as a rule being bent here and it is not in your favor . $4 overnight shipping is a financial incentive being offered to the end user, same as the Ebay thing[2cents]

 

[Bob Marino]

[So how does this different from the Ebay business of the 'microsoft money'? Money saved is money saved. Getting it cheaper is still getting it cheaper. The methodology is merely semantics.

In defense of Real dealers: I see this as a rule being bent here and it is not in your favor . $4 overnight shipping is a financial incentive being offered to the end user, same as the Ebay thing[2cents]
[/quote]

Hey Harry,

Point taken, but shipping is the one area that Festool does not get involved in. What price, if any, a dealer charges is (rightly so) up to the dealer. Third party "deals" like BING are topics that have been discussed and are not allowed. Same thing for instance,  dealers advertising "hey, buy the TS 55 for list price and you get a free Makita drill."

Bob

 

[nickao]

To get the 3.99 one-day shipping a person must join Amazon Prime, which is not free and 79.00. So if a person orders only twice a year, really the shipping is a bunch more than 3.99. If a Prime member orders a lot of items Amazon is supplementing the shipping cost through many other sales.

Because I order so much from Amazon I do benefit from the 79.99 Prime payment up front. Most likely since Amazon offers it they make money on it and are not giving the shipping away. Probably thousands or hundreds of thousands join up for Prime and never spend more than the 79.99 in shipping fees.

Just a note to tell the dealers the cost of the one day shipping is not truly 3.99 at all.

 

[marrt]

It should be noted...to get $4 overnight shipping, I "assume" you have to be a Prime member.  I think Prime membership costs $80 per year.  Since I'm already a Prime member, this is the shipping I see.  I suspect it would be free to everyone else, but not overnight for an additional $4.  I didn't go into this detail originally because the post was already getting too long. 

As a customer, I'm running a business of one (me).  As a result, I'm happy about Amazon carrying Festool in principle.  As many of my old posts will confirm, I've never been a big believer in the price fixing model, defended by the "We charge you more for your on good...by ensuring high service dealers are readily available to help you." 

I believe competition, on both price and service, is a good thing.  Restriction of competition too often leads to complacency and a "take or leave" attitude.  You doubt my words?  Consider most government services (an effective monopoly) or your cable company (Comcast, the largest cable company, has the lowest customer satisfaction of ANY company or government entity in the US for several years running).

All that said, I do recognize that once you start competing on price alone, high service dealers disappear.  Most people act in their own self interest of will visit the high service dealer to touch and feel the product...then buy somewhere that has better pricing.  This is why all US retail dealers are slowly, but surely, moving to the Walmart model. 

And this is where I see little difference between Walmart and Amazon, in terms of service.  If service is the foundational premise behind the price fixing model, then this premise has been violated by allowing Amazon to carry the product.  If you don't believe that, then please give me the phone number of who I can call at Amazon about some problems I'm having with my MFT.  Oh...never mind...I'll just call Bob, pretend I'm interested in some other tools, then ask my MFT questions.

 

[harry_]

[So how does this different from the Ebay business of the 'microsoft money'? Money saved is money saved. Getting it cheaper is still getting it cheaper. The methodology is merely semantics.

In defense of Real dealers: I see this as a rule being bent here and it is not in your favor . $4 overnight shipping is a financial incentive being offered to the end user, same as the Ebay thing[2cents]

Hey Harry,

Point taken, but shipping is the one area that Festool does not get involved in. What price, if any, a dealer charges is (rightly so) up to the dealer. Third party "deals" like BING are topics that have been discussed and are not allowed. Same thing for instance,  dealers advertising "hey, buy the TS 55 for list price and you get a free Makita drill."

Bob
[/quote]

Bob,

I can clearly see that there is a difference, however I still see it as semantic.

If I have a budget of $1500 (or whatever), I could get the kapex tomorrow and have more of that $200 left over to buy more (Festool) stuff, maybe even at Amazon. So in effect you real dealers could end up getting poked in the eye,..... twice.

Additionally, where is the "service" from amazon, in particular, after the sale. Not all return issues are of the `30 day` type. Their service will end as soon as the 30-day NQA return period is over, if not sooner. We all know that, or at the very least presume that.  

As an internet dealer yourself, you are more well aware than I how much service can be made available post-sale. If I had a question re: a tool, there will be no help from amazon. You however I could call. I would also bet that if you told me yoyo (you're on your own), the equivalent of what I would get from Amazon, someone at Festool would flip right out!

So although Festool is trying to push the competition into the service are of the equation, the minute amazon comes into play the bar has been set at 2 different levels. This other level, seems to me, unfair to you!

Admittedly, you as a online retailer, would know better than I.

 

[tbellemare]

I have tried to stay out of this discussion because I felt I was portraying myself as less than rational a couple of days ago. That isn't something I often do and I am more than a little embarrassed about it. I have to admit that I was glad that the thread had subsided.

I will state, without equivocation, that I see this as the first step down a slippery slope. Not the slippery green slope that is so often mentioned on this forum, but a slippery slope, which is part of a race to the bottom.

I hate to see it...

Tom

 

[harry_]

I have tried to stay out of this discussion because I felt I was portraying myself as less than rational a couple of days ago. That isn't something I often do and I am more than a little embarrassed about it. I have to admit that I was glad that the thread had subsided.

I will state, without equivocation, that I see this as the first step down a slippery slope. Not the slippery green slope that is so often mentioned on this forum, but a slippery slope, which is part of a race to the bottom.

I hate to see it...

Tom

Tom,

Quite honestly, I don't see anything for you to be embarrassed about!

 

[Bob Marino]

I have tried to stay out of this discussion because I felt I was portraying myself as less than rational a couple of days ago. That isn't something I often do and I am more than a little embarrassed about it. I have to admit that I was glad that the thread had subsided.

I will state, without equivocation, that I see this as the first step down a slippery slope. Not the slippery green slope that is so often mentioned on this forum, but a slippery slope, which is part of a race to the bottom.

I hate to see it...

Tom

Tom,

Couple of things. As Harry mentioned, you have nothing to be embarrassed about. You said nothing (IMHO) that wasn't hearfelt... and true.
I'm just glad that I waited a few days, because I probably would have posted something that I would have regretted. Then again, maybe I wouldn't have regretted it .
As per our conversations, I share your concerns. You know where I stand. Festool is an integral part of our business (100% for me) and changes like this are "disconcerting"...to put it mildly. I have a history with and committment to Festool and my customers. So do you. Does this "test" that history and commitment?  I'm gonna give it my best shot and as mentioned earlier, stay on this train.
This could indeed be that "race to the bottom" but I don't think, as with other manufacturers, this will be a race to the bottom in terms of tool quality. Festool will always manufacture to the highest levels; to do so would be suicidal to this proud, family owned business. No worries on that end.  In terms of knowledgeable, helpful dealers losing sales, probably so. In time, I'm hoping to be proven wrong...and embarrassed by this post.

Bob

 

[tbellemare]

Thanks, Bob.

Tom

 

[Mr. Jeff Smith]

I'm late to this discussion (just joined this site yesterday), but wanted to provide some small anecdotal evidence to the idea that Amazon could benefit "real dealers".

I first learned of Festool on another woodworking forum, but didn't really act on Festool until about 3 months ago; I was searching for a "best sander" on Amazon and came across some Festool stuff listed which officially began my journey into the land of green...

Its true I could have just bought the sander through Amazon, but I had some questions and I also wanted to "give" my business to the sponsor of the site I enjoy.  So that is what I did.  (Bear in mind, I buy a lot through Amazon)

What I see in this discussion is the question as to whether it's better to have a larger pie with more competition (with Amazon in the mix) or a smaller pie and less competition (Amazon out).  My advice to the dealers is to differentiate by continuing to focus on service and relationships (both individual and the WWing community), because this is the area Amazon will never be able to compete on, nor will they try.

 

[marrt]

I stopped by my local lumber yard today to pick up some sticks.  The owner happened to be there.  I knew he was considering the Festool line and even had Katz at his location a few weeks back (which I missed unfortunately  [mad]).  So I asked him...."Hey, are you going to carry Festool?"  He said:  "We really wanted to pick up the line, but they're too restrictive.  For a "lumber yard," you must commit to carry the line exclusively" he said.  In addition, he mentioned the usual issues (price fixing, commit to carry a minimum of $30K inventory, etc...). 

Assuming he was correct, I still say this makes no sense.  Here was an opportunity to have a local dealer carrying and SELLING the product.  Historically, this lumber yard has carried mostly Makita stuff and ALL the local guys with accounts there use Makita from him.  Is he supposed to drop Makita and tell all his loyal customers to start upgrading to Festool...at 2x to 4x the price...or go somewhere else?  He can't do that to his customers.  Meanwhile, we see the product at Amazon...with no personal service and no requirement to carry the product exclusively.

I still say the decision to distribute through Amazon is misguided and likely driven by an over-anxious sales guy looking to make his bonus.  In the mean time, this (potential) local dealer is saddled with heavy-handed requirements that limit his ability to carry the line and my ability to buy locally.

I'm not saying all this to bash Festool.  Festool, and the Real Dealers, have displayed tremendous effort and patience to establish the brand's premium position in the US.  It would be a shame to see all that work thrown away in the pursuit of short term sales bonuses.  That's how so many American brands have been destroyed.  Just look where Porter Cable is today, for example.  A "low end" house brand for Lowes, designed to compete against Home Depot's Ryobi exclusive.  Pathetic.   

 

[Bob Marino]

I stopped by my local lumber yard today to pick up some sticks.  The owner happened to be there.  I knew he was considering the Festool line and even had Katz at his location a few weeks back (which I missed unfortunately  [mad]).  So I asked him...."Hey, are you going to carry Festool?"  He said:  "We really wanted to pick up the line, but they're too restrictive.  For a "lumber yard," you must commit to carry the line exclusively" he said.  In addition, he mentioned the usual issues (price fixing, commit to carry a minimum of $30K inventory, etc...). 

Assuming he was correct, I still say this makes no sense.  Here was an opportunity to have a local dealer carrying and SELLING the product.  Historically, this lumber yard has carried mostly Makita stuff and ALL the local guys with accounts there use Makita from him.  Is he supposed to drop Makita and tell all his loyal customers to start upgrading to Festool...at 2x to 4x the price...or go somewhere else?  He can't do that to his customers.  Meanwhile, we see the product at Amazon...with no personal service and no requirement to carry the product exclusively.

I still say the decision to distribute through Amazon is misguided and likely driven by an over-anxious sales guy looking to make his bonus.  In the mean time, this (potential) local dealer is saddled with heavy-handed requirements that limit his ability to carry the line and my ability to buy locally.

I'm not saying all this to bash Festool.  Festool, and the Real Dealers, have displayed tremendous effort and patience to establish the brand's premium position in the US.  It would be a shame to see all that work thrown away in the pursuit of short term sales bonuses.  That's how so many American brands have been destroyed.  Just look where Porter Cable is today, for example.  A "low end" house brand for Lowes, designed to compete against Home Depot's Ryobi exclusive.  Pathetic.   

  Marrt,

Few points to mention. There is absolutely no  requirement for carrying the line "exclusively" -  if by that  you mean to the exclusion of other lines. Just about every dealer in the country selling Festool, sells many other lines. I don't have any idea of the amount of stock a new dealer must carry, but the reason Festool wants its' dealer to carry a "decent" amount/supply of tools, accessories and consumables is because they want to  maintain a certain level of sevice to customers. They don't want to have customers (on a regular basis) complaining that there is no sandpaper available when you buy that Rotex, or no clamps for the rail, etc.etc.
I also think that many of the American brands have been destroyed because of poor business decisions (short term sales focused) by reducing quality to maintain a low price point, and perhaps equally as sad, American's eagerness to insist on getting tools at the lowest possible (and sometimes impossible) prices, damn the quality. Kinda goes hand in hand/ chicken or the egg type of situation.

Bob

 

[harry_]

I stopped by my local lumber yard today to pick up some sticks.  The owner happened to be there.  I knew he was considering the Festool line and even had Katz at his location a few weeks back (which I missed unfortunately  [mad]).  So I asked him...."Hey, are you going to carry Festool?"  He said:  "We really wanted to pick up the line, but they're too restrictive.  For a "lumber yard," you must commit to carry the line exclusively" he said.  In addition, he mentioned the usual issues (price fixing, commit to carry a minimum of $30K inventory, etc...). 

Assuming he was correct, I still say this makes no sense.  Here was an opportunity to have a local dealer carrying and SELLING the product.  Historically, this lumber yard has carried mostly Makita stuff and ALL the local guys with accounts there use Makita from him.  Is he supposed to drop Makita and tell all his loyal customers to start upgrading to Festool...at 2x to 4x the price...or go somewhere else?  He can't do that to his customers.  Meanwhile, we see the product at Amazon...with no personal service and no requirement to carry the product exclusively.

I still say the decision to distribute through Amazon is misguided and likely driven by an over-anxious sales guy looking to make his bonus.  In the mean time, this (potential) local dealer is saddled with heavy-handed requirements that limit his ability to carry the line and my ability to buy locally.

I'm not saying all this to bash Festool.  Festool, and the Real Dealers, have displayed tremendous effort and patience to establish the brand's premium position in the US.  It would be a shame to see all that work thrown away in the pursuit of short term sales bonuses.  That's how so many American brands have been destroyed.  Just look where Porter Cable is today, for example.  A "low end" house brand for Lowes, designed to compete against Home Depot's Ryobi exclusive.  Pathetic.   

  Marrt,

Few points to mention. There is absolutely no  requirement for carrying the line "exclusively" -  if by that  you mean to the exclusion of other lines. Just about every dealer in the country selling Festool, sells many other lines. I don't have any idea of the amount of stock a new dealer must carry, but the reason Festool wants its' dealer to carry a "decent" amount/supply of tools, accessories and consumables is because they want to  maintain a certain level of sevice to customers. They don't want to have customers (on a regular basis) complaining that there is no sandpaper available when you buy that Rotex, or no clamps for the rail, etc.etc.
I also think that many of the American brands have been destroyed because of poor business decisions (short term sales focused) by reducing quality to maintain a low price point, and perhaps equally as sad, American's eagerness to insist on getting tools at the lowest possible (and sometimes impossible) prices, damn the quality. Kinda goes hand in hand/ chicken or the egg type of situation.

Bob

I am not a dealer, nor do I play one on TV.

For sure $30 is a lot of money, but in the bigger (Festool) picture,... not so much. As I am sure any of the dealers here can verify, a kapex (or two) and pretty much any random 50 tooling units will hit that. As far as units go, it is not a lot of inventory, and you haven't even hit accessories yet.......... of course I am talking retail pricing, but even still. This stuff is rather spendy, it can't take very long to add up to $30K

 

[marrt]

Bob,

Regarding the exclusive, I agree and pointed this out to him.  He said he had the same discussion and was told this was their "policy for Lumber Yards."  This was his main issue...having to remove the Makita line.  He wanted to use Festool as an "upgrade" option to cover the full market. Framers and such would stick with Makita, but Trim guys and Cabinet Makers could go with Festool.  In any case, this is technically "hear say" and I probably should not have posted it.  

The larger issue is the risk a manufacturer takes when they move from "Specialty Distribution" (what Festool has today) to mainstream retail distribution.  As I noted elsewhere, I have a long history in Product Marketing.  One "trick" mainstream retailers often pull is to place a very large initial order.  Then, when the product sells too slowly, the retailer will demand a retroactive price reduction so the end price to the consumer can be reduced.  Simultaneously, they will demand a "co-op" kickback of 5% or so to support greater advertising of the product.  Those inserts you get in the Sunday paper for Best Buy and so on...those are actually managed like profit centers (as opposed to advertising expense for the retailer) because they get the manufacturers to pay and compete for placement in the insert.  "Want to be on the front page this Sunday?, that's an extra $40K for a quarter page."  

What's worse, as a manufacturer, you can't refuse any of this stuff if you ever want to work with that retailer again.  Due to consolidation in the retail industry, these large retailers hold ALL the leverage.  They will get you addicted to the herion (greater sales) then start to put the squeeze on you.  I strongly encourage you to read this article (assuming you're interested in this stuff) Wal-Mart You Don't Know.  I've sold to Wal-Mart (and all major retailers) and this article is spot on.  I could tell you some real horror stories.  As a manufacturer, you do what they say...even if you know you are being led down a path that's not in your brand's/product's long term interest.  

Admittidly, Amazon is not Wal-Mart, or Home Depot.  But I would arque it's only one step away.  As noted earlier in the thread, from a user's point of view, they are basically the same...no personal service so you buy on price and convenience.  The issues above are the main reasons we see so much Brand and Price erosion in American retailing.  If you want to control your Brand and Positioning, you MUST control your distribution...not the other way around.  And I will guarantee you that Festool does NOT control Amazon.    

 

[nickao]

To me if Festool keeps all pricing the same there is no benefit to buying from Amazon so I don't. I use Amazon to save money and if the prices are the same I always use a regular online merchant first.

As a seller if Amazon was selling the Festools for 20% less than I would worry. Otherwise they are just another seller online. Someone is going to see a Festool at Amazon and have a question, they will go to a dealer ask the question and then see the price is the same and then purchase from the dealer. Since Amazon can not answer any questions about the actual tools operation I think the regular sellers are safe. With tools this expensive it takes a special buyer, one that knows tools and has questions about why they are so expensive.

I just do not think Amazon does nearly as well at the higher price points for tools( I may be wrong). I guess over the years we will find out.

 

[Neill]

I know I am coming a bit late to the party, but what the heck it's fashionable.

Funny thing is that I first became acquainted with Festool through Amazon more than 2 years ago.  I was looking for a new jigsaw.  I was looking at the latest from Bosch.  One of the reviewers mentioned how much better they thought Festool was than the Bosch.  Well I started searching and ultimately bought the Trion barrel grip from CPO.

As time has passed, I find myself wanting to be increasingly loyal to Festool dealers, especially those that post here like Tom and Bob.  I have also noticed that Sean is posting a lot more lately.  The biggest dilemma is who to buy from.  Through their knowledge and relationship with their clientele they render a service no cut rate retailer can provide.

I agree with Nick about having no advantage to buying from Amazon.  Even if Amazon had the power to discount, I think that everyone would have to jump into the boat to remain competitive.

Neill

 

[Bob Marino]

Bob,

Regarding the exclusive, I agree and pointed this out to him.  He said he had the same discussion and was told this was their "policy for Lumber Yards."  This was his main issue...having to remove the Makita line.  He wanted to use Festool as an "upgrade" option to cover the full market. Framers and such would stick with Makita, but Trim guys and Cabinet Makers could go with Festool.  In any case, this is technically "hear say" and I probably should not have posted it.  

The larger issue is the risk a manufacturer takes when they move from "Specialty Distribution" (what Festool has today) to mainstream retail distribution.  As I noted elsewhere, I have a long history in Product Marketing.  One "trick" mainstream retailers often pull is to place a very large initial order.  Then, when the product sells too slowly, the retailer will demand a retroactive price reduction so the end price to the consumer can be reduced.  Simultaneously, they will demand a "co-op" kickback of 5% or so to support greater advertising of the product.  Those inserts you get in the Sunday paper for Best Buy and so on...those are actually managed like profit centers (as opposed to advertising expense for the retailer) because they get the manufacturers to pay and compete for placement in the insert.  "Want to be on the front page this Sunday?, that's an extra $40K for a quarter page."  

What's worse, as a manufacturer, you can't refuse any of this stuff if you ever want to work with that retailer again.  Due to consolidation in the retail industry, these large retailers hold ALL the leverage.  They will get you addicted to the herion (greater sales) then start to put the squeeze on you.  I strongly encourage you to read this article (assuming you're interested in this stuff) Wal-Mart You Don't Know.  I've sold to Wal-Mart (and all major retailers) and this article is spot on.  I could tell you some real horror stories.  As a manufacturer, you do what they say...even if you know you are being led down a path that's not in your brand's/product's long term interest.  

Admittidly, Amazon is not Wal-Mart, or Home Depot.  But I would arque it's only one step away.  As noted earlier in the thread, from a user's point of view, they are basically the same...no personal service so you buy on price and convenience.  The issues above are the main reasons we see so much Brand and Price erosion in American retailing.  If you want to control your Brand and Positioning, you MUST control your distribution...not the other way around.  And I will guarantee you that Festool does NOT control Amazon.    

Marrt,

Can't argue too much with you here. That Wal-Mart  link is/should be a must read for all of us. It should serve as a reminder that  though we all want low prices (good thing) at the register for everything, there's another price being paid (bad thing) in terms of loss of jobs and manufacturing - with  the resulting demoralizing of the work force and the public's acceptance of inferior quality products as the norm. But this is a whole nother' topic in and of itself.
Back to Festool and Amazon. I am totally certain that Festool will never  drop its' tool quality to meet a retailer's (any retailer) demand for a lower price point. Regarding Amazon, who knows how this will eventually shake out; I am hoping for the best.

Bob

 

[irvin00]

The perspective is different for different people. Festool dealers are probably justified in looking at this Festool move as something potentially dangerous. Regular "consumers" (like me) - Festool's most important target - do not have a real reason for concern. We should just look for the best deal out there, regardless of who offers it (to save time, please notice I said "best deal", not "lowest price" - but oftentimes the best deal does include a lower price, indeed!).

And, let's be honest here: Amazon.com, just like Wal-Mart,  is NOT guilty of any wrongdoing. They have business practices just like Festool does. And it is up to Festool to decide if they want to profit from Amazon.com's huge clientele base. So, if this move by Festool ends up hurting someone other than Festool, it would be Festool's responsibility, not Amazon's. We should not behave like dumb groupies and act like Festool is a business Cinderella about to be raped by the big ugly Amazon wolf. Let's keep it real, guys!

 

[RONWEN]

Not to side track this interesting (and important) thread but we were all amazed when Walmart started selling caskets http://www.walmart.com/search/search-ng.do?search_query=caskets&search_constraint=0&ic=48_0&ref=&depts=Mu  It obviously raised many, many questions such as "are they going to start selling home embalming kits?"  Surprisingly in many (most?) states embalming is not a requirement and it is perfectly legal to bury humans on your own property (it must be recorded in case at some point you want to sell the property).
The question that this raises (somewhat similar to Festool dealers) is the potential effect on the mortuary business.  [scared]

 

[marrt]

Wal-Mart likes to "disrupt" any business where profits are artificially high. Take caskets for example.  Most people don't know what a casket "should" cost because, thankfully, it's no something you buy every day.  As a consequence, the markup is VERY high if you buy from a local dealer.  So, from Wal-mart's perspective, this is a nice market to disrupt.

For those that don't know, Wal-mart generally works on an 18% markup for most goods (less for some, more for others).  Most other retailers require much greater markups.  As a result, manufacturers adjust the price they charge each retailer to address these markup differences and ensure the consumer price does not vary too much from retailer to retailer.  Consequently, as a manufacturer, you actually make the MOST margin by selling to Wal-Mart.  Add this to the incredible volume they (and their sister company, Sam's Club) can deliver and you may find that 60% or more of your total profit comes from Wal-Mart alone.  This is a siren's call that few manufacturers can resist.