In defense of Real dealers....

[peter halle]

I once had a customer who accounted for 95% of my business and profit.  One day, thru no fault of my own, that customer no longer dealt with me.  I scrambled, started another company, and have survived.  It is never a healthy business position to be in long term where you do not have control of your destiny.  Especially in today's economy when there are those who will produce or work for cash flow and hope that profits will come later. 

Many years ago when Sears was huge, the percentage of the Gross National Product that was attributed to their operations was staggering.  What about now?  What happened to those suppliers whose business model was developed around Sears?  In many cases Sears even paid for the machinery to produce their goods.

Just food for thought.

 

[nickao]

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.

 

Caskets have been a scam for 75 years. I am not a great fan of Walmart, but in this particular case of caskets  I don' think Walmart is disrupting anything at all. They are making the dealers get real and stop ripping people off. I have read that some caskets have a 3000% mark up at Funeral parlors! Funeral Parlors have been taking advantage of hurting families for far to long.

When I die my family better not pay 10,000.00 for my casket. I'll take a Pine box or Walmart special  and my grand kids can use the money for a semester or two of college.

Heck, maybe I will use my Festools and make my own.  

 

[harry_]

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.     

Yeah, until you have to meet their pricing demands, then quality goes in the toilet, and your brand name becomes worthless..... actually only the name itself has value as a commodity.

 

[irvin00]

Yeah, until you have to meet their pricing demands, then quality goes in the toilet, and your brand name becomes worthless..... actually only the name itself has value as a commodity.

Businesses have an obligation to make a profit, maintain their brand and generally protect their future. If they choose - out of pure greed - to "get in bed with the Devil" (Walmart, Amazon  or somebody else) they are responsible for the consequences.

Blaming Walmart, Amazon or any other big business for determining what they want to pay for a product is like accusing Festool of price-fixing because it forces a certain retail price on its dealers...

 

[harry_]

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.

 

Caskets have been a scam for 75 years. I am not a great fan of Walmart, but in this particular case of caskets  I don' think Walmart is disrupting anything at all. They are making the dealers get real and stop ripping people off. I have read that some caskets have a 3000% mark up at Funeral parlors! Funeral Parlors have been taking advantage of hurting families for far to long.

When I die my family better not pay 10,000.00 for my casket. I'll take a Pine box or Walmart special  and my grand kids can use the money for a semester or two of college.

Heck, maybe I will use my Festools and make my own.  

[thumbs up]

 

[Mr. Jeff Smith]

... This is a siren's call that few manufacturers can resist.     

but some do:
http://www.fastcompany.com/magazine/102/open_snapper.html

That's the question that motivated Jim Wier to stop doing business with Wal-Mart. Wier is too judicious to describe it this way, but he looked into a future of supplying lawn mowers and snow blowers to Wal-Mart and saw a whirlpool of lower prices, collapsing profitability, offshore manufacturing, and the gradual but irresistible corrosion of the very qualities for which Snapper was known. Jim Wier looked into the future and saw a death spiral.

Wier had two things going for him: First, he had another way to get his lawn mowers to customers--a well-established network of independent lawn-equipment dealers that accounted for 80% of Snapper's sales. And Wier had the courage, the foresight, to take an unblinking view of where his Wal-Mart business was heading--not in year 3, or year 4, but year 10.

 

[irvin00]

From the same link:

*******
The Snapper factory has had an invigorating decade. Ten years ago, it produced about 40 models of mowers, leaf blowers, and snow blowers; now it makes 145. Today, robots do the welding, lasers cut parts, and computers control the steel-stamping presses. Productivity is three times what it was 10 years ago, and the number of people working here, 650, is half what it was.

Indeed, the productivity of every factory worker is measured "every hour, every day, every month, every year," says Snapper president Shane Sumners, who walks the 10.5-acre factory floor with comfort and familiarity. "And everybody's performance is posted, publicly, every day for everyone to see." It's a lot like Wal-Mart--which measures the number of items every checkout clerk scans every hour. Some of Snapper's dramatic productivity improvements, in fact, seem to come almost directly from the Wal-Mart playbook. These days, the Snapper factory operates in Wal-Mart time. It must, because it operates in Wal-Mart's ecosystem.

********

So much for Walmart being the big bad wolf...

... This is a siren's call that few manufacturers can resist.     

but some do:
http://www.fastcompany.com/magazine/102/open_snapper.html

That's the question that motivated Jim Wier to stop doing business with Wal-Mart. Wier is too judicious to describe it this way, but he looked into a future of supplying lawn mowers and snow blowers to Wal-Mart and saw a whirlpool of lower prices, collapsing profitability, offshore manufacturing, and the gradual but irresistible corrosion of the very qualities for which Snapper was known. Jim Wier looked into the future and saw a death spiral.

Wier had two things going for him: First, he had another way to get his lawn mowers to customers--a well-established network of independent lawn-equipment dealers that accounted for 80% of Snapper's sales. And Wier had the courage, the foresight, to take an unblinking view of where his Wal-Mart business was heading--not in year 3, or year 4, but year 10.

 

[marrt]

Businesses have an obligation to make a profit, maintain their brand and generally protect their future. If they choose - out of pure greed - to "get in bed with the Devil" (Walmart, Amazon  or somebody else) they are responsible for the consequences.

Irvin00, now it's my turn to tell you to "get real."  I personally know the Sr. Executives and several large companies and I can tell you they are motivated by one thing and one thing only....their bonus.  They don't give a crap about the brand or protecting the company's future.  They care about protecting THEIR personal future.  Ultimately, they're are running a business of one...their personal net worth. 

With the stroke of a pen, they can often send the company down a path that results in huge increases in short term profitability but which, long term, will be very damaging to the company.  Further, there's no oversight to stop these events.  In theory, the Board has oversight.  In practice, the CEO is often the Chairman of the Board and appoints board members.  Talk about BS.  This is the fox guarding the hen house.  Put yourself in the CEO's shoes...if you could make millions and let the next guy worry about the consequences...wouldn't you do it too? 

The process is broken, fundamentally, and nothing will change until CEO's and the rest are motivated to build LONG TERM value for the company, not pursue short term "get rich quick" schemes that destroy the company, it's workers and shareholder value.

 

[irvin00]

You don't realize it, but you just confirmed what I have been saying: it is not Walmart or Amazon.  Thanks for the un-intended support  [big grin]

Businesses have an obligation to make a profit, maintain their brand and generally protect their future. If they choose - out of pure greed - to "get in bed with the Devil" (Walmart, Amazon  or somebody else) they are responsible for the consequences.

Irvin00, now it's my turn to tell you to "get real."  I personally know the Sr. Executives and several large companies and I can tell you they are motivated by one thing and one thing only....their bonus.  They don't give a crap about the brand or protecting the company's future.  They care about protecting THEIR personal future.  Ultimately, they're are running a business of one...their personal net worth. 

With the stroke of a pen, they can often send the company down a path that results in huge increases in short term profitability but which, long term, will be very damaging to the company.  Further, there's no oversight to stop these events.  In theory, the Board has oversight.  In practice, the CEO is often the Chairman of the Board and appoints board members.  Talk about BS.  This is the fox guarding the hen house.  Put yourself in the CEO's shoes...if you could make millions and let the next guy worry about the consequences...wouldn't you do it too? 

The process is broken, fundamentally, and nothing will change until CEO's and the rest are motivated to build LONG TERM value for the company, not pursue short term "get rich quick" schemes that destroy the company, it's workers and shareholder value.

 

[marrt]

If that's your main point, then we do agree. 

But MY points have been aimed at Festool and whether it's wise to expand distribution to a non-service "dealer" like Amazon (or even Home Depot or Wal-Mart).  I certainly don't blame Amazon for wanting to carry Festool.

 

[irvin00]

If that's your main point, then we do agree. 

But MY points have been aimed at Festool and whether it's wise to expand distribution to a non-service "dealer" like Amazon (or even Home Depot or Wal-Mart).  I certainly don't blame Amazon for wanting to carry Festool.

I guess we have been making the same point, albeit using different words  ;D

My posts were really meant to stress the point that if (that's a big IF) any harm comes out of this, it is Festool's responsibility, because Amazon.com is not forcing Festool to do anything. If I were a dealer, I would do whatever is best for my business (stay with Festool, sever ties with Festool, etc.), because that's exactly what Festool is doing. This is a business, after all, and it is completely unrealistic - and perhaps unfair - to expect one of the parties to suffer because of a sense of (un-reciprocrated) loyalty.

 

[RONWEN]

If that's your main point, then we do agree. 

But MY points have been aimed at Festool and whether it's wise to expand distribution to a non-service "dealer" like Amazon (or even Home Depot or Wal-Mart).  I certainly don't blame Amazon for wanting to carry Festool.

I couldn't agree more with the points you've made.  "Long term" for U.S. company execs today is 3-5 yrs. max. and the focus is totally on the weekly numbers and "staying alive" (if you can't do it we'll get someone who can).  Weeks turn into quarters and quarters into annual bonus.  [cool]  How many companies have we seen that no matter the good initial reasons once they break across that line into "minimum service/lowest price" market product quality falls not far behind.  I'm not familiar with German management mindsets but I would predict that within 2-3 years you'll be able to buy festools at deep discount prices.  [sad]  Can you say "Black & Decker, Stanley, Dewalt, Festool"?  [crying]

 

[Bob Marino]

Long term" for U.S. company execs today is 3-5 yrs. max. and the focus is totally on the weekly numbers and "staying alive" (if you can't do it we'll get someone who can).  Weeks turn into quarters and quarters into annual bonus.  [cool]  How many companies have we seen that no matter the good initial reasons once they break across that line into "minimum service/lowest price" market product quality falls not far behind.

    Unfortunately true.

 I'm not familiar with German management mindsets but I would predict that within 2-3 years you'll be able to buy festools at deep discount prices.  [sad]  Can you say "Black & Decker, Stanley, Dewalt, Festool"?  [crying]

Fortunately not true (IMHO...and hope).

  I know I sound like that proverbial broken record, but Festool has been around in Europe a long time and is doing so well because they don't have that  (recent) "American" mindset of looking at the next quarter/short term at the expense of the long term viability of their company. Again, being family owned has a lot to do with it.
In 2003, a dozen of we Festool dealers were treated to a trip to Festool's factory and headquarters in Germany and were given a look into Festool's marketing approach by Festool Germany's CEO. Essentially, Festool's take on it was that there were plenty of low-end and mid-level tool companies around, whose basic approach was to cut quality to maintain a low price point. Those companies, BTW, were suffering the most at that time of recession.  Festool's approach would be to keep quality, not a low pricepoint, as their main goal.  BTW, Festool was hurt far less by that recession than the other companies. It is an approach that worked for them then and, I think, still works for them now. It is their own self interest to follow that approach to survive and prosper.
Obviously, much has changed in the world since then, but I think that Festool will remain true to that philosophy/approach. Yes, perhaps, you may see Festool in HD, Lowe's at some given time in the future. Who knows? I don't, but no matter who sells them, the inherent quality of the tool will remain high.
Just as an aside, I'm wondering if this thread should be moved to the Off-Topic area.

Bob

 

[RONWEN]

I sincerely hope that you are correct Bob, what a shame for all of us if festool travels down that path.  [unsure]

 

[Bob Marino]

I sincerely hope that you are correct Bob,
 
Me too!

what a shame for all of us if festool travels down that path.  [unsure]

Agreed.

Bob

 

[Papajoe]

I have to say this is certainly a topic of interest, not just for festool products, but other "high end" products. IMO, if a local dealer can provide "displays of tools" and expertise of the product, the real cost difference is sales tax, your travel time/expense vs online dealers. if you going to invest ?$12,000.00 Festool dollars you pay $600. to $900. in sales tax(area dependent). IF the dealer is knowledgable, and has the product to touch and feel, and answer the technical questions, I would pay the additional cost for local economy, service, and knowledge. IF the dealer knows less than I do(newbie) by reading this site, and doesnt stock much product, the online amazon's will rule. Maybe an online dealer with time for advice, and experience would be the the next best thing. UNLESS "LOCAL DEALERS" CAN STEP UP TO THE PLATE; FESTOOL'S MARKET PENETRATION POTENTIAL WILL BE VERY, VERY SLOW TO BUILD. ! 

 

[K119Phil]

in favor of brick-n-mortar dealers!

let's not forget:

- warranty requests - just drop off and we'll handle the rest
- repair requests
- replacement parts orders
- new product release events
- Festool Road School
- open house
- shop-in-shop Q&A / hands-on demo
- really really ridiculously good looking sales staff
- a pint of Old Harper
- no elevator hold music

It's simple.  Walk into a store, here we are right in front of you.  A human being!  ;D

 

[Slappy]

Ok, at the end of the day, will Amazon becoming a dealer affect my sales in a negative way, or as Peter H mentioned, - result in increased sales because of Amazon raising brand awareness and increasing market share (sort of  John Kennedy's "a rising tide lifts all boats" thing)? I am not sure and would be lying (and a terrible naive businessman) if I  said that I am not concerned. But I honestly think I bit more philosophic about it now than I would have been  about it a few years back and am reminded about a quote from the movie "The Godfather" - "It's business, not personal". I accept that.
But, on the other hand, it's been a wild and wonderful 8+ years with Festool, and I consider my self so incredibly fortunate, privledged and maybe even blessed, to have jumped on and been a part of, this train called Festool. There are some incredible tools coming out in the latter part of this year and next..and next, so that I ain't jumping off anytime soon. To Festool and all my customers -"THANKS"!

Bob[/b][/i]

I just bought a TS55REQ from Bob , Why ? His free shipping , his no sales tax , his willingness to swap a holey rail for the stock rail, his direct timely communication skills .  
I myself am a heavy user of Amazon Prime but just recently Amazon & the Governor of Califorina agreed to collect sales tax for ALL Amazon direct sold items , in effect added 9% to every sale .  Yes Bob's shipping is not 2 day but really do I actually need a big ticket item in 2 days (Rarely )
I now look for dealers such as Bob who ship free & don't send 9% to CA gov.
9% + shipping really adds alot to a any item .
I will continue to buy from Bob Marino as I know if I PM or email him I get a straight up front reply ,free shipping & no CA sales tax
I now look for outside Amazon for free shipping & no sales tax 1st before I even look at the Amazon site , but I do my homework always by comparing prices to Amazon before I buy anything .
Returning on Amazon is not without it's own perils , as they do add a restock fee if the item is bought by me in my error & they have charged me return shipping charges . Yes you CAN lie to them & say a item is defective BUT they do track those returns , make a habit of returning defective items  they will discontinue that option , make a inspection of the items  & refuse to let you return in the future .

 

[sancho57]

I spread the wealth around. Ive bought from Bob Tom and brick and mortar.  I still do that. Why? Well though I was getting items tax free on the net and sometimes quicker then my local brick and mortar, it was my brick and mortar I went to for advice on how to set up, use a product and other ideas.

I felt that if i didnt support them they wouldnt be there. But I also like Tom and Bob very much to. Both as individuals and their service. So I spread the wealth I buy from all those sources. Here in the UK, I have a brick a mortar , small family place I go to. But I also still give Tom ( I havent called Bob yet but I will) and asked about purchasing products. Same thing, spreading the wealth around.
If we dont support these guys, they wont be here to help us.

Try calling Amazon for help setting up your Parallel Guides or LR 32 system. Try going to Amazon and have them demo or allow you to play with a new tool say the TS55R. Aient gonna happen. But it will from your local brick and mortar and Bob and Tom.

BTW this is a great thread, thanks for reviving it.

 

[Papajoe]

can anyone refer their top 2 or 3 online dealers that "really" understand (and will answer questions)the Festool product line?
thanks