In my 34 years with the pool and spa industry, I’ve had three brick-and-mortar pool stores, as well as a wholesale hot tub distributorship and a successful catalog operation. In the last 19 years, I have devoted my career to starting and running one of the largest pool and spa supply websites in the country. We were one of the first pool and spa companies to be on the Internet, beginning in 1994.
Many people have misconceptions about web operations. As somebody with experience in both brick and mortars and the Internet, I’d like to set some things straight.
Running a reputable Internet operation entails significant overhead — some that brick-and-mortar stores traditionally don’t have to manage.
For those who do not have major e-commerce websites, I have to report that costs are fairly high. Having a decent website customized for you can run anywhere from $50,000 to $200,000, depending on how elaborate you want to go.
You still have all the overhead of a normal B&M store — rent (for a warehouse); utilities; taxes; health, liability and disability insurance; employee payroll costs; worker’s compensation; accounting; legal; office supplies; computers; phones, etc.
The costs that many e-commerce companies also have, which B&Ms don’t, include monthly site-hosting fees, which for larger sites can be upwards of $5,000 per month; email service provider fees, which can be up to $1,000 per month, depending on your customer list; and additional IT and network employees to keep everything updated and working correctly.
We operate and maintain elaborate inventory-control systems, sometimes involving multiple locations and vendors across many states. We pay monthly call center fees, which can cost tens of thousands of dollars.
And then there’s the bane of existence for any e-commerce retailer or catalog company — shipping. This involves equipment and staff to fulfill orders, something B&M-only dealers do not have to worry about.
While many seem to think that most Internet retailers work out of their garage, those operations account for only a small portion of online sales.
I am sure that out of the thousands of pool and spa websites that are out there right now, probably most are either operated “out of the garage” or out of existing B&M stores for additional income. Many of these are run through eBay, Yahoo Stores or other available e-commerce platforms. Yes, these operations do have very little extra overhead.
However, saying “most” here really means nothing statistically when it comes to market penetration or the actual percentage of pool and spa supplies sold.
Data varies on who is selling what percentage online, but my educated guess is that less than 1 percent of pool and spa e-commerce sites account for more than 90 percent of pool and spa products purchased online.
The Internet is not one big monolith where all retailers are alike. It’s simply a marketplace, just like your local mall, where larger players like JC Penney, Sears and Macy’s co-exist with smaller chain-stores such as Footlocker and Pacific Sunwear. Many sell the exact same products at different price points, and many tend to specialize in certain niches. You can price shop amongst stores within the same mall, and make your final purchasing decision based on an incredibly complex, and mostly unconscious, thought process. The Internet is absolutely no different in this respect.
Not all e-tailers are just order takers.
Some are just order-takers and some have trained pool and spa customer service reps. Our site offers technical phone support, so in addition to the regular call-center-type personnel who take orders, we have to pay actual pool professionals to return hundreds of technical emails, while also answering our tech-line phone calls.
That may or may not make a difference to a buyer. Some are only interested in price, but others want the comfort of knowing they are buying from “real” pool and spa people rather than just a faceless website.
But this is very much like the world of B&Ms when you compare buying your pool chemicals at a specialty store versus a big box.
Are brick-and-mortar pool and spa stores losing a lot of business to the Internet?
There are too many unknown variables here — the recession, millions of home foreclosures, low housing starts over the past five years and unemployment.
While I am sure that some B&Ms have lost business to Internet sales, I heard no complaining at all about this topic until the recession started to hit our industry hard.
I can remember the same type of uproar when big box stores started selling pool and spa chemicals, hot tubs and aboveground pools in the late 1980s. Our industry was not destroyed by that. If anything, the big boxes exposed our products to people who may not have been previously aware of them and actually gave us all quite a lot of free advertising.
According to almost every study or survey conducted, most pool and spa owners purchase their products from B&Ms and not online. It is true that the percentage of pool and spa owners who buy online is increasing, but it is still under about 15 percent, depending on whose survey you believe. As the Internet grows and people become even more comfortable with purchasing things online, there will most likely still be some degradation for certain pool and spa product. But as with most other industries, this will plateau. At this point, B&Ms still have a huge upper-hand.
Additionally, numerous studies have shown over the years that consumers tend to be almost 85 percent loyal to the B&M where they bought their pool or spa. Many have no experience with any other pool or supply store, so if the pool or spa was built, serviced and installed correctly, B&Ms can build a large database of loyal clients.
We are very lucky to be in a diverse industry of pool dealers, hot tub dealers, B&M supply companies and pool and spa Internet companies. There is room for so many niche companies in our industry that it is almost unbelievable. I think the argument that “the Internet is killing B&M stores” is just the “15 minutes of fame” topic of this passing phase in the development of our industry.
I don’t think it’s fair to blame all of our industry’s problems on legitimate Internet retailers. We are just selling through a new and robust technological sales channel. There are two great quotes that I think of every day. One is from the French author François de La Rochefoucauld: “The only thing constant in life is change.” The other is from Steve Hammock from Watkins Spas who recently said “The Internet will never be smaller than it is right this second.”
Those who adapt will survive, and those who do not, will go the way of the dinosaurs. I have always found it better to change and be a survivor, than to be a dinosaur.
In the First Person is a monthly opinion column appearing in Pool & Spa News. The ideas expressed are those of the authors.