Dispelling The Mysteries Of Online Pricing

Jerry Otte   Nov 05, 2020

As a veteran of retail sales, I have sold scuba equipment for three different dive centers over a period of more than 25 years. I was a young instructor when I began, nervous and uncomfortable with asking people to purchase equipment, and a bit annoyed that I was being asked to sell equipment instead of teaching classes. Over the years, however, I began to appreciate the satisfaction of helping customers and my students find the right equipment. I now enjoy working on the sales floor of Aquatic Adventures as much as teaching.

Sadly, these days, more and more equipment sales are done online. Even smaller retailers like Aquatic Adventures try to make it easier for customers to purchase by setting up online stores. While convenient, online selling is fraught with unseen hazards and obstacles that can be both confusing and costly for the purchaser. After all, you may now be purchasing from someone you don’t know, someone who knows nothing about scuba diving, or someone who really doesn’t have your best interests in mind.

One of the most misunderstood aspects of online sales, however, is pricing, and a common misconception related to pricing is that online prices are cheaper. This is almost never the case. Let me explain why. Virtually all manufacturers and distributors of scuba equipment require online retailers to maintain established price levels for their products.

Before the days of online sales, this was not the case. Manufacturers would sometimes set an MSRP (Manufacturer Suggested Retail Price) for products, but it was up to the retailer to use that price or set one of their own. Some stores would set prices above MSRP to make greater profits, and this is probably where customers started to believe that products sold in a dive retail store were always overpriced.

With the advent of online sales, things evolved into something very different. Initially, big warehouses bought up products from failed dive stores or from dealers who acted as middlemen for the warehouses. The online warehouses, because they were selling at much greater volumes, dropped prices well below MSRP and offset the lower margins by selling at greater volumes and lower costs. Customers enjoyed reduced prices but lost their warranties. Eventually, many dive stores went out of business, and customers also lost the ability to get their equipment serviced and places to get trained in how to scuba dive.

Realizing that this was not a sustainable business model, manufacturers started making changes. They closed accounts where dealers were funneling product to warehouses, eventually allowed warehouses to become dealers, and finally imposed pricing restrictions on online dealers to maintain the credibility of their products and viability of their smaller dealers.

Today, dealers who engage in online sales must observe something called Minimum Advertised Price (MAP) on most products. MAP is applied to new or established products, and it is generally lower or equal to MSRP. Online retailers are not allowed to advertise these products below MAP, so online prices tend to b exactly the same from retailer to retailer on current products.

MAP also applies to advertising in emails, newsletters, and newspaper and magazine advertising. That means a company like Aquatic Adventures is not allowed to post prices that are below MAP in holiday or special event advertising even if we are selling those products in the store well below MAP.

MAP doesn’t apply, however, within a brick-and-mortar business. Retailers are allowed to sell products at any price they like within their business. They simply cannot advertise at a price lower than MAP if the manufacturer has set MAP for the product.

So where would a savvy shopper find the best deals this holiday season? The short answer is by visiting a dive retailer in person. Aquatic Adventures, for example, often has better than internet pricing on select products throughout the year. During the holidays, our prices in the store are often well below MAP, but the only way to find these savings is by visiting us. So don the mask, fire up the car, and come visit us soon. You may get a far better deal than you think.

Happy Holidays!

Jerry Otte
Aquatic Adventures