Selling Optics: Is it for You?

Selling Optics: Is it for You?

Strong, personal, one-on-one selling is the best way to move optics

Store owners fall into two opposing camps when
it comes to optics.  The first feels they absolutely must sell binoculars to be considered a complete bird store.  The other camp is vehemently opposed to optics.  They argue it is impossible to compete with the ridiculously low prices available on-line or from mail order sellers.  Moreover, because of this price competition, any potential profit margins fall far below all other product categories.  So why tie up inventory dollars in slow moving, high ticket merchandise with low margin?

Although both camps feel strongly about the correctness of their arguments, recent changes in the industry may make it worthwhile for the second camp to reconsider their anti-optics position.

Optics manufacturers have always been attracted by the large unit volumes that mass merchants can generate but really prefer the strong, personal, one-on-one selling that specialty stores devote to selling binoculars.  Manufacturers want the ultimate consumer to feel their binoculars are special.  Bird stores add that value to the product.  Mass marketers treat binoculars like any other commodity selling primarily based on the lowest possible price, not on the best value for the money.

Quality manufacturers have always been concerned that excessive price cutting will hurt their product image in the long run.  But they have been powerless to control reasonable retail prices.  Whenever a manufacturer tried to enforce the final retail price courts continuously ruled that they were violating antitrust laws. If a reseller is willing to accept a lower margin he is free to set his retail price as low as he wants.  So price cutting has been rampant.

However, in recent years two different factors have combined to make it easier for manufacturers to control the final retail price.  The first was the economic slowdown that makes it difficult for low margin businesses to succeed.  Excessive discounting has not been leading to increased sales but to an increased possibility of bankruptcy.  The second was a 2007 Supreme Court ruling in the case of Leegin Creative Leather Products v PSKS that gives manufacturers considerably more leeway to enforce prices and sets a high legal hurdle for retailers to prove that this practice is bad for consumers.

Since that ruling, manufacturers started aggressively using a technique sometimes called Minimum Advertised Price (MAP) that restricts retailers from advertising a specific product for less than a given price – the MAP – established by the manufacturer.  This practice began with consumer electronics products but has now spread to other product categories including optics.

Today you will notice on-line or mail order ads no longer trumpet a low-ball price on a specific model.   Rather they often contain a phrase such as “call to learn our low price”.  Or the ad simply lists the MAP as their price.  Marketers can still sell for lower than MAP.  They just can’t advertise or promote the lower price.  MAP pricing, in effect, has stabilized retail prices for all sellers.  This practice makes comparative price shopping somewhat more difficult for consumers.  If you set your retail price at MAP, you are competitive with on-line sellers.  (In reality, you could set them $5-10 higher since you don’t have to charge a shipping fee.)  Now customers won’t come into your store waving an ad for binoculars at a ridiculously low price.

The MAP price won’t allow you to make the traditional 50 percent margin (or a 100 percent mark-up) you expect on other products.  You may only make a 30 percent margin (or a 42 percent mark-up).  Is that sufficient?   A 30 percent margin on optics seems considerably less than the 50 percent you can achieve on other product categories such as seed. That 30 percent versus 50 percent doesn’t seem attractive.
But rather than focus on margin percentages, consider the actual margin dollars involved.  (An accountant once reminded me that you can’t put percentages into your bank account, only dollars.)  A 30 percent margin on a $300 pair of binoculars is $90 while the seemly higher 50 percent margin on an $8 bag of seed only generates $4.00 in profit.  So you have to sell over 22 bags of seed to generate the same amount of margin dollars as one pair of binoculars. 

Manufactures also recognize that optics are not a rapid turnover product.  You don’t sell a pair of binoculars every day.  It may take weeks or even months.  So many manufacturers will offer extended payment terms.  You don’t have to pay for binoculars within 30 days.  You may receive 60, 90, even 120-day terms.  This greatly helps your cash flow and reduces worries about money tied up in slow moving inventory.  In many cases you will actually sell your inventory before you have to pay for it.

Here is another plus:  I’ve noticed that the majority of customers who participate in my monthly bird walks bought their binoculars from me.  I see thousands of dollars worth of optics hanging around their necks.  They are all pleased with their binoculars and eagerly share their satisfaction with beginners or with others looking to up-grade their bargain-priced optics.  I often hear “Take a look through mine, you will love them.”  That kind of word-of-mouth advertising is priceless.

I also do advertise.  Not in newspapers but in the local telephone pages.  Mine is the only ad under a banner heading called “Binoculars and Telescopes”.  I’m the only listing.  And my immediate geographic area contains over 600,000 people.  Anyone interested in binoculars sees my ad.  You might be amazed at the number of people looking to buy binoculars for non-birding reasons:  horse racing, boating, vacation, hiking, theater going, people watching.  A tip:  some optics manufacturers often provide co-op advertising reimbursement if you include their logo in your ad.  That significantly helps justify the cost of the ad.

It may be time to take another close look at whether your store should carry optics.  They not only generate extra revenue and margin dollars, they also enhance your image as the one complete source for all birding
products.


Nikon Ecobins 10x25mm Binocular

While many of the products now commonly found on store shelves are increasingly being made of recycled materials or manufactured in ways that are ecologically sustainable, binoculars have been somewhat noticeably behind the curve on both these points. Aside from many optics manufacturers moving toward lead- and arsenic-free glass in their lenses, many of the materials and methods used in their creation are still often outside of the ecologically friendly category. However this is beginning to change, and at the forefront of this change is a new binocular from Nikon.



The new Nikon 10x25mm Ecobins binoculars feature Eco-Glass™ lenses and prisms that are both lead- and arsenic-free. In addition to this, both the armor and eyecups are made with non-chloride rubber, and no harmful inks or dyes are used during production. Even the packaging is “green,” being constructed from eighty-five percent post-consumer material and printed on recyclable FiberStone™ paper that is completely tree-free and made from limestone collected as waste material from existing quarries for the building and construction industry.

Of course, just being eco-friendly isn’t a sufficient indicator of a binocular’s quality. Fortunately, Nikon has that covered as well. BaK4 high index prisms and multiple layers of anti-reflective lens coatings help to provide the user with an image that is both vivid and bright. A small overall size, low weight, and expansive interpupilary distance range makes them comfortable and easy to use by everyone.

So if you are looking to provide your customers, be they ecologically-minded or simply in need of a good binocular, with the option to choose a product that takes every possible advantage of state-of-the-art eco-friendly materials and production methods, the Nikon Ecobins might just be the perfect addition to your shop’s optical products display.

For more information please visit www.nikonecobins.com

 

BY HANK WEBER | Contributing Editor