Not to open the proverbial can of nasty worms but....yeah, this hobby takes price fixing to a whole new level. It’s sucks for the consumer. To me it is completely and undeniably NOT free markets when this stuff happens. Any retailer that buys product from a mfger ought to be able to sell it for whatever they want, including at cost or a small loss. It’s silly that there are hundreds of vendors that sell the same thing for the exact same price.....even when said item is on sale. It’s comical and shouldn’t even be legal but it’s too small of a hobby for anyone to really notice I guess.
One thing is for sure: the margins on this stuff for the mfgers much be enormous. The resellers prolly don’t make much at all. Or maybe they do? Ah well, some may hate the idea but I’d be fine with amazon getting their hands on some of the premium gear and discounting the crap out of it! Sign me up!
The reason why so many retailers have closed over the past 25 years is largely because the margins on astronomy equipment are so low, the overhead of having a retail store cannot be brought down enough
to make a brick and mortar retail store profitable. With only a couple exceptions, the distributors or manufacturers sell direct to consumers and by doing so reduce the sales of the retailers who remain.
MAPs (minimum advertised prices) are an attempt to allow retailers to stay open since prices would literally be at cost if there were none and the market would quickly be distributors only, selling direct to consumers and there would be no retailers at all, either in stores or on-line.
I came from another industry many years ago in which margins were 3 to 5 times higher than the astronomy world and still the retailers complained about low margins (there were MAPs in that market, too). But in that industry, nearly all business was in brick and mortar stores and there were literally thousands of them across the country. In contrast, the entire astronomy market is tiny, and, for a variety of reasons, is destined to remain that way or even shrink.
MAPs have been found legal in the courts as long as the retailers know in advance that these are the terms of doing business. As they say, we are always free to sell at higher prices--there is no restriction--but, of course, no one does. You would make no sales.
The astro market is an upside down market. In a mature industry, the lowest margin goes to the manufacturer because they have the highest volume. The distributor makes a bit higher margin because his sales are lower than the manufacturer. The retailer, who sells the lowest volume, makes the highest margin. A classic case is a retail price that has a 50% margin to the dealer, a 25% margin to the distributor, and a 10% margin to the manufacturer. If the astronomy world were like that, there would be lots of stores selling astronomy equipment all over the place and the average eyepiece would sell for $500 and there would be hundreds of eyepieces selling for over $1000 each. Instead, the profit distribution is reversed.
We have a "cottage industry" in which many manufacturers sell direct to consumers at low margins because the products are quite expensive to make and the marketplace would simply not support the prices they should sell for. To expand the market, the manufacturers sell to retailers, but there is no longer enough margin to give the retailer more than merely a small "courtesy" discount on the product.
What happens if a market like that matures is that prices go up a lot and the retailers make enough margin to eat and pay for employees. But that will never happen in this small an industry.
And now, we have direct-from-China retail sales below the wholesale costs the US dealer pays. I should have retired years ago.
P.S. If all the astronomy gear were sold on Amazon, prices would go up because Amazon wouldn't stand for the non-profitable profit margins in the business.
Or, like Hayneedle tried to do, subsidize the loss in the astronomy products with high margins elsewhere. Eventually, though, an accountant points out where the losses are and the products get dropped.
I'll give you one example of a product that retails for $29.95 and costs the dealer $22. The retailer has to pay for shipping, so from the wonderful $7.95 profit comes the cost of shipping to get it.
Then, when it is sold, the cost of boxes, packing material, and labor come out of whatever is left of that $7.95. MAP is $29.95, and everyone immediately sells it for that because if you didn't, you'd sell zero.
But, it is not profitable to sell it at all, so why sell it? Why not raise the price to $44, which, though hardly profitable, would at least make a couple dollars for the retailer after expenses?
Because the consumers think $29.95 for the product is "gouging" and simply won't pay more for it. If all the retailers decided to stop selling it, then someone who needed it would have to pay a local machine shop to make it, and it would cost $150 or more.
Edited by Starman1, 11 August 2019 - 04:38 PM.