Re: [Leica] Re: Subject: Increasing sales of R8s and R lenses.

["Bryan Caldwell" <bcaldwell@softcom.net>]

Bill,

If I understand you correctly, the dealer makes no profit on the sale of the
R8. He gives up the R8 that he has in stock (which he purchased at a
wholesale price greater than his customer has just paid Leica directly for
it) and has to wait for a replacement from Leica - that he still won't be
able to sell at any profit above his original cost, because his next
customer will do the same thing. The dealer's capital is continually tied up
in a camera that he can never sell. The dealer becomes a wharehouse for
Leica's direct sales operation.

Granted, there are hypothetical future sales from this customer, but these
aren't going to pay the dealer's bills and what guarantee does he have that
Leica won't start doing the same thing with lenses. A customer might
becoming to him just because he has an R8 in stock - not because they intend
to become a future customer. I can't think of a single retailer I know (of
cameras or anything else) that would buy into such a plan.

I think the first result would be that an authorized dealer would have
virtually no incentive to sell Leica equipment. Any customer who was
comparison shopping or considering other manufacturers would be steered to
products where the dealer was going to make some profit.

The surest way for a manufacturer to get into trouble is to start
undercutting its authorized dealers and distributors. This is one of the
main reasons manufacturers use rebates to, in effect, lower the price to the
consumer. The dealer still makes his profit, but the cash outlay to the
consumer is reduced (provided he or she does a little paperwork and waits
for the rebate - but I've seen dealers process the rebates for their
consumers and even advance them the discount).

Again, I hope I haven't misunderstood your idea - please correct me if I
have.

Bryan

- ----- Original Message -----
From: "Bill" <m6rf@yahoo.com>
To: <leica-users@mejac.palo-alto.ca.us>
Cc: <hpc.vv@leica-camera.com>
Sent: Tuesday, July 04, 2000 1:42 PM
Subject: [Leica] Re: Subject: Increasing sales of R8s and R lenses.


> Brian Caldwell wrote:
> The problem with your plan is that it puts Leica into direct
> competition
> with its authorized dealers.
> Leica would be, in effect, stealing sales away from dealers who have
> the R8
> in stock. No dealer would be able to sell an existing stock R8 unless
> they
> did so for a loss. All the capital a dealer has tied up in R8s would
> become
> a loss.
> Not a good way to inspire dealer loyalty.
> Bryan
> ....................................................................
>
> Hi Bryan,
>
> Re-read my initial post.
>
> Here's how it works:
> John Doe orders an R8 and pays for it on the Leica web site.  John
> then goes down to his local Leica dealers and picks up an R8 (from
> dealer stock) with the receipt and authorization number generated off
> of the Leica web site. The local Leica dealers then submits a form to
> Leica USA showing that he delivered an R8 to John Doe that he
> purchased on the Leica web site.  Leica USA then ships the dealer an
> R8 to replace the one which he sold.
>
> There are of course variation on the above, but you get the idea.
>
> This is one of those rare deals where everyone comes out a winner.
>
> * John gets an R8 (for which he needs at least one lens)
>
> * Leica (Solms) moves a slow selling inventory item and gets paid for
> it immediately
>
> * The dealer has a de facto product cost of zero
>
> * The dealer acquires a new in store customer
>
> * The dealer has the opportunity to sell the customer more product
>
> * The dealer increases his inventory turn-over rate
>
>
> Regards,
>
> Bill
>
>
>
>
>
>
>
>
>
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