Leverage the Forum for group buys

[srv]

I'm new to this forum, but after watching Scott Haskins camloc group buy, it is apparent that this wonderful forum inherently has the potential of being leveraged for more than just information.

I'm throwing these out for general discussion:

1) Would it be in the interest of this group to formally contact suppliers of kitplane parts to offer group or seasonal discounts here?

2) Should there be a "group buy" forum?

Companies like Milspec not only have offered a great deal to users of this forum, but is also making a very smart business decision. Many of the decisions my father and I have made on purchases for our RV-8A have been base predominantly on the advice of other builders, and their loyalty to companies who have treated them right. Should this be leveraged for buying power?

If 80 or so people are thinking about camlocs at the same time as I am, how many are thinking about the Garmin 296? Or an IO-360? While we want to support the advertisers who help this forum exist (and many of you seem to do so), maybe vansairforce.net could also get a referral percentage on group buys?

Just ponderin.

[DeltaRomeo]

Hi srv,

I've been thinking about this very thing lately (link to the camloc group buy thread). I'm leaning toward starting a 'Merchandiser Group Discounts' forum and encouraging merchants to jump in. I'm fairly certain this will occur, and I'm not interested in 'referral fees' - I'd much rather those be passed on as savings to the buyer(s) using the forums as the communication vehicle. It might be as simple as a forum I can post announcements in (and me only), with the merchant taking care of the details. After all, they know their price breaks and I don't .

Examples:

1. 50 people agree to buy Garmin 396s. Van's might possibly get a price break on such a large order and be able to pass that on, still making their same profit.
2. Bob Avery can offer 200 sets of tires cheaper (but with same profit) because he ordered so many.
   
   These might be bad ideas here, as I'm just thinking off the top of my head. OEM agreements and such could easily impact it in a way I'm not aware of...

I just need to work out some more details of the mechanics first. Talk with Van's, talk with Bob Avery and others - the usual suspects. So many twists...and possibilities. There's usually some kink I forget about and have to re-work the work flow. I'm sure we can utilize the popularity of the forums in a way that benefits both the buyers and merchants.

I don't see the section becoming massive, but I do see the potential for savings and would be happy to help if possible.

Best,
dr

[ptrotter]

Excellent idea.

[Captain Avgas]

Originally Posted by srv

I'm new to this forum, but after watching Scott Haskins camloc group buy, it is apparent that this wonderful forum inherently has the potential of being leveraged for more than just information.

.

I was part of the Milspec group buy and it was immediately obvious (and I raised this same point on that particular thread) that the potential benefits of further group buys was enormous.

Vendors just luuurv volume and this forum has the ability to deliver it. In a way it doesn't make sense for all of us to be buying the same products individually for our RVs when we can undoubtedly obtain very significant discounts by buying at the same time. Group buyers are also more likely to be treated better.

The Milspec group buy produced a 30% discount and the popularity of the event surprised everyone. Who would have thought that virtually 70 builders would want to buy camlocks at one time.

And of course as the group buy item becomes more expensive the savings can become even greater. Thirty percent on camlocks might save you $100...but 15% on a Garmin 430 might save you $900. And I'm now thinking that it would be quite easy to get at least 15 builders once a year to join a 430 purchase which would produce a purchase package of around $100k. Vendors start to get excited about those sort of numbers.

Some RV purchases are not so time dependent and are less likely to be outdated if purchased earlier. An example would be seats and interior trims. I suspect that if a 30% discount (or more!!!) could be arranged for these sort of products then many builders would buy a bit earlier than initially planned in order to take advantage of the massive savings. So the response, and the sales volume, could be very large indeed on certain items.

I am suspecting that we may be on the verge of a very exciting and very beneficial concept which again highlights the power of the internet.

And of course there is no added financial risk to the concept because (as per the Milspec group buy) each individual purchaser pays the Vendor directly and receives the goods directly so there is no middle man.

It is also obvious that members of a group buy do not need to purchase exactly the same thing from a vendor. In the end it's the total sum of sales money that matters. For instance with the Milspec group buy we were all buying fastener kits but everyone was free to buy the kit that suited them individually. I even had a few extra fasteners added to my particular kit. So there was individual flexibility to negotiate directly but still receive the substantial discount on everything.

Doug Reeves doesn't need to make any percentage from a group buy, nor should he as it raises issues of transparency. All saving should be passed on to buyers. Doug has already stated this as he is a smart operator. The benefit to Doug will come from Group Buy vendors feeling compelled to advertise on Dougs forum. Group Buyers can repay Doug not with money but by giving first preference in negotiations on Group Buys to companies that support the site.

Group Buys on tool kits, Group Buys on seats, Group Buys on engines, Group Buys on propellors, Group Buys on autopilots.....there's no end to it and the savings over the course of building a whole RV could be very very significant. You want to purchase a GRT EFIS at a great price...set up a Group Buy.

I think we might be on verge of something big here.

[Squeak]

I was also part of the Milspec Group buy and really appreciated the great deal Scott Hoskins got us. The last count I heard there were over 80 RV builders in on the deal.
The group buying works great because everyone got the same deal. Would really like to see more group buys and it will work as someone not trying to be an intermediary for profit. Ready to purchase a new IO 360 or O 360 anyone less need one???
Squeak

[Highflight]

As one of the participants of the Milspec group buy, my first vote for the next one is to shake down.... GARMIN! How 'bout it Stein?... John Stark?... ??

Hee hee I feel like such a trouble maker.

[SteinAir]

Originally Posted by Highflight

As one of the participants of the Milspec group buy, my first vote for the next one is to shake down.... GARMIN! How 'bout it Stein?... John Stark?... ??

Hee hee I feel like such a trouble maker.

Hmmmm.....I was going to post a quick note about this topic yesterday but decided to wait, so here I go!

First let me say I'm all for people saving money and as a builder/flier myself I think group buys can be a good deal.

That being said, it hasn't been but a couple of years since an ambitious builder did try that exact thing and in fact setup a website for "group buys" of all sorts of things. He tried and did setup a group buy on engines, props, avionics, etc.. In the end it turned out to be a huge flop. While buying as a group can and is attractive to both the merchant and the consumer, everyone needs to remember that the huge margins built into things like hardware and such just are not there in a lot of the other big ticket items. I don't want to burst anyones bubble, but I know for a fact that you won't get another 15% off of a garmin buy or GRT or Lycoming buy because the margins are already razor thin on those products...even at the mfgr level. Group buys work very well on products that have huge margins built into them, or products which are relatively young to the market, and from people trying to get into the market. The problem is that as soon as a bunch of people pay let say "30%" less for something, that becomes the de-facto selling price for awhile. It has the tendency to devalue products to the point where the manufacturers get kind of upset...they've traded profit for market share which is good for awhile, but in the long run doesn't pay the light bill. Take this mil spec stuff...now that they've sold that many kits at that price, they are stuck for awhile. Sooner or later one of two things is going to happen. Both them and Skybolt will have lower their selling price, or they'll realize that they're giving away profits for market share. Once they have market share.....do they still need to give away profits? - My guess is no. Not saying it's good or bad, just a fact of economics.

While simple hardware and "piece parts" traditionally have much higher marging, there is so much competitive pricing pressure among the avionics, engine, autopilot and prop people that they haven't left themselves much room for discounting. This is both good and bad...it makes products cheap for us, but leaves little to no room for negotiation. For example, some peoples prices are already so low that even if they take a credit card for a purchase they lose money...just to give you an idea. GRT, Dynon, BMA and others at the lower end of the pricing tree for EFIS's have already priced things so low that I doubt there is literally any room for discounts, even in decent sized groups. None of them are getting rich yet, they're all just trying to establish market share (which of course large chunks of sales helps).

So, in the end I'm still all for group buys on some things, but I wouldn't get your hopes up for the pie in the sky discounts on all the other big ticket stuff we all buy for our planes. In the grand scheme of things, you will be able to save money here and there on some things and it pays to be wise, but to be honest and frank, large discounts on the engine stuff, props, avionics, interiors, etc.. just aren't going to be there because I know for a fact that most of those things just don't have much wiggle room and you'll find that mature merchants know it's a waste of time to sell stuff at cost...you can do it occasionally and for awhile, but if the margins are too low then the businesses and products we like end up being gone because in the long run they couldn't make any money....

Competition is healthy and good, and if managed properly then group buys on some things are possible and provide benefits to both manufacturer and buyer. Just be carefull how you approach it, who you approach and it'll be good. Do it wrong and you'll do nothing but draw the ire of both builder and merchant (it has happened before and the well intentioned fellow's name is burned into the memories of nearly every merchant he dealt with and has left him with a permanent black eye and loss of credibility - even if not publically so).

To cap off this long rambling novella, I'll say go for it - just do it right.

Cheers,
Stein.

[DeltaRomeo]

Good write up, Stein. I updated my original post to clarify a bit. I agree with everything you've said - if done *right* the occasional discount might be had and everyone will benefit.

Taking time to think this through is paramount, me thinks.

b,d

PS: Home with a cold. Why am I in front of a PC and not in bed?

[Highflight]

Originally Posted by SteinAir

So, in the end I'm still all for group buys on some things, but I wouldn't get your hopes up for the pie in the sky discounts on all the other big ticket stuff we all buy for our planes. Cheers,
Stein.

Of course, Stein, you're 100% right. Being self employed myself, I not only understand the issue, but intended for my little "trouble maker" post to convey what you explained... only in as simple a phrase I could come up with. I thought that my over-the-top cynical use of the term "shake down" would be obvious, but such is the risk of using humor in printed discourse.

My personal choice for doing it "right" as Doug says is to simply provide a forum section where dealers and manufactures can willingly go in and make offers to the group rather than a group of us approaching a seller and making him feel like we're strong-arming him.
If a seller has some overstock or just wants to have a promotion with a discount (of his choosing) to promote his business, then all's well and good.

More of my thinkin'... I need to quit that.

[Captain Avgas]

You might think that a small company like GRT might crave greater market share so that they can initially make greater profits. But that is probably not their initial strategy at all. Their plan is to increase their volume so that they can have some decent purchasing clout with their component suppliers.

The problem for a manufacturer with small volume is that they pay more for the same crucial component than a competitor who buys in bigger volume. It's just the way the market works. Volume is God. Commercial success ultimately results from profitability based on smaller margins and greater volume. Smaller volume and increasing margins leads only to insolvency.

Sorry for the treatise but I believe that there is plenty of gain to be had by all parties in volume purchasing. It is probably true that some vendors of avionics might be on tight margins, but when the order becomes gigantic they in turn can go back to the manufacturer for a special deal (and they'll get it!!!). Alternatively if the sales numbers are there you might find that manufacturers who normally only deal through distributors can be seduced into a direct deal.

And It's not "strong arming" a vendor or manufacturer to approach him with a volume deal. It's just normal business. Vendor / manufacturers don't get upset by the opportunity to quote a large volume of sales...they get pissed off when they're not asked to quote a large volume of sales.

The concept may not have worked in the past because it was controlled by a middle man as a commercial venture to make profits and the margins were being siphoned off. The Milspec Group Buy on the other hand had no middle man taking profits and was therefore completely transparent. That added enormously to the attactiveness of the offer. It was a great success and there is no reason to believe that subsequent Group Buys run on similar lines will not be equally successful.

Anyway, as they say, the proof will be in the pudding. Who's for a Group Buy on seats. I'm in.