Highflight said:
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.