Sage One at costco...

Discussion in 'Fly Fishing Forum' started by WA-Fly, Jun 28, 2013.

  1. I'm well aware of this. I use to be in retail as well.

    What I'm saying (to Sage) is, that they shouldn't hurt the pro shops, and let them sell it at the same price. They are well aware of what Costco is doing. Who says Sage can't change the "rules"? Was it (or is it) not Sage that sets that price? They can change it. There's no law that says Sage has to make the pro shops sell at a certain price.... it's Sage saying the pro shops must sell it at a certain price. And I am well aware of why they do that as well. It is kinda tricky, but if they don't pull their product from Costco, maybe the pro shops shop "rebel" and sell them at the same price.... maybe $5 cheaper! <- Yeah, yeah, I know...:mad:

    As far as the top 2% goes, ultimately I agree. We have the power to say no. If we don't say no, we can't blame the 2%. I can't pick at a scab, then get mad that it got infected. If I drive 100 miles an hour, I can't get mad at the cop who pulled me over.

    I bought 2 Winston BIIX fly rods from a local fly shop, when I could have bought both for a lot less online. For me, it's a matter of principle.
  2. Sage doesnt sell directly to Costco.
    Costco buys through a third party and resells..."loss leader" style. Its only a handful of rods and not approved by sage.
    Some people on here know the truth.
    Read carefully.

    oh..and maybe buying something made in our state in a local shop will help our economy instead of buying it for a few bucks less online out of state
  3. I guess you're right pastorbrian, I don't now the truth. I'm sure Sage has no idea. :rolleyes:
  4. This suggests to me that Sage is price gouging. Where the hell is the outcry from all the same folks who crapped all over petroleum industry for this very same despicable offense? This is unfair because, unlike gasoline and diesel, we all need fly rods to survive.
    Dave Kaiserman likes this.
  5. Occupy Bainbridge
    constructeur and Jason Rolfe like this.
  6. Nothing illegal about it as far as I can see.
  7. What Costco is doing is totally BS, IMHO. Sage and their dealers are the ones being hurt.

    Setting and enforcing MSRP is totally legal according to the FTC and is very different than antitrust:

    "Dealings in the Supply Chain: Manufacturer-imposed Requirements
    Reasonable price, territory, and customer restrictions on dealers are legal. Manufacturer-imposed requirements can benefit consumers by increasing competition among different brands (interbrand competition) even while reducing competition among dealers in the same brand (intrabrand competition)... an agreement to set minimum (or "floor") prices or to limit territories may encourage dealers to provide a level of service that the manufacturer wants to offer to consumers when they buy the product."
    JesseCFowl likes this.
  8. I agreed with Freestone the first 2 times this happened, but I find it odd that Sage isn't able to avoid this now. They're aware of what Costco does,...they really can't keep a closer eye on where their stuff goes? I also find it odd that this keeps happening with Sage. Why not Echo, TFO, or Sage's Asian brand Redington? If they're using foreign companies to set up they're diversion shipping practices, I would expect it to be even easier to do that direct from a foreign factory or distributor. Someone in the purchasing offices at Costco must be a Sage fanboy.
  9. Don't forget G.Loomis too....
  10. Yeah, but Loomis is owned by big bad Shimano. Sage is supposed to sit on the hallowed ground with T&T, Scott, and Winston.
  11. Doesn't change the fact that fly shops have to sell the GLX's for 700 bones and costco is selling them for 400.

    It wasn't until fairly recently that the supreme court ruled enforcement of MSRP wasn't antitrust. Granted, people have done it for decades, but there was a time it wasn't legally cool. I've worked at places where we weren't allowed to discuss MSRP with customers as it could bring a lawsuit.

    As for price gouging, the fly fishing industry average is between 30-40% Gross Profit Margin, which is better than some industries but by no means is great compared to many. Especially when you consider that the cost of a lifetime warranty isn't something most industries have to deal with. The idea that Sage could be price gouging is laughable. Costco is notorious for taking high end items and selling them at cost in order to draw new customers; it's much cheaper than traditional advertising. Costco doesn't do it to other fly rods because they don't need to; Sage is at the top of the fucking food chain.

    As far as who Costco is getting them from, it could be anyone. The "freight forwarder" blamed the first time seems odd to me, since that would imply Costco was selling stolen goods. My guess is they're buying small amounts from dealers sitting on too much inventory, or one of Sages distributors. Most of the companies in the fly industry feel compelled to use additional distributors because it lowers the rate of excise tax they pay. When you're making quarterly payments to the government for 10% of your sales (in addition to regular taxes), you look for legal alternatives to pay less. Having a distributor is one of those alternatives. Unfortunately, that often means you're dealing with a company that's essentially competing with you domestically selling your own products, and it can lead to brand imaging issues.
    Gary Knowels and Freestone like this.
  13. I never understood how many people make a living simply by sitting in the middle of supply chains and rerouting merchandise through different channels. I worked with a major retailer opening 30 stores this past holiday season and I'd say about 50% of the customers during the opening week were "people" trying to buy bulk quantities of the product specifically as re-sellers. It's a love hate relationship in the retail world. Yes, you appreciate the bulk sales initially, but it's a bummer to see product sold internationally in unglamorous circumstances or dumped to another distributor and sold through a channel that doesn't fit the brand (costco, etc)

    These people operate almost like ticket scalpers. They'll have 10-20 people they've recruited off craigslist to stand in line for product releases, they'll bribe employees, they'll bribe freight forwarders. It's unreal.

    It's probably not the same with Sage merchandise, but I'm betting that they're dealing with an international reseller that's dumping product domestically through costco. The international reseller is probably based in the Seattle area and has a relationship with procurement in Costco.

    Seeing this happen for the third time is interesting. You'd think they'd be able to track down the source via serial numbers on the rod. But, perhaps their ERP isn't that sophisticated.
    Anil likes this.

  14. I had the same thought about tracking thru serial numbers to see where the problem resides. It should be a no-brainer.
  15. Good idea but I have a feeling this problem is like wacka-mole - they close off one channel and the scum bags figure out a new one. I get multiple calls and emails a week from liquidation companies who want to know if I have excess or dead inventory to sell them (at steep discounts). I never sell to them as I want to know where our products are going and they can't tell me. They will sell to anyone so no good manufacturer of premium products would sell to them. Better to sell directly to STP, etc., know where your is going and how it will be sold and for what price then to risk these low-ball liquidators. But how many fly shops have gone out of business in the last few years? How many of them have been approached by liquidators who offer cash money for inventory in desperate times? Or, if the shop's assets were seized by the IRS, what happened to the inventory after the IRS got it?

    As Flyborg said, even with the best distributors, you still have potential issues if people either don't do their jobs (screening new accounts) or are willing to look the other way for a fast buck and a 'Oops, sorry I screwed up, I won't do it again Sage/Loomis/etc.' The reasons we see only premium brands like Simms, Sage, Loomis, etc is no one is going to flock to Costco to buy Hodgeman or Shakespeare. Even if they did, the price is so low there is not much profit in it for Costco plus Costco could probably buy them through normal channels anyway.

    There are a million ways this stuff can end up at Costco. Like I said, wacka-mole. Costco once wanted some of our products and we said no. We then held our breath and hoped they didn't really, really want it and go get it through dirty, backdoor means - the 'gray' market as it is known and it is something that all good manufacturers with controlled, specialty shop distribution worries about.
  16. mythology. costco does not go to the trouble of getting these small lots of specialty/seasonal product through back channels so they can sell them at a loss. they don't need "doorbusters" to get traffic. you can't even walk through the door without being a member, and no one is a member simply so they can have the option of getting one or two great deals a year when something they really want shows up as a "loss leader". they are making money on every unit. the most striking implication to me is that whoever made the unauthorized sale of these rods to costco also made money on every unit, which implies that all the way back up the food chain to sage, everyone made money on every unit, and there was still enough margin for costco to make money at $300 off map. that's a minimum of three separate markups, with a strong probability of 4 or more, but there was still enough profit built in to support a price that allegedly is putting fly shops out of business left and right. if i was the fly shop owner, i wouldn't be bitching about competition, i'd be after sage for an explanation of how they could sell low enough to ANYONE at any volume to make it possible down the line for costco to make money 3 markups downstream from the manufacturer, and nearly 40% below map. no one should be feeling sorry for sage unless they are just embarrassed for them. but as jesse pointed out, their core customers don't care about paying that much, so it doesn't matter.
    PT, miyawaki, and 1 other person like this.

  17. Yeah you're totally right!

    Sage ought to charge a $25 profit margin on every rod they make and sell them at $250. That'll surely keep all the awesome local fly shops in business. Maybe the fly shops can keep $15 off each rod? That'll be really awesome because it'll make it really easy for all of us to coordinate our shopping on the ONE day they can all afford to open their doors.

    I see Leland also liked your post. I'm looking forward to picking up a Helios 2 for $250 in Bellevue tomorrow as well!

    Come on guys...

    Costco doesn't make much of a margin on what they sell. It's all about volume for them and the likes of wal-mart. There's nothing wrong with it. However, in order for us all to enjoy going into a shop to buy the maybe one rod a year we buy.... you need a bit more reasonable of a business model and margins to support it.

    Well, unless you want to shop at costco for the rest of your fly fishing needs.
  18. Listening to all this reminds me why I buy most of my rods used (or make my own)...only one middle man trying to scalp me and with folks like Jesse around, there is sure to be a constant inventory of last years, outdated models to choose from :D.
  19. Disagree, whether it's Sage or any other business. There's no money to be made in retail by selling at low profit margins, especially low volume movers like fly gear. A $200 Reddington or St. Croix will have the same markup percentage as a Sage, although there might be a little added for "top of the line" rods line the One, Helios, NRX, or whatever. Markups in retail are 100% or better no matter what you're selling. Simply how the market works.

    Is Sage turning a blind eye to Costco having their rods? I don't know. Apparently the last time this happened they bought all the rods back from Costco, making me believe they don't like what's happening. Can they keep doing that and stay afloat? Probably not. I'm sure there's not a pile of "buy rods back from Costco" money in the safe.

    As far as punishing whoever's responsible for the rods being at Costco, Sage's hands are probably tied. Someone at Sage knows how those rods got into Costco, guaranteed. A company that size can't have many distributors to deal with. But, there can only be so many distributors in the business to deal with. Burning that bridge may lead to crippling Sage's distribution with no other options for distribution. And of course finding a new distributor and setting everything up costs money. Maybe they're using "cheap" distributors and getting what they pay for, and maybe that's why Orvis rods aren't showing up in Costco.

    Bottom line is we don't know what's going on. Sure is fun to guess though. What's for sure is Costco will get what they want no matter what the manufacturer thinks about it. The North Face has had the same issue with Costco and had to buy back product. I personally know of two different North Face jackets bought at unauthorized retailers and sent to The North Face for warranty reasons. Both were returned to the owners with nicely worded letters saying that they'd bought a fake. I've never heard of a bogus fishing rod, but someone took advantage of a company's aggressive buying tactics on those jackets. Buyer beware.
  20. Costco is currently being sued by Tiffany for violating their trademark by knowingly selling fake Tiffany rings.

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