Sage and Simms at Costco?

Discussion in 'Fly Fishing Forum' started by Philster, Mar 31, 2011.

  1. martyg

    martyg Active Member

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    Kim - let me simply say - as someone who commutes between Washington and China - as someone who is intimately familiar with those brands - as someone who does QA inspections and walks those factory floors - you simply have no clue.
     
  2. Chef

    Chef New Member

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    Tell us marty
     
  3. Kim McDonald

    Kim McDonald member

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    Yes, Marty, please tell us. Because I am very familiar with many outdoor brands and their "factories" in Viet Nam and China. Fly rods, waders, wading boots...the QA on those isn't that much different than the QA from, er, let's see, all the high end dog and cat food that hit the US market a few years ago which ended up killing hundreds of animals and tons of recalls. Or how about the toys? Or....it's all about the profit margin. Sorry. I don't think Sage or Simms is that much different. And I own products from both lines and enjoy what I own. But because they have tight regs on MSRP doesn't mean the quality is all that much better.
     
  4. martyg

    martyg Active Member

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    Kim -

    I am simply not going to waste my time on-line explaining the nuances of development cycles, inventory control and product positioning in the marketplace on an on-line forum. If you ever see me at a WWF event I will be happy with talk to you.

    It sounds like you are intimately familiar with those "factories" and probably spend a lot of time in Asia. Hell, I bet you have an apartment in HCM - don't you? You obviously see an opportunity in the marketplace since everyone is producing such junk, and since you have answers on how it could be done better. So why don't you leverage everything that you have - your retirement, house, vehicles, savings, etc. bring out your own brand? You obviously have the sourcing contacts and have spent time in those "factories." It sounds like you area a master of design and fabric development. I say go for it!

    You boys play nice now.
     
  5. Anil

    Anil Active Member

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    Both Simms and Sage are among the few manufacturers who do still make (many of) their products here.

    SIMMS: For Simms all of their ‘Gore-tex’ waders are made from raw material (sewn, taped, tested) in Bozeman Montana.
    SAGE: All rods labeled with the ‘SAGE’ brand are still rolled from graphite sheets at their factory on Bainbridge Island (many high end rods are still made here in the U.S.) They are then sanded, painted, polished, rapped, glued, dried and the ferules are hand fitted.

    If you would like, both companies offer tours. Obviously Simms is going to be a trek for you, but I highly recommend the Sage tour. Somewhere in the neighborhood of 17 different American workers touch a Sage rod before it leaves the factory. Since you already own Sage rods, you might appreciate them even more.
    Anil
     
  6. Chef

    Chef New Member

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    Marty: I am not trying to be a dick but would love to know more about your insights. It interests me.
     
  7. dennysmith

    dennysmith New Member

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    For those that do not believe the aforementioned manufactures would not sell to Costco and for those that believe Costco only purchases items that they can purchase in massive quantities at heavy discounts, the following article will open your eyes to some of Costco's buying practices.

    Aggressive and Uncaring Methods
    This is part of an article written by Elise Eden & Wendy Berner titled "At What Price Costco?" The article was published in the April 10-16 issue of Willamette Weekly.


    When Bob Laman's company started out seven years ago, it sold the rooftop carriers through a toll-free phone service. Within months, Laman says, Packasport had developed a small but loyal group of customers, who loved the luxury item and its wide variety of options. As sales grew, the company began to sell the storage systems at automotive outlets and high-end sporting goods stores. These retailers were chosen, Laman says, because they could maintain attractive floor displays of the six Packasport models and afford to train customer service representatives in the finer points about the features and custom work available with each carrier.

    In January 1995, a Costco buyer approached Packasport and asked to carry the company's rooftop storage systems in its warehouse stores, Laman says. Packasport refused, giving two reasons. First, the company was concerned that Costco couldn't provide adequate customer service for the specialized equipment. Second, Costco admitted that it would sell the cartop carriers below the manufacturer's suggested retail price. This, in Packasport's mind, could sully the product's reputation and anger its regular retailers. Those retailers would be so upset about Costco offering the same product at a discount, Laman says, that they might decide it wasn't worth the effort to order any more Packasport merchandise. "For a small company, [selling to Costco] destroys the market," he says. "The last place we'd sell to is Costco." Laman thought that was the end of the conversation. He was wrong. "Telling Costco you won't sell directly to them," he says, "is never the end of the story."

    Soon after Costco's inquiry, Packasport received a large order request from a small sporting goods shop in Seattle, which Laman won't identify. The size of the order seemed out of place given the size of the store. "It raised an immediate red flag in my mind," Laman says.

    Laman was so curious that he asked one of his other retailers to call the shop's owner, who confirmed that Costco had approached him about getting Packasport's basic model and that the products his store had ordered would indeed end up on Costco's shelves. Packasport refused to fill the shop's order.

    Several months later, the Bend manufacturer received an order from New Delhi-based Indian Distributors for 104 carriers. Suspicious, Packasport made the small export company sign a contract stipulating that the Indian firm would not sell any Packasport products to any stores in the United States. The cartop carriers were to be picked up at Packasport's small Ohio manufacturing plant, loaded onto semitrailers and trucked to Los Angeles, where the shipment would go through customs and end up in India.

    The shipment, however, never arrived at customs. Within three days after the products left Ohio, the Packasport System 90 rooftop carrier was on shelves at Costco warehouses in Oregon and five other Western states.

    Laman didn't find out right away. It was only after handfuls of warranty response cards, which accompany each Packasport cartop carrier, started pouring into the Bend office from destinations as far away as Wyoming and Montana. "It was kind of like a little mystery," he says.

    Even though he suspected Costco right away, Laman was baffled. His company had done everything within its power to keep Packasport products away from the discount chain. He drove to the Bend Costco and walked straight down the automotive aisle. There, sandwiched between haphazardly stacked truck storage boxes and an occasional radial tire, sat his product--only partially displayed and still in the original shipping boxes. He stood motionless on the cement floor as he stared at the price tag: $499.99, almost 33 percent below the suggested retail price of $745. He took a minute to remind himself that this wasn't a personal attack, just a business technique. But still, he says, "They're not the kind of business partner I'd like to have."

    Costco officials won't comment specifically about their dealings with Packasport, but top brass don't deny that their company often obtains products by using what it euphemistically calls "diversion." "Our goal is to bring high-quality products to consumers at the lowest price," says Richard Galanti, Costco executive vice president and chief financial officer, from his Issaquah, Wash., office. "We try to buy directly from manufacturers, but in instances where they refuse, we buy through a third party--legally." Galanti estimates that about 4 percent of the goods in Costco are diverted, but a number of retailers are convinced that the figure is closer to 12 percent. At an average of 4,000 products per warehouse store, that means that anywhere from 160 to 480 brand-name products on Costco's shelves at any given time are there without the express approval of their manufacturers.


    This should scare the you-know-what out of all small business owners. Costco is certainly not the first to obtain their products through diversion, but they are certainly the first to do it in such a manner. Small businesses must be able to control their market to compete with large corporations. The way they compete is by keeping their products out of the bottom-end sales bracket. The advantage of large corporations is that they can produce lots of products for a very low price, a price that small businesses can't match. The key is to find a niche in an existing market or create an entirely new one that operates on variables other than the bottom dollar.

    Using Packasport as an example, that business is only successful because it has found a market where they are sheltered. By selling to the upper-middle class outdoor types, their product is evaluated on presentation, customer service, and sign value. When Costco acquires this product, they destroy its presentation by leaving it in the shipping box, customer service is non-existent, and the low price makes it just another car top carrier. Costco has taken it out of its market where could do well and dropped it down to the bottom-dollar market where the only thing that counts is the price tag. Small businesses can never compete in this market so Costco's actions destroy small businesses while fueling large corporations. The effect that this could have is frightening. If power-boxes like Costco continue to spread and consumers continue to only be concerned with getting the lowest price, small business will suffer greatly. Say "hello" to monopolies, larger corporations, more powerful corporations, homogenization of products, and an ever growing lower-middle class. View Original Text in Willamette Weekly
     
  8. Philster

    Philster Active Member

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    Right on Pee Wee
     
  9. Evan Burck

    Evan Burck Fudge Dragon

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  10. Philster

    Philster Active Member

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    DURK A DURRRRRR!!!!!
     
  11. Jerry Daschofsky

    Jerry Daschofsky Moderator Staff Member

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    I won't speak for Marty (though I do know of him and deliver to him) but I know a few dozen companies who do manufacturing in China thanks to my job with UPS. Can honestly say you must deal with a lot of "knock off" companies. Those that don't hold the patents but skirt them by going to China and having lower grade crap made and selling below patent holders prices (though their product made at same factory is produced at a higher quality.

    So not saying you have no insight Kim. Just I have a MUCH wider view from numerous industries and see the different qualities of same product made differently depending on who was ordering (and I mean numerous, everything from outdoor products to POS systems and everything inbetween). Personally watched one company in Gig Harbor start the folding chair market. Yet all the copies are made in same factory at much cheaper/crappier standards. Can say my original chairs from said company have well outlasted the knockoffs and I use one of their chairs DAILY as my lunchtime lounger.
     
  12. Ian Broadie

    Ian Broadie Flyfishing is so "Metal"

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    God Damn Mongorians... Tear down my shitty warr!!!
     
  13. flybill

    flybill Purveyor of fine hackle, wine & cigars!

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    Skip the YouTube junk and read the most informative post of this thread. Obviously Costco isn't the only retailer that does stuff like this (i.e. - "The Evil Empire" - rhymes with Ball-smart!)...

    Thank you for sharing!
     
  14. Cactus

    Cactus Dana Miller

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    Interesting article. Many small manufacturers like this can be hurt by sales to large stores like Costco and others. If Packasport were to sell to a volume retailer this would take sales away from their smaller dealers and eventually force them to stop selling the Packasport items; it makes no sense for them to carry an item that they sell only occasionally. Once Costco became the majority reseller of the Packasport product, they are in a position to demand a lower wholesale price or they will no longer carry the item. This can cause the small manufacturer to either go out of business, sell out to a larger corporation or start manufacturing overseas to cut costs.

    I was not aware of the predatory purchasing tactics of Costco and find it disappointing.
     
  15. Brady Burmeister

    Brady Burmeister Active Member

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    Ditto. I wonder if anyone has a compiled list of companies that Costco has done this to.