Golf Manufacturers Are Hurting the Golf Industry
The golf industry continues to work through challenging times, no question about it. However the business of golf has another hurdle that it must deal with. That is the ‘direct to consumer’ sales that many wholesalers/ manufacturers are now deploying.
Wholesale to Consumer
E-bay, Amazon and many others have been selling direct to consumers for more than a decade. It is killing typical brick and mortar shops. Every community we visit has as many closed/ for sale businesses as open businesses. Golf retailers like Golf Town, Dick’s Sporting Goods, Edwin Watts Golf and even the PGA Tour have long been a thorn in the side of small businesses (and almost all golf courses are small businesses occupying a big piece of land, but that’s for another blog).
Wholesalers Have Become Retailers
Recent trends of decreased consumer spending have been tough on golf wholesalers/ manufacturers. You only have to look at the recent sale of TaylorMade or Nike getting out of the golf club/ ball business all together to know the struggles they must be having. We understand their need to generate revenue and increase sales (shareholders), but they are doing it at the expense of golf course green grass golf shops.
We have a course we oversee that deals with only a few suppliers (to get best volume pricing). Recently we discovered that not only were some of their products in Wal-Mart stores (including one less than 1km away), but also through their own website. They are selling direct to consumers (freight included on $100+ orders). After a conversation with our sales rep we will be returning all the product available in Wal-Mart. However they will continue to offer it in their online store. They are selling the products in question at roughly at 14% profit margin (based on our cost). Obviously our cost is higher than their own so there is absolutely no way we can compete at that! We need 30% margin (at minimum) to bother putting any effort into selling the product. If we cannot earn 30% then it is better for us to not carry those products at all.
It’s time to rethink your retail strategy and to have some serious discussions with your suppliers. You need to ask all of the questions and get concrete answers before making a decision to buy from certain vendors. I know we will be having those discussions this fall long before buying season!
We, Jeff and Tara Ciecko of CK Golf write two blogs, one is our 19th Hole Blog where we share personal experiences and the other an Industry Blog where we comment on general business and internet marketing best practices, sales strategies and give golf industry related opinions. We have owned CK Golf for 9+ years and provide business services to the golf and other industries. As of August 2016 our life and our business is ‘location independent’. Our 19th Hole Blog is about the places we visit and the things we do. If you have any questions or comments, or happen to be in the same location as us please reach out and contact us anytime.