Generally speaking, what kind of differences can one expect between wholesale and retail pricing for blanks, guides, cork, etc... Are we talking 5-10%, 20%, maybe 40%? I know there are other variables, but I am just looking for a guideline. Thanks in advance for sharing your experience.

On blanks it's usually 40% off retail.

I suppose that depends on the number of blanks ordered? Perhaps with a maximum of 40%?

I've never seen the wholesale blank price vary with quantity. Blanks and guises are generally the biggest mark up Everything else varies

40% regardless of how many you order.

John,
The discount numbers you are getting above are about right if you are buying from a distributor. However, if you can buy a larger number directly from the manufacturer the situation is somewhat different.
Most of the rod/blank manufacturers have distributor agreements with their distributors that basically limits how much they, the manufacturer, can discount their blanks. However, if your volume is enough, and it does not have to be that high, you can go directly to the manufacturer and ask them about an OEM (Original Equipment Manufacturer) agreement and some of them will enter into this type of agreement with you and give you very attractive pricing. Usually they will want to alter or modify the blanks so as not to compete directly with there distributors but the modification can be as small as coloring the blank for you.

Few companies sell at full retail. So, the difference between the standard selling price and wholesale price is usually only a handful of percent.

You may save 40% off retail, but no one is paying retail to begin with. More likely, a wholesale price will save you from 15% to 20% but will require you to begin filling out excise and sales tax forms on a regular basis.

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Tom,

When you write "few companies sell at full retail," are you saying that the prices listed by the board sponsors are less than retail?

Great info! Thanks to everyone for your replies.

None of the prices listed in the catalogs or websites are retail. Most companies don't even publish retail prices. And most of the blanks and seats can be had for about 30% off of what would be considered retail anyway. You just wait a week or two and somebody will announce a sale. Most rod building products are pretty heavily discounted as it is.

When I made the jump to a wholesale customer I was a bit shocked that the savings were so little. Most of the time I was only saving about 10% off what things commonly go on sale for. I only sell about 15 to 20 rods a year and now I'm faced with the paperwork Tom mentions. I wouldn't do it again. It's not worth the headache for what little you save. And for some of the big name products like Sage and Winston and some others, there is no wholesale price anyway. There's only one price and everybody pays it.

The retail price discounts are usually based on are the OEMs recommended retail price. Most retailers sell a little below that depending on what the market will bear. In most industries top OEMs will limit how low their retailers can go, or they will cut them off. John Butterfield

The rod building industry isn't like that - I wish it was. Only a few manufacturers even have retail prices and at this point in time the discounting of rod blanks and components has reached an all time high.

It is very doubtful that buying wholesale is going to save you 40% off anybody's current selling price. As I said, 15% to 20% is more like it. And with some of the sales taking place these days, you're almost buying at what would be considered wholesale anyway.

If you do a large volume of business then it's certainly worth looking into. Otherwise, you'd want to think twice about it.

You're still liable for excise and sales taxes anytime you sell a rod, however, regardless of at what level you buy your components at.

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I know I save at least 40% off the published (in catalogs and on websites) prices on many items by having a business. The St. Croix 5S60MF I just paid $70 for from my wholesale dealer would cost me $116 through the (very popular) company I used to buy from. Both advertise here on this site. That is a very substantial savings. The Fuji TYSG 25 I often use as a first guide is $21 from my wholesaler, and $28 at the same big name retailer. On just those two items alone that's $53 in savings...

Some things you get no discount on at all (certain brands of blanks for instance), and most things are more like the 20% Tom cites. But still, on a typical rod I will save at least 25% and usually more.

Unless you make a lot of rods, getting wholesale prices is in no way shape or form worth the @#$%& you need to go through setting up a business and dealing with the tax issues though...

A distributor has a limited margin that he can work with or discount that he can offer. The manufacturer is an entirely different story. An OEM discount with a manufacturer can be significantly better than the discount that a distributor can offer. In fact, an OEM discount, if you have the volume to justify it, can be much better than the discount that the distributor is getting.
If you have the volume you can get blanks that are private labeled for you, colored the color you want them or even modified for you. But from the blank manufacturers point of view the issues are volume and delivery. If the manufacturer only has to cover his variable costs, labor, material, etc.and a profit and does not have to worry about the fixed costs, plant, equipment, etc. in other words he does not have to add capacity, then he can offer much deeper discounts. I actually buy a couple of blanks that I use a lot of at a price that is much lower than the manufacturers distributors pay for these same blanks. However, I have to order a minumum of 25 of a particular blank at a time and I have to be a little flexible about delivery.
From my point of view, it takes me a number of months to work through the 25 blanks so I am tying up money in the blanks for several months so the discount must be more than enough to offset the opportunity cost of that money that is tied up in them.
The key from both the manufacturers and from your point of view is volume. However, the volume does not really have to be all that high.

And when the volume required to buy direct from the manufacturer is not very high - we see the possible downfall of this industry. It's happening right now. The poor trade practices doomed the general fishing tackle market have now been borrowed by the rod building industry. A few days ago we witnessed the demise of long time supplier Heads or Tails. Many more will follow in 2005.

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Tom,
I think that you are correct that it is somewhat related to volume but
don't you think this is a natural consequence of our free market system? The strong will get stronger and the weak will get weaker and die until there are only a couple left. It is happening in every industry. It is not pretty but it is the way our economic system works.

It probably is, but the fly fishing industry turned the tables on this type of thing and they all got stronger. In fact, the fly fishing industry is the lone shining star in the fishing market. Not as fast growing as it was a few years ago, but still much stronger and profitable than the rest of the fishing industry.

Another problem is that with the advent of the internet and low dealer buy-ins - it's the older and more established dealers that are feeling the pinch. Anybody with a $500 website, computer and a spare bedroom can now get into the rod building supply business. And many are doing just that. A great many don't even bother to stock any product - but they offer everything under the sun. It's a bad situation that is only going to get worse.

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I realize that I am probably part of the problem, as are others who shop the way I do - and I think that represents a whole lot of people. I have dealt with so many of the sponsors who provide good service that I basically wait for sales and price deals and let that be my guide on where and when to buy. I don't want to deal with the hassles that Mike Naylor refers to that go along with business management and wholesale accounts. And, as Tom explains, I don't have any wholesale accounts but also rarely pay more than 75% of the retail price (i.e., 25% discount). To me, given the current state of things there is very little incentive to set up wholesale accounts. If I wasn't so addicted to this hobby, I would build way fewer rods and probably wouldn't mind paying a little more for blanks and components. But I like to keep busy with a lot of projects and so I have to look for super bargains.

Just my perspective as a hopelessly obsessed and addicted hobby builder.

Steve

The marketing in this industry is interesting. Years ago, I headed the marketing department for a bicycle helmet OEM. I had a number of distributors and although they overlaped a little, I did not accept new distributors in their area. Except for 4 shops in the area of the factory, which were grandfathered from when the company first started, we did not sell directly to retailers. I did not allow exceptions. To me, an OEM owes this to their distributors. Emory, would not have got product from me, even if he bought thousands. To support our distributors, we provided point of purchase sales materials and coop advertising, where I paid 25%, distributor 25% and retailer 50%. for advertising preapproved by us. We created a big happy family that worked well. John Butterfield

I imagine it did. The rod building industry isn't like that, however. You can open up accounts with many distributors or manufacturers for only a few hundred dollars, come on site and announce a "30% off sale" (and do this on product you don't even have in stock) and with little overhead, knock companies like Heads or Tails right out of business. The only recourse other companies have is to match your prices, which many have a hard time doing as they have real overhead with a storefront, large inventory stock, employees, etc.

In 1987 when the general fishing tackle market had about finished off most of the independent retailers, the fly fishing companies formed a trade group. They set fair trade pricing (NO discounting) and territory protection. Cabelas paid the same for a Loomis fly rod as I did, even if they bought ten times as many. And we both sold them for the same price. The fly fishing market boomed and remains the one area in the fishing industry where the dealers can make enough margin to operate.

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Tom, Once when I was doing the bicycle helmet thing, a large outdoor goods mail order firm in Maine, ( you probably know who I mean), wanted to put our helmet in their catalog. They not only wanted the distributor price but wanted us to drop ship. I wanted to turn them down, but my CEO, thought it was such a big deal to be in their catalog, we accepted. What a mess, the drop shipping was a pain, distributors and dealers were upset with us and on top of this they took forever to pay us. Worst of all we did not sell many helmets. The rod component industry could sure use a trade organization. With one major item (helmets) and a few others, we could pretty well keep profit margins firm for everyone, but the complex mix of stuff in this industry would be almost impossible. John Butterfield