It could be done and in the long run it'll have to be done or there are going to be some big changes in this industry, most of which will not be good for anyone.

What your CEO, and many others in similar businesses think, is that the more dealers they have, the more product they'll sell. This isn't the case. Usually, based on the manufacturer's marketing and advertising, there is a finite demand for the product. The same amount will be sold whether you have 10 or 100 dealers. So you can either make things profitable for a smaller number of dealers, or open up everybody and their brother and none of them will sell enough to make any money. The manufacturer will sell about the same amount either way, so which is in his best interest?

But I suspect you already know what I'm talking about.

................

John,
As you must know distibutor agreements and OEM agreements are quite different. With a true OEM agreement the end product is not the same, it is in some way altered or modified. OEM agreements exist in most industries. In the case of blanks if the blank is modified or altered and sold under a different name and directly or through a different sales channel then it does not compete directly with the OEM's products being sold by the distributor.

Tom,
I would argue that because the blanks, under an OEM agreement are different blanks, even if it is only a color difference, the total market is somewhat larger. I admit that it may only be slightly larger but it is larger.

I still remember a little from the couple of semesters of economics that I took and the market is only fixed if the product is a commodity. If the product is a commodity then I would agree with you that lowering the price or increasing the number of distributors will not increase the volume. However, I think as custom rod builders, at the heart of what we are doing is making a product that is not a commodity, a product that is unique or in some way different and hopefully better than what is otherwise available.
It seems to me that the distribution business is a tough buisness. The distributor only has two tools to work with, service and price.

I don't think service is something a dealer can work with any longer. It's only a tool if the prices between all dealers are the same. If this were not so, then WalMart could not possibly sell anything.

For most consumers, price always trumps service. WalMart has proven this.

Private Label blanks are one thing, but where there is a real problem is with the manufacturers who undercut their own dealers by selling their blanks, guides, etc. to individuals. I know for a fact that their are manufacturer's who will sell me their products for the same price that they sell to the vendors on the left (If I spend $1,500.) While that may benefit the few of you that can do that, it kills the vendors. I agree with Tom that "Acme" corp. is going to sell a given amount of blanks, etc. no matter how they choose to market them. However, by bypassing the normal distributer/vendor set up, ultimately the vendors will go belly up and then all of a sudden the manufacturer will lose the huge numbers of sales that go to the small purchaser (you & me) and they too will pay the price.

What's to prevent 4 or 5 builders from chipping in and having one of them buy large numbers dierct from the manufacturer and eventually driving the vendors out of business.

As manufactures undermine their own vendors, the vendors will quit carrying that particular brand as their will not be enough market or profit. When that happens (and it is going on right now), there will be fewer and fewer vendor selling Acme blanks and be harder for you and me to be able to buy their products.

Tom is 100% right when he talks about the fly industry. I live in an area that is one of the heaviest fished waters in the country (on the Detroit River at the mouth of Lake Erie. I have seen lineups a half mile long at the ramps (and there is no shortage of ramps).

What is scary is that there are few independent bait/tackle shops and the ones that are still here are not like ly to last.

What is strange is there are not that many places in the area to fly fish but the remaining shops are turning to flyfishing tackle to stay afloat and it's working. In order to be cometitive, they have to sell a reel they pay $250 for, for $275. On fly tackle they pay the same as Cabela's and sell for the same as Cabela's.

I could go on, but you're probably tired already of seeing my ramblings!

Mike

Mike,
I think that the distributors do a pretty good job of supplying those who are buying in quanities that are too small for the manufacturers to deal with but they do not add enough value for those who are buying in larger quanities. I do not see any problem with those who are buying in larger quanities expecting lower prices and going directly to the manufacturers to get the lower prices. And I do not see any problem with a number of builders getting together and forming a co-op, as you suggest, and going directly to the manufacturer.
I appreciate your and others frustration but I believe in demand curves and believe that lower prices in the long run will result in higher volume not lower volume.
Plus to tell you the truth I do not believe that the pricing structure that presently exists with fly rods that Tom talks about will hold up over time. Someone will try to get a larger share of the market than they are presently getting and will break ranks and start discounting. It has happened in every other industry and it will also happen with fly rods.

I have very mixed emothions about American manufacturers going off shore to get lower costs, particularly lower labor costs. I think that the American manufacturing base is evaporating, but it is happening and you and I can not do very much about it. But these lower costs will ultimately mean lower prices especially for purchasers that buy in higher volumes and the lower prices will also result in higher volume. If the distributors can not in the process figure out how to increase their value added that they are offering then I think that they will suffer the consequences. As I said before, it may not be pretty but that is just how our economic system works.