Leverage the Forum for group buys

I'm new to this forum, but after watching Scott Haskins camloc group buy, it is apparent that this wonderful forum inherently has the potential of being leveraged for more than just information.

I'm throwing these out for general discussion:

1) Would it be in the interest of this group to formally contact suppliers of kitplane parts to offer group or seasonal discounts here?

2) Should there be a "group buy" forum?

Companies like Milspec not only have offered a great deal to users of this forum, but is also making a very smart business decision. Many of the decisions my father and I have made on purchases for our RV-8A have been base predominantly on the advice of other builders, and their loyalty to companies who have treated them right. Should this be leveraged for buying power?

If 80 or so people are thinking about camlocs at the same time as I am, how many are thinking about the Garmin 296? Or an IO-360? While we want to support the advertisers who help this forum exist (and many of you seem to do so), maybe vansairforce.net could also get a referral percentage on group buys?

Just ponderin.

Hi srv,

I've been thinking about this very thing lately (link to the camloc group buy thread). I'm leaning toward starting a 'Merchandiser Group Discounts' forum and encouraging merchants to jump in. I'm fairly certain this will occur, and I'm not interested in 'referral fees' - I'd much rather those be passed on as savings to the buyer(s) using the forums as the communication vehicle. It might be as simple as a forum I can post announcements in (and me only), with the merchant taking care of the details. After all, they know their price breaks and I don't .

Examples:

1. 50 people agree to buy Garmin 396s. Van's might possibly get a price break on such a large order and be able to pass that on, still making their same profit.
2. Bob Avery can offer 200 sets of tires cheaper (but with same profit) because he ordered so many.
   
   These might be bad ideas here, as I'm just thinking off the top of my head. OEM agreements and such could easily impact it in a way I'm not aware of...

I just need to work out some more details of the mechanics first. Talk with Van's, talk with Bob Avery and others - the usual suspects. So many twists...and possibilities. There's usually some kink I forget about and have to re-work the work flow. I'm sure we can utilize the popularity of the forums in a way that benefits both the buyers and merchants.

I don't see the section becoming massive, but I do see the potential for savings and would be happy to help if possible.

Best,
dr

Excellent idea.

Group Buys could be really huge !!!

srv said:

I'm new to this forum, but after watching Scott Haskins camloc group buy, it is apparent that this wonderful forum inherently has the potential of being leveraged for more than just information.

.

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I was part of the Milspec group buy and it was immediately obvious (and I raised this same point on that particular thread) that the potential benefits of further group buys was enormous.

Vendors just luuurv volume and this forum has the ability to deliver it. In a way it doesn't make sense for all of us to be buying the same products individually for our RVs when we can undoubtedly obtain very significant discounts by buying at the same time. Group buyers are also more likely to be treated better.

The Milspec group buy produced a 30% discount and the popularity of the event surprised everyone. Who would have thought that virtually 70 builders would want to buy camlocks at one time.

And of course as the group buy item becomes more expensive the savings can become even greater. Thirty percent on camlocks might save you $100...but 15% on a Garmin 430 might save you $900. And I'm now thinking that it would be quite easy to get at least 15 builders once a year to join a 430 purchase which would produce a purchase package of around $100k. Vendors start to get excited about those sort of numbers.

Some RV purchases are not so time dependent and are less likely to be outdated if purchased earlier. An example would be seats and interior trims. I suspect that if a 30% discount (or more!!!) could be arranged for these sort of products then many builders would buy a bit earlier than initially planned in order to take advantage of the massive savings. So the response, and the sales volume, could be very large indeed on certain items.

I am suspecting that we may be on the verge of a very exciting and very beneficial concept which again highlights the power of the internet.

And of course there is no added financial risk to the concept because (as per the Milspec group buy) each individual purchaser pays the Vendor directly and receives the goods directly so there is no middle man.

It is also obvious that members of a group buy do not need to purchase exactly the same thing from a vendor. In the end it's the total sum of sales money that matters. For instance with the Milspec group buy we were all buying fastener kits but everyone was free to buy the kit that suited them individually. I even had a few extra fasteners added to my particular kit. So there was individual flexibility to negotiate directly but still receive the substantial discount on everything.

Doug Reeves doesn't need to make any percentage from a group buy, nor should he as it raises issues of transparency. All saving should be passed on to buyers. Doug has already stated this as he is a smart operator. The benefit to Doug will come from Group Buy vendors feeling compelled to advertise on Dougs forum. Group Buyers can repay Doug not with money but by giving first preference in negotiations on Group Buys to companies that support the site.

Group Buys on tool kits, Group Buys on seats, Group Buys on engines, Group Buys on propellors, Group Buys on autopilots.....there's no end to it and the savings over the course of building a whole RV could be very very significant. You want to purchase a GRT EFIS at a great price...set up a Group Buy.

I think we might be on verge of something big here.

I was also part of the Milspec Group buy and really appreciated the great deal Scott Hoskins got us. The last count I heard there were over 80 RV builders in on the deal.
The group buying works great because everyone got the same deal. Would really like to see more group buys and it will work as someone not trying to be an intermediary for profit. Ready to purchase a new IO 360 or O 360 anyone less need one???
Squeak

As one of the participants of the Milspec group buy, my first vote for the next one is to shake down.... GARMIN! How 'bout it Stein?... John Stark?... ??

Hee hee I feel like such a trouble maker.

Highflight said:

As one of the participants of the Milspec group buy, my first vote for the next one is to shake down.... GARMIN! How 'bout it Stein?... John Stark?... ??

Hee hee I feel like such a trouble maker.

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Hmmmm.....I was going to post a quick note about this topic yesterday but decided to wait, so here I go!

First let me say I'm all for people saving money and as a builder/flier myself I think group buys can be a good deal.

That being said, it hasn't been but a couple of years since an ambitious builder did try that exact thing and in fact setup a website for "group buys" of all sorts of things. He tried and did setup a group buy on engines, props, avionics, etc.. In the end it turned out to be a huge flop. While buying as a group can and is attractive to both the merchant and the consumer, everyone needs to remember that the huge margins built into things like hardware and such just are not there in a lot of the other big ticket items. I don't want to burst anyones bubble, but I know for a fact that you won't get another 15% off of a garmin buy or GRT or Lycoming buy because the margins are already razor thin on those products...even at the mfgr level. Group buys work very well on products that have huge margins built into them, or products which are relatively young to the market, and from people trying to get into the market. The problem is that as soon as a bunch of people pay let say "30%" less for something, that becomes the de-facto selling price for awhile. It has the tendency to devalue products to the point where the manufacturers get kind of upset...they've traded profit for market share which is good for awhile, but in the long run doesn't pay the light bill. Take this mil spec stuff...now that they've sold that many kits at that price, they are stuck for awhile. Sooner or later one of two things is going to happen. Both them and Skybolt will have lower their selling price, or they'll realize that they're giving away profits for market share. Once they have market share.....do they still need to give away profits? - My guess is no. Not saying it's good or bad, just a fact of economics.

While simple hardware and "piece parts" traditionally have much higher marging, there is so much competitive pricing pressure among the avionics, engine, autopilot and prop people that they haven't left themselves much room for discounting. This is both good and bad...it makes products cheap for us, but leaves little to no room for negotiation. For example, some peoples prices are already so low that even if they take a credit card for a purchase they lose money...just to give you an idea. GRT, Dynon, BMA and others at the lower end of the pricing tree for EFIS's have already priced things so low that I doubt there is literally any room for discounts, even in decent sized groups. None of them are getting rich yet, they're all just trying to establish market share (which of course large chunks of sales helps).

So, in the end I'm still all for group buys on some things, but I wouldn't get your hopes up for the pie in the sky discounts on all the other big ticket stuff we all buy for our planes. In the grand scheme of things, you will be able to save money here and there on some things and it pays to be wise, but to be honest and frank, large discounts on the engine stuff, props, avionics, interiors, etc.. just aren't going to be there because I know for a fact that most of those things just don't have much wiggle room and you'll find that mature merchants know it's a waste of time to sell stuff at cost...you can do it occasionally and for awhile, but if the margins are too low then the businesses and products we like end up being gone because in the long run they couldn't make any money....

Competition is healthy and good, and if managed properly then group buys on some things are possible and provide benefits to both manufacturer and buyer. Just be carefull how you approach it, who you approach and it'll be good. Do it wrong and you'll do nothing but draw the ire of both builder and merchant (it has happened before and the well intentioned fellow's name is burned into the memories of nearly every merchant he dealt with and has left him with a permanent black eye and loss of credibility - even if not publically so).

To cap off this long rambling novella, I'll say go for it - just do it right.

Cheers,
Stein.

Good write up, Stein. I updated my original post to clarify a bit. I agree with everything you've said - if done *right* the occasional discount might be had and everyone will benefit.

Taking time to think this through is paramount, me thinks.

b,d

PS: Home with a cold. Why am I in front of a PC and not in bed?

SteinAir said:

So, in the end I'm still all for group buys on some things, but I wouldn't get your hopes up for the pie in the sky discounts on all the other big ticket stuff we all buy for our planes. Cheers,
Stein.

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Of course, Stein, you're 100% right. Being self employed myself, I not only understand the issue, but intended for my little "trouble maker" post to convey what you explained... only in as simple a phrase I could come up with. I thought that my over-the-top cynical use of the term "shake down" would be obvious, but such is the risk of using humor in printed discourse.

My personal choice for doing it "right" as Doug says is to simply provide a forum section where dealers and manufactures can willingly go in and make offers to the group rather than a group of us approaching a seller and making him feel like we're strong-arming him.
If a seller has some overstock or just wants to have a promotion with a discount (of his choosing) to promote his business, then all's well and good.

More of my thinkin'... I need to quit that.

You might think that a small company like GRT might crave greater market share so that they can initially make greater profits. But that is probably not their initial strategy at all. Their plan is to increase their volume so that they can have some decent purchasing clout with their component suppliers.

The problem for a manufacturer with small volume is that they pay more for the same crucial component than a competitor who buys in bigger volume. It's just the way the market works. Volume is God. Commercial success ultimately results from profitability based on smaller margins and greater volume. Smaller volume and increasing margins leads only to insolvency.

Sorry for the treatise but I believe that there is plenty of gain to be had by all parties in volume purchasing. It is probably true that some vendors of avionics might be on tight margins, but when the order becomes gigantic they in turn can go back to the manufacturer for a special deal (and they'll get it!!!). Alternatively if the sales numbers are there you might find that manufacturers who normally only deal through distributors can be seduced into a direct deal.

And It's not "strong arming" a vendor or manufacturer to approach him with a volume deal. It's just normal business. Vendor / manufacturers don't get upset by the opportunity to quote a large volume of sales...they get pissed off when they're not asked to quote a large volume of sales.

The concept may not have worked in the past because it was controlled by a middle man as a commercial venture to make profits and the margins were being siphoned off. The Milspec Group Buy on the other hand had no middle man taking profits and was therefore completely transparent. That added enormously to the attactiveness of the offer. It was a great success and there is no reason to believe that subsequent Group Buys run on similar lines will not be equally successful.

Anyway, as they say, the proof will be in the pudding. Who's for a Group Buy on seats. I'm in.

Bob...you hit the nail on the head on several points...past, present & future. Some of what you said is what I was referring to previously. You also make some good points on "pass through" of savings.

One thing that I neglected to point out however is that on larger big ticket items, people usually make their choices based on a combination of things and of course one of them is money, but not the whole reason. The point I bring up is that the mfgrs know this as well, and they are trying to convince people to buy their products for what they do, not just being the lowest price - another business reality...ANY company who bases their sole value on price alone won't be in business very long. I'm not trying to sound sarcastic or fecetious, but the point is this..(and I can tell you any marketing manager or business development manager worth their weight will know this as business basics 101). If a customer is going to buy your unit, and has made up his mind to buy your unit....he'll buy your unit. If he doesn't like your offering he won't. The percentage of people who make engine choices, avionics choices, etc.. based solely on price is quite small. So, the end result is the customer is going to buy or not buy your unit sooner or later at a certain price. If you can keep the margin the same and save the customer some dough then they'll do it. But, where there is not a 100% competing product (like EFIS's & avionics & props & even some engines, which ALL can differ significantly) the leverage is somewhat less than the Mil Spec deal. In this case there is a (virtual) 100% competing product so the comparision on value was an easy one and the only decision here was whether to buy the Skybolt kit or the Mil Spec kits...which varied in price by 10's of %'s - not a hard choice.

Now compare Dynon, BMA, GRT, Chelton, Advanced Flight Systems, Xerion, Vision Microsystems, etc... How many people buy the above units based solely on price?? From my experience with hundreds of you....it's not many. It's almost 100% of the time a combination of mission requirements, budget, likes & dislikes of each system, company, resolution of the screen, layouts, etc...a 10% price difference is rarely the deciding factor.

I guess what I'm getting at here is that I'm encouraging the group buys, but I'm also trying to be a bit realistic on what you all should expect and what products might be better suited for it. I know this market well, and I'll guarantee you Garmin knows to the number how many registered pilots there are in this country and how many 396's they expect to sell at the current price. I'll also guarantee they did MANY market feasibility studies on price points and have long ago determined that a person that'll pay the current price for the 396 will do so even without a 5% or 10% or 15% discount. Have you noticed that Garmin controls their pricing Ft. Knox?? There's a reason for that!

I can't speak for any particular mfgr, and like Bob said, I'm sure if the right number were presented that gave the mfgr the opportunity to procure parts at a reduced rate then they surely would pass along the savings. This will be much more prevalent the smaller the company, and less prevalent with larger companies who already have purchasing power like Garmin (our aviation units have virtually the same hardware guts as the boating counterparts that outsell us by 1000's of %'s), the premium we pay Garmin is not on parts but because we have "aviation" stamped on it and the number of units us 600K+ pilots make up is a drop in the bucket compared to the millions of boat owners in this country.

Anyway, I digress (once again) and have written another boring "book". I think this is a healthy discussion and like I said before, managed correctly this can and will be good for builders and merchants alike!

By the way, Bob's insight about the past problems are fairly accurate - I can't be the only one who remembers that debacle!

Cheers,
Stein.

Group buy

The only products this will work on are those that are sold direct from the manufacturer. Any company that has a distribution network set up will not sell directly and undercut their distributors.

I think this is a great idea, but as Stein stated, don't get your hopes up to high.

I think Darwin is mostly right here, except it may be possible in some cases. to make the deal with a distributor, who in turn may be able to get a better deal from the manufacturer for a single large order.

I think Stein is also correct in that many of the high ticket items like avionics have such small margins that a group buy may not net much difference. Also things like seats that are pretty much hand made to order are not likely to be able to be discounted.

There should, however, be other products like the Milspec camlocs where this idea will work. Everyone should be on the lookout for these opportunities and ask any suppliers of products that they want to use of this possibility.

Suggestion to facilitate group buys

After seeing how successful the camloc group buy was and how successful the hooker harness deal seems to be, I'm wondering if creating (yet) another section on this forum for "Group Buy" issues might be a good idea. That way...

1. When someone has an idea, they can post it and gauge interest and then ONE person can contact the manufacturer rather than having 2 or more of us do it independently, which would probably just create confusion for us and wariness from the manufacturers.

2. The second advantage of a "Group Buy" section would be that it would allow us to quickly see what has been available in the past. For those of us who are not yet quite at the stage where we are ready to buy (camlocs or harnesses, for example), knowing what deals there have been in the past would helps us schedule another group purchase at a time appropriate to other builders at our stage, say in 6 months or a year.

Of course, I post this from a selfish point of view. I'd love to get in on the camloc deal especially, but just don't want to part with the cash when I am probably a year away from needing them. Anyway, just a thought for Doug or anyone else to comment on.

Go For it

alpinelakespilot2000 said:

Of course, I post this from a selfish point of view. I'd love to get in on the camloc deal especially, but just don't want to part with the cash when I am probably a year away from needing them. Anyway, just a thought for Doug or anyone else to comment on.

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Price is only going to go up, so if you get in now, consider it an investment that you'll have to spend more for later... BTW, I think you have one more day on that Camloc deal, so strike while the iron is HOT!

alpinelakespilot2000 said:

I'd love to get in on the camloc deal especially, but just don't want to part with the cash when I am probably a year away from needing them.

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But you have to understand that this is always how it's going to work, i.e., I'll bet very few people actually NEED a group buy item at the exact time a group buy is going on.
Even though you don't need it (whatever it is), you will need it, so buying now at a significant discount not only locks in pricing you weren't expecting when you ran your original budget, but prices seem to only go up so getting 30% off now (for example) might end up being closer to 40% off later when the price has gone up 10% and there is no hope of a group buy when you need the item.

What makes the whole thing work is that a bunch of people jump in at once to make the deal sweet for the manufacturer or distributor even if it means you buy a bit early. It's better than having to buy when you need it at any price.

alpinelakespilot2000 said:

Of course, I post this from a selfish point of view. I'd love to get in on the camloc deal especially, but just don't want to part with the cash when I am probably a year away from needing them. Anyway, just a thought for Doug or anyone else to comment on.

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You would not want to assume that just because Milspec have offered this discount at this time means that they will offer it in the future. That may not be the case at all. Many manufacturers might enter into a once-off discount structure to promote their market visibility. They might view their margin erosion during the exercise as a marketing expense. But they may not necessarily wish to repeat the exercise on a regular basis. The danger of constantly entertaining discounts is that consumers might come to believe that your standard everyday prices are bloated. Or they might stop purchasing at standard prices because they are going to wait for the next "sale".

If I was you I'd buy the camlocks today...if the deal is still on. A bird in the hand.

Incidentally there has been some speculation on this thread as to whether some types of vendors will be prepared to entertain the Group Buy discount. I would suggest that speculating in that area is exactly that......speculation. Some company managers look at a discount structure as a gain ("we're going to gain some volume and market visibility"). Others look at it a loss ("we're going to lose some margin").

In my experience fortune favours the brave in business and those that see that the glass is half full ("we're going to gain something") tend to do better than those that see that it is half empty ("we're going to lose something"). But that's just my opinion and it counts for nought. All I know is that some companies will go for the Group Buy and some wont.... and in the end it will depend more on the outlook of the business manager than on the type of product he sells / manufactures.

Future buys

As one who has now benefitted from 2 group buys, and in the process of organizing another, I say it is always worth a try. I don't expect that we can always be able to get one, but you never know unless you ask.

It is also a bit more work than I envisioned, but I keep saying $210 saved, every time I type. For those builders on a tight budget, such as myself they are a welcome boon to the wallet.


I would like to add that in the future we try and space out the group buys about a month apart, so that everyones wallet can recover and we can get the full turnout and maximum savings.

Semantics

Maybe this is semantics, but instead of calling this "Group Buys", why not refer to it as a "Quantity Buy." Stein has a point in that sellers are going to back away from "Group Buys" or "anyone ordering in this time period" because of the uncertainty of enough orders to break even. However, if we ask at what quantity will they give a price break, then get others to join in on the order, we might have better response.

The upside is we will not scare off suppliers. The downside is someone will have to manage the buy. If we form our discussions with the vendors in this manner, maybe we can get the 'big boys' to respond.

I know it's semantics, but we all know words only confuse the idea.

What do you think?

Now everyone's getting the idea here. Like I said before, this HAS to be managed right in order to work. Take this current hooker deal. Luckily I think it will end up ok, but this was just about another example of exactly what I mean when I said it needs to be done right.

One guy works out a deal with a dealer (In this case Mark Frederick...who spends his time to get a deal going). Then, another well intentioned individual unbeknownst to the 1st goes direct to the mfgr and sets up another deal. The deal turns out to be not much better than the 1st, only this time you've gotten two levels of people involved and created something that in the future might actually work against you. I mean, how much of a discount could you expect Mark to work on next time if he thinks that someone might just go around him to get another couple %? He's not getting rich on them to begin with.

This particular deal also brings up another point that needs to be managed. I've seen people saying..."I'm in if they are doing this option or that configuration, etc...". The mil spec deal was easy...one product that only differed in the number of units delivered. Now you're dealing with still a very simple product, but comes in quite a variety of configurations. Someone now needs to manage who wants what, which ones are discounted and which isn't, which options are part of the deal and which ones aren't, etc.. These are all things people forget about and think of things as "just a seatbelt, or just an certain model EFIS or just an engine or just a certain model engine monitor or just a prop, etc..". Throw in all the multitudes of configurations and it can become VERY complex real fast. Simple products with no options are easy, largely customized things are difficult.

Anyway, my point is that this stuff CAN BE GOOD for everyone if it's managed properly. Do it wrong and mark my words it'll make mfgrs think twice about doing it. If dealers like Mark start getting upset, then the mfgr starts getting upset....yada, yada, yada. In this case I doubt that has happened, but without better communication it could have. You end up with confused consumers, frustrated dealers and mfgrs that in the end don't want to get in the middle of it.

So, my advice is exactly as before. Do it right, do it carefully and do it respectfully and all of us as builders (and businesses) can win.

Cheers,
Stein.

P.S., happily flying with Hookers from Mark in both my RV's. The group buy is a good idea on these...I love 'em - but then again I thought I already got a decent deal from Rocket.

VansAirforce Volume Purchase

TTU_RV7 said:

Maybe this is semantics, but instead of calling this "Group Buys", why not refer to it as a "Quantity Buy."

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I think this is a very constructive suggestion and not silly at all. It reflects that people are really starting to think seriously about this thing. However I would recommend that calling this a "VansAirforce Volume Purchase" would be even better. "Volume" is the word that everyone in business understands. It rings the right bells.

Stein's comments also contain a lot of good business nous and he's dead right when he says that this matter needs to be structured. The only trouble is that the Internet tends to be an anarchy so it is very easy for group pursuits to become a dog's breakfast. However I still think that handled properly the "Volume Purchase" could be of enormous benefit to both RV builders and vendors of RV components.

My suggestion now is that we start to discuss the protocol by which we might run our "VanAirforce Volume Purchases" and that individuals abstain from approaching any further vendors until we have an agreed structure.

In my opinion the first move is that we should get Doug Reeves to set up a new category called "VansAirforce Volume Purchases" and establish it above "RV General Discussion" so that it is in a prominent position.

Then we can start making an inventory of the issues we need to resolve to formulate our protocol. Ultimately we might call this our "Volume Purchase Buyers' Guide". We can all ensure that the agreed protocol is adhered to by not supporting group members who attempt to set up "Volume Purchases" outside of the guidelines (and who might reflect the Group in a poor light).

Here's a starting point on some protocol issues that might be discussed. I invite others to raise further issues. These are just initial cursory recommendations to get some movement going :

1. How do we agree on what Vendor(s) to approach.
2. Should we approach Multiple vendors when identical or very similar products are being supplied (introduces competition and gives more Vendors a chance to quote).
2. Who actually makes the Vendor approach and maintains negotiations.
3. Do we have product evaluation / discussion before we make an approach (I think that would be a good idea...there's a lot of experience with products out there we could draw on).
4. Do we need to canvas group support for a particular item before we make an approach. If so how is that best done (we can have more impact on a Vendor if we say: "We have 100 members ready to buy widgets and based on previous experience that number will increase").
5. What should the format of the approach email to Vendors be (we obviously need a generic document that reflects upon us as being civilised, cohesive and structured).
6. Do we invite RVers from other email groups to join our Volume Purchases with timely advice (why not...the more the better).
6. Etc etc.

VansAirforce Volume Purchase

Incidentally, something I forget to mention. It is my strongest opinion that individuals representing members of the VansAirforce Volume Purchase are not permitted to negotiate for private advantage in any way other than by obtaining the same discount structure as everyone else involved in the purchase. It will be tempting for some individuals to try to get their widgets for free. We can't have that...we must have absolute transparency and honesty in these dealings.... no kickbacks, free items, or commissions. Corruption will kill this thing.

Good comments. The group buy/volume discount concept isn't new. I've seen it on car forums. Maybe we can borrow rules/guidelines from somewhere else.

Somebody mentioned spacing out the deals. That's good, except I've got a bunch of stuff to buy this year.