Every regional center has a local survey supply store. Stop in for a visit now, because they are going to disappear soon. But don’t worry, their demise won’t make it more difficult for you to obtain the supplies that you need, in fact it will be much easier, faster and less expensive than before.
However your local small store that makes a significant portion of their profits selling supplies is toast.
This is the place where I need to disclose that I own a survey equipment store: we primarily sell big ticket, high-tech devices that are support and service bound (think GNSS receivers and robotic total stations.) We do offer non-disposable supplies, however we sell them as accessories to equipment sales and they are a very, very, very small part of our overall business.
Long, long ago…
In the old days if you needed a pole for your theodolite, most of the country could drive across town and pick one up locally from a repro-graphics engineering-surveying supply store. There was no internet with online supplies. Every store in the USA had the same price on the same poles.
A few decades ago, your local supplier lost the blue-line reproduction business. High volume reproduction houses dropped large format copying down to 4 cents a square. The entire pre-printed title block market disappeared. Initially local suppliers picked up ink cartridge sales, but then lost that segment to online discounting.
Home Depot starting stocking lath, stakes and paint further eroding the specialty supply shop’s market.
Next online web suppliers started putting price pressure on your local suppliers offering significant discounts with free shipping and delivery within a week.
However, another shoe has recently dropped…
A Worked Example with Real Numbers
Let’s look at a single representative SKU. The SECO 5125-20 2-meter snap lock pole is a good example, almost everyone with a GPS receiver will have one.
The landed cost for this item from SECO for most dealers is between $97 and $102. This includes the dealer’s NET purchase price and the inbound shipping for a bundle of quantity 10 poles. (Shipping is expensive, which actually is an important part of this story.)
The MSRP (Manufacture’s Suggested Retail Price) for this pole is $135 and that is what most dealers sell them for. If you pick one up at your local store, it will cost you $135.
This same pole is available online, typically either at list price $135 or slightly discounted to $127.25 plus shipping:
We sell them for $121.05 plus shipping. But looking at sample UPS Ground shipping for across town or to an imaginary zip code in Eastern Texas we still can’t begin to compete with your local supply store. This pole ships in a 3″ x 4″ x 52″ (over-sized) box weighing 4 lbs; here are the actual UPS Ground rates from our office to another address in Salt Lake City and to a coastal Texas location:
So, even when purchasing from us (with the probable lowest price) the landed price for most customers is going to be $153.07 and delivery will be between 1 and 7 days after purchase depending on how far from Salt Lake City you are.
Your local dealer is a better value and if you need the pole in a hurry, is worth driving across town for.
Amazon with the help of FBA (Fulfillment by Amazon associates) is adding zero friction purchase, with deep discounts and essentially overnight shipping on high quality products:
The featured rod pictured above is NOT a SECO brand rod. However, I have purchased one and it is indistinguishable from the ‘brand name’ pole. I suspect that it is made at the same factory that makes the brand name, the ‘DW’ and other second market supplies. The Amazon pole also includes a decent canvas carry bag.
Most importantly the Amazon pole also includes free shipping. And I believe that the pole is in stock a the Salt Lake City distribution center because delivery is often listed as next or second day when I view them.
Let’s talk about ‘Zero Friction’ purchase for a moment. If you purchase a pole from an online supplier you are going to need to setup an account and enter a credit card number and your shipping address. If you purchase from Amazon and you have Prime, you just use the smartphone app, click ‘buy-now’ and it shows up in a day or two. There is zero transaction friction.
So the calculus here is:
local supply place: $135 + drive across town
online supply place: $153 + 2 to 7 days
Amazon Prime: $90 + 1 or 2 days
Death of All Stores?
So is this the death of all Survey Supply outfits? I think we will know by the end of 2020, perhaps sooner. While most stores don’t exist entirely on accessory sales, the loss of accessories, consumables (wood, ink, repro) leaves less profitable lines.
Amazon will work great for accessories, paint, flagging, pk nails, ink, toner, markers, monuments and almost all supplies. Anything that is a commodity and requires no support, service or training will be available faster and highly discounted. Amazon has a better return policy than most suppliers so that won’t be an issue either.
I am not sure Amazon is a good channel for consumables like wood (lath, hubs and stakes), however I think most small and medium sized surveyors are best served by purchasing a pallet of mixed wood at a time and having it delivered by freight.
Larger suppliers that are primarily equipment dealers (like us) will be just fine. The equipment that we sell requires a lot of training, lots of support, lots of firmware updates, lots of service and is not something that Amazon can deal with.
What about the Manufacturers?
The manufacturers are a wild card in all of this. I think in every segment, there is a smaller manufacturer who will jump at the chance to distribute directly through Amazon.
Consider paint. What if instead of shipping paint to 100’s of dealers nationwide, you can just ship pallets to your local Amazon warehouse and they then automatically stock-balance nationwide based on historic sales.
Customer’s search for ‘inverted paint’, your paint comes up in case-lots with Prime 2 day (or in the case of towns with a local Amazon distribution center ‘Next Day’ with the possibility of ‘Same Day’) delivery.
A small paint manufacture essentially goes direct, skipping all the headaches (ordering, credit, receivables) of dealing with a multitude of dealers. One customer, one supply stream. Nationwide, zero-friction-fulfillment.
The threat of a small upstart paint manufacture quickly capturing significant market share makes it impossible for established manufacturers to ignore the Amazon threat. They must include an Amazon channel in their distribution scheme, or risk being leapfrogged by smaller upstart producers.
Those manufacturers who refuse to distribute supplies via Amazon out of a commitment to existing dealers will be toast. Their existing channel (supply stores) could quickly fail.
Let me say this again, because it is important: every manufacturer of commodity survey equipment must incorporate a direct to Amazon channel. Their existing supplier network is going to quickly fail and they will be left with no distribution partners if they refuse to distribute via Amazon.
What about equipment manufacturers?
For non-commodity or very-high-value items (like robotic total stations and GNSS systems) there is probably no way to successfully distribute on Amazon. A high return rate, or high dissatisfaction (poor reviews) will doom a SKU’s life on Amazon. To make Amazon distribution work with complicated devices there must be excellent direct factory support available and I don’t currently see any survey equipment manufactures with even poor support for direct customers.
For commodity items (lasers, manual total stations and similar easy to use, no support required items) I think we are already seeing major brands producing a second-brand instrument (same quality, just another brand name) and making them available on Amazon. The primary brand is kept for traditional brick and mortar partners, who then directly compete with factory direct via an Amazon channel.
The manufacturer has two streams that compete and from the manufacturers standpoint they can both be successful. But for the local survey supplier it will be way too much competition.
How will we (iGage) cope with this new Amazon reality? One way is to just suggest to our customers that they purchase the items that we can’t compete on directly from Amazon.
For example, if we sell a Base/Rover pair but the customer purchases a 2-meter snap lock pole direct from Amazon, we will loose $16 net profit (before G&A) on a $15,000 transaction. The customer will save $45 and have faster delivery.
If you have read this far and would like to see a short list of items that ‘we can’t compete with Amazon on’ checkout this link: [ index to Amazon accessories ]. While limited to survey related items, it is not really a full list of competing devices. The reality is that anything that Amazon stocks is going to have a better price. The only thing that your local supplier can compete on is service and support, the two things that Amazon has none of.