Dan Harrison is president of poolandspa.com, an online retailer of pool and spa parts based in Las Vegas, Nev. He's also operated traditional retail outlets, including AQUA 100 Hall of Fame member Long Island Hot Tubs and, more recently, Las Vegas Hot Tubs. We called Harrison to get his thoughts on the differences between selling from a server and selling out of a store.
What year did you start in the industry?
I had a pool store in 1980 on Long Island, then we opened Long Island Hot Tubs in 1984. It was the first all-hot-tub store on Long Island. We ran that until 1992, then we were killed by that recession. That's when I started doing cataloging, because Al Gore hadn't invented the Internet yet. We did that, and some repair service, and I also had a pool company. After 1994 we went online and started selling there. We continued to run Paramount Pools, and we ran Long Island Hot Tubs as a service company. Then, we expanded to Vegas in 2003 and opened up Las Vegas Hot Tubs here. That was then killed by this recession.
We started selling stuff online before even Amazon.com. We sold parts and supplies, and it slowly grew. You have to realize I had all of those companies running, and everything continued, much like this whole industry, to go up and up and up and up until about 2007, which is when we closed pretty much everything and went totally online.
We never sold hot tubs online from our website, because we always had hot tub manufacturers as sponsors. So it was kind of a conflict — if we sold Jacuzzi hot tubs, then Hot Springs was an advertiser . . . So we always had that division between what we would accept advertising for and what we would sell, spa-wise.
Can you talk about some of the inherent advantages to selling in a store vs. online?
We did a consumer survey that looked at people's impressions of buying hot tubs. We went into quite a number of questions about whether you'd buy a hot tub online, if no then why? It was very interesting to see it from the consumer's point of view. In a nutshell, I can tell you that consumers are buying hot tubs online.
I can tell you consumers are more comfortable buying spas online now, and that has gone up exponentially over the last 36 months. As the recession has gotten worse and worse and worse, people's willingness to experiment with getting a hot tub online has gone up.
Before 1994, you didn't have to deal with this problem.
Well, I've seen a lot of "the Internet is evil" articles by the trade magazines, but when I first opened up in 1984 I had to deal with vicious competition from big-box stores and chain stores. I hate to say it, but now people just have to deal with big-box stores, chain stores and the Internet. It's just another thing. People are looking for somebody to blame. They're looking to demonize the Internet because they have both feet in bear traps and they don't know where to claw right now.
For the spa industry, our competition right now isn't between Coast Spas, Clearwater Spas and Hawkeye selling them over the Internet; it's between the spa industry and Sea-Do, the spa industry and home theater, the spa industry and a trip to Vegas, or a boat. This is the big obstacle the industry has to get over. There are some of our advertisers that do sell spas online, and there are a lot of spa manufacturers that have opened up sub-companies that are flat-out offering their spas, only a little different, over the Internet. That's just how the market is changing. I'm very against anybody trying to demonize the greatest invention since the Gutenberg printing press because somebody is selling a cheap Chinese spa for four grand on eBay.
Can traditional retailers and online retailers co-exist?
They do coexist. But there are some people who would never consider buying something like a spa online.
We did a survey and asked people if they looked into buying at an online hot tubs store. This was 50,000 people that we surveyed, and 52 percent said that yes, they had at least looked. The bottom line was that there were about 10 to 12 percent of people who said they'd actually consider buying a hot tub online. Now, when you're talking about an industry that could be up to 400,000 units a year, that's huge. It's going to continue to grow. But if I were a brick-and-mortar person and one of my staff said, 'Ugh. I can't sell against the Internet,' I would immediately fire him. You're not selling against the Internet. That's ridiculous.
Any other comments?
A brick-and-mortar store and a service man have 100 times more advantages than an online company. They get to see the person face to face, they get to go the yard, they get to say, 'Oh, you just got this pump? You need a filter too for another $800.' They can do the water testing. You know? I've had brick-and-mortar stores on and off for 31 years, and for anybody who has one of those, or a service company, to be scared of the Internet is like Sears being afraid of poolandspa.com. It's absolutely ridiculous. I mean, if I could invent a way to send a hand through the computer and fix a person's heater? Hey, great, we'll have an advantage.
Also, today as compared with three or four years ago, the prices of stuff from the retailers? We're not giving this stuff away, Barrett. We're not. There was a while there in the mid-2000s where everybody was racing to the bottom on the Internet because they were just looking at it as an adjunct revenue source to their 300 pools and 1,000 spas they were selling. Now, of course, sales are going down so everybody is crying like a baby. But the Internet has done more for this industry than anything ever. Period. It has helped this industry, it has made it seem more professional to consumers, it has given consumers more information about the new Polaris automatic cleaner or whatever. But still, to this day, 96 percent of people do not buy their pool stuff on the Internet, I hate to tell you. They research it on the Internet, and they print it out and walk into the brick-and-mortar store. So, if anything, I'd like to see a reverse article done about how evil the brick-and-mortar stores are, taking away business from online retailers! (laughs) We go through all the promo and the teaching and the video and everything and then maybe three percent of those people purchase online. Who gets the business? The service guys and brick-and-mortar people. And then during an economic downturn, they want to go and bite the hand that feeds them.
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