Point: Online Sales Help the P/S Industry

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It’s no secret that customers are increasingly turning to the Internet for their everyday shopping needs. According to the Commerce Department, web sales totaled $304.91 billion in 2014, up 15.4 percent from 2013. And those numbers are only expected to climb in the coming years.

For pool and spa dealers, the rise of Internet retailing is one of the most pressing issues of our time. As customers flock to the Internet to buy APCs, pumps and chemicals at cheaper prices born of lower overhead, long-established stores lose vital sales.

To learn more about each side of this issue, we turned to two people directly affected by it: Dan Harrison, president of PoolAndSpa.com; and Scott Long, a longtime brick-and-mortar retailer. We asked them both the same question: Does e-commerce help or threaten the pool and spa industry?

Below, we have Dan Harrison's response; come back Thursday to read the other side.

Having been in the pool and spa industry for more 35 years, running both brick and mortar stores as well as online retailing websites, I firmly believe that the internet and online retailing have helped our entire industry as a whole.

In my years in this industry, I've seen this business from both sides — I've even operated walk-in brick-and-mortar stores at the same time I ran online retailing sites. In that time, I never felt Internet sites hurt the walk-in B&M sales. Quite the contrary, I feel customers who have researched products online prior to visiting a B&M make for the best type of consumers: people who are most likely to make a purchase that day. Additionally, I feel that the massive national and international exposure of the pool and spa industry's products via the Internet has helped out our industry more than any other single factor over the last 50 years.

The Internet is simply a marketplace, just like your local mall or Main Street, where retailers like Target, Sears, Macy's, Kohls, etc., all co-exist with smaller chain-stores like Old Navy, Foot Locker, Kay Jewelers, etc. Many of them sell the exact same products at different price points, and many of them tend to specialize in certain product niches. You can compare prices between stores within the same mall or Main Street in town, and then you make your final decision as to where to buy an item based on incredibly complex (and mostly subconscious) brain activity wherein you eventually decide that this is the best deal on this item.

The Internet is absolutely no different. With e-commerce, you're just throwing another purchasing channel into the mix. The Internet will not destroy our industry!

Remember when pool and spa companies starting selling products via mail-order catalogs in the 1980s? There was a similar debate back then, too, about how mail-order catalog companies were going to destroy our industry. And as you all now know, they did not.

As on online retailer, I would certainly like to see the percentage of online sales increase. But within our industry, there are certain inherent obstacles that online retailers will never be able to overcome with many pool and spa customers. The simple fact is that many (I would say most) pool and spa customers are loyal to their original dealer/installer, and many of those who may not be still prefer to shop at a B&M for pool and spa supplies for numerous logistical reasons (the need for water testing and chemical advice, the inability to properly install many pool and spa products, the need for very large item to be delivered and installed, the need for repair to their pump or APC, their immediate need for some chemicals or parts, etc.).

Obviously, our industry (and specifically B&M's) have taken a big hit over the last few years, primarily due to the recession. Concurrently, e-commerce has been on a slow and steady rise. It's very difficult to come to any statistically relevant conclusions about which is affecting what, since those two major historical events have been occurring at the same time.

If you asked any statistician to look at the pool and spa industry statistics from 2008 to the present, given the economic turmoil and the rise of Internet acceptance (as well as the invention of smartphones and tablets) there would be no way to statistically pinpoint what proportional effect the Internet specifically is playing within our industry. It may have caused some downward pricing effects on aftermarket supplies, but then again, maybe not. Maybe B&M's would have been forced to lower their prices during the same recessionary period just to stay in business, and maybe many of them would have gone out of business anyway, even if there were no internet. It is extremely hard to empirically measure these things given the variables present in our industry since 2008.

In fact, one could argue that if it were not for the Internet and online e-commerce sales during the last six or seven years, our entire industry may have tumbled even more than it did. I would argue that if anything, the Internet and e-commerce will go down in pool and spa industry history as the single most powerful guiding force that helped our entire industry weather the longest and worst economic downturn it has ever seen.

We simply have too many unknown variables here. The recession, millions of home foreclosures, a lot of people still out of work, low numbers of new housing starts over the last several years and an unknown amount of consumers who chose not to open or use their existing pool due to operating costs — all of these issues have hurt our industry to a larger extent than e-commerce.

The only real statistical conclusion about the Internet that can be drawn here is that, yes, B&M's have lost some business specifically to Internet sales. And there are certainly some e-commerce companies who are putting downward pressures on the prices that our industry's products were historically sold for. And even I, as a long-time Internet retailer, don't like to see companies use a "race to the bottom" pricing strategy. But let's not forget that fact that the Internet has been around since 1994, and we heard very little complaining about this entire topic from anyone until the recession really started to hit our industry around 2008. Once the big money started to dry up from new pool and spa sales, that's when these "Internet-is-evil-themed" debates really started to heat up. And as I have written many times before, I feel that this whole topic will go by the wayside once the economy fully recovers once again. Of this, I am certain.

Remember the big uproar that occurred when big box stores started selling pool and spa chemicals, hot tubs and aboveground pools? That started to happen in the mid 1990s. Last I checked, our industry was not singlehandedly destroyed by big box stores — although if you were active in our industry during that time, you were probably concerned it was going to be.

If anything, big box stores ended up exposing our products to many people who may not have been previously aware of them. This actually gave us all a lot of free advertising because these products were shown and offered by big box stores. Again, some people did buy those products from big boxes, but many went directly to their nearest B&M store to get more detailed information and purchase them from a "real" pool and spa dealer. Once again, another total similarity in the buying tendencies between different types of consumers, and another example of how alternative distribution channels for our industry's products are rarely a bad thing in the long run. The rise of e-commerce is no different.

For all of these reasons and many more, I firmly believe the B&M's and online e-commerce retailers can, and will, co-exist moving forward. And in my opinion, they should work to complement each other, with the ultimate goal of bringing our industry's fun and wonderful products to the largest audience possible, regardless of where any specific consumer feels the most comfortable making their purchase.

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