Dear Black Diamond,
I've just heard the news that BD has pressured Scarpa and Fritschi into not permitting the good folks at Telemark-Pyreness to sell those brands. I understand some of your motivation for protecting your turf in the states. However, I had to plop down over US$1300 hard cash this past fall to purchase my Lazer/Diamir/Mito setup through BD-Idaho Mtn Touring and, in hind sight, don't feel we Yankee's should have to pay over 40% more for gear than our European brethren. I will now make it a point to put BD at the bottom and T-P at the top of my list when its time for my next major gear expenditures. I guess this all comes down to economics, but there are your economics and there are mine. I understand yours but I must live with mine and those are that I can't afford to throw away hundreds of extra dollars on AT/Tele gear. I still appreciate the concept of the value added by purchasing through local shops who get their gear through distributors like BD, but not at +40%.
I don't appreciate your aggressive Microsoft like manipulation here. I just hope others sit up and take note of what you've done. T-P's worldwide business model represents are new paradigm (sorry I had to use it here) in the ski industry which is overdue for an overhaul to rid the purchasing public of the monopolistic pricing strategies it has suffered with over the years. O.K. I'll step down of my soapbox now.

You've clearly stepped over the line here in my mind.

A former BD customer,

Steve Durnal

I havent bought much BD stuff YET, and Now I am sure that I will be following your leed.
Terry

>Dear Black Diamond,I've just heard the news
>that BD has pressured Scarpa and
>Fritschi into not permitting the good
>folks at Telemark-Pyreness to sell those
>brands. I understand some of your
>motivation for protecting your turf in
>the states. However, I had to
>plop down over US$1300 hard cash
>this past fall to purchase my
>Lazer/Diamir/Mito setup through BD-Idaho Mtn Touring
>and, in hind sight, don't feel
>we Yankee's should have to pay
>over 40% more for gear than
>our European brethren. I will now
>make it a point to put
>BD at the bottom and T-P
>at the top of my list
>when its time for my next
>major gear expenditures. I guess this
>all comes down to economics, but
>there are your economics and there
>are mine. I understand yours but
>I must live with mine and
>those are that I can't afford
>to throw away hundreds of extra
>dollars on AT/Tele gear. I still
>appreciate the concept of the value
>added by purchasing through local shops
>who get their gear through distributors
>like BD, but not at +40%.I
>don't appreciate your aggressive Microsoft like
>manipulation here. I just hope others
>sit up and take note of
>what you've done. T-P's worldwide business
>model represents are new paradigm (sorry
>I had to use it here)
>in the ski industry which is
>overdue for an overhaul to rid
>the purchasing public of the monopolistic
>pricing strategies it has suffered with
>over the years. O.K. I'll step
>down of my soapbox now.

>You've clearly stepped over the line here
>in my mind.

>A former BD customer,

>Steve Durnal

[ It is Black Diamond’s policy to refrain from using the Internet (outside of our own website) as a vehicle for publishing our position or point of view. However, in this case, we felt it was worthwhile to post our response to this email as an attempt to clarify certain aspects of this situation. ]

Dear Steve,

Thanks for your post/email. Though it’s upsetting to have you referring to yourself as a “former BD customer”, the exchange of different points of view is always a good thing in my opinion. Your dissatisfaction seems to be rooted in what things cost in our/your marketplace as compared to what things cost in other marketplaces. The Internet is certainly playing a significant role in making consumers aware of what various products cost in other markets as well as speeding up the process of moving to a “global” pricing scenario for consumer goods. This is a sticky issue that everybody, especially those who are involved in the making or selling of any consumer good or service that is sold internationally, is wrestling with.

Everyone wants the best value and price that they can get when it comes to spending their hard-earned dough. We feel exactly the same way so we understand where you’re coming from! I’d like to respond to a few of your points and make a few of my own.

First, let me assure you that no one at Scarpa, Fritschi, Black Diamond or Idaho Mountain Touring (or any BD dealer for that matter) is parking a Mercedes in their garage with the wild profits being made selling telemark or AT gear! Frankly, this is a tough business to be in (granted, no business is easy) but what makes it a very rewarding business to be in is the fact that we all, just like you, share a love for skiing in the backcountry. Any business needs profit to survive, grow and invest the millions (yes, millions!) of dollars it takes to develop killer new product, but counting the money is not the motivating factor for any of us.

It seems there are two issues here. The first is the difference in price from one market to another and the second is Telemark-Pyrenees being asked to limit their sales to their marketplace.

What goes into the cost and pricing of these products in the U.S. market and why is this different than the cost and pricing of the same products in the French market? First, there are big differences in the costs of sales and promotion between these two markets and this certainly affects retail pricing. Another factor affecting retail pricing is the cost of product development. Unlike most distributors BD is a co-developer of all our ski-line product, even if we are not the manufacturers. I’m not talking about sitting at a sales meeting and offering our opinions, I’m talking about design, engineering, field-testing and travel costs.

The biggest factor affecting retail pricing differences is the actual landed cost of the product. This obviously is a combination of the price the product is sold to Black Diamond for along with freight and duty. All of these are different for both the French and U.S. markets. The transatlantic freight is included in the U.S. retail price and obviously is not in the French retail price. You also are beating the U.S. duty, which again is included in the U.S. retail price, unless you are unlucky enough to have customs notice your package!

But honestly, the biggest difference is due to how the product is priced from the manufacturer for the different markets. In other words Black Diamond and the French distributor do not have the same basic product cost. This happens for a variety of reasons. Different economies, the fact that a manufacturer may be making a price play for market-share, currency factors, etc. all factor into it.

If Black Diamond and our Dealers were to try and match French retail prices on telemark and AT gear we would go out of business. Not because we are crappy business people but because our marketplace costs are different, simple as that. Can BD and our dealers become more efficient? Sure, we are working hard to do exactly that because our survival depends on it as we move towards “one world, one price”. Steve, you state in your email that you understand and appreciate the concept of “value added” and that you believe that good distributors and local dealers bring that to the table but that your not willing to pay “+40%” for it. You’re not paying that, not even close.

I’m sure that the folks at Telemark-Pyrenees are great people. I don’t know, but I would bet that they share the same passions that drive Black Diamond and our Dealers. That said, their “business model” is not a “new paradigm”. It’s simply a different cost structure. If they wish to compete with Black Diamond’s Dealers that’s fine with me as long as they compete on a level playing field on the basis of product assortment and service, not on the fact that they are buying product at prices designed for one market and selling it in this one.

Black Diamond has invested aggressively in order to develop Tele and AT products for our market. Black Diamond and our Dealers have worked hard and invested aggressively in building and servicing this market. Do you think it’s fair to then let a dealer from another market who has contributed no “value added” to this market and who pays a different price for the product sell in this market?

One last thing I would like to address is your reference to the “monopolistic price fixing strategies” of the ski industry. I just want to point out that this “monopolistic” strategy has been anything but and the end result has been the collapse and consolidation of the manufacturing end of the ski industry over the last decade.

Steve, whether or not you’re a BD customer is your choice to make. Clearly, we seem to disagree on some basic philosophy and where the balance lies. My hope is that this response will effect that decision or at the very least explain our point of view.

Sincerely,
The Employee Owners of Black Diamond Equipment LTD.

Chris Grover,
Sales Manager

The primary letter written regarding this thread and the primary response bring up excellent points and counter points within this topic. The letter writer seems to see a black and white problem that actually has many shades of grey as described in the response. Economics, currency, dealer/seller motivation for market share and "overhead" costs in different countries and marketplaces can drastically affect pricing ability. I do not believe that BD and their Dealers are trying to soak the US backcountry population though making a profit is important to survival in this business. I buy all my equipment for backcountry use in the US via local shops and internet because I know that we are a market that supports the R&D that has made skiing such a blast these days. You want cheap prices? Wait 'til this stuff goes on sale...it all does at one time or another during the year.

As a final note. The response from BD did not directly address the allegation that they pressured European distributors/dealers into "sticking to their own market place". Could you please address this directly? Global marketplaces are a thing of the future (and even the present) and this kind of tactic is not endearing to your customers. You will have to deal with this kind of global shopping more and more so you may want to rethink your marketing/sales/pricing strategies (or whatever).

Thank you

Paul Salyers

I can sympathize with BD's poistion - they can't keep their prices as low as T-P (and other European outlets) and it's not BD's fault. I'd even be willing to pay more for BD gear in view of their innovative product line that continues to make skiers' lives that much better. However, we're not talking about a small price difference. The difference between US and European prices are HUGE and I'm not prepared to pay THAT much more for my ski gear. There is a limit to the price difference that I'll tolerate before buying from Europe.

Other skiers may make the same decision and as a result companies like BD may not be able to survive in the ski industry. C'est la vie. We'd have to buy from European companies. Rather that than pay twice the price.

Since BD have brought up the subject of different costs, how about giving us a brief rundown of the numbers involved? For instance, what does it cost BD to buy a T1 from Scarpa. Does it cost a European outlet the same amount? How about shipping and tax? How much profit does BD make on a boot? Maybe breaking it down in this manner would illustrate how much more difficult it is for BD to keep their prices down? How about it BD? Why not gives us the facts?

Also, why block T-P's sales, but leave other European companies free to sell to the US?

The post by BD is very interesting reading. As a European resident I have from time to time purchased motivated solely by pricing - whether that means buying here in Switz/France or importing from the US, paying freight and customs duty and VAT.

Although skis have pretty much always been cheaper here, the new exchange rate has made the differential on bindings, boots, etc., even higher. On the point about different costs, I would note in passing that Europe, and France in particular, are internationally infamous for their outrageously expensive overheads taxes etc and freight charges.

The real reason (and only excuse I can fathom) for BD's dilemma seems to be related to the STUNNING evolution of the US/CHF/FF exchange rate. Over the last year, the balance has shifted in favour of buying locally. We've seen close to a 40% improvement (in US favour) of the exchange rate, and the medium term prognosis is for further gains. In practical terms this meant that last winter Skyhoys were selling in Switz and France for around 1200FF (US$168), full retail price. I understand that they sell for rather more than that in the US. Conversely, when you import a G3 binding from the US it costs the same as a Skyhoy.

If BD have been invoiced for their Austrian skis, their Italian tele boots and their Swiss telemark bindings in US$, I can see the problem (though that is what hedge funds are for). IF, however, they've been invoiced in Euros, I have no sympathy for them AT ALL!

Peter European perspective is vital here. We American's tend to have a rather self-assured notion of the value of the dollar, particularly in times when the economy is strong and "consumer confidence" (that subjective measure of willingness to buy on which everything American seems based). But the dollar is not a fixed concept and does not have universal value, especially when other currencies are at such a disadvantage. The common wisdom is that BD pays the same manufactured cost that TP does; but the dollars that BD pays are worth much more than the Franks TP pays, even if the manufactured worth (as opposed to cost) remains the same. I doubt Scarpa is dealing in Euro values yet, although even the Euro is not holding value either. When BD answers that TP should "level the playing field," a rather complex matter of international finance is being oversimplified. And by comparison, TP has a lot to gain by being payed in dollars; they are playing this game, too.

One other matter: BD is a distributor, not a retailer. BD has it's own markup. The only time BD make a lot of money is when they sell direct through catalog sales because they have effectively bypassed the markup of one of their retailers. But BD has never been predatory about catalog sales, and they support their dealers quite well (I have worked for one for 12 years) and have been exemplary in growing the industry.

This issue is just one little corner in what will soon be a deluge of internet international purchasing complaints, and there is apparently legislation afoot to do exactly what BD wants, to "level the playing field" by observing economic boundaries even when making international purchases.

Now, will a real economist please lay this all out numerically?

Dave Swain

Speaking as an englishman who has always found that most outdoor stuff in the US costs about the same in dollars as it does in pounds in the UK (ie a _lot_ less) this argument comes as something of a surprise.

If it's any consolation houses, cars, energy, clothes, CD's etc all seem to be cheaper in the US than in the UK. But in the UK, for some reason, we pay a lot more for cars than our neighbours in mainland Europe.

I don't suppose it makes anybody reading this in the States feel much better about paying more for ski gear (is this really true across the board) but might give some indication of the complexity of the issues.

Richard

>Peter European perspective is vital here. We
>American's tend to have a rather
>self-assured notion of the value of
>the dollar, particularly in times when
>the economy is strong and "consumer
>confidence" (that subjective measure of willingness
>to buy on which everything American
>seems based). But the dollar is
>not a fixed concept and does
>not have universal value, especially when
>other currencies are at such a
>disadvantage. The common wisdom is that
>BD pays the same manufactured cost
>that TP does; but the dollars
>that BD pays are worth much
>more than the Franks TP pays,
>even if the manufactured worth (as
>opposed to cost) remains the same.
>I doubt Scarpa is dealing in
>Euro values yet, although even the
>Euro is not holding value either.
>When BD answers that TP should
>"level the playing field," a rather
>complex matter of international finance is
>being oversimplified. And by comparison, TP
>has a lot to gain by
>being payed in dollars; they are
>playing this game, too.

>One other matter: BD is a distributor,
>not a retailer. BD has it's
>own markup. The only time BD
>make a lot of money is
>when they sell direct through catalog
>sales because they have effectively bypassed
>the markup of one of their
>retailers. But BD has never been
>predatory about catalog sales, and they
>support their dealers quite well (I
>have worked for one for 12
>years) and have been exemplary in
>growing the industry.

>This issue is just one little corner
>in what will soon be a
>deluge of internet international purchasing complaints,
>and there is apparently legislation afoot
>to do exactly what BD wants,
>to "level the playing field" by
>observing economic boundaries even when making
>international purchases.

>Now, will a real economist please lay
>this all out numerically?

>Dave Swain

I was about to purchase Denalis and Fritschis from Telemark-Pyrenees. I had budgeted the amount necessary to do so. If I cannot make that choice due to the interference of BD, I problably will not choose to purchase those items from BD distributors. I just cannot justify paying the full retail price of those items in the US right now - especially knowing the difference between the prices that European skiers would pay for the same items and what I would pay at a local shop.

There is no duty on ski boots imported into the United States. The price of the boots advertised by TP includes shipping to me in the United States. There is still a difference of approximately $140 on the Denalis. Excluding shipping, the Fritschis are around $150 cheaper from TP than they are in US shops distributing them for BD.

BD can spin this any way they want to. I could do just as well in a Garmont or Lowa boot, and I may like a Silvretta binding just as well as the Fritschi. That would be true whether I buy them from TP or not. The global marketplace cuts both ways and this marketplace includes information as well as goods. That information will shape consumer expectations just as it shapes consumer preferences. My expectations, as well as my brand preference, has now changed.

The same situation that exists between Europe and USA exists between Canada and USA. Different pricing policies, different distributors and of course the strong US dollar have all played a part in making Canadian sourced products cheaper. In many situations we are buying these products through the same channels as our US competitors but due to exchange rates and the monopoly pricing situation created by the MEC have meant that Canadian independant retailers have and continue to work for less money per transaction. Essentially we are just the northern mexicans working for powder instead of surf.

Hard Goods - ie skis, boots, etc are always the most price conscious products purchased and clothing, accessories are usually the items that actually generate profit - All of the independant outdoor stores in Canada must have an seperate source of income within the store in order to be profitable. Most stores use gear as the draw and make money on their other sales. In our case we offer a wide variety of services from ski mounting, avalanche courses, and our new venture - Ymir Yurts in order to actually turn a profit.

Customers obviously wish to buy their product at the lowest possible price and Retailers obviously wish to sell as much product at the most competitive price they can to make the most profit. BD is completely right in talking about the level playing field. The other thing to think about when buying your gear is do you want an outdoor industry in North America. Your local store and distributor deserves support if they support you in your activities and if they support the outdoors in the way you approve. BD and ourselves invest every penny of profit back into the industry - improving service, product, or support of events, pushing for support of the outdoors in front of the politicians.

Anyway it's getting late and this is an endless conversation. Think about it.

We should make it clear that ALL products
have costs for materials and design etc., not
just BD products, as Chris implies.

The comments made regarding the French
market seem to show a total ignorance of the
French market because costs are higher
there, for materials and administative costs in
addition to the fact that exchange rates
disfavor a weak Franc in relation to the dollar.
Chris' comments regarding the these two
markets seem so ridiculous as to suggest he
is just making up a bad excuse.
I have never bought BD (I buy French) and now
I will never.

What many of these posts seem to be ignoring is the markup at the dealer level. I'm not a skiier, but I am a cyclist, which by definition means I buy a constant stream of components (replacement rims, pedals, clusters, cranksets, it just never seems to stop!) And, the price difference between purchasing from a local shop (in Seattle, where there are a lot to choose from) and mail order is pretty significant, often on the order of 50% or more.
That's to be expected: they have salespeople to pay, building rent and utilities, display costs, shrinkage (i.e., shoplifting losses) and much lower volume than nashbar.com. (On the other hand, a good salesperson can give you valuable advice about new products and compatibility issues that the phone bank at the catalog store won't have a clue about.) And, if you need a replacement part at 6:00 PM Friday night for a Saturday morning departure, there's no substitute for a local retailer.
Of course, this doesn't address tarrif issues, or currency valuations, or even collusion, but on the face of it, it's unrealistic to expect to pay as little at a retail store as you do from a mail-order (or web-order) sales operation, even if the retail store is REI, and they sell skiis by the truckload (after all, the money for these flashy Flagship stores they're putting up as to come from somewhere.)