The Current State of the Industry- A Wholesaler’s Perspective - Part 1
In recent times there has been a lot of commotion amongst the shop retailers and rightly so. This industry is highly competitive and everyone is out there trying to get ahead often at any expense. This is clearly voiced in various aquarium circles where the retail sector, focuses the blame and demise of the industry on wholesalers, online retailers, backyard operators and maintenance people. From a wholesalers perspective, which is seldom heard or voiced, there are very similar concerns but at another level.
Most stores come from a perspective of being the big fish in a small pond. I come from being a small fish in a big pond. I would like to highlight the vast issues that I as a wholesaler deal with on a daily basis and bring to your attention and broaden your understanding of what is going on out there. One of the main issues for me is retail stores bypassing the wholesaler and purchasing their stock direct from the producer.
I myself being a wholesaler with a warehouse have similar types of overheads as a retail shop front (only on a much grander scale!). I am disappointed with the fact that many store operators choose to purchase their locally bred goldfish from wheeler n dealers who drive around in vans selling goldfish at tiny margins. These wheeler and dealers do not have any rent to pay, staff to pay, electricity/water bills to pay yet a huge proportion of my Sydney customers continue to buy from them. Yet they cannot understand what’s wrong with this. Simply they are saving money on a cheaper product. This is just one example of the myriad of cases where the retailer bypasses the wholesaler and purchases their stock direct from the producer.
Similarly customers/backyard-ers/home breeders who bring fish to stores in buckets are another example. I would be out of place to demand they be sent to a wholesaler to be sold back to the retailer at a margin. I understand and accept this kind of practice happens and it is not my place to comment but to purely highlight how complicated and widespread this practice is. Retailers want wholesalers to support them yet they are not reciprocating this support to the wholesaler.
I understand with the development of the internet and the widespread use of social media the “secret suppliers” we all had are now much more visible and contactable. They are often contacted by retailers to get fish at a cheaper price and also in attempt to make a quick buck the producers themselves target the stores directly and all these activities have been quite common practice and we have all been guilty of this to some degree.
To be honest the wholesale price of fish has not changed much over the past 10 years even though so many associated costs have risen and keep rising at astronomic rates. For a wholesaler the following costs have all been going up; petrol, freight, wages, quarantine fees, broker fees, electricity, water, rent and combine this to the Australian dollars’ weakened state all have had a negative impact on the landed cost of fish for an importer. Yet most wholesalers are in a price war at the moment keeping prices down in order to grab market share to survive. Working on low margins is tough and I am sure most retail stores face similar issues with other stores undercutting each other and customers walking in with price match requests on their phone from the cheapest seller regardless if they are online or shopfront.
This is such a complicated issue on so many levels, as such there is no black or white answer, or easy solution to it. Recently we have several importers selling direct to the public through both online avenues and their own retail shopfronts. What stance do the retail stores have on this threat?
I understand the need for tiered pricing for a wholesaler but who will regulate this? And what would the level of pricing be? And how would anyone know if it was being adhered to? Conversely, is there any set standard for pricing out there for retailers to adhere to (ie an RRP)? Just as retailers voice their concerns of how the retail price of fish is damaged by online operators, so to the wholesale price is also damaged by the producers selling direct to retailers and importers selling direct to public.
I myself have been in the wholesale industry for over 12 years and during my early days an avid aquarist and home breeder of cichlids, rare L-number catfish and shrimps. I ended up with keeping over 100 tanks in my parents’ basement (more tanks than many shopfront stores out there). This experience has given me great insight and understanding of “backyard-ers” and during this time I had many visits from not just the general public but from many retail stores from all over NSW who would buy my home-bred fish and shrimp. People will come to you if you provide incentives to them. This experience has given me a good insight on many aspects of the industry and assisted me to save the money to purchase this wholesale business. So I confess to being a backyard-er in my early years but that is what got my foot in the door into this industry and I am sure many retailers have come from a similar starting point so please remember your roots and where you came from. These days I cannot remember the last time a new aquarium store has opened, all the recent growth has been online. Would it be wrong for us to prevent these potential newcomers to the industry who one day may own a shopfront?
I believe and hope most of my valued customers have come to understand that I am a man of my word and strong supporter of this industry and not a dodgy operator out there to make a quick buck. I am in this for the long haul and those who have met me know how hard I work each day to supply the best fish around at the best prices. I would also like to clear up several damaging and untrue rumours that are going around about Aquatic Solutions currently.
- We do not supply any of the retail chain stores
- We do not own any retails stores
- We do not sell to the public
- We do not have a website that sells fish direct to the public
- I, Julian Wong still own Aquatic Solutions
I hope this article provides some insight to what we deal with here and hope to see some real progress in addressing these issues. Please check out part 2 of this article ‘The Current State of the Industry- Ideas and Solutions Moving Forward’.
Julian Wong B.Sc. Hons
JMW International Pty. Ltd. t/as Aquatic Solutions