Fountain eliminates factory-direct purchases

[LuckyLady]

Fountain eliminates factory-direct purchases

Posted on December 03, 2010

Fountain Powerboats is discontinuing its factory-direct Fountain Factory Superstore, the company announced today.


"The factory superstore was an effective interim selling solution prior to Fountain's reorganization, but today retail interest is on the rise, our dealers are gaining confidence in our new management team and other dealers are taking notice," COO John Walker said in a statement.

"Overall, the mood surrounding Fountain Powerboats is very encouraging and we are enacting new strategies that serve our long-term vision for the company," he added.

Previously, potential retail customers in North Carolina, South Carolina and Virginia were offered the option of purchasing boats directly through the factory superstore, via its website and dedicated factory sales staff. This practice is discontinued, effective immediately.

"Providing Fountain's end customers with a positive service experience is crucial and there's no better way to assure such an experience than by partnering closely with a strong dealer network," Walker said. "With that in mind, the decision was made to allow our dealers to do what they do best while we refocus our own efforts on supporting them."

Washington, N.C.-based Fountain Powerboats produces an array of fishing boats, express cruisers and high-performance boats ranging in size from 29 to 47 feet.

Last month, Fountain's parent company, Liberty Associates, said it was moving the manufacturing of two other brands - Donzi and Pro-Line - to Fountain's North Carolina plant.

Liberty also announced plans to relaunch Baja as a stand-alone brand.

[LuckyLady]

Wow I can't believe that it took them this long to figure out what a destructive process they created for themselves

[tags11]

how does the process become destructive? not disagreeing, just curious about the business model. is it because they now have to sell through dealers at a higher price or at least get a cut taken out of their originally whole pie? i never knew fountain boats worked like this...pretty interesting

[LuckyLady]

how does the process become destructive? not disagreeing, just curious about the business model. is it because they now have to sell through dealers at a higher price or at least get a cut taken out of their originally whole pie? i never knew fountain boats worked like this...pretty interesting

Its pretty simple actually, the biggest factor that plays in to factory direct is a lot of people get hurt in a few different ways.

The number one for the consumer is there is no stable retail price and it affects resale and trade in value.

Midnight express did it to themselves 1st and Fountain decided to give it a whirl. What happens is you create a retail market that is unbalanced and unstable pricing.

Example

Take a 39 Midnight for an example

The consumer buys it a X price keeps it for a year or so and the goes to the market to sell it and is asking a reasonable price based on the rest of the boats on the market and then the actual trade in value.

So we have 7 used Boats listed with all similar pricing and price point characteristics , and they all are selling at or around say 200k.

Now a new boat buyer comes in to the mix and he starts shopping used and new and learns that holy frick I can buy a brand new 39 for 170k

You tell me if it was cheaper to buy a new boat vs used what route would most take. Then you have a bunch of boat owners that can't get rid of thier boats, can't trade them because the value is so far off that they can't even get a note.

Potential used boat buyers can't finance on used boats because the bank runs the numbers and says there is no way the boat is worth 200k its trade value is 110 and can't be insured for the full value

Then dealers that bought 07 products still has them in 2010 because the factory dropped their pants with pricing and can't move a single unit..

It's a vicious cycle that it produces and the end results are bad for the factory because they can not hold their doors open not get their dealers to buy inventory because their lots are over stocked with old product.

Then the dealer goes bankrupt they Fountain ends up having to buy some if not most back off some of the floorplans

Make sense?

[tags11]

got it, makes sense. if there's an overflow of boats at companies, perhaps they could have a one day event where they open their doors and if you have a towing vehicle u can just take the boats off their hands for them! some people could tow a nice 30cc and if u have a really bad ass rig like admin, u could prob tow away the whole factory!! i'll pitch this idea to a few companies for the holiday season

[SeaBiscuit]

Mary,
Doesn't yellowfin sell factory direct? It seems to me they have been successful with that approach and they certainly have loyal customers.
On the other hand, dealer rigging and service have been the only problems I have ever had with my contender.
Thanks,
SeaBiscuit

[LuckyLady]

Mary,
Doesn't yellowfin sell factory direct? It seems to me they have been successful with that approach and they certainly have loyal customers.
On the other hand, dealer rigging and service have been the only problems I have ever had with my contender.
Thanks,
SeaBiscuit

Yes Yellowfin sells direct but they have sold direct since day one so there is no dealers and odd ball pricing or dealers to deal with.


It becomes a problem when the factory sells to dealers for them to retail the boats then decide to sell factory direct while they have a field full of inventory.

The 39 Midnight is a real life story a guy had a 39 brand new trick and rigged out and it was cheaper to but a new one because at the time when the guy bought his boat pricing was X on the boat. Then Midnight must of got in trouble or wanted to compete harder and lowered their prices on the boat making it cheaper to buy a new boat than a tricked out rigged low hour boat that was on the market.

Kind stuffs customers on resale as most likely they will always be stuck with that boat

ps. I'm not a big fan of the dealer in your neck of the woods.