Must Be This Way » Gear: A Question of Ethics?

Gear: A Question of Ethics?

This is a subject that I’ve talked about before but one that – in the light of some recent conversations – I thought I’d return to.

Imagine you are a small-scale, lightweight, gear company, let’s say in the US. You’re designing some new titanium products for the lightweight gear market. Maybe, you’ve designed a new, titanium mug/stove.

You then search around for a company to manufacturer your product. The best prices are in China and the far east and you commission a company to make your product. You have to lay out for the tooling costs upfront and then pay for the first production run. So far so good. The product does well, after all the lightweight market is one that is growing. You then develop other items in your lightweight range and the company begins to get a high reputation in a small, but very passionate, niche market.

A few years go by and the product continues to be successful. You’ve now covered your original tooling and development costs and are into pure – but modest – profit. Profits are used to invest in the development of new additions to the range.

The range and its reputation grows. Specialist retailers in other areas of the world begin to get interested in your product. They contact you and work out a deal for distributing your product in, say, the UK.

And then other companies cotton on. Not only do they make the same kind of products they seem to be making exactly the same product. The product now appears in new guises, sold by companies who deal direct with the Chinese manufacturer and cut out the original developer completely.

Now this is nothing new. I remember my first trip to Hong Kong about fifteen years ago. Every evening, outside of my hotel, was a mobile market stall selling very expensive and exclusive shirts. I assumed that they were simply fakes but then found out it was not the case. My host for the trip – a business development expert – told me that these were kind of ‘real’ products. The garment manufacturer would receive an order for 10,000 shirts but would actually produce 15,000; 5,000 of these could then be sold direct on the streets the original design and set-up costs being met by the client and allocated across the unit costs of the first 10,000 shirts. Alternatively, the designs would be kept so that another few thousand could be run of quietly before anyone else knew it. Of course, big manufacturers employ agents to make sure this kind of thing cannot happen but in a place where there are so many, small, companies turning out
many different kinds of products for different clients, well it’s difficult to catch-up.

Well, this model is now alive and well and operating in the lightweight gear world. Apparently, China-based manufacturers of titanium gear are touting their wears direct now having seemingly forgotten the original designer and developer.

Now, what should we make of all of this? Well on the one hand we might be grateful, after all we are now getting quality stuff at knocked down prices. We’re all winners?

But are we winners, especially over the long term? There may well be two big loosers.

The first looser is the original designer. Yes they’ve recouped their initial product development costs and they’ve made some money. But they’re loosing out on sales and perhaps their product will simply stop selling. But your average lightweight specialist is not making a fortune out of their business; it is much a labour of love as a way of making a lot of money. If their revenues fall then they have less security, a reduced ability to think of new ideas and develop new products. And we – the consumer – might find that the innovation stops.

The second looser might be the decent and honourable lightweight company here in the UK. These are the people that have hunted out innovative products for us, developed proper relationships with US gear companies and have made the products available at a cheaper price than we could have imported them for ourselves. Of course, these products may still be relatively expensive given that they have to be imported but we expect that to some extent in niche activities. But cut-throat, discount selling – of the kind described above – might just make it difficult for our retailer pioneers as well.

So, perhaps we should think about the legitimacy of big discounters. Chinese manufactures can do this things partly because the country doesn’t follow all international business conventions. Some of the discounts look quite crazy. Their competitors know just how much a product costs and what a reasonable product mark-up is. Of course, at any one time these companies have their own discounts on items; but the dramatic across the board reductions we sometimes see leave them scratching their heads.

Does this really matter? Aren’t we the consumers just the winners here? I think not.

Often pure market economics don’t work in our interests. Over time our specialist companies can be short changed and those pioneers that we have come to rely on might simply decide that there is no point in continuing their business. And we might just loose those very businesses that are run by knowledgeable people who have developed reputations for good customer service.

There seem to be a lot of people suddenly operating in a very small market. Some of them may be new start-ups who are surviving with the help of first year start-up grants. Maybe others are being run by people who are quite happy to mess about in the evening after work, running their mail order business from their back bedroom. There’s nothing new in this; I’ve known all kinds of people that have done this. But few of them ever survive.

I seriously doubt that there is room for all of these companies and there will be a natural culling of many of them over the next year or so. And who knows where that will lead us.

It was clear from conversations at the Outdoor Show (so no – this isn’t Bob Cartwright talking here as he’s away on holiday) that some of the big manufactures know that trouble is brewing. And – for example – the big players and fabric producers know that too. I’m told that a number of the well known fabric brand names simply will not supply some companies. They fear that as soon as they do the designs of their customers will be knicked and the same things we see with titanium will happen with other products. For example consider, say,a Montane Featherlite windshirt. These are astonishingly cheap but £9, where would that leave us?

So, I think we should all have a think about ethics before we buy. Are the prices of that retailer widely out of synch with what the majority are doing? maybe there is a hidden subsidy here and maybe we’re talking about someone who won’t be around next year; in the meantime they could have done a lot of damage. And also, have a look at the gear manufacture’s range of products. Are they using major fabrics? If not, well maybe its not just because they’ve been skilled in design, maybe it’s because they won’t be supplied for the reasons I’ve just looked at.

The gear industry in general faces a great challenge from the Lidls, Asdas and Tescos, and no doubt this is why we are seeing so many branches of Millets closing down. But to some extent this is a fair fight in the world of high street retail.

But it is not the same when we look at small, niche markets, like lightweight backpacking. We need to be protective of our small and fragile market.

What surprise me is why we’re never seeing anything written about these issues in any of our major magazines.

It’s time for a debate I think.

18 Comments so far
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Possible because the mags rely on the big advertisers to keep their print copy going? And don’t want to rub them the wrong way. Lets face it the revenue from readership alone won’t keep any big mag alive these days.
I had some parallel thoughts considering the kit on offer at the NEC, thinking along the Tesco/budget lines business model and their potential impact.
But Millets – typical coproate buy out of competition, and then overextension based on a market fluctuation. Blacks big enough to ride this one out I reckon.

So at least there’s a few of us talking about it. Ah the joys of blogs

Thanks Andy – a thoughtful piece.

John,

I knew I could count on you to read it!

Great article! I wonder if we will observe a tendency in our niche market that manufacturers will move away from producing in countries like e.g. China back into their home countries. Companies like ÜLA doing it since their start and making a good marketing campaign around it. In comparison companies like Big Sky do face big challenges in terms of production quality and delivery times by outsourcing their production to China. And see also the comments on the recent titanium pots introduced by Backpackinglight in the US. They also suffer badly from product quality resulting in lowered customer satisfaction. I wonder how many people moved away from buying products from e.g. Big Sky after reading the endless comments in the forums complaining about them.
It might be a chance as I observe the customers of lightweight equipment being less price sensitive compared to the mass market consumer. They know that quality and lightweight comes at a price and are willing to pay it.
Maybe the challenges are bigger for the mass outdoor market producers and less for the lightweight niche market.

Maybe….

Certainly, price is not the only issue.

What we must recognise that the lightweight market is small and also fragile.

Very thought provoking Andy. I agree that we need more debate on this and identification of the discounters benefiting from this – am I right in thinking that the (ulatra) big boys are just as guilty as the ebay traders ? Most outdoor consumers just have no idea (me included until I read this)

I’m no expert on this but have had several conversations about it over recent months, and these were amplified at the Outdoor Show.

Many of these discounters do flog stuff over eBay as well. There are all kinds of reasons that they might do this.

For example, there is one major tent manufacturer who for a long time would only supply to businesses with shops. This really pissed off many of the internet traders as these same stores had cheapo web operations which is where they really did sell their stuff.

The manufacturer then changed their policy. But now – as I understand it – they will only supply a package of tents, i.e. you have to take the whole range, This essentially means that lightweight and backpacking sites have to be prepared to take tents that they can’t sell. This costs can cost them thousands of pounds in outlay. As a result many of them seem to have just decided to look elsewhere.

But one or two of the cheapos may have simply bought the whole package and simply disposed of the unwanted stuff over eBay.

All of this creates confusion. And it is the manufacturer that is to blame. What really strikes you is that they really don’t understand the backpacking market and so, perhaps inadvertently, just make things very difficult.

They need to treat the net seriously and be clear that they can supply people who sell online and provide great customer service.

Afterall, I live between London (the capital) and Birmingham (2nd biggest conurbation) and I can’t buy this stuff in normal shops !!!

Yes, I think I know the tent manufacturer you mean and there was recently a similar parallel in the clothing market, but their argument was that they were under pressure from their large retail customers not to supply internet-only businesses. It’s a tricky issue, where everyone has a point, none of which are easily solvable and the ultimate loser is the consumer.

Obviously, this is the same company!

They are either being very disingenuous (for want of a better expression) or they just don’t understand their market.

Amongst their customers are companies that may have, say, a small store in the home counties but who sell most of their stuff under a separately branded, and priced, business over the net – and where, incidentally, the website is very crude.

Maybe you can understand that they have pressure from the big suppliers but then this confuses me also.

It is impossible to buy these tents from the major stores in Birmingham, for example. One of these big chains will supply the tent but only over the net. Go into the store and ask about them and nobody can help, they can’t take order and just refer you to the website.

This is really hitting the choice of the consumer. I don’t believe some of these stores have any intention of selling this stuff through their retail outlets. And so the ‘we’re avoiding’ discount merchants doesn’t ring true as – of course – they discount them over their websites anyway.

The Outdoors retail world in changing significantly because of the web. Web retailers can offer great customer service and provide us with choice. We as customers have no choice but to use them because it is the only way to secure products. I just think that we should be aware of our own sense of community and buy from responsible online merchants.

Wondering around the gear shops in Birmingham last week I realised that I can’t buy – or see – an eVent jacket anywhere in the city. I can’t buy Rab clothes (though this may change after the winter season has gone) and can’t find Montane anywhere. Paramo does not sell anywhere in the city either!

So, internet distribution is the way of the future; the industry itself has made this so. But there are eretailers and eretailers!

But back in the great second city I really have to settle for Berghaus, whichever chain I’m in !!!

Oddly enough, I’ve noticed quite a lot of rab & montane gear at my local cotswold.

Perhaps you should mention this debate to cameron – it deserves an editorial (or at least a debate on OM)

Cameron reads the blogs! I might write something and I’m sure he’d publish it, but I’d have to write something properly, of course.

There is no branch of Cotswold in BIrmingham

It’s one of the reasons I go to Snowdonia so often!

Well there’s now a local branch of Cotswolds in bournemouth, and I’ve become increasingly frustrated in trying to buy stuff that’s not in stock, or just poorly represented.
As a result they’re off my ‘must visit’ list for some time to come. i’m used to being in a non walking area, so don’t xpect the shops. But I have my favourites dotted around the country where I’ll go for the gear if I want choice and good advice. A pity the nearest is 100 mile away in Devon. Good excuse for a weekend away though

This illustrates the issue that I have raised before, namely, that gear shops now only stock some issues online.

I’ve always appreciated Cotswold but I’ve noticed that even their store in Snowdonia is now focussed mainly around end of line items – at least it has been the last few times that I have been there.

I think cotswold (& many others) went down the “travel clothing” route some time ago. That’s why I was suprised to find rab softshell and a fair bit of montane in my local one (kingston). It’s by no means a full range though, & I think i’d struggle putting together a proper kit list there.

The range certainly isn’t consistent. One time at Cotswold you can find one thing but never find it again. You certainly couldn’t get a gear range together.

Very interesting… what i’ve heard from alot of shops regarding tents and why they are less than helpfull these days is mainly due to people going in asking to see the tent up taking its name and then leaving without buying, in some cases even saying thanks i’ll go and look on the internet as it will be cheeper. So i’m not suprised that it’s hard finding them in store anymore especially as over the last 2-3 years most independents have been left with stock at the end of the season which they have had to discount and make no money on, another reason why they will not invest in the stock these days.

In one way, Rob, this is inevitable. But what is annoying me is that the manufactures are not really being honest about it.

And sometime, just sometimes, I get very confused. I live under the delusion that the make these tents because they want to sell them !!!

“The best prices are in China and the Far East…”

Well… if price is the only concern, then China and the Far East will do it, but they may well do their own bit on the side and nothing will stop them. Perhaps Nick at Paramo found a better way of getting a job done, dealing with people who are unlikely ever to do the dirty on him. Price isn’t everything. If you want an ‘ethical’ deal then maybe the ‘ethics’ have to come first.

Spot on Paddy. Nick at Paramo has certainly found a better way forward.

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