Editorial | Dive Industry Structure
Don’t Blame The Internet! The Traditional Dive Shop Business Model Was Dead Before That
Eight challenges & six elements of solution for a scuba diving industry in tune with today’s consumers, plus one new industry survey.
Darcy Kieran is the author of the handbook “Your Career and/or Life as a Scuba Diving Instructor: How to Make a Good Living Out of Your Passion for Scuba Diving” and a unique advanced logbook & checklists for scuba divers, divemasters & instructors.
Whenever I discuss the dive industry business model, people readily agree that the old business model doesn’t work anymore “because of online sales.” For sure, the rise in eCommerce affected the profitability of local dive shops. Still, the structural issues we face in the scuba diving industry go much beyond the internet and eCommerce.
If online sales were “the” reason local dive shops have a hard time, it would not be a challenge unique to the dive industry. It would simply be a question of the retailing world changing shape for everybody.
To design a new dive industry business model that can satisfy today’s consumers, we need to recognize that we have fallen behind even before the internet became a matter. If we only work on patching problems created by online sales, it would be like putting a band-aid on a scratch on the right arm while the left arm was entirely cut off. What should our priorities be?
First, I will summarize numerous ways in which our current dive industry structure and business practices do not satisfy today’s consumers. And then, I will suggest a few elements of a solution.
Please take part in our survey on dive industry business models & practices. Many thanks!Challenges With Our Current Dive Industry Structure & Business Practices
First, let’s look at eight pressing challenges we face in the scuba diving industry. They are presented in no particular order. Some of these challenges, like the lack of consistency in the quality of the experience, are more damaging than others. Still, together, they create a perfect storm that has dragged scuba diving participation down while the rest of the outdoor industry has been booming.
Specialists Working As Generalists
To be recognized as a dive center, training agencies and dive gear manufacturers require you to offer a complete set of products & services that were designed to satisfy the consumers in the 1980s.
To meet the requirements of being a “complete” or “real” dive center, owners must operate six businesses in one:
- A school for dive training
- A retail store for dive gear
- A travel agency or tour operator for dive adventures
- A fill station with a compressor
- A rental department for dive gear used in training and dive outings
- A repair & maintenance department for after-sale service and to maintain the rental dive gear
Through the years, numerous dive instructors made the plunge and opened a local dive center with all of these departments because they loved scuba diving and wanted to teach scuba. Right there, we have a structural problem.
We were asking and still expect dive instructors to suddenly, by some miracle, become businesspeople and retail merchandising experts. These dive professionals were trained to teach people how to remove and replace their masks underwater. Who taught them how to provide a proper level of customer service in a retail store? Nobody.
Dive store owners are usually dedicated people who care about the well-being of their clients. It’s not their fault if the level of service in local dive shops is often sub-par. It is the fault of dive training agencies and dive gear manufacturers continuing to enforce an outdated business model without providing these people with the training, tools, and support they need to make it work.
It can be fixed, and we’ll look at solutions later in this article.
Lack of Inventory & Merchandising
The typical local dive shop is a small business with revenues below half a million dollars a year, of which about half may come from selling dive gear. With annual gear sales of less than 250 thousand dollars, it would be financially disastrous for that business owner to keep every size, color, and model of the various products offered in the dive shop.
Unfortunately, today’s consumers expect everything to be available to them within 24 hours. That is the most significant impact that the internet, especially Amazon, had on local dive shops. People will not wait weeks or months to get the product they need for their dive trip next week!
Before the internet, scuba divers would place an order with their local dive shop and wait for the product to arrive. It was crappy customer service, but divers didn’t have a choice. Today, they do!
When people shop for snorkeling and diving gear, they expect to have access to every model, in every color and every size. Not a single local dive shop offers that kind of selection, which is one of the key reasons people go online.
Here’s a story from last month. I wanted to try the new Bare Exowear suit and compare it to the Sharkskin ones. Because I work in the dive industry and previously operated numerous local dive shops, I was determined to buy it locally. I am in South Florida, the area in the USA with the most dive centers. Yet, I couldn’t buy it locally, and it’s not because of a supply chain issue. All Florida Bare dealers I checked only carried a limited range of sizes. None of them ever had the LT (large tall) size in stock. They all decided to focus on the common sizes: M, L, XL, and the hell with the rest.
I understand that a retailer would want to limit the number of SKUs in his inventory and try to maximize the sales of each SKU, but here’s the thing. I need LT! If I didn’t know any better, I would have bought a Large, which is what two dive stores desperately tried to sell me. If I were a regular client, that is most likely what I would have bought, only to be uncomfortable while diving. And if later on, I had found out that a better suit existed for me, I would most likely have put that dive shop on my blacklist.
Huish Outdoors (Bare) went to the trouble of providing an assortment of sizes to make diving as comfortable as possible for everybody, but local dive shops don’t follow through with this game plan. So, I ordered it online directly from Huish.
Back to our discussion on the business model.
If (relatively) large dive shops in South Florida can’t afford to carry a complete inventory of Bare sizes, the small dive shops around the U.S. can’t, even less. Therefore, we have to find a different operating model that will allow us to serve customers properly by offering all models, in all sizes and colors, within 24 hours.
“It’s impossible” is not an answer in the competitive business world of 2022.
There are solutions, and we will get to them later in this article.
Free-Flowing Information & Pricing
When I hear dive industry people talk about the impact of the internet, they usually refer to “cheaper prices online.” Well, sorry, guys, but I don’t believe that to be the biggest problem.
First, on the pricing front, the real problem was that local dive shops were selling dive gear at ridiculously high margins to subsidize the money-losing parts of their operations. We can’t run a business like that. We need each of the six business units within a dive center to be profitable on their own. Now that retail dive gear prices are the same everywhere because there are no more online or catalog discounters, and local dive shops can’t overcharge because clients can check prices online, we still haven’t changed the rest of the operations to make them more profitable. We will get to that.
With price out of the way, let’s talk about the most significant impact of the internet: freely available information.
In the good ol’ days, people would come to my dive shop to find out about diving in Bonaire. We had books of pictures at the counter for people to browse, and we would answer all of their questions. Nowadays, nobody goes to a local dive shop to ask about diving in Bonaire. They ask Google. That’s one thing that makes the local dive shop much less of a place where divers naturally gravitate.
The other impact of free-flowing information is this. If I were to go to a local dive center, it would be to get expert advice that I cannot get online. And do I get expert advice? With most dive centers operating on a tight budget, the “store staff” is often composed of low-paid employees with little to no product knowledge training. The more I realize that the staff at my local dive shop doesn’t know more than I do, the less I feel the need to stop by or support it.
When I go to Walmart, I don’t expect the staff to know much about anything because it is a big-surface store focusing on everyday low prices. But when I go to a specialized retail store, I expect expert advice. And for that business to be able to offer that level of service to me, they need to invest in staff training. In that sense, a local dive shop should be much more like an Apple store than a Walmart. Typically, it isn’t.
No Consistency in The Quality of The Experience
That is a killer!
A new scuba diver may have a fantastic experience learning to dive with you at your dive center. Then, they go to another dive center under the same banner (pick any dive training agency you want) and be scared to death by the lack of professionalism.
We do not have exact figures on the impact of such a lack of quality on the considerable dropout rate we see in the dive industry, but it is sure to be significant.
A Training Model Focused on Fast Volume Instead of The Quality of The Experience
We all know it! It’s one of the most talked-about topics among dive professionals. We all complain about sub-par courses being offered all over the globe. Yet, we keep on running on the hamster wheel, like everybody else!
The simple fact that we sell “courses” instead of “dives” puts our clients and ourselves in the mode of “let’s complete this course” instead of thinking about improving people’s skills dive after dive, regardless of how many dives it will take.
The fact that you have to take a “course” is a turnoff for many clients and then, because it is a “course,” it is natural to want it to “be done” as fast as possible. My engineering degree was four years long, and it seemed like an eternity. I would have paid to get it done in three. The focus of everybody in that program was to “graduate.” Of course, we learned along the way, but we all wanted to “be done.” Life would start after graduating.
Similarly, because it is a “course,” it is normal for people to be in a mood along the lines of: “scuba diving will start after this damn course is done.”
Lack of Convenience
Take a step back and look at how we operate. Mostly, our business processes were designed to be convenient for us. It worked in the past when customers were not as demanding as they are today. But the past is the past! Today’s consumers will not jump through hula-hoops for the right to give us money!
Let’s clarify one point. I am not talking about making things “easy.” Many divers will take on scuba diving for the challenge of it — especially when getting into tech diving. I am talking about convenience.
For instance, instead of asking divers to come to a retail store with limited parking downtown to fill their cylinders, imagine if airfills were provided at the dive site…
“Be A Diver” vs. “Go Diving”
Male white baby boomers were the primary scuba diving market for many years. And for many of them, it had been a lifelong dream. Once they completed their scuba diving certification course, they proudly identified themselves as “being” a diver.
Younger generations are much less likely to fit into that pattern. Instead, they are more likely to “do” scuba diving, among many other activities, even during the same vacation. Selling a dive trip vacation with nothing to do except diving and drinking beer doesn’t fly with them.
A Segmented Industry
It is common when an industry matures to see consolidation and vertical integration. We have seen some of that in the dive industry. For instance, Huish Outdoors acquired many dive gear brands, and PADI swallowed Bonnier Publications and Diviac.
But the industry remains fragmented, which reduces any brand’s ability to control the quality of the experiences offered under its banner.
Furthermore, this lack of vertical integration means that the price paid by the end-user includes profits for numerous intermediaries, which reduces the financial ability of any of these stakeholders to make significant investments in quality control and marketing.
This list of challenges is not exhaustive. Two other opportunities I will address in forthcoming posts are the need to redesign how we use online learning to recruit and train scuba divers, as well as the necessity to redefine the dive tourist experience as part of sustainable tourism, a topic dear to Alex Brylske.
Six Elements of Solutions For a Better Dive Industry Business Model
Competing but not growing? Time to make a shift!
Each of the following six elements of a new business model for the dive industry has been discussed in one way or another in prior Scubanomics posts. I summarize them for you here.
A Trustworthy Brand Offering Consistency in The Quality of The Experience
This is not rocket science! It exists in every other industry. We need to design processes to systematically and consistently deliver quality to scuba diving clients, and then we need serious quality control.
Anybody who wants to operate a dive center under that new banner would need to be committed to the operating processes. It’s a bit like a franchise, but it doesn’t need to be one.
Over time, clients will seek that banner because they “know” what kind of service they will get at such a dive center or resort. It can only reduce the dropout rate (it’s impossible to do worse) and, therefore, contribute to growing the dive industry, on top of that brand grabbing additional market shares.
More info on the lack of a trustworthy brand in the dive industry and the need for consistency in the quality of the experience.
An Octopus Strategy
To be able to sell every model, in every size and color, and have it provided to the scuba diving client within 24 hours, we cannot rely on a network of small retail stores that cannot afford that level of inventory, on top of not being equipped to manage that kind of business.
However, it would be reasonably simple to operate a network of dive centers similar to showrooms and associated with a big warehouse where every model of every brand is available in all colors and sizes. Whoever runs that warehouse would need to be an expert at picking, packing & shipping, not at removing & replacing a mask!
In some markets, there may not even be a need for such a showroom. In some cases, the local brand representative could be an instructor setup with a compressor and rental gear at a local pool or dive site.
The octopus strategy would work nicely with the trustworthy brand discussed above.
More info on the octopus strategy in the dive industry.
Think Convenience
There’s not much to say about convenience except that we need to look at everything we do every day and ask ourselves if it is the best way to satisfy the client. It’s about removing pain points.
Reviewing our standard operating procedures to make them more client-friendly could be done while defining the processes for a brand offering consistency in the quality of the experience.
Vertical Integration
To maximize how much control that new trustworthy brand has on the quality of products and services it offers, vertical integration would help considerably.
For instance, if the bulk of the gear sold under the octopus strategy is from brands owned by this new operator, there are more profit margins to invest in quality assurance and marketing while being able to support the network of local showrooms and instructors.
Coaching
Let’s stop annoying people with the fact that they “must” take a “course” before they are “allowed” to go scuba diving, and instead, let’s offer them coaching sessions like my kids got at the ski hill.
We could then focus on helping each diver be better at the end of each dive until they are ready to go scuba diving with a dive buddy.
In that context, a per-hour rate makes much more sense for numerous reasons that could be the topic of a future post. Subscribe to be part of that discussion.
A Variety of Activities
Finally, to satisfy a wider section of the population, we should think about setting up and operating water sports centers instead of dive centers — or even better, water & wind centers! When the weather is bad for diving, it’s usually good for kitesurfing.
Having a wider variety of activities would make it easier for somebody whose spouse is not scuba diving. Maybe that spouse is into yoga on paddleboards, kayaking, or even snorkeling.
Otherwise, perhaps the “diver” is not ready for the whole intimidating set of scuba diving gear but would gladly jump on a small tankless diving unit to “snorkel” down to 10 or 30 feet without having to come back to the surface every minute.
As a start, we should stop seeing snorkeling as the equivalent of kissing through a screen door. It is a valid activity in itself. And on top of that, if we start offering legendary snorkeling experiences, we may end up with more scuba divers!
Also from Darcy Kieran:
- Handbook: Your Career and/or Life as a Scuba Diving Instructor: How to Make a Good Living Out of Your Passion for Scuba Diving.
- Logbook: Advanced Scuba Diving Logbook with Checklists for certified scuba divers, divemasters & dive instructors.
- Handbook: Advanced Guide to SPF Scuba Diving for Scuba Divers, Divemasters & Dive Instructors: Develop Better Scuba Diving Skills, Dive Safer, Save Money & Have More Fun!
- Handbook: The Ultimate Beginner’s Guide To Scuba Diving: How to Increase Safety, Save Money & Have More Fun!
- Logbook: STARTER Scuba Diving Logbook with Checklists while getting your open water diver certification!
- Reference book: Scuba Diving Industry Market Reports, Data & Statistics.
Side note: During your surface intervals, have a look at my novels with a scuba diving twist, starting with “Mystery of The Blue Dragon” and “Shadows on Ocean Drive.”
You could help the dive industry by taking part in ongoing dive industry surveys. You will also find results from our past scuba diving market studies here.
Don’t be left out! Subscribe to Scubanomics: The Dive Industry Compass to be the first to know about new dive industry market data & insights. Otherwise, be our “dive business buddy” on LinkedIn, Facebook, and elsewhere.
What now? Have a look at the complete Scubanomics Table of Contents.
