Date: Wed, 4 Sep 2002 15:07:03 -0500
Reply-To: Bruce Nadig <motorbruce@HOTMAIL.COM>
Sender: Vanagon Mailing List <vanagon@gerry.vanagon.com>
From: Bruce Nadig <motorbruce@HOTMAIL.COM>
Subject: Re: VW obscene parts pricing
Content-Type: text/plain; format=flowed
Here is another take on the pricing issue. In the past I have worked for
several dealers (no VW dealers). At one dealership we sold oil drain plug
seal rings for about $0.32 each. Now think about it. How can that be
possible. Here is what had to happen to get the seal rings to the customers.
A weekly computer report had to be generated to indicate which parts we were
low on (of course the computer didn't know this on it's own - someone had to
figure out what our inventory level should be and enter that into the
computer). The report would be reviewed to make sure that everything made
sense. This was necessary because occasional irregular patterns in demand
would tell us to order absurd amounts of some items. Our orders then had to
be manually entered into the ordering computer.
Once the manufacturer received our order someone had to print labels then go
to pick the parts. He or she would count out the seal rings one, two, three,
four,... and put them into a plastic bag. The plastic bag would then be
labeled and sealed and put with the rest of our order. At packing time
someone had to make sure that all of our little bags and boxes of stuff were
there. Our order than had to be shipped to us (another expense). When that
order arrived, all of the parts would be checked into inventory on the
computer (after we counted them) and put into their bins on the parts shelf.
Finally, a counter person would have to look up a part number, retrieve the
part and print a customer receipt when someone purchased a seal ring.
Now how can you do that for $0.32?
On the other hand there are larger, more complicated parts that must be made
in batches large enough to make the manufacturing economical. Once these
components are made there is a very good chance that they will sit on
shelves for YEARS before they are needed. Whenever I buy any sort of large
cast part I always look for the casting marks. The casting marks usually
indicate when that individual part was manufactured. You would be amazed how
long some parts sit around. They sit not because a company can't manage its
inventory, but it wouldn't be economical to produce these parts in smaller
batches.
Why is this important? Someone has to pay for all the warehouse space that
part is taking up. The manufacturer usually has to pay their supplier for
the part when it is delivered to the manufacturer (or thereabouts). The
manufacturers have a lot of money tied up in these parts so part of the
price you pay is sort of a finance charge.
Finally, you have to consider the time of the dealership parts counter man
or woman. Dealership parts people are always getting calls about this part
or that part. A very high percentage of these calls are from people that
have no intention of ever buying that part from the dealer. None the less,
the parts person graciously looks up information and shares it with the
customer. Why? Because they never know who will come in and buy the parts.
You have to be polite to everyone. As I said, parts counter people spend a
shocking amount of time helping people who will never buy a part from them.
The counter people still have to be paid their salary. This drives up the
prices for those of us who do buy things from the dealer.
I try to save money when I shop, but I also like to support local
businesses. If I have questions or need help when I am buying a part I am
going to buy it from the person who is best able to answer my questions and
help me, even if his price is a couple of bucks higher. Why do I do this?
Because if I don't, he may not be around next week. Where will that leave
me?
Bill (below) is right. It isn't a crime to make money.
This is just my $0.02.
>From: Bill N <freeholder@STARBAND.NET>
>Subject: Re: VW obscene parts pricing
>
>Well, I am about to become unpopular... unfortunately not a new experience.
>
>Here in the good ol' USA, we are capitalists. I have run retail businesses
>most of my life.
>The object is to buy it as cheaply as you can and then sell it for as much
>as you can get.
>That's what VW does. If they can get outrageous prices for their parts,
>more power to them.
>If you don't like it, buy elsewhere. If they have a corner on the
>particular part you need,
>well, good for them. Now they can really hammer you. It isn't evil or
>even immoral.
>
>If I have some Vanagon part to sell, and I put it up on Ebay, I never
>complain if the bidding
>goes higher than expected. I have never heard anyone else complaining that
>THEIR stuff was
>worth too much, either. Nope, the complaints are all about the other guy's
>stuff selling for
>too much. Well, sometimes I'm the seller, and then I'm happy when the
>bidding goes up. On the
>other hand, when I am the buyer, I hope the price stays down. Remember,
>buy it as cheaply as
>you can and sell it for as much as you can get.
>
>I am involved with our local movie theater, which is run as a non-profit
>company attached to a
>local museum. Know what the markup on popcorn is? 3000% !!!! Good for
>us. I wish it sold
>for more.
>
>Bill
>
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