Microscopes for Sale

The microscope business is based on a three tier marketing system. Theoretically this leads to a very efficient system were each level does what it does best. All manufacturers except for Zeiss that sell directly to the customer have dealers. There may or may not be other dealers for the same microscope brand in the territory. A territory with no other dealer for the same brand is called an exclusive territory and it is what all dealers want. It’s just hard to turn down a sale. All dealers have quotas, a dollar number and in many cases a fixed number of frames that they are required to sell. If the manufacturer knows how many frames the dealers have to buy as a minimum then they know how many to make. What the manufacturer wants to do is let the dealers do all the stocking of microscopes and what the dealer wants to do is stock as little as they can get away with. Microscopes have a good profit margin but slow times turn rate. When I worked for a computer wholesaler we turned our inventory about 24 to 30 times a year. Some things we turned 3 to 4 times a month. With that high a turn rate we could afford to reduce our profit on each sale and literally make it up on volume. That means the stock is sitting around a long time.

The way out of this slow inventory turn rate is to have fewer inventories. Now here’s the rub, if the dealer doesn’t have it and the manufacturer doesn’t have it then the customer waits. Just to make it more interesting lets throw in production scheduling. Some items are only made at one time of the year; this is called a “run”. This is a problem with exotic parts. One way around shortages is to call other dealers and see if they have any extras they want to sell. They make money and move goods and keep up good relations for when they need something. To sell all these microscopes the dealer is required to hire sales people. A sales person is an expensive proposition. Sometimes a base salary is paid and the commission reduced but the compensation package will tend to be in this ballpark. The costs to the dealer are high and getting higher. The dealer wants good coverage to but the dealer pays the bills. Just to make it more fun for the dealers the manufacturers have their own sales people out in the field. Theoretically they are supposed to help the dealer’s sales people. Now they act as an alternative sales force and a way for the manufacturer to take a sale with no profit to the dealer. This is called “sell direct” and it is the nightmare of all dealers. They may do it to make a sale they otherwise wouldn’t have gotten by giving a price that the dealer couldn’t afford to give. If a manufacturer makes a sale the dealer may still get a percentage. Of course if it is under their profit margin then there is nothing to split.