Quote:
Originally posted by Planter91C2
don't spread yourself to thin and sacrifice on service, which is what i believe your competetive advantage is.
also, aren't you watering down your brand identity. pelican parts is associated with knowledge and specialization in porsche, isn't that identity valuable?
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I'm not sure there is much choice.
I looked into buying a Porsche/BMW parts business (or starting one) several years ago. It seemed to me there are 2 ways of going these days - (1) a small business owned by one person, specializing in parts for one or two makes (like Europroducts, GPR, Vertex, Paragon, etc), or (2) a giant congolmerate, like Automotion/Performance Products, or Mid-America (or whatever the name of that giant company is that bought Tweeks). Even Automotion, Performance Products and Tweeks were pretty big companies that ended up consolidating or getting aquired by even bigger companies.
Number 1 was not a viable option for me. The margins are so thin on most parts these days, with all of the competition, that it seemed very tough to make a decent living. With the thin margins, you need a lot of volume. A lot. Esp. if you have 2 partners involved in the business - both need to make a living so you need double the volume.
Number 2 would require a major investment of capital, more than most individuals would have and very difficult to get without a track record in the industry.
Wayne obviously knows better than I, but my guess would be that it would be difficult for Pelican to sustain 2 people (Wayne and Tom) selling just Porsche parts, given the thin margins it would be difficult to obtain the needed volume selling just one make.
I also found in my research that catalogs and mailings are what drive the big parts sellers. And that the cost of doing that is astronomical. It separates the Vertexs of the worlds (which are not bad businesses at all - just a different model than Performance Products, etc.) from the "Big Boys."
To me the Pelican experiment is very interesting - the plan seems to be to become much larger than Vertex, etc., but without catalogs. In place of catalogs is the Internet. Which is pretty novel in the Porsche/BMW parts arena (everyone has web sites, most seem pretty perfunctory).
The big question, of course, is while a Web site like this generates a lot of traffic, does it generate significant sales? Can it become a substitute for printed catalogs? An interesting question.
Of course, if this were 1999, there would be some great options. Drive up the revenues as high as possible (without regards to cost, profit, etc.), and sell the company to Mid-America! At that time, dotcoms were selling for 10-20 times revenues (regardless of whether the company was making a profit or not, in 1999 revenues were all that mattered). I don't think Wayne is intending to sell, but I'm sure he'd listen to an offer at 20X revenues!
Anyways, too much competition plus too thin of profit margins is what turned me away. My hat is off to Wayne and Tom for making a go at it. From my perpective, they are doing everything right and optimizing the chances for success - I sure wish both of them the best of luck.