Why are so many thing sold out in the Ski industry?

Like this...

Because the goal is to not be sitting on old stock that you have to blow out for a fraction of the price.

st.vanskiLike this...

I have an XL Mahalo Triple stack if you want it...

Because the ski industry is 100% dependent on cold, snowy conditions. No cold, no snow, no sales. This is an absolute fact of our industry. And there are at least 2 seasons where we have had dismal snow years, especially in North America.

This means that shops are scared to spend too much of their money on product that no one will buy. Smaller orders are then given to each manufacturer which in turn causes less products to be produced. And I hate to say it, but the freeski market is the absolute fringe of the ski industry. If any products are to be produced in smaller and smaller quantities, it is freeski-related products.

I think Jiberish only makes like ten of each t-shirt. Those things are gone before they drop sometimes.

Quantity control is crucial in any industry. In snow sports even more so because the market is so small and if the winter isn't any good no one is going to be buying anything. Having inventory on hand as the season nears the end can be detrimental to any brand.

onenerdykidBecause the ski industry is 100% dependent on cold, snowy conditions. No cold, no snow, no sales. This is an absolute fact of our industry. And there are at least 2 seasons where we have had dismal snow years, especially in North America.

This means that shops are scared to spend too much of their money on product that no one will buy. Smaller orders are then given to each manufacturer which in turn causes less products to be produced. And I hate to say it, but the freeski market is the absolute fringe of the ski industry. If any products are to be produced in smaller and smaller quantities, it is freeski-related products.

Question for you...

I was under the impression that some independent shops purchased equipment on consignment, especially high-value items likes boots & skis. If my understanding is correct, that would mean that contractually, the shop then owned money to the supplier only when the goods were sold. If the goods went unsold, they were returned to the supplier. This meant that shops were able to sell goods heavily discounted at the end of each season, though the goods are sold at a lower margin. They were able to use margin from MSRP or marked-up inventory sold at the beginning of the season to recover the cost of selling at a discount retail price.

If that is the case, the inventory a shop holds does not necessarily matter, so long as they are holding enough to meet the demand for a product. There is no such thing as holding "too much" if it is purchased on consignment. That leaves the wholesale inventory management the responsibility of the manufacturer.

The consignment thing was told to me by the employee of a local shop at the end of last year, so not sure how valuable that information is. I'm basically extrapolating the rest from there. Nonetheless, it is definitely an interesting business model.

BenWhitI was under the impression that some independent shops purchased equipment on consignment, especially high-value items likes boots & skis.

This strategy accounts for probably less that 5% of the deals made with retail shops. No company wants to engage in it because it's a super huge risk for a company with no risk for the shop. No company wants to take back gear at the end of the year because they will have to discount it at wholesale -40% in order to sell it again. It's a losing business model that only makes sense when the product is super hot and the company knows they won't have to take it back. It for sure happens, but not with entire pre-season orders nor is it widespread.

onenerdykidThis strategy accounts for probably less that 5% of the deals made with retail shops. No company wants to engage in it because it's a super huge risk for a company with no risk for the shop. No company wants to take back gear at the end of the year because they will have to discount it at wholesale -40% in order to sell it again. It's a losing business model that only makes sense when the product is super hot and the company knows they won't have to take it back. It for sure happens, but not with entire pre-season orders nor is it widespread.

yeah, I think the shop employee who mentioned this to me may have been mis-informed. It makes so little sense for the manufacturer to bear the risk of a consignment deal unless they can effectively gauge the demand for a product in each region they are selling to, which is virtually impossible. They would have to ride a fine line between selling too little and selling too much to make it a profitable endeavor.

BenWhityeah, I think the shop employee who mentioned this to me may have been mis-informed. It makes so little sense for the manufacturer to bear the risk of a consignment deal unless they can effectively gauge the demand for a product in each region they are selling to, which is virtually impossible. They would have to ride a fine line between selling too little and selling too much to make it a profitable endeavor.

A plausible scenario when it makes sense is when a brand wants to be in a certain retail shop but the shop doesn't necessarily want that brand or the shop has no "open to buy" to place an order with that brand. The brand gives the shop a bunch of product on consignment and hopes that all their product sells out before the agreed upon return date. The shop then sees that there is demand for the product and the shop then places a normal order for the following year.

onenerdykidA plausible scenario when it makes sense is when a brand wants to be in a certain retail shop but the shop doesn't necessarily want that brand or the shop has no "open to buy" to place an order with that brand. The brand gives the shop a bunch of product on consignment and hopes that all their product sells out before the agreed upon return date. The shop then sees that there is demand for the product and the shop then places a normal order for the following year.

Seems like the only business case for a consignment contract; limited supply & market penetration.

A company has to measure productivity with Output/ (Labor+Energy+Capital) to define how much money they will receive that year. Ski companies have to do this a bit more hard core with Output/ (Labor+Energy+Capital+Weather or am i gonna get screwed on sales because it isn't going to snow). They have to play it a bit more safe, especially since the products they are creating are expensive and they never know how much they will sell more than a regular company (wish it was an ice age)