New Business Model

October 21, 2020 7:08 AM | Howard Ratsch (Administrator)

Educational Blog

A New Business Model for a Redefined Local Dive Center

COVID-19 accelerated changes happening in the scuba diving industry. How to be ready.

By Darcy Kieran

https://medium.com/scubanomics/a-new-business-model-for-a-redefined-local-dive-center-12b9c24ac3f5

This article represents the views of the author.  The article has not been fact checked by myself, the Board of Directors or any member of the USA Dive Club.

Copyright Disclaimer under section 107 of the Copyright Act of 1976, allowance is made for “fair use” for purposes such as criticism, comment, news reporting, teaching, scholarship, education and research. Fair use is a use permitted by copyright statute that might otherwise be infringing.

Retail, education, and travel industries are going through a severe transformation that started before the coronavirus pandemic. But the speed of change has accelerated in a COVID-19 world, and we need to keep up — or better yet, get ahead of the curve. The dive industry has been resisting changes to its business model for a while but can no longer withstand a tsunami of changing customers’ expectations and behavior.The global pandemic has reset the gameboard. How can dive businesses emerge stronger?

I will look at the historical ‘distribution channel’ used to provide scuba diving lessons, dive gear, and scuba diving travel to scuba diving consumers. Then, I’ll look at how it is changing and how the current coronavirus pandemic is accelerating this evolution. Finally, I’ll look at what it means for your scuba diving business.

Traditional Distribution Process for Scuba Diving Products & Services

Historically, dive gear and scuba lessons have been provided to the consumer by ‘local dive shops’ (in ‘origin’ dive centers) and ‘dive resorts’ (in dive destinations). And way back then, dive travel was mainly sold by local dive shops.

We’re talking, here, pre-internet. But the dive industry business model barely changed after the arrival of the internet. Consumers have changed, but not the scuba diving industry.

Bear with me for a minute.

Pre-internet, it was difficult for a newly certified scuba diver to independently select the best dive destinations for his/her annual vacations. The dive instructor in the local dive shop was the principal source of information. Scuba divers would come to the local dive center to check pictures of previous trips to different scuba diving destinations. And group travel was arranged by the dive instructor.

Dive gear manufacturers, scuba diving training agencies, and dive resorts (dive destinations) were relying on local dive shops to reach consumers.

The local dive shop was both ‘the front line’ and the gatekeeper.

This model doesn’t work anymore, and you can expect this fact to be even more apparent post-COVID19.

Noticeable Dive Industry Trends

I will be looking at ‘trends’ but only as it relates to the distribution channels used to reach scuba diving consumers.

Trends in Dive Travel

Dive travel was the first scuba diving industry sector to bypass the local dive shop significantly. Knowledge about dive destinations is now available to all, on the internet — with much more in-depth knowledge than what the local dive instructor could provide.

A local dive professional can’t be knowledgeable about every dive destinations in the world. In that sense, the internet is providing more value to the scuba diver. And ‘providing value’ is vital for a business to be sustainable.

The next dive industry segment to bypass the local dive shop (in ‘origin’ locations) is scuba diving training.

Trends in Scuba Diving Training

Initially, online education (eLearning) was introduced as a means to let dive instructors do what they love best — be in the water — while the ‘boring’ part of teaching in-class could be done at home ‘in the comfort of your pink slippers.’

What eLearning also created is an additional way to bypass the local dive shop. It is quite simple and convenient to proceed with the ‘dive theory’ part of learning to scuba dive at home — or at work! And, then, you get to your dream vacation destination where you will go underwater with a dive instructor, first in a pool, then in the magical ocean.

I do not believe this provides the best value to the consumer. You end up with rushed ‘confined-water’ (pool) training sessions because there are just so many more exciting things to do under sunny tropical skies! Cutting corners is no way to fight our excessive dropout rate. But it is a challenge to be communicating to future scuba divers that it is more valuable to them (in the long run) to be learning to dive at their local dive center before going on vacation. Therefore, the trend toward going to a dive resort after eLearning is continuing to grow.

With COVID-19, learning online instead of in-person has become the norm rather than the exception. It means that selling online courses will simply be easier than ever before. The coronavirus pandemic has accelerated the trend toward eLearning.

Within the dive industry, we’ve seen training agencies rush to launch new online learning programs — about anything and everything.

This eLearning trend is here to stay, and it means that it is becoming even easier to bypass the local dive shop.

“The shift of learning from outside the home to inside has blurred the lines between learning and leisure.” McKinsey & Company

To counteract this trend, local dive shops would need to reach local consumers while they are researching ‘scuba diving in Fiji’ or ‘PADI certification in Cozumel.’ Even with an unlimited online marketing budget, this would be a tough challenge. And local dive shops barely have any marketing budget!

Trends in Scuba Gear Distribution

This was the last leg on which local dive shops could still hope to stand. And there would be a lot to say about this! But I will move as quickly as possible to discuss ‘what to do about these trends.’

Selling scuba diving equipment is the way most local dive shops have kept the lights on. The cycle of extracting money from clients in a local dive shop has, for the most part, be in this order:

1.                     get them in with cheap scuba lessons,

2.                    sell them overpriced dive gear, and

3.                    book them on a dive trip to sell them more courses and equipment.

With the beginning (training) and the end (diving) of this cycle bypassing the local dive shop, it is making it hard for local dive shops to keep their lights on! Scuba divers going straight to the dive resort are often not even aware of the existence of a local dive shop.

And that’s only one trend.

Another significant trend with dive gear has been a reduction in “sales per diver.” New scuba divers tend to buy less scuba equipment than their male baby boomer predecessors. This could be an entire post in itself. Make sure to subscribe to Scubanomics at the bottom of this article.

Otherwise, a crucial development in retailing, of course, is eCommerce. That’s another trend we’ve seen surging during this worldwide pandemic. If you are not convinced, look at this graph from McKinsey & Company, a renowned US-based management consulting firm that advises on strategic management to corporations, governments, and other organizations.

Just like eLearning is now part of everyday life, eCommerce is now more accepted than ever before. The dive industry can’t continue to ignore this fact.

Why has eCommerce been so slow at being implemented in the dive industry?

There are numerous reasons why eCommerce has been slow at penetrating the scuba diving industry.

For one, dive industry leaders have continued to maintain that the local dive shop was, and ought to, remain the focal point of the industry. This was based more on nostalgia than on sound business principles.

Can local dive shops operate an eCommerce site in a way that will satisfy today’s consumers? No. It would require an investment far superior to what a local dive shop owner could afford.

When shopping online, consumers expect speed and convenience. Delivery has to be tomorrow, or earlier! And convenience means that a scuba diving equipment website should have all models in all sizes and all colors. Our internal distribution issues are none of their concern! On this front, as for dive travel, the internet is providing more immediate value to the scuba diving consumer than the local dive shop with its limited inventory and product knowledge.

By pretending that local dive shops were able to continue to satisfy evolving consumers with a small, undercapitalized store, the dive industry has simply delayed the inevitable.

Direct to consumer’ is how most dive gear manufacturers will try to offset a reduction in scuba gear sales in local dive shops. We can already witness it on Aqualung’s USA website, which is now a full-fledged eCommerce website.

You can’t blame dive gear manufacturers from bypassing local dive shops — they were the last to do it after scuba diving certification agencies and dive travel.

New Distribution Process for Scuba Diving Products & Services

The local dive shop is no longer ‘key’ in reaching scuba diving consumers, and it is facing an existential challenge: What is the new raison d’être of the local dive center?

A Redefined Local Dive Center

First, let’s address the elephant in the room.

I can hear you yelling at me through your smartphone screen! “Local dive shops are crucial for the diving community. They provide air fills as well as access and information on local dive sites.”

Yes. I know.

In fact, the current coronavirus pandemic is contributing to making local dive shops more of a dive destination than merely an ‘originator’ of clients for dive resorts in the tropics. But here’s the thing… That’s about scuba diving (the activity), not selling gear.

Local ‘dive centers’ can still bring value to scuba diving consumers. Dive ‘shops’ provide very little value nowadays.

Shaming people into buying dive gear from you because you are providing air fills was always a non-sustainable business scheme, and it is now utterly disconnected from reality.

local dive shop sells six different products and services to scuba divers:

·                      Education / Training

·                      Equipment / Toys

·                      Experience / Travel (the activity of scuba diving)

·                      Rental Dive Gear

·                      Repair and Maintenance

·                      Refills

The first 3 are the big ones. They are known as the 3Es or the 3 Ts.

We’ve already discussed them. These products and services no longer need the local dive shop to reach end-users. And in many cases, the scuba diving consumers find more value when shopping outside the local dive shop. ‘Value’ includes convenience, product knowledge, and availability.

We need to face reality: the 3 Es (or 3 Ts) are bypassing local dive shops, and that trend is intensifying.

So, now what?

You can only swim against the current for so long!

The way to be successful in any business is by bringing value to consumers. And that could be in the last three services listed above. They can more hardly be remotely provided.

It is conceivable that repair & maintenance and rental gear could eventually be provided from a centralized and remote location. But for now, these are services for which scuba divers may directly benefit from your local services.

In other words, the local dive shop should drop the word ‘shop’ and work on being a quality ‘dive center’.

Find a location near an appropriate local dive site. Setup a fill station for air, nitrox, and possibly trimix. Maintain quality rental dive gear to be used at that dive site by scuba divers and dive instructors. And offer repair & maintenance on scuba diving equipment.

That is a ‘local’ business.

I bet you’ll find that your profitability may even go up! Maintaining a retail store can be expensive.

At that new dive center location, the focus is on scuba diving. That’s why you want to be near a proper local dive site. You may also select a pool, especially if it’s deep enough for scuba divers to practice their skills outside of scuba lessons.

Of course, you may offer scuba diving lessons at that location, but the focus has to be on promoting ‘scuba diving’. The rest is just there to support the activity.

And now is a good time to do it. People are looking for adventures close to home.

Operating under this new business model requires that each of these services be profitable in itself. You can no longer rely on selling overpriced dive gear to subsidize the rest of your operations. It is not sustainable. It is preventing evolution in the dive industry.

Promotional & Visibility Issue

I know the owner of a local dive shop in an urban area who will be transforming his local dive business into such a dive center, dropping the in-store retailing of dive gear.

The first problem you will encounter if you proceed like him is with dive training agencies and scuba gear manufacturers.

To be listed on their website as a retailer or training center, you must be operating a store. Scuba diving training agencies and dive gear manufacturers are forcing us to maintain this non-sustainable model of a ‘local dive shop’ operating 6 businesses under one roof.

So… The h*** with them!

Your main source of new clients is likely to be Google and word of mouth.

Word of mouth and good reviews will be easier to get if you concentrate your energy, money, and time at providing what you are good at, instead of trying to be everything to everybody. You got into diving because you love diving. Focus on that! That’s how you will be able to offer consistency in the quality of the experience under your personal craft brand.

This is how you can plan to make a good living out of your passion for scuba diving.

Furthermore, soon, the most significant part of your revenues should come from repeat business because your focus is on the adventure of scuba diving. Your business model is based on people diving locally. It is no longer based on quickly churning new entry-level scuba diving certifications to please the PADI and SSI of this world.

Otherwise, Google is not like your dive training agency. You do not need to operate a retail store to be listed as a business on Google map. The same principle applies to Facebook. Take advantage of that!

It will be good for you — and for the dive industry.

It’s always been ridiculous that consumers searching how to ‘learn to dive’ on Google where being directed to ‘retail stores’ selling gear, while the actual location to take the scuba lessons was often miles (kilometers) from there!

This is a business opportunity for your local diving business, and it can be an exciting transformational time for the scuba diving industry.

A Future Scuba Diving Brand Based on The Experience

The scuba diving industry is lacking a reliable worldwide brand. Scuba diving is a global activity, no matter where you live. And the experience you encounter under Brand A in dive destination X is usually totally different than the experience you discover under the same Brand A in dive destination Y.

Since scuba diving is an activity where safety matters, scuba diving consumers need to have ‘trust’ in the quality of the experience they will encounter, everywhere they go.

Eventually, we will see a scuba diving brand establishing itself as a provider of a consistent scuba diving experience at all locations. The focus will be on the consistency of the quality of the activity of scuba diving.

Keep an eye out! That is the brand under which you would want your reborn ‘local dive center’ to be operating.


© Copyright Under Sea Adventurers Dive Club 2020

Powered by Wild Apricot Membership Software