One of the few benefits of living and working in St. Paul, part-time, is having acess to 7-Corners. The tool salemen are up on all of the latest inside info. Ever since B&D bought PC, I’ve been whining about them repping Festool…….. the story up until today was that they would have Festool prior to the ’06 printing of their catalog….well the salesmanager told me today that the deal doesn’t look good. Fetool refuses to allow 7-Corners to stock an inventory and/or discount the tools! He seemed very taken aback by “Festool’s arrogance”. I have read stuff here about buying directly from Festool. Is that much of a hassel?
1 Thes 4:11…..mind your own affairs, and work with your own hands……
Replies
Buying directly from them is no hassle at all. You will get a salesperson who knows his product. Case closed.
I am curious why a potential seller would be upset about Festool's business philosophy. A retailer is freed from the economic burden of carrying inventory, which he may or may not sell quickly. The price is set by Festool so he does not need to worry about competing with a high-volume (read; big box) retailer down the street who can cut better deals and then undercut him. He will get competent technical support from the manufacturer, AND, he will have a region in which he will be the guy with the line. He will also be selling what is certainly the gold standard for hand power tools. Am I missing something?
Greg
For reasons best known to their marketing people, Festool has settled on a very restrictive policy for marketing their tools. No retailer can sell the tools direct to the customer. They will stock one item from across the line, the customer can place an order with the retailer, but the tool is then sent directly from Festool. In my case (a jig saw) this took about 2 weeks. Moreover, Festool sets the price -- which is what you pay whether you buy from a retailer or direct from them. 7 Corners is probably the largest industrial tool outlet in MN. I think most of their business comes from contractors and other professionals -- folks who expect to walk out of the store with the tool (because they need it today), rather than wait a week or two. They function in an intensely price competitive market place, and I think they want to be able to set their own prices -- a practice which Festool will not permit. I don't know, but it is also possible that 7 Corners will not take on the Festool line because the retailer discounts offered by the company are not "adequate" to justify the space/effort. I also suspect the demand for these premium priced tools is still pretty thin. I'm no lawyer, but it looks to me as though Festool has conspired to control the distribution channels for their products and keep the prices artificially high. Sounds a lot like restraint of trade to me. And I would imagine the guvmint will have something to say about it sooner or later. This kind of thing has happened before in other industries, and the practice was eventually struck down. They are really fine tools, though -- and I laud their efforts to bring quality to the marketplace.
First, I bought Festool directly last month, and everything went off without a hitch. I received a router and a circular saw within 72 hours of ordering on-line.
I have mixed feelings about their distribution system. It wasn't too long ago that many brands had fixed price distribution schemes, and the consumer was forced, by restraint of trade, to pay inflated prices. In my view, this was predatory.
Now, however, I am more concerned by the "race to the bottom" caused by big box retailers. One good toolmaker after another has succumbed to the "Walmart" (and HD) business model of relentless price point pressure, corrupting the brand and undermining quality. It has become more and more difficult to find good quality power tools, and the retail channels are swamped with inferior models by once decent manufacturers- so much so, that even those willing to pay a bit more for better quality are often out of luck. I think that this is just as predatory as the old fixed price system.
Festool is a thoughtfully designed, well made tool that costs more than many similar tools. I think the premium is ~20-30%, but a good bit of that is quality. There are some tools that never seem to have negative reviews- L-N planes, Tormek grinders and Festool are examples. I hope that as they penetrate the high end market, Festool will allow for some discounting or perhaps annual sales events (I'm not aware of any at present). But I would rather have the option of paying more for a high quality tool than to have it get swallowed up by a big box retailer and have the quality suffer. At least I have the choice of paying more for a tool when I think it merits the premium.
Glaucon
Anything I left unsaid, was eloquently covered in your post. I cannot improve on your comments.
Greg
Like many other knotheads I like a good deal. Once I discovered Festool, and wanted more, I was chagrined to discover there is no such thing as a discount. That said:
1. There is a discount, if you buy multiple tools - not from the retailer, but from Festool itself. There are two Festool tools I have my eye on, and once the spirit moves me on a third, I will happily buy them at 15% off.
2. There is something to be said for knowing nobody else got the tools cheaper when any of us buy a Festool. I learned something from the patriarch of a small tire business where I have been a customer for 15 years. One day I said to him "I buy so many tires from you, how about a deal?". He said the price is that same for everybody, and regardless of whom you buy from behind the counter. This has been my experience, but let me tell you this: there are any number of times when something comes up and they'll take care of me... and just hand me my car key and say you are all set. So all in, I think I get a fine deal. Even though every one is paying the same price. In a somewhat similar way I would not be entirely surprised if I bought a couple of Festools an accessory or two might mysteriously come my way.
3. I think that Festool is smart, and for reasons besides the fine tools. When the retailer margins go down, something has to give. I value the fact that my local dealer spends time with me over a tool, lets me use the tool on wood, and make the right purchase decision. If they support discounting, there is no way a dealer can give all that. Would I like to have more Festools, and pay less? Of course I would. But I do understand their business model.
NO FIGHT HERE! REALLY BUT!
to pay inflated prices. In my view, this was predatory..
I was in Marketing so .. Kick me butt.....
I have no problems with their selling strategy.. Folks would be amazed about what they pay for good verses costs to manufacture it. Getting into distributors IS A PAIN! A REAL PAIN!
No I do not own any of their tools but I think I soon will have some.
However, predatory is when QUALITY is not there.
I understand the thought process and, for many years, I agreed. There are some differences, I think, between Festool's approach and some other cases. First, Festool's policy is an effort to level the playing field amongst their own distributors. Second, they in no way have a monopoly on the market, or even a dominant position, such as a Microsoft, for example.
Perhaps 7-Corners is not used to working with a manufacturer with these philosophies. Many business relationships are predatory in nature and, in my opinion, not particularly suited to building long-term and loyal relationships between manufacturer and retailer, retailer and customer. Two examples: 1. In the auto industry, the classic case is the intro of a new model. The best customer is that guy who steps up early, buys the car, and gets it on the road. The loyal guy who pays top dollar. As the early blush wears off, rebates and discounts come into play to keep sales up, which makes the value of that guy's investment disappear. The customer has been betrayed. 2. Manufacturer gives (or is strong-armed into giving) discounts to volume retailers, at price-points so low that the lower volume retailer, the guy who services the product and provides expertise on its use, cannot compete. Customer is seduced by low price but can no longer find competent support.
Festool differs in both examples. They offer discounts when the tool is introduced, knowing that they are most likely going to sell to the faithful at this time. The loyal customer is rewarded, the new customer is enticed, and all early purchasers feel they got a deal (relatively speaking). At the same time, retailers know they will not be betrayed by subsequent deals between the manufacturer and another distributor that could jeopardize their chance at a reasonable return on their investment. In fact they have not even been required to make that investment, save the installation of demo tools. They will be rewarded for providing good customer service, which is the vehicle by which they differentiate themselves.
Regarding your two week delivery, I am baffled. Did you order directly? I have never waited more than 3 days for a delivery (with about a dozen orders processed) and the ordering experience has been the best. No mistakes, no damage, no back orders, perfect. As far as walking out of the store with the tool, well Festool probably feels that their potential cutomer base is made up of people who tend to plan just a little better and can stand a little delayed gratification. If they miss a sale occasionally because it does not fit their business model,well so be it. At the same time, if a customer has an idependant sales agent he probably can get a loaner, maybe even delivered to the jobsite, until the ordered tool arrives. I know of several cases where this has happened.
Greg
nikkiwood,
Not that I am a legal expert, but I have to comment on your following statement:
"...it looks to me as though Festool has conspired to control the distribution channels for their products and keep the prices artificially high. Sounds a lot like restraint of trade to me."This is illogical. No one has to sell Festool tools if they don't want to. Festool has a network of national reps who will be more than happy to do the sales. Any retailer who gets involved in selling Festool tools does so because they want to, not because they are forced to do it in order to stay in business. This is a key point in your "restraint of trade" argument.I think you are mixing up Microsoft-like cohersion with Festool's sales practices. With Microsoft, computer retailers esentially have no choice but to work with Microsoft, since Windows is the dominant platform for PCs. Microsoft knows this, and uses their power to force sellers to do whatever it wants. The tool industry has no Microsoft: retailers can simply decide that they won't carry a particular brand and they'll do just fine.I'm sure Festool would love to have the same market position in the tool industry that Microsoft has in software!Where is your evidence that Festool prices are "artificially high"?
Edited 4/7/2005 11:59 am ET by Matthew Schenker
No antitrust issues here.
I have no interest in provoking an argument here. Please remember, I already own one Festool product, and sometime soon I will probably spring for one or another of their sanders. I agree with all of the comments regarding Festool quality. Like many of you, I bemoan the general downward drift in tool quality, and I agree the big box stores are the leading culprit (for their downward pressure on prices). I have written all over these Knots threads about this issue, and I have consistently lauded the perspicacity of Festool (and Metabo and Fein, to name two others) in realizing that a segment has opened for premium products in the American marketplace for tools.That’s a good thing. And, I believe, it’s also a good thing that for the first time in my tool buying life, there is an incredible range of products at every price point through the spectrum. You can buy a jig saw for $29 and march right up the quality line and lay out some $270 for the Festool version. Now that my preamble is over, let me offer a few comments on the thoughts conveyed in these post so far:1) I don’t know how the anti-trust issue (and Microsoft) got into this discussion. Festool is almost a boutique manufacturer –- offering a premium product to a tiny fringe segment at the very top of the tool market. It’s more like an Armani suit or a pair of Gucci shoes. 2) To say that Festool should stay out of the usual distribution system because they might be “tempted” to reduce their quality/price so they can get on the HD shelf --- well, I think that’s a specious argument. I am both amused and weary with folks who think “others” need to be protected from potential temptations. I am thinking particularly of the whole controversy right here recently about the Café.The people running Festool are smart and shrewd, and they are also grown-ups. As such, they ought to be allowed to devise whatever marketing strategy they deem suitable – and can get away with. 3) Mathew (Schenker) says … “Festool does this to create uniform prices for their products, and also to give their salespeople an equal chance of selling the tools.”Uniform prices? If this is not “restraint of trade” I wish a lawyer would join in this discussion to tell us what is. And an “equal chance” for all salespeople? I think I know Matthew well enough to understand he probably did not mean this the way it sounds, but geez ………..4) I don’t think there is anything “illogical” in saying that Festool has deliberately created a distribution system that allows them to maintain the tool price at what they determine it should be. That’s a fact, and not an argument from me. **************************************************I really don’t care, one way or the other, how Festool sells their products. I will contentedly shut up about all this, if just one lawyer (any lawyer) comes into this discussion and argues what they are doing is proper, and does not smack of conspiracy or restraint of trade.
wow you must be a fast typer.
but what was the cafe contraversy?? i was gone for a while.
<<<"but what was the cafe contraversy?? i was gone for a while.">>>About two months ago, a few folks (in my opinion, a very few) started to complain there was no place in a woodworking forum for the kind of non-woodworking topics discussed in The Woodworker's Cafe. They complained that too many of the discussions were vitriolic, and personally offensive (to them). Some of us argued strenuously that they could avoid the whole matter by simply not opening the thread topic. But this argument fell on deaf ears, since they objected to the mere presence of the Cafe. Hence my comment about "potential temptation" -- since if the Cafe was present on the screen, many (in this small group) seemed compelled to sample the "offensive" discussions, even though they might object to them. For reasons known only to Taunton, they actually listened to these people, and decided that the Cafe would henceforth be placed behind a kind of "cyber curtain" -- and access would be granted only on the specific request of each forum participant. Thus, if you missed all this, the Cafe will apparently not appear on your screen when you enter the Knots forum (or the Tavern in Breaktime) -- unless you have sent an email to the Sysop.
nikkiwood,
Again, I emphasize that no one HAS TO BUY Festool. Anyone who buys Festool does so because he/she knows how good the tools are. And if you want the tools, here's the price -- period. Anywhere you go, you'll get the same deal. It makes things a lot simpler and more fair to everyone.No retailer HAS TO SELL Festool tools. If a retailer wants to sell the tools, here's the price -- period. And you have an equal playing field with everyone else who sells the tools because no one is going to start selling Festool tools at lower prices than someone else. That's what I meant by an "equal chance." Sellers can choose not to carry Festool tools, and they'll do just fine sticking with DeWalt, Jet, Delta, Porter+Cable, and lots of others. Their business won't be harmed by the lack of Festool tools, so there is no restraint levied by Festool.Think of it this way. Let's say I invented some phenomenal new gadget. Let's say I decided to only sell it through a local tool seller, who already has a good business selling lots of other items. My gadget becomes famous and thousands of people want one. But I am determined to sell it through this one tool supplier, and at a certain price. My local tool seller could decide any time that it's not worth it to him, drop my gadget, and continue doing just fine. It's up to the consumer and to the tool seller to keep me going. It's their choice, and neither the tool seller nor the consumer will be harmed by my selling practices. Therefore I'm not "restraining" anyone (look up the word restraint in the dictionary and you'll see what I mean). This is analogous to the model Festool has developed.
Mathew, I have tried to be really nice in the face of what I regard as some dimwitted statements from you. I fully realize that "no one HAS TO BUY Festool" and that "No retailer HAS TO SELL Festool."But you are completely missing my point; I can't tell if you are being obtuse, or just blinded by your passion for the tools and the company. I think we need to change the subject -- maybe go back to Rikon jointer/planers.
good word. (dimwitted)
but really just think of it as they only sell direct but will allow tool stores to rep them.
next topic
Edited 4/9/2005 12:18 am ET by TURNSTYLER
Nikkiwood,
Hey folks, how's this quote from Nikkiwood for irony:
"I have tried to be really nice in the face of what I regard as some dimwitted statements from you."Yes, you certainly are trying to be "really nice"!Anyway, I'll leave your insulting remark aside, and simply ask you to specify which of my statements are "dimwitted." Honestly, I do want to know, because I think this is a worthwhile discussion.
Edited 4/9/2005 11:24 am ET by Matthew Schenker
"I'm no lawyer, but it looks to me as though Festool has conspired to control the distribution channels for their products and keep the prices artificially high. Sounds a lot like restraint of trade to me. And I would imagine the guvmint will have something to say about it sooner or later. This kind of thing has happened before in other industries, and the practice was eventually struck down."Actually, what they are doing is GOOD channel management. The approach Festool uses means that they don't have to deal with resellers driving the margins out of the product.Say HD is selling Ftool, Lowes says hey I wonder If I can get a better deal from the Ftool than HD is getting. Loews haggles with the Ftool. Lowes gets a better price, and to beat HD, lowers their price to the customer. HD sees this and goes back to Ftool says - hey, we want a better price... endless spiral - great for the consumer (at first) bad for the manufacturer. Eventually there's no margin left in the product. To maintain margin, the Ftool starts to cut corners with lower cost components and by going to off shore manufacturing... then the consumer starts to suffer because the product quality starts going down hill.Meanwhile, the off shore mfg gets better, but as they get better, their costs go up relative to the lower quality off-shore mfg.
So Ftool in persuit of margins, says lets move our mfg to the next cheapest place (For example, many companies that used to manufacture in Mexico, have moved to China).This does not make the product better...I spend a lot of time in manufacturers - cost reduction projects are big business. When you make many hundreds of thousands of something in year, pennies per unit are a big deal.I helped a project team work on a project to save $3 on a unit with a total cost of about $160. Why, they make about 1800 units a day in one plant - about 360 days a year - thats amost $2,000,000 a year savings!
Mark
Measure it with a micrometer, mark it with chalk, cut it with an ax.
RE: channel management and the slippery slope.You've written a good explanation of the dynamics of the process (haggling, cost cutting, etc.). I think it is the prerogative of the manufacturers (of any product) to make decisions regarding the materials they use, the costs of production etc.However, if Festool refuses to sell to distributors who might price the product at some level below their (Festool's) desired consumer price -- well, that really does sound to me as though they have conspired to set up a distribution system that controls prices. And, isn't that a restraint of trade?At the advent of the discount age some years ago, many manufacturers refused to sell their goods to these people because the seller would not respect the price structure established by the mfg. Let me say that if I were running Festool, I would do exactly what they are doing -- since it seems the best way to maximize prices/profits. At least I would do so as long as I could get away with it.
"However, if Festool refuses to sell to distributors who might price the product at some level below their (Festool's) desired consumer price -- well, that really does sound to me as though they have conspired to set up a distribution system that controls prices. And, isn't that a restraint of trade?"I think "restraint of trade" applies when multiple companies get involved to price fix. It's not an issue when a single company does it.Ftool can say, "If you want to sell our product, here are the rules. Take it or leave it." It's been done many times before.Try and buy a pair of Bose quiet comfort headphones from anybody but Bose (excluding Ebay sellers). It can't be done. That's why QC headphones are still $300. Sure other companies make similar products but they don't have the "bose" name on them and can't demand the price.Nintendo Game Boy Advance - last christmas I wanted to get one for one of my kids. Toys r us, target, walmart you name it - the prices were the same. Some threw in extras (a cheap game, a carry case, a light) to get your business but the GBA was the same price everwhere... Nintendo did a good job managing their channels...If the reseller breaks the rules, they lose the right to sell the hot product. Means less foot traffic in their stores or mouse trails on their web site, fewer sales of other, higher margin games and accessories... In the end it's good for the seller and the manufacturer, not so good for the consumer but it's not restraint of trade, just good channel management.MarkMark
Measure it with a micrometer, mark it with chalk, cut it with an ax.
Festool, or any other company, can sell their tools for any price they wish, and that is perfectly legal. However, if they choose to wholesale their tools to another company for resale they cannot tell that company how much to charge for the tools, that is price fixing, and not legal. They cannot selectively sell to only those retailers that agree to sell at list price, that again is price fixing. There are many schemes to try to get around this (such as "warranty applies only if purchased through authorized dealer", etc.), but this is a fine line that manufactures must walk.
This doesn't mean that I take exception with Festool, but it could indicate why they are reluctant to sell to 7-Corners -- i.e., concern over losing control.
Woody
I suspect that Festool would be happy to sell 7-corners all the tools it would like to buy, but not at a special, discounted price that would allow 7-corners to sell at a discount to their customers. I am quite happy to pay the price Festool wants because the quality of their tools warrants it, I know that no one else will get a better deal, and I know that Festool is ready, willing, and able to quickly provide service and support. These are things that the other major tool manufacturers do not offer any longer.
Steve,
Of course, this practice is not uusual in the business world. There are lots and lots of companies that either sell exclusively to certain retailers, who only sell through their own plants at fixed prices, or allow retailers to sell their products at specified prices. There are also lots of other companies (any fast-food chain, for example) that specify exactly what retailers will stock, how much they will charge, and even how they will advertise.Retailers like Woodcraft decided to sell Festool, and sought out the company's tools, because they started to realize the quality of the tools. If the retailers don't like Festool's selling practices, they can drop the Festool line any time and return to business as usual without harm (the legal situation that would indicate restraint and which differentiates this from the other examples I have cited in this discussion).Of course, there is room for opinion about Festool's distribution method. If someone says, "I find it inconvenient," or "I wish I could just walk into a store and buy a Festool drill," I can understand that. We can discuss that. But when someone argues that Festool is somehow in violation of trade practices, it's another story.
Edited 4/9/2005 12:45 pm ET by Matthew Schenker
I think there is still some confusion here. No retailer sells Festool stuff, only Festool sells Festool tools. Retailers, like Woodcraft, are merely sales agents for Festool; Woodcraft takes the order, routes it on to Festool, who then ships the pruchase directly to the buyer. I am sure retail agents, such as Woodcraft, receive some commission for the sale -- and it is apparently enough to financially justify their role in the transaction.
nikkiwood,
Exactly!
they have a new drill coming out. The current model d handle is like 100 bucks off right now.
j
Edited 4/11/2005 5:18 pm ET by TURNSTYLER
Steve,
I suspect that you are right.Woody
I am "Woody", whose real name is Woody, not "woody", whose real name is Ken. I am so confused...
Mark,Both you and Woody make very good points – at least your argument seems logical to me. The Bose example is interesting. Of course, I know the brand, but I don’t know their marketing strategy. Do they sell some of their stuff through retailers, and other stuff direct to consumers (bypassing retailers)?I think Woody’s argument is the clincher; they don’t allow any retailer to actually sell their stuff – in the sense I show up with the money, and walk out the store with the tool. The retailer merely places the order (for the customer), transmits it to Festool, and they (Festool) ship it directly to the consumer. Therefore, by bypassing regular retail distribution outlets, they avoid the jungle (and the fair trade laws)of wholesaling to retail distributors.But Mark, you say Nintendo is merely doing a good job of managing their marketing channels. How do they avoid the charge of price fixing?You guys are giving me a good education in modern marketing. But it still doesn’t make me feel warm and fuzzy about Festool’s strategy. I am not a little surprised that others seem to so meekly accept the practice.
"You guys are giving me a good education in modern marketing. But it still doesn’t make me feel warm and fuzzy about Festool’s strategy. I am not a little surprised that others seem to so meekly accept the practice. "
It is not a matter of "meekly" accepting the practice. I embrace it. It is a brilliant way of not allowing other corporate entities to get control of your business. Somewhere I read an account of how WalMart's marketing crippled Vlasic, the pickle folks. You might want to do a Google on WalMart and Vlasic to get an eyeopening insight into how one company can lose control of its financial health. I cannot remember the original source or I would post it.
Greg
I hadn't heard of the Vlasic example. A perfect example of the big box stores killing business. But if you shop a walmart, you are guilty (or at least complicit).Personally, I avoid the place as much as possible.Can't say that for Hdepot however.Mark
Measure it with a micrometer, mark it with chalk, cut it with an ax.
Bose does sell some stuff through retailers. Best buy, circuit city, even BJs. But I'm guessing that those items don't have the margin that the wave radio and quiet comfort headphones have. BTW the Wave radio is not in retailers either... Only Bose stores (they have a few) and direct order.I suspect with Nintendo the deal is something like - sell the GBA at this price and we'll let you sell the game cube. I really don't know but there are many creative people in sales and marketing... if there is a loophole to restraint of trade laws, they'll find it.Mark
Measure it with a micrometer, mark it with chalk, cut it with an ax.
Godscarp,
Retailers do not stock Festool tools. However, Woodcraft and other suppliers do stock Festool accessories and supplies, which helps once you own the tools.
Festool does this to create uniform prices for their products, and also to give their salespeople an equal chance of selling the tools.
The reason Festool can work with this model is, quite simply, because their tools are superior. You can place an order directly on the Festool Web site and it will be delivered within a few days.
IT DOES NOT TAKE TWO WEEKS FOR DELIVERY. I've ordered numerous Festool tools, and they always arrive within 3-4 days. Here's the address, in case you don't have it: http://www.festool-usa.com
If you want to work with a sales rep, I would recommend Robert Marino, who has built something of a national reputation for his attitude, service, and knowledge. He developed his own Web site, located here: http://festool.safeshopper.com/
It's no hassle whatsoever! In fact, it is a lot more friendly than buying from Amazon.
If you want lots of feedback on Festool, consider joining the Festool Owners Group, which I manage. Here's the address: http://groups.yahoo.com/group/FestoolOwnersGroup/
Edited 4/7/2005 11:46 am ET by Matthew Schenker
there is no reason to buy through a rep./store.
Go direct to festool.
The only reason they can do this is they have better tools than everyone else.
They are able to maximize profits, and for the consumer there is little difference.
j
Don't know much about the Festool thing, but 7 Corners sure is a fun place. They've got every hardware item ever invented.....and a few that haven't been.
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