WHEN THE BOAT WAREHOUSE in Kingston, Ontario first opened, industry veterans said things like; a flash in the pan, a bunch of kids, they’ll learn you can’t make money by giving boats away, they’re ruining the market…they won’t last.
If you walked into the Toronto International Boat Show in January 2013, the first thing you’d see was a Four Winns family stern drive runabout with a big $17,499 sign (including trailer) in the main aisle.
Is it a consumer come on? Intimidation? Or, is The Boat Warehouse continuing to give boats away?
Read on and you can be the judge. Dave Mayhew and his team at The Boat Warehouse have won awards year after year, been the world’s number one Four Winns dealer six times (including during the US boom times) and they typically sell over 100 boats in just nine days at the Toronto International Boat Show.
It seems the skeptics were wrong.
Dave Mayhew is a boat dealer, not a marina operator who sells boats and that puts his business into the same league as other key brand dealers.
There are very few real boat dealers in Canada. But, when you read about The Boat Warehouse, we think you will see that their unique business strategies set them apart from other dealers, explaining the track record of the awards The Boat Warehouse has earned.
Dave Mayhew was born in Ottawa. His family was relo- cated to Kingston where Dave was raised and educated. Boating in Lake Ontario became a regular pastime in his teenage days.
Dave told us, “I love boating, but I can’t say that was the reason I got into this business. I got into the boating business because it presented a unique opportunity.”
He started in the car business at 19 right out of college and became a sales manager at the age of 23 at a Jaguar Jeep dealership in Kingston.
It was a great experience in managing and, more impor- tantly, he learned how to sell two different brands of car to two different types of buyers, the Jaguar customer and the off- roading Jeep customer.
He saw an opportunity in the boat business that he never saw in the car industry. Selling a recreational product to a cus- tomer who wants (as opposed to needs) the product makes the sales process more enjoyable.
We share his responses here to some key questions.
BOATING INDUSTRY CANADA (BIC):
So, Dave how did you get into the boat business?
DAVE MAYHEW (DM):
After being in the car business for 8 years, I decided I wanted a career change. I was presented with an opportunity to manage a newly purchased local marine dealership, Paris Marine.
After 2 years in the changing economic times Paris Marine scaled back and closed the Kingston location
In the 2 years I worked for Paris Marine, I recognized the potential to bring more sophistication to the boating industry through the knowledge gained in the car industry.
It was a vision to me that somebody could take this business and really run with it; Kingston had several mom-and-pop type operators then, but nobody came from a sales and marketing force into the boat business.
At the time Paris Marine closed I was 28 years of age and was already thinking of a way I could get into the business. This happened to be in 1989 / 1990 and it was a brutal economic time for the boating industry; many dealers were closing their doors and finance companies were taking some big hits. It was at this time that I applied for credit with a major inventory finance company.
I will never forget my first meeting with Bill Blight who held an upper management position with the finance company. It was he who gave me my start. Bill was coming to Kingston for a hockey tournament with his kids. We met and talked for an hour and a half. After our conversation, he picked up the phone and said, “I want to do something for this guy” (me – Dave Mayhew).
I was fortunate that I had my house paid for and I was able to put my house up as collateral for $150,000.
So, $150,000 became my original line of credit in the boat business.
Could anyone do today what I did that back then? Absolutely not. Timing is everything. The industry was at an all-time low, the finance business wasn’t as tight and they were looking for new business.
So, I put my house on the line and we started with a $150,000 line of credit. Which, as you can appreciate back then, didn’t buy us a lot of boats!
Our first line was with Bryant fiberglass boats and we were one of the initial Tracker dealers in Canada. Obviously, we had to flip our inventory very quickly to keep our line of credit going!
Again, timing is everything. Three months into opening my business here, the dealership next door decided to close. They were a large dealer and had been in business many years. The owner had over $1 million worth of inventory held by the finance company with whom I had just signed
Many of the boats were Bayliners. In the tough economic times, the finance company was being offered $.50 on the dollar and they were going to take a huge hit.
I saw an opportunity to approach the finance company and offered to sell the boats on my floor plan for a commission rate as opposed to them selling the boats at $.40 or $.50
on the dollar. It was a mutually advantageous agreement. I sold all of their boats and my floor plan grew from the initial $150,000 to $1.2 million.
Even with a $1.2 million floor plan the boat business was tough so to make ends meet I sold furniture out of one side of the business and boats out of the other. I did that for two years until the business picked up around 1993 / 1994 and then we became a full-fledged marine business.
It was in 1993 that The Boat Warehouse first took on Four Winns.
In 1993 we signed up with Four Winns and committed to 2 or 3 truckloads of boats. Four Winns was not building the vast lineup they have today, so we ordered a bunch of 18 and 19 foot boats and they arrived in April or May. Every week Four Winns would call us and ask how many we had sold. Week after week we would reply that we hadn’t sold any.
I found out later that they were concerned about their deci- sion to sign me on as a dealer. This concern would change in August when all the boats were sold.
From that time they referred to me as Mr. August.
BIC: Have you always been a Four Winns dealer since then?
DM: Absolutely. Product lines are important to the success of the dealership. You need to establish the right relationship with your manufacturer, because it brings you warranty support, rebates and programs that help move the product.
In my opinion if you have too many lines, you’re just another dealer to the manufacturer.
If you have just a few relationships, you become impor- tant to the manufacturer. Your whole world changes, right from sales programs to warranty programs to taking care of the customer. Everything changes.
I came out of the car business. The car business taught me everything I know, everything I needed to know, to be in retail. We didn’t have a choice to deal with different manufacturers. Your only choice in the car business was to become really good at what you did with that manufacturer.
You had to belong to their programs.
BIC: What about signing up for multiple lines? Can’t you get the best of all worlds?
DM: We have seen dealers that have that have tried to carry mul- tiple lines but now, the manufacturers are starting to pull away.
In my opinion, it is difficult for multiline dealers to be aware of what is going on with all their brands and their competitors. They don’t have the ability to keep up with the marketing, warranty and sales programs.
When somebody walks into our showroom and asks us about Four Winns, we know everything about that boat. My sales representatives know the brand inside-out; we have been selling it for years.
BIC: How does that benefit your sales people?
DM: Our salespeople are confident about Four Winns and Lowe because of their familiarity after years of selling both of these brands.
BIC: But didn’t the big boat market really slow down?
DM: Yes. We changed gears and we changed gears very quickly. I realized that I needed to pick up our sales by changing our focus away from big boats. So, just a few years ago, we expanded with Lowe and we became the Master Dealer for Ontario.
Our Lowe sales surpassed our expectations, making us the World’s Largest Lowe Dealer for these past two years.
BIC: What was driving that spectacular increase?
DM: Timing was everything. We expanded at the right time, when the aluminum and pontoon boat business was on the increase.
We have been fortunate that our relationship with the factory enables us to communicate models and features that we require to gain market share in the Ontario market. We have been successful in determining the price point and the models we considered would be strong sellers.
For example, we approached Lowe and suggested that they build a 21 foot tri-toon pontoon boat that would give consum- ers the option to ski or wake board behind at a price point below $20 000. This model was so successful that Lowe went national with that boat the next year.
BIC: What benefits do you gain when you hit those numbers and can’t a regular marina take advantage of that tri-toon model?
DM: Any dealer can take advantage of any model. The problem is without volume purchasing it is more difficult to reach a competitive price point.
BIC: OK, but it looks like there’s no margin left at your prices. DM: Again, volume buying allows us to meet our margins,
benefitting the consumer with a very competitive price point.
BIC: So, are your sales people being more like consultants?
DM: Selling has changed for us. We used to be able to close deals very quickly. The process of selling has changed a lot in the past 5 years. It has become much more of a relation- ship. The relationship is established through the consumer confidence that is established. The customer has to be con- fident that you are selling them what they really need and want. That’s the key.
BIC: Is that the main difference from small marinas?
DM: No—The volume of inventory we stock attracts the con- sumer and instills confidence in the consumer that we can provide them with the boat that best suits their needs. We sell people what we know they need. When a customer walks into our yard and sees the amount of inventory, they know we are in the business of selling boats.
BIC: When we talk about volume, how many boats are you really talking about?
DM: The Boat Warehouse sold over 400 new units this
BIC: That’s a tremendous volume and Kingston is not that big an urban area!
DM: We are in a great area with literally hundreds of small lakes to the north from Ottawa to Lake Ontario and the Thousand Islands too. Our brands give us the opportunity to reach a large market in Ontario.
BIC: How do so many customers find you?
DM: Initially the Trader magazines in Ontario had the most impact for us.
We would run a double-page ad in the middle of the maga- zine, 52-weeks a year regardless of how business was even in slower times when our competitors were cutting back.
People would walk into the Toronto Boat Show with that double-page ad and could easily identify us.
Obviously, the internet is now the major marketing tool for customers to research our company and boat inventory.
BIC: How important is the Toronto Boat Show to The Boat Warehouse?
DM: The Toronto Boat Show requires months of planning. There are only two things that really take years off my life. One is the first time that I drive under the Exhibition Place arches and the other is the May long weekend.
The boat show represents 20 to 25% of our entire year sales sometimes. The preparation that goes into it; pricing, ordering boats, set up and tear down—unbelievable.
BIC:What if there was no boat show, would you still find those buyers?
DM: No—The Boat Warehouse is very successful in front of the consumer’s face. My sales staff shines at the show when they are in the heart of the competition.
The industry needs the boat shows. It’s a great environment for the consumer. They can see so many different units all in one place. Ten years ago consumers commented that some- times the volume of product was overwhelming.
Today with the Internet it is not as confusing. The con- sumer has researched the brands and models of boats they are interested in before they attend the show. They don’t wander around anymore like deer in the headlights.
Most consumers today with the help of the Internet know what they’re going to look for and the boat show is the perfect venue to make a proper buying decision.