While I try to be an optimistic guy…I am not so optimistic about the purchase of Drs. Foster Smith, and ultimately LiveAquaria, by Petco. I am pretty sure that I do not need to really explain myself on why that is the case.
I don’t think that Petco doesn’t care about the husbandry of fish or understand the market dominance of fish/reef…but it is not an advantageous business practice when you are a large corporation and all the matters is the highest profit margin possible (of course there are other things that affect it, like minimum wage employees that don’t have the passion as we do for fish and really don’t care…but I am sure you can understand the generality of the statement). When you look into the cost of fish, shipping costs, electricity, water, salt, loss of life, employees and what we actually pay for fish, you can logically infer that there really isn’t that much of a markup for the fish store owner. I also have spoken with people who have fairly in-depth knowledge of LiveAquaria and their actual numbers; LiveAquaria is basically a loss leader for the bigger picture of Drs. Foster and Smith, in regards to their dry goods side of their business model.
Considering LA’s fairly competitive prices, unheard of guarantee, top notch husbandry care, immediate and stellar customer service, I fully believe the whispers I have heard. It does make sense as a privately held business and it’s practice, if you buy fish from LA, chances are pretty high you will buy from their dry goods section, which has a much bigger mark up.
While an individual can survive off such a modest income…a corporation that has bloated executive budgets and shareholders to keep happy, will find it not worth the venture to try and pursue the reef/saltwater trade. My assumption is that Petco mostly just wants the dry goods, Drs. Foster & Smith, book of business and not so much the LiveAquaria portion. However, I am willing to venture that the owners want to just sell it in one whole lot and retire. They don’t want to sell a piece of it and run the other portion or sell a piece and then have to find a buyer for the other remains, they just want to sell and be done with it.
Here are few scenarios that I see happening:
1- Petco buys it and then immediately sells the live portion to a private investor or two and just washes their hands of it. We can hope that the private investor(s) keep the staff on board (especially Kevin) and allow it to function as it has and continue it’s very prominent and positive reputation.
2- Petco tries their hand at running an already proven business model, keeps everyone on board and let it run how it has been running and follow the model of, if it ain’t broke don’t fix it.
3- They treat Liveaquaria as they do the rest of their fish sections and it takes a massive dive and it becomes dismal at best. We then have one less option of the best places online to buy fish, that are some of the most well cared for and one of the best success rates in the biz and best guarantees as well.
While I am just speculating on what could potentially happen, the only real way I see LA sticking around as we know and love, is for Petco to sell it off to someone who isn’t big corporation minded, instead is small business minded. I do think that will be a very tough nut to crack, as you would need a vast knowledge of the saltwater and freshwater industry and I am guessing a sizable portion of cash to try and entertain the offer of buying it. However, there is one possible avenue I see that could with some real possibility of working and that is, Marine depot. They have recently started up the live portion of the coral and fish sales, of their business. They were pretty prominent in the online coral and fish game, but I think just didn’t see the value in having a “divers den” or WYSIWYG and kind of lost out the battle to LA and some of the others that offer that service. I do believe that they could potentially have the capital to purchase LA and the right mindset to pretty much leave it alone and follow in lockstep with it’s very much proven business model.
I do hope for a healthy and successful transition for LA and the current staff involved. It would be a shame to see it disappear into the night. What are your thoughts on the future of LA?