Support independent drone dealers – or lose them

It’s a big world out there, with tons of buying options. Today, we make the case to throw your support behind reputable owner-operated stores and websites.

What’s your go-to when it comes to drone purchases? For many, the answer will depend on the type of drones they’re into. Those testing the waters with inexpensive starter drones often go to Amazon. Those who’ve been into this field for a bit might wind up going over to Banggood.com or another site from Asia. Or maybe it’s one of the hobby chains. And if you’re buying a DJI? The choice for many is to buy directly from the company.

We get that. But let’s make a case for the independents.

Your local hobby store

As a kid, the local hobby store was the place to go. That made sense – at least in my case – because the internet didn’t even exist. The only option was to head to a brick-and-mortar location and look at the inventory and talk to staff. You could actually see the stuff before you bought it, and get an opinion from a real human being.

When I revisited my interest in things that fly as an adult, I initially took the same path: I went to a local hobby story in Toronto and spoke with a staff member. I wound up buying a ready-to-fly park flyer called a Slo-V. Amazing how old this video looks now:

I settled on the Slo-V because a patient staff member took the time to listen to what I needed: Something easy and forgiving to fly for a first-timer. He also knew the reputation of the brand and reassured me they’d be around with parts and support as I progressed. Turns out I would need some replacement parts later on – and the store always either had them in stock or could quickly get them in.

Plus, I developed a relationship with staff at this particular store. They valued my business; I valued their knowledge. That relationship is absent when you’re ordering from some distant giant online.

Enter drones

When I first decided to build a drone, back in 2011, I’d become a big online fan of David Windestål. His site, https://rcexplorer.se, contained a full build blog for a tricopter, along with a list of parts. David was fabricating the carbon fiber bits – which I purchased from him – but the rest was a long shopping list from HobbyKing. The build required some very specific parts, and this seemed the most efficient way to try to get them all at once.

At the time I placed that order, I was on vacation and far from my local hobby store. I also was not yet aware of an incredible resource right in my back yard.

Rotorgeeks

A few years back, someone mentioned I should check out Rotorgeeks. The owner, I was told, was really knowledgeable. Plus, he had an amazing inventory you could check out in-person or online. When I first visited his store, I was stunned at the incredible variety of specialized stock. I’d never seen so many drones all in one place – or so many parts with which you could build them. The store has been around since April 2014 and is truly one of the pioneers in the FPV field.

Rotorgeeks, then and now, specialized in everything FPV (and I do mean everything). Owner David Klein was (and is) an avid pilot with an incredible depth of knowledge. Technical question? No problem. Advice? You’ve got it. Quick repair? Sure, pending time. Klein is the original rotorgeek.

“It’s really complex stuff, and chances are you’re going to need help or parts,” explains Klein. “Most of the time you can’t get any support, you can’t get help (from massive or distant retailers).”

My first FPV purchase was a used drone via Facebook, which needed a receiver for it to work with my old Spektrum radio. It was an inexpensive part, but David took the time to solder it onto my drone and ensure it worked with my radio. Without his expertise at that stage, I probably would have faced an hours-long YouTube rabbit hole to learn what needed to be done. (I’ve since gone on to purchase a radio, an excellent battery charger, two drones, batteries, and other assorted widgets from his store.)

It’s hard work running a small business

Rotorgeeks remains my example here, but we can extrapolate to other independent drone or hobby outlets. David works long hours: Much of his business, the majority, is a thriving mail order with international clients who’ve come to rely on the broad inventory and expertise. Aside from dealing with those orders and walk-in customers, people who run these stores also deal with multiple manufacturers, often from China. In David’s case, that means late hours so he can communicate in real time with people on the other side of the planet.

It’s a necessary part of the business, but it comes with some challenges.

“The China factor is the hours, it’s the very short product life cycles and all the inventory risks associated with that,” says Klein. “It’s managing currency fluctuations and exposure. It’s language and communication, international shipping – much of the hassle of this business comes from being a China importer.”

Diminishing returns

Retailers – unless they’re doing massive volume – rely on decent profit margins to keep their businesses running. There’s rent, salaries, insurance, the cost of carrying a large stock of inventory – and a multitude of other expenses that come with the territory.

In the early days of this business, profit margins were often around 40%. But as the world of drones has expanded, and particularly with the competition inside China and the multitude of competing websites, that profit margin is now a sliver of what it once was.

“The problem with China is we have now worked our way down to 20-25% margins. And in the case of some more expensive pieces of equipment it can be down to 10 or 15%,” explains Klein. “And that does not support a North American business model: North American rent, North American salaries. At the start of the business there were products that had as much as a 60-point margin.”

There’s also the issue of quality control, which can sometimes be spotty in China. There can also be hassles with warranty, which sometimes result in the dealer having to eat the cost of repairs or replacement.

With Chinese retailers marketing direct, margins have become so thin that Klein says “the trajectory of the industry has been like a frog in boiling water.” By that, he means the frog – the independent retailer – is surrounded by an environment that slowly but surely is becoming more hostile and will ultimately prove fatal. Klein describes the kind of decisions retailers routinely face: “Do I want to bring in goggles that sell for $500 US and carry a net profit of $50? Do I want to tie up that capital?”

The rise of Amazon and Walmart with their almost no-questions-asked return policies have also made things more challenging for the little guy. There’s now an expectation from some consumers that retailers should accept any and all returns – even products where the user has soldered or used the product, meaning it can’t be sold again.

Klein has seen more than a dozen other retailers in the FPV space start – and fail – due to market pressures. And that’s in Canada alone.

“It’s just lack of profitability. It’s low margin, low volume. And not to be underestimated is the sort of fashion element of the business: Product lifestyles are short and crowds are fickle.”

It’s true. Retailers can purchase inventory of something that’s hot, only for it to be supplanted by a new shiny object a month or two down the road.

Owner-operators also maintain their own websites, do social media, build drones for customers and more. It’s not uncommon at Rotorgeeks to see two 3D printers spitting out canopies or camera holders or ducts for CineWhoop drones when in the shop. It’s hard work.

The splintering of the market

It’s not just massive Chinese websites that put the pressure on independent retailers. The incredible rise of influencers and creators who use affiliate codes has also taken a gouge out of sales.

That YouTube video you just watched? It likely has an affiliate link in the description. Click on that link to purchase and that influencer will pocket probably 5%. And yet these influencers don’t stock inventory, pay rent, deal with repairs or returns – or face any of the other costs associated with running a retail business. Yes, they create content – some of which is really useful and time-consuming and worth your click. Collectively, however, they add up to another hit that impacts the bottom line for a retailer.

“When you factor in the other costs of running a business, that 5% likely rivals what I’m pulling in,” he says.

DroneDJ is one of those places where affiliate links provide a significant source of our income. We’re transparent about it, and do our best to provide content we think will be meaningful to our readers. But let’s not kid ourselves: We’re not running a store with hundreds of items in our inventory, nor are we providing support to customers (though we do try to help out when queries come our way).

The solution? Give us or your favorite creator a click from time to time. But divvy up your purchases so that some go to your retailer.

The DJI connection

Many retailers (and Rotorgeeks is one of them) also sell DJI products. And of course, DJI also sells DJI products. It’s very similar to the model used by Apple, which has online ordering, “official” Apple stores, plus a network of authorized retailers.

And while it’s great to be a DJI retailer, that also can come with challenges. I know from an Apple retailer I support that sometimes the company promotes a product at a discounted price. But if the retailer already had inventory of that product, they’re put in a squeeze. The only way they can compete with a sale price is to match it, which means a reduced profit margin.

Plus, many consumers opt to purchase directly from DJI or Apple and completely bypass independent retailers. That’s a pain for retailers but understandable. What’s more difficult – and this does indeed happen – is when consumers who purchased from the manufacturer have a problem and walk into the local retailer demanding solutions. Not cool.

But one of the biggest challenges is one that has no easy solution: Direct sales from DJI are shipped free and without charging tax. The manufacturer simply absorbs those costs – and can afford to – because its profit margins are greater. That’s a significant advantage over the retailers.

“That’s an automatic 13% discount in Ontario, 15% in Nova Scotia. So as a retailer I have at least a 13% disadvantage,” says Klein.

Buy local – or from independent online dealers

You get where this is going.

Independent retailers, and we’re talking specifically about those with the expense of a retail storefront, are a tremendous resource. The right retailer can offer knowledgeable advice and after-purchase support. They can fix things that are broken, or recommend the next appropriate stepping stone as you get deeper into the hobby/sport. They pay the salaries of local employees and help the local economy. They know what the regulations are.

Above all, it’s in their interest to provide service at a level that will bring you back. They’re an incredible resource – and under incredible pressure due to the many reasons we’ve discussed.

So when it’s time for your next order, consider an independent like Rotorgeeks – or ask around in your local community for recommendations. It’s the right thing to do – and will ensure that independents are part of the drone scene for many years to come.

Says Klein: “You should support independent retailers because you want them to be there tomorrow.” That’s the bottom line.

(Oh. In case you’re wondering: We do not have an affiliate relationship with Rotorgeeks. We just truly believe it’s important to support independent retailers – regardless of your retailer of choice.)