Are “Basement Vendors” Ruining The Reefing Industry?

[IceNein]

He told me that the money isn’t in corals, it’s in the services (tank cleaning and maintenance). That kept him pretty tied up. He’d sell you a nice coral or fish for a good price to hook you…

This seems to be the case at my LFSs. If their shops don't primarily earn their money from maintenance contracts, then I have no idea how they can stay in business given the cost in leases, wages, electricity and how empty the store is at all times.

 

[Frags 2 Fishes]

As a LFS owner myself I think that it can definitely impact things. However, I think that local stores do need to grow with the times and try to be as competitive as they can. So I don't sit here and curse at the local basement guys. They do their thing and we do ours. Sometimes people buy stuff from them and sometimes they buy from us. I try to provide more than just a Walmart environment for my customers and have a lot of pride in our store and the products we sell. I am always hopeful that due to having a good experience the customers will come back and support us.

I think what impacts is the most is the manufacturers selling direct to consumers and aggressively marketting for direct sales. We've lost quite a few sales to customers buying direct (at the same prices we order) just because they assumed that it didn't matter if they bought their aquarium from us. I've also seen sales on dry goods go at or below our wholesale cost for direct to consumers sales. However that's another rant for another thread I think.

The thing with the LFS store (if they are a good one). They will be there to answer questions based on years of experience. They will be there to help you work through tank issues. They will be there if you have a pump fail and need a quick replacement.

The basement dealers come and go but a quality LFS that grows with the times will be there much longer. I think it is important if you can to support the local stores as this hobby would be much different if they all went away.


If you have a quality store that has the products you like and the knowledge that is helpful. Give them some business even if a coral is $5-$10 more than the basement guy. They got a lot of skin in the game to do what they love. I don't know any store owners driving around in Bentleys so its definitely something we do for the love of it.

My 2 cents.

 

[danreef55]

As a LFS owner myself I think that it can definitely impact things. However, I think that local stores do need to grow with the times and try to be as competitive as they can. So I don't sit here and curse at the local basement guys. They do their thing and we do ours. Sometimes people buy stuff from them and sometimes they buy from us. I try to provide more than just a Walmart environment for my customers and have a lot of pride in our store and the products we sell. I am always hopeful that due to having a good experience the customers will come back and support us.

I think what impacts is the most is the manufacturers selling direct to consumers and aggressively marketting for direct sales. We've lost quite a few sales to customers buying direct (at the same prices we order) just because they assumed that it didn't matter if they bought their aquarium from us. I've also seen sales on dry goods go at or below our wholesale cost for direct to consumers sales. However that's another rant for another thread I think.

The thing with the LFS store (if they are a good one). They will be there to answer questions based on years of experience. They will be there to help you work through tank issues. They will be there if you have a pump fail and need a quick replacement.

The basement dealers come and go but a quality LFS that grows with the times will be there much longer. I think it is important if you can to support the local stores as this hobby would be much different if they all went away.


If you have a quality store that has the products you like and the knowledge that is helpful. Give them some business even if a coral is $5-$10 more than the basement guy. They got a lot of skin in the game to do what they love. I don't know any store owners driving around in Bentleys so its definitely something we do for the love of it.

My 2 cents.

Sounds like one of the 'good shops' Thanks

 

[Reefer Matt]

As a LFS owner myself I think that it can definitely impact things. However, I think that local stores do need to grow with the times and try to be as competitive as they can. So I don't sit here and curse at the local basement guys. They do their thing and we do ours. Sometimes people buy stuff from them and sometimes they buy from us. I try to provide more than just a Walmart environment for my customers and have a lot of pride in our store and the products we sell. I am always hopeful that due to having a good experience the customers will come back and support us.

I think what impacts is the most is the manufacturers selling direct to consumers and aggressively marketting for direct sales. We've lost quite a few sales to customers buying direct (at the same prices we order) just because they assumed that it didn't matter if they bought their aquarium from us. I've also seen sales on dry goods go at or below our wholesale cost for direct to consumers sales. However that's another rant for another thread I think.

The thing with the LFS store (if they are a good one). They will be there to answer questions based on years of experience. They will be there to help you work through tank issues. They will be there if you have a pump fail and need a quick replacement.

The basement dealers come and go but a quality LFS that grows with the times will be there much longer. I think it is important if you can to support the local stores as this hobby would be much different if they all went away.


If you have a quality store that has the products you like and the knowledge that is helpful. Give them some business even if a coral is $5-$10 more than the basement guy. They got a lot of skin in the game to do what they love. I don't know any store owners driving around in Bentleys so its definitely something we do for the love of it.

My 2 cents.

I absolutely agree with supporting the LFS as well. I’ve even grown out a few coral for mine, and trade in other frags for salt and magazines, heavily discounted for them of course. Like you said, when you we need something in a pinch, the LFS can get us squared away quickly, and even order in things we are looking for.

I think there’s room for both, as long as the respect is given to those who need the income to live. I wish I could make that leap, but my wife is a solid no on that. So it’s cheaper to keep her happy, yet still satisfy my love for this hobby (lifestyle).

 

[IceNein]

For me the biggest advantage of a LFS over a basement vendor is that I can go to the LFS any day they're open and look at what they have. It's the ONLY way to really WYSYWIG. You are actually looking at the coral you are going to take home. They can't use photoshop on you.

With a basement vendor the only time I can look at their stuff in person is at a frag swap. Most aren't going to want you to come over to their house to maybe not buy anything because nothing impressed you very much. Thankfully living an hour or so out of LA, I can go to a bunch of different stores.

 

[Dragen Fiend]

Unless you have a very large reefer community near you that does this. Likely not. Profit scales the bigger you go. Your basement reefer isn't going to produce enough to compete with LFS. Most of these people are just trying to sell frags from overgrown colonies to recoup costs or maybe even a tad profit.

LFS will always capture the new reefers. The only people going to a basement reefer is someone who understands the hobby by then the LFS got their monies worth.

Add on to reputation. Obviously reputation matters. Unless I've seen your tanks in person. I won't buy anything from you. Plus insurance from LFS that most basement reefers don't offer.

 

[BeanAnimal]

Yeah, but then I have to prove to the IRS that I’m trying to make a living off of it, which I am not. They would consider me a hobbyist. So I just add the business income to my personal income taxes and pay the sales taxes too.

That is not really how it works. If you set your business up and deriving income then you can claim the expenses related to the business. It does not have to be what you "make a living" off of. You are reporting the income and being taxed on it. Clam the expenses. Now, all in they may not add up to more than the standard deduction, but you are paying ~30% on that income as tax to the federal government, another chunk to the state and local.

 

[areefer01]

That is not really how it works. If you set your business up and deriving income then you can claim the expenses related to the business. It does not have to be what you "make a living" off of. You are reporting the income and being taxed on it. Clam the expenses. Now, all in they may not add up to more than the standard deduction, but you are paying ~30% on that income as tax to the federal government, another chunk to the state and local.

Not directed at you but as you know there are also laws that are applicable to online sales and taxes that will vary by purchase location, city, state, etc. Anyone doing anything like this should have an accountant and business license. The last thing you want to do is be audited or have penalties.

Social media content glorified the side hustle but left the finer details off.

 

[BeanAnimal]

Very few states actually require general business licenses. To that end, I would advise anybody to do discrete research and not opening a can of worms if they can help it.

Calling your local government and asking what licenses and permits you need is often a huge mistake, as they tend to treat everything like a nail and they are a hammer. Do research and get what you needed, but not just because some paper pusher at the city building thinks that is what you need. I hope that makes sense…

“Hi I am putting a 200 gallon aquarium in my basement what do I need” can quickly lead to site inspections, grey water permits, animal permits, zoo licenses, hazardous chemicals permits, etc.— because the person you are asking applies the wrong laws or misinterprets them. Once you head down that path there is no return.

 

[ChrisfromBrick]

i’ll stick to buying deal frags with multiple heads for 15 bucks. Yes, there are people out there that will take care of their fellow reefers instead of try to rip them off for a frag of scrambled eggs. I’ve seen these go for $5-10 pp. Outrageous. You know what, when I need to make room i’m either going to give away my coral or sell it for super cheap. I encourage others to do the same.

 

[areefer01]

Very few states actually require general business licenses. To that end, I would advise anybody to do discrete research and not opening a can of worms if they can help it.

There are over 80,000 IRS employees.

Calling your local government and asking what licenses and permits you need is often a huge mistake, as they tend to treat everything like a nail and they are a hammer. Do research and get what you needed, but not just because some paper pusher at the city building thinks that is what you need. I hope that makes sense…

“Hi I am putting a 200 gallon aquarium in my basement what do I need” can quickly lead to site inspections, grey water permits, animal permits, zoo licenses, hazardous chemicals permits, etc.— because the person you are asking applies the wrong laws or misinterprets them. Once you head down that path there is no return.

I ran into this during our most recent drought in California. I reached out to fish and game, then state water resource control board, asking about collecting natural sea water to prevent waste from RODI. That was a very interesting exercise.

I agree - it may, or may not, be warranted. I just tend to play things safer but respect others decisions.

 

[stewy14]

what time does high end start

wat

 

[polyppal]

Funny you say that. Some of the worst advice I’ve seen around here comes in the form of “my LFS said to dump this bottle in my tank”.

Truth, I would consult google over most LFS’ advice I’ve heard over the last 20yr

Go to 3 different LFS and ask the same question and you’ll likely get 3 radically different answers

 

[polyppal]

There is one LFS that I go to in Denver (locals will know) who manages to sell dry goods at a comparable price to internet, huge desirable frags from $20 that would run triple that online and healthy fish at online prices (or cheaper). The owner is a real expert (has decade+ old show tanks on display that prove it) and one of the nicest guys you’ll ever meet. Buys coral for store credit with offers that aren’t insulting. If you shouldn’t buy something - he’ll tell you, not sell you. They do not sell online and are only open Fri-Sun (though they do maintenance/custom work though the week)

All that said, they are easily the most successful LFS in Colorado and theres droves of people there when the storefronts open on weekends.

He invested in his reputation, actually cares about his customers and the hobby and it’s clearly paid off.

 

[drbark]

This is a very interesting topic. As a "basement vendor" myself, I'd love to give my $0.02.

From the LFS perspective, I think I would be pretty upset about basement vendors. They show up at frag swaps with corals, have small margins due to almost no overhead (because they have fewer expenses), and undercut all the LFS prices. This is an extremely competitive business, so there's absolutely no question that this has an impact.

From my perspective, we are able to get some really, really unique pieces and take risks that most LFS's would not be able to take. We grab lots of speciosa, lokani, and cherry-pick specific LPS that no LFS around us would bother with, and charge a really fair price for them.

So, to answer the question, I think there is definitely room for both. I see both types of vendors as extremely important to the hobby, and I think they serve different purposes.

That is the second reason why I finally used my resale permit to get corals. My LFS was looking at me as a money maker after Covid and they didn't have the high end corals that I kept asking him for it. And when he finally did get one in, he asked a crazy price for. Then was visibly upset that I didn't buy it.

 

[BeanAnimal]

That is the second reason why I finally used my resale permit to get corals. My LFS was looking at me as a money maker after Covid and they didn't have the high end corals that I kept asking him for it. And when he finally did get one in, he asked a crazy price for. Then was visibly upset that I didn't buy it.

What a jerk for trying to stay in business!