Anton van Leeuwenhoek observations of microscopic life were initially met not until observations were fully vindicated by the society. Best priced microscopes are made later on until today. This led to one of the most significant and simultaneously technical insights in the history of science.

This is how the microscope business works as opposed to how a microscope works. The microscope business is based on a three tier marketing system. The manufacturer sells to the dealer who then sells to consumers. Theoretically, this leads to a very efficient system were each level does what it does best. It looks great in marketing books anyway.

Almost all manufacturers sell directly to the customer have dealers. A dealer has an assigned territory that they are supposed to sell in and not sell out of. There may or may not be other dealers for the same microscope brand in the territory. Each manufacturer has a different territory structure.

A territory with no other dealer for the same brand is called an exclusive territory and it is what all dealers want. Dealers are not supposed to sell outside their territories but frequently do. It is just hard to turn down a sale. Naturally the manufacturer expects something from the dealer and that was lots and lots of sales.

All dealers have quotas, a dollar number and, in many cases, a fixed number of frames that they are required to sell. A dollar amount would seem obvious but the frame volume is an important number to the manufacturer. If the manufacturer knows how many frames the dealers have to buy as a minimum, then they know how many to make. Experience will show how many accessory modules and of what kinds to build.

What the manufacturer wants to do is let the dealers do all the stocking of microscopes and what the dealer wants to do is stock as little as they can get away with. This is particularly true if the dealer is financing their stock. Microscopes have a good profit margin but slow times turn rate.

The times turn rate is the number of times in a year that you sell your inventory. When one worked for a computer wholesaler, we turned our inventory about 24 to 30 times a year. That is at least twice a month. Something we turned 3 to 4 times a month. That is a very good number. With that high a turn rate we could afford to reduce our profit on each sale and literally make it up on volume.

A microscope dealer may have a 1.5 to 3 times turn rate per year. That means the stock is sitting around a long time. If the dealer has financed the stock, each sale will have a lot of finance costs attached to it. The way out of this slow inventory turn rate is to have fewer inventories. But the manufacturer has the same problems so they don’t want to stock in large amount either.

Now here is the rub, if the dealer does not have it and the manufacturer does not have it then the customer waits. The customer then gets ticked and cancels the order or tells everyone at a national meeting what a group of losers this brand is.

Just to make it more interesting lets throw in production scheduling. Not every part in the dealers price list is made all the time, some of them are not made at all. Some items are only made at one time of the year this is called a run. If the dealer does not have an item and the manufacturer does not, then you wait for the next run. This is a problem with exotic parts. A skilled dealer knows what parts they must stock to prevent shortages.

They make money and move goods and keep up good relations for when they need something. If the item is rare and in demand, the dealer may want to keep it for them and make the higher markup selling to and end user.

To sell all these microscopes the dealer is required to hire sales people. This is the coverage issue. A sales person is an expensive proposition.

It is hard to get experienced sales people and it takes a long time to train an inexperienced one. The costs to the dealer are high and getting higher. The manufacturer wants to see the dealer people calling on every account every day. The dealer wants good coverage to but the dealer pays the bills. This is why the dealer wants an exclusive, costs are high, and the dealer needs to keep the profit margin up.

Just to make it more fun for the dealers the manufacturers have their own sales people out in the field. These are called factory or factory direct sales persons. Theoretically, they are supposed to help the dealer sales people. Ten years ago, the factory people were supposed to be more technically competent. Now, they act as an alternative sales force and a way for the manufacturer to take a sale with no profit to the dealer.

This is called sell direct and it is the nightmare of all dealers. For whatever reason, the manufacturer can bid against the dealer and take the sale away from the dealer. They may do it to make a sale they, otherwise, would not have gotten by giving a price that the dealer couldn’t afford to give. They may do it as a demonstration of who is really important or the factory person may have done all the work and deserves the credit for the sale.

If a manufacturer makes a sale, the dealer may still get a percentage. Of course, if it is under there profit margin, then there is nothing to split. Companies may or may not give the dealer anything. It just depends on their sales and if the best priced of microscopes were sold.