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The golf club industry is due for a major correction.


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Being an equipment junkie, I did some online shopping for some new clubs over the week.  Here is what I found.

Mizuno, one of the most respected brands in golf, is making some of their iron sets available through an ebay seller to the highest bidder.  I got my set 4-PW for $230 +shipping.  The listing describes the condition as "used" (to save some brand reputation amidst the cheap prices), but in fact they are brand new in retail packaging drop-shipped directly from Mizuno.

Adams, recently acquired by Taylormade and undergoing a brand identity shift, is making what was their previous top of the line XTD iron set available to anyone with $190 + free shipping with custom shaft and grip specs.  Their corresponding XTD brazed titanium hybrids are also available brand new to the highest bidder and going for about $20 each plus shipping, again drop-shipped directly from Adams.

Cobra, not shy about discounting previous year's models on their own website, must have found they needed to do more because their excellent titanium/carbon Fly-Z+ driver with real-deal Matrix shaft from last year is running about $95 through a large dealer and you can pick either white or black.  This one is described as "open box with accessories" probably to disguise the fact that is is another production over-run being dumped at bargain-barrel prices.

Nike makes one of the most costly putters to produce in the Method, and even here they are dumping excess inventory under the "open box" guise for something like $35 to $55 depending on the model.

So needless to say I did well in my shopping.  But notice that these premium clubs made by respected brands have depreciated by up to 75% from the original "store" price within 1-2 years without ever being taken out of the packaging.  This is literally below the high-volume production cost levels.  Something must change.

I can think of two things could alleviate the glut of new equipment.  The club manufacturers could collude and drastically reduce their supply of clubs and correspondingly increase prices and eliminate fire-sale discounts.  This would also need to incorporate a much longer product cycle.  It's probably not realistic due the collusion aspect alone.  The other possibility is for quite a few manufacturers to go out of business.  Adams can't survive if their new business model involves selling $200 hybrid for $50 within a year of release and then dumping them for $30 on ebay a few months after that.  Who else could go?  Well probably every single one of the smaller brands plus some bigger ones (Cobra?, Nike?, Mizuno?, Callaway?).  What does it mean to the consumer?  I would say sell any "extra" clubs you own while they still have some kind of value.  Don't expect the trade-in market to exist very much longer.  The new normal is going to be an environment where used golf clubs are dealt with like used socks.  And don't fool yourself about anything holding value after buying it at retail.  The value in your clubs is created by the length of your experience with the instrument.

Edited by Tee2Trees
typo
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1 hour ago, Tee2Trees said:

Adams can't survive if their new business model involves selling $200 hybrid for $50 within a year of release and then dumping them for $30 on ebay a few months after that.  Who else could go?  Well probably every single one of the smaller brands plus some bigger ones (Cobra?, Nike?, Mizuno?, Callaway?).  

I don't think Adidas has much to worry about what is going to happen with their Adams hybrids.  Then again, TaylorMade always did have a very quick product cycle.

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Driver:  Titleist 915D2.  4-wood:  Titleist 917F2.  Titleist TS2 19 degree hybrid.  Another hybrid in here too.  Irons 5-U, Ping G400.  Wedges negotiable (currently 54 degree Cleveland, 58 degree Titleist) Edel putter. 

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1 hour ago, Tee2Trees said:

Mizuno, one of the most respected brands in golf, is making some of their iron sets available through an ebay seller to the highest bidder.  I got my set 4-PW for $230 +shipping.  The listing describes the condition as "used" (to save some brand reputation amidst the cheap prices), but in fact they are brand new in retail packaging drop-shipped directly from Mizuno.

This makes me curious about which sets.  I'm not an equipment junkie and I'm happy with my i20s, but if a nice set of Mizuno irons was available on the cheap ... hmmmm. :beer:

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Mizuno enforces MAP (minimum advertised price).  Some eBay resellers use shady methods of circumventing the MAP policy by claiming the clubs are demo or used clubs.  If Mizuno finds out, that reseller will lose their right to sell Mizuno equipment. 

As for Adams and Cobra, it's reaching the end of their product life cycle and as they do every year they are dropping the price to clear out warehouse inventory.  What you're noticing is nothing but traditional cyclic marketing and sales practices, not a indicator that the golf market is adjusting.  

Acushnet is offering Titileist and Footjoy as an IPO, if their business wasn't sound and profitable they'd never do this.  

Yes, some golf manufacturers are struggling, like Adidas with TaylorMade and Adams but in the end TM will likely be profitable and Adams is going to get sold or closed because there is no longer a reason for them to exist.  

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Joe Paradiso

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Just now, newtogolf said:

Mizuno enforces MAP (minimum advertised price).  Some eBay resellers use shady methods of circumventing the MAP policy by claiming the clubs are demo or used clubs.  If Mizuno finds out, that reseller will lose their right to sell Mizuno equipment. 

As for Adams and Cobra, it's reaching the end of their product life cycle and as they do every year they are dropping the price to clear out warehouse inventory.  What you're noticing is nothing but traditional cyclic marketing and sales practices, not a indicator that the golf market is adjusting.  

Acushnet is offering Titileist and Footjoy as and IPO, if their business was sound and profitable they'd never do this.  

Yes, some golf manufacturers are struggling, like Adidas with TaylorMade and Adams but in the end TM will likely be profitable and Adams is going to get sold or closed because there is no longer a reason for them to exist.  

Good info - thanks.

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3 minutes ago, Golfingdad said:

Good info - thanks.

Mizuno, Titleist and Ping heavily enforce MAP on current product lines, which is why they aren't included in the bonus trade-in offers or sales flyers places like GolfSmith send out, read the small print, those three will almost always be excluded.  If a reseller circumvents MAP, they are usually terminated as a reseller.  

The three will offer sales, but you'll see it on their site as it's promoted as a corporate offering.  Resellers cannot even discount discontinued clubs beyond what the three allow for a specified period, after that period, the resellers can discount discontinued clubs.  

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Joe Paradiso

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2 minutes ago, newtogolf said:

Mizuno, Titleist and Ping heavily enforce MAP on current product lines, which is why they aren't included in the bonus trade-in offers or sales flyers places like GolfSmith send out, read the small print, those three will almost always be excluded.    

Yep, as soon as I read you post I remembered that. :)

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I see it as a non-issue for a majority of golfers, the only ones it affects are people who are getting new equipment every year or two. I would assume a lot of the big manufactures plan for the discounted sales and are still making profit. That $400 driver probably only costs the company sub $100 to make, advertise and sell.

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1 hour ago, Golfingdad said:

This makes me curious about which sets.  I'm not an equipment junkie and I'm happy with my i20s, but if a nice set of Mizuno irons was available on the cheap ... hmmmm. :beer:

It's the updated 2016 JPX-EZ.  JPX-EZ Forged were running about $90 higher.

1 hour ago, newtogolf said:

Mizuno enforces MAP (minimum advertised price).  Some eBay resellers use shady methods of circumventing the MAP policy by claiming the clubs are demo or used clubs.  If Mizuno finds out, that reseller will lose their right to sell Mizuno equipment.

This speaks to the basis of my conjecture.  These were in original Mizuno packaging.  I think Mizuno is in on the ebay sales just to dump excess inventory without affecting the pricing on their website.

1 hour ago, newtogolf said:

As for Adams and Cobra, it's reaching the end of their product life cycle and as they do every year they are dropping the price to clear out warehouse inventory.  What you're noticing is nothing but traditional cyclic marketing and sales practices, not a indicator that the golf market is adjusting. 

I don't think it is traditional cyclic marketing.  The closeout price cuts are getting deeper and they are coming sooner.  Something has to give.

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Pretty sure the cost/pricing model for a golf product cycle includes majority of cost recovery + profit baked into first 2-4 months (just an educated guess) of sales. All sales after that are icing on the cake. No way any of the companies survive if they DEPENDED on more sales.  

Clever of Ping, Titliest and Mizuno to control the market with pricing. Staying away from compromised pricing structure (deep discounts) even late in a product cycle upholds their image as uncompromised quality product makers. As I said, the cake has been already had by then anyway.

 

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Vishal S.

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In the early 2000s, most major OEMs had a two-year product cycle on their club models.

Then came the TaylorMade vs. Callaway arms race. It got so bad that I walked into Dick's one afternoon to get some workout gear, and I saw the TM Jetspeed long clubs were on clearance. Js was on clearance before I even knew they had hit the market.

One posive change:  thing the OEMs seem to be getting more generous in stock shafts. In a trend that started in 2015, most of the major clubmakers are offering lots of shaft varieties in their clubs for no upcharge.

I haven't figured out how this meshes with production levels and timing of early price cuts.

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Early 2000s....let's see Daiwa, Yonex, Wilson, Ram, Cleveland, Hurricane (Azinger), Tommy Armour, Hogan, Nickent, Top Flite, Spalding, Nicklaus, Penna, Macgregor, Langert, Founders...all either casualties of the big boy marketing, absorbed as sub brands, or subject to major restructuring and foreign markets because they couldn't keep up. 

Golf clubs have a limited lifespan at full retail for sure. I remember when a pw was 50 degrees and the 3 iron was maybe 21. Then came the loft bumps, longer shafts, club makers jumping ship (Roger Cleveland to Callaway), lower center of gravity, space age materials, and the branching out into clothing, shoes, balls, etc. to grow market share. 

What the big boys have done is to create a thirst for the latest while keeping the peak retail selling season the longest it can be. And of course enlisting star power, marketing and status. 

With all that said, I don't know manufacturing costs, but the cyclical nature of the industry has to be built in to the overall budgeting magic to keep them profitable. They bank on the early sales and before the latest is released, the next version is already out of concept and being tooled. Mass production has overruns. Smart consumers take advantage of that. How those companies dump the old may be through a variety of ways, but it has to be done to keep pace with the new cycle of sales. 

The correction comes in when you see companies restructure, that has to be a sign of market reaction and bottom line. Will there be more casualties? Of course, just look back at how the dominant brands have really deteriorated and how companies like Callaway diversified by picking up Top-Flite, Hogan, and Odyssey. 

Enough of my rambling on, the point is that the golf business is ever evolving and deals have can be had if you are patient and know what you want. Just make sure to pick up a new hat, bag, shirt, shoes, gloves, and other add-ons that cost little to make but sure have high margins and volume. 

 

Cobra LTDx 10.5* | Big Tour 15.5*| Rad Tour 18.5*  | Titleist U500 4-23* | T100 5-P | Vokey SM7 50/8* F, 54/10* S, SM8 58/10* S | Scotty Cameron Squareback No. 1 | Vice Pro Plus  

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1 hour ago, TourSpoon said:

Early 2000s....let's see Daiwa, Yonex, Wilson, Ram, Cleveland, Hurricane (Azinger), Tommy Armour, Hogan, Nickent, Top Flite, Spalding, Nicklaus, Penna, Macgregor, Langert, Founders...all either casualties of the big boy marketing, absorbed as sub brands, or subject to major restructuring and foreign markets because they couldn't keep up. 

Golf clubs have a limited lifespan at full retail for sure. I remember when a pw was 50 degrees and the 3 iron was maybe 21. Then came the loft bumps, longer shafts, club makers jumping ship (Roger Cleveland to Callaway), lower center of gravity, space age materials, and the branching out into clothing, shoes, balls, etc. to grow market share. 

What the big boys have done is to create a thirst for the latest while keeping the peak retail selling season the longest it can be. And of course enlisting star power, marketing and status. 

With all that said, I don't know manufacturing costs, but the cyclical nature of the industry has to be built in to the overall budgeting magic to keep them profitable. They bank on the early sales and before the latest is released, the next version is already out of concept and being tooled. Mass production has overruns. Smart consumers take advantage of that. How those companies dump the old may be through a variety of ways, but it has to be done to keep pace with the new cycle of sales. 

The correction comes in when you see companies restructure, that has to be a sign of market reaction and bottom line. Will there be more casualties? Of course, just look back at how the dominant brands have really deteriorated and how companies like Callaway diversified by picking up Top-Flite, Hogan, and Odyssey. 

Enough of my rambling on, the point is that the golf business is ever evolving and deals have can be had if you are patient and know what you want. Just make sure to pick up a new hat, bag, shirt, shoes, gloves, and other add-ons that cost little to make but sure have high margins and volume. 

 

Read the book Crossing the Chasm, it will give you good insight into product life cycles and consumer behavior.  It costs golf companies a certain amount for R&D and molds after that it's material costs.  Each manufacturer has a good idea of how many clubs or sets they need to sell at full price to break even, after that it's profits and then inventory management.  

On the consumer side there are plenty of early adopters who have no issue paying full price for the latest and greatest.   

Joe Paradiso

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I've been wanting a new driver for some time since mine came with complete set I bought when started golfing. All this talk had me stumble over to global golf where I found this guy for $159 brand new before 15 percent off code that also worked:


New TaylorMade AeroBurner Driver Men Right Hand, 12 degree Loft, Includes Headcover
Shaft: TaylorMade Matrix Speed RUL-Z 50 Graphite Regular Flex
SKU: 1030179-AAF-2B7-AEH

It should arrive in time for my round at Champions Gate. I'm excited!

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You find me a set of forged Mizunos for under $300 shipped and I'll kiss you.  It's something that I've aspired to for a long time and finally feeling like I have a halfway consistent game so I can actually make some use out of them...

Woods: Ping G15 10.5* Draw Driver;   Ping G Series 14.5* 3 Wood;  Callaway 2019 Apex 19* 3 Hybrid

Irons: Mizuno MP-33 4-PW

Wedges: Ping Glide 1.0 52* SS, Glide Stealth 2.0 56* ES, Hogan 60* SW

Edel E-1 Putter

 

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10 hours ago, amished said:

You find me a set of forged Mizunos for under $300 shipped and I'll kiss you.  It's something that I've aspired to for a long time and finally feeling like I have a halfway consistent game so I can actually make some use out of them...

Looks like about one set per week is going for that.  Remember they are new but have to be listed as used due to MAP restrictions.

http://www.ebay.com/itm/Used-2016-Model-Mizuno-JPX-EZ-Forged-Irons-4-GW-Steel-XP-95-Stiff-S300-Iron-set-/391513678229?hash=item5b2808a195:g:1dQAAOSw9eVXWDUl

 

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14 hours ago, TourSpoon said:

With all that said, I don't know manufacturing costs, but the cyclical nature of the industry has to be built in to the overall budgeting magic to keep them profitable. They bank on the early sales and before the latest is released, the next version is already out of concept and being tooled. Mass production has overruns. Smart consumers take advantage of that. How those companies dump the old may be through a variety of ways, but it has to be done to keep pace with the new cycle of sales. 

The correction comes in when you see companies restructure, that has to be a sign of market reaction and bottom line. Will there be more casualties? Of course, just look back at how the dominant brands have really deteriorated and how companies like Callaway diversified by picking up Top-Flite, Hogan, and Odyssey. 

Enough of my rambling on, the point is that the golf business is ever evolving and deals have can be had if you are patient and know what you want. Just make sure to pick up a new hat, bag, shirt, shoes, gloves, and other add-ons that cost little to make but sure have high margins and volume. 

 

I keep thinking about how the massive number of new golf clubs being manufactured each year.  Is it reasonable to think that an equal number of old clubs are being thrown away?  At some point, the world will have reached peak inventory and these two numbers will balance out, meaning huge numbers of golf clubs will end up in the dumpster each year.  Today we are comfortable throwing away old Spaldings, Bullet, and Daiwa clubs, but it won't be long before before your treasured Taylormade R11 driver goes right in the trash because it is literally worthless and you need the closet space to hold your winter coat during the golf season.  Kind of odd to think about!

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On 7/28/2016 at 10:10 PM, newtogolf said:

 

On the consumer side there are plenty of early adopters who have no issue paying full price for the latest and greatest.   

True. Like the idiots who will line up outside a store to get the latest iteration of the iPhone!

Or buy Nike shoes!

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Note: This thread is 2748 days old. We appreciate that you found this thread instead of starting a new one, but if you plan to post here please make sure it's still relevant. If not, please start a new topic. Thank you!

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