Mule Team flipping

[ugaarguy]

Sal, may I propose Hidden Wounds as a candidate for the charity donation? http://www.hiddenwounds.org/about-us/our-mission/

[JNewell]

Saturday and Sunday and he's spending it in the forums with us. Truly a labor of love.

When it's your business, and when you give a d@mn, there is no 9-5. :o

[Joshua J.]

Hi Bill,

We already contribute to both Knife Rights and AKTI.

sal

Even if you already give, I wouldn't mind knowing that a few of my dollars from Mule purchases went specifically to that cause.

[TomAiello]

I think the first adjustment will need to be to increase the number we make. I would like to keep the prices as low as possible for the reasons mentioned. (Though I am thinking about dinging you 5% for a charity). I would also like to keep the 2 minimum for many of the reasons mentioned.

I think that sounds great.

And I'd be happy to pay an extra 10% for a charity.

[jvarn81]

Glad to hear the mule team will continue......now bring on the 4V :)

[twinboysdad]

If we are suggesting charities for the 5%, I will shamelessly plug Autism Research. I know I am not the only member here with a child or family member affect by Autism

[nccole]

I just looked at this thread for the first time tonight because I just noticed it was started by Sal. I have avoided getting wrapped up into certain conversations on the forums because it gets tiresome. I have not read every post in depth and fully digested it, but saw some ideas, and some interesting viewpoints. I think it is really not as big of a problem as it is being portrayed. I saw some of the estimates of percentages of knives actually being flipped, and it is a relatively low number. I can't bring myself to flip them, but I am not mad at the guys doing it either. In the end, most of the knives end up with people who actually want them. The argument completely stems from certain guys having to pay a middle man more money to get their knife. I just don't see that as warranting drastic measures.

Most of the ideas are simply too complicated, or require too much extra work on Spyderco's part. Spyderco in my opinion should not try and stop flipping, they should only worry about making enough knives available to the people who actually want them (for whatever reason, store, use, gift who cares) in the original intent of providing users with an inexpensive avenue to try out new or rare steels. I think the ONLY things Spyderco should do is try to increase the number of Mules available on steels they know will be popular. Sal has a good enough pulse on the excitement of certain steels, that I don't think that should be too hard to improve on. The other thing Sal may want to consider is when they make them initially available. I can set an alarm on my phone and while at work jump on Spyderco.com and buy my Mule(s). Not every steel junkie has that option, and while you cannot cater to everybody's schedule, releasing them when most are not at work would be nice. I don't know how feasable that is, I have no idea what it takes to turn them on for sale, but would like to see that considered at least.

[FCM415]

^
I think I agree with everything you said which mirrors what I've been saying lol. Like JNewell pointed out, that much extra trouble for 1.5 to 3% is probably not worth it.

It's good to see how Spyderco really cares even for a knife that's not a standard issue. Let's not forget that the obscene examples of the one or two guys who was able to purchase TEN or so is what probably got Sal to respond on the weekend where everyone should be doing something other than work/business.

[bdblue]

I just did a quick survey at eBay and found 20 sold or for sale S110V mules

That means that up to 20 knife enthusiasts didn't get one because someone that only wants to scam for a few bucks was able to get in there first.

We shouldn't worry all that much about what happens on the secondary market, we should worry about why a product that was made for knife enthusiasts is not getting to knife enthusiasts. I don't know how many people actually missed out, but production quantity needs to be increased by at least that many and maybe that would be a simple thing.

I've been interested in the Para 2 sprints and missed out on a couple of them recently so I've been on that side of things and I know that it is very disappointing. I've also noticed that some of the real hot releases such as the Para 2 and Military sell out very quickly, while others such as the Manix 2 XL are available for a long time. I don't completely understand this but there seems to be something magic about the Para 2 and the Military, and this seems to apply to a Mule in uncommonly exotic steel. There may be upcoming mules in less exotic steel and maybe a large run of them would take a long time to sell.

[Skidoosh]

Do an auction, top bid sets the MSRP which is what the mule goes for, the difference goes to charity from production cost

[GaTChE]

2 choices: raise the price or increase the production. Anything else is wishful thinking.

[yablanowitz]

Do an auction, top bid sets the MSRP which is what the mule goes for, the difference goes to charity from production cost

That sounds like a sure-fire way for Sal to get burned. Unless their was a reserve to cover costs, he could go in the hole on the whole run. More likely, a couple of people with deep pockets (like the ones buying up several extras to resell) would run the price up to where the rest wouldn't sell at all.

5 or 10 percent for charity I'm okay with. Fifty percent or more I have problem with.

[senorsquare]

I am happy that Spyderco is listening and trying to find ways to make us all happy but I think that their hands may be tied on this one. As long as you have people willing to pay 200% of MSRP on mules and sprint runs then people are gonna flip them no matter what Sal and co. try to do to stop it.

[gaj999]

... but production quantity needs to be increased by at least that many and maybe that would be a simple thing ...

I agree that this is the simplest solution. But two things about it kind of chap my butt. I've probably mentioned them already, and I won't again.

First is that the solution costs Spyderco more money and brings in no profit.
Second is that middlemen are making money and Spyderdo is not.

That makes it a lose/lose for Spyderco.

Question: Are we getting the Mules at cost, or at whatever wholesale would be if these were production items? I think it's the former. If it's the latter, there's no skin off Spyderco's corporate butt and the secondary sellers aren't doing anything that dealers aren't doing already. If it is the former, I think a fair solution is to raise the price to wholesale equivalent. We're getting a gift either way.

Gordon

[buckthorn]

Sal,
The substantial amount of time you've spent trying to figure this out is further evidence that you and your family are running your business on strong ethical principles. That is one of the reasons I, and many others on this forum, feel good about being supportive of Spyderco.

[dgebler]

I got my mule today and one thing I will say is at least they have prevented flippers from opening the knife and selling this as NIB. I tell you what that has to be the hardest knife box to open without damaging. I do not sell or plan to sell my knives for profit, but I do like to keep boxes in good condition with my collection. Even with the help of my Caly I still did some damage...although not destroyed like I did in my fever to open my first Mule the venerable MT17!

[hunterseeker5]

It seems like the Mule Team products being flipped is creating problems. Probably time to ask for suggestions on solutions.

sal

Hi Sal,

I hope you get a chance to read my reply, as I realize this is a very busy thread with a topic near and dear to many people's hearts. If I may offer my ideas regarding an economics based problem/solution set:

Mule flipping is a game of supply and demand. Because there is an extremely limited supply of mules, and for certain highly desirable steels insane demand, there is an obvious market imbalance. If I may delve into macroeconomics briefly (which I'm sure you're aware of)


As demand increases, in the face of a fixed supply, the price increases. Flipping is therefore not the root of the problem, but merely a symptom. If you were to remove the term "flipping," or the game itself even, and just assume that some percentage of people who bought the mules would later want/need to sell them, if they posted them at auction, the prices they sold for would still be incredibly high. Trying to fight a market imbalance like this is extremely difficult if not impossible.

What is the solution then? Overtly it sounds simple, correct the market imbalance or in other words provide more mules which will shift the supply curve and bring down after-market prices. There is another, more subtle, aspect to this though, which is that part of the value is speculative. That is to say, over time, the number of minty fresh mules will go down as they're used and thus people "invest" in them because they know with time the value will keep increasing. This is also highly undesirable, as it promotes hoarding of the Mules as they'll be even more valuable a few years from now.

The first step would be to simply break the illusion of fixed volume/scarcity, by announcing that mules are NOT limited, and any mule could be re-released at any time to give another generation of Spyderco AFIs and those who missed out another shot at trying out a particular rare steel. Just the announcement that values may not increase forever, should get rid of some of the speculation surrounding these knives releasing them onto the market and deterring future hoarding.

The second step is increasing the volume of mules in the various desirable steels. This creates a problem for you (Spyderco) because you don't want to use an unpopular steel and end up holding a bunch of mules in inventory which you're struggling to get rid of. This is, of course, a market forecasting problem. I see a few ways around it:

1) Popular mules are released in multiple runs. As I mentioned above, you simply keep releasing runs of a highly desirable mule until the scalping and prospecting on that particular steel stops.
2) Mules can be ordered in advance. When you start your market research on a particular steel, you open up a pre-order on that mule. There are two real subcategories as far as doing this. The first is it is a free pre-order, or really reservation. You primarily gauge interest, and allow users to pre-order 1 or 2 mules. Really then it is a sign-up, and when the mules come in stock they'll have the option to purchase them within a given time frame. If they do not, they will be added to the general inventory to be sold. This has the advantage of being clean, if something goes wrong with a run there are no messy payments to refund and so on. It also should, excluding some structural issue (market crash, pre-holiday release, bad press for the given steel, etc), provide a reasonably accurate estimate of the number of mules which need to be produced to satisfy demand. The other option is to allow pre-orders for either a non-refundable deposit or the full purchase price. With this strategy, you would allow users to pre-order as many mules as they want. The disadvantage is that, if something happens, you'll have to process refunds for everyone who isn't going to get one and there will be obvious unhappiness. In both scenarios, more mules would need to be produced than are reserved/pre-ordered, because obviously some people "miss out" on these things.

That would be my strategy to solve the problem. At the end of the day, there are worse problems to have (as a company) then your products being so desirable your customers are complaining of insufficient supply and thus outrageous secondary market prices. :P

[cckw]

I think that sounds great.

And I'd be happy to pay an extra 10% for a charity.

Not me. I don't need Sal or United Way to handle my charitable giving. I am quite happy with how I handle it on my own. If Sal chooses to do a 5% up-charge to pass on to a charity that is his prerogative and I won't be mad or anything. As I recall he does local charities in Colorado that are more likely to get money to the need rather then eat up 80-90% in administration and exec salaries, like the big name charities do. But again, I can give to charity without it being deducted from my paycheck or added to a purchase.

[JNewell]

I agree that this is the simplest solution. But two things about it kind of chap my butt. I've probably mentioned them already, and I won't again.

First is that the solution costs Spyderco more money and brings in no profit.
Second is that middlemen are making money and Spyderdo is not.

That makes it a lose/lose for Spyderco.

Question: Are we getting the Mules at cost, or at whatever wholesale would be if these were production items? I think it's the former. If it's the latter, there's no skin off Spyderco's corporate butt and the secondary sellers aren't doing anything that dealers aren't doing already. If it is the former, I think a fair solution is to raise the price to wholesale equivalent. We're getting a gift either way.

Gordon

And the third problem is that in some cases it is essentially impossible due to lack of available steel and/or the inability to source additional amounts on cost-effective terms.

[dancer]

Interesting analysis of the market situation related to mules. However, product strategy needs to take into account cannibalization of other product lines. Especially the profitable ones.
If sal did everything we wanted, selling knives with great steel at cost, how would Spyderco continue as a business? I mean, I'm sure as it is,the mule program eats slightly into fixed blade sales. And I've heard suggestions for mule folders! That's like your boss calling you to work for free. He'll just pay for your gas to get to the office.

As a market, I think we have to accept that there will always be some level of dissatisfaction, which is normal. This is what drives other more profitable sales.