Could Aquatics Retailers Expect a Boost in Coral Sales? - PetProductNews.com

Posted: 03 Apr 2020 10:00 AM PDT

The Indonesian ban on coral exports appears to finally be lifting, and retailers are expecting to see growth in the hobby.

By Ethan D. Mizer

Published: 2020.04.03 01:00 PM

The reef aquarium hobby is growing, and the latest developments in livestock availability are giving retailers a reason for optimism in an industry that has been hard hit by online competition for dry goods.

Retailers are seeing more beginners enter the expanding reef-keeping segment.

"The [reef] hobby is in a growth phase," said Scott Eliason, owner of Artistic Oceans, a tropical fish store in Las Vegas. "I'm getting more beginner customers every day coming in and talking to us. Not all of them are buying, necessarily, but they're looking into doing it. I think it's growing."

Most beginners are purchasing smaller setups, industry insiders reported, as a way to enter the hobby without breaking their budget.

"I see a lot of beginners coming into the hobby," said Sean Rice, assistant manager for Reef To Rift Aquarium Store in Hatfield, Pa. "A lot of customers are trying to get into small, nano-sized setups. They just get their feet wet in the hobby that way."

Nano reef aquariums are popular, with customers gravitating to attractive tanks.

"The Fluval Evo 13.5-gallon has been a very popular tank," Rice added. "Customers are really tending to go for that as a small beginner tank. It can fit on a side desk or a little table. We actually are selling a lot of those here, and I've seen a lot of people online and on Facebook groups dedicated to nano tanks talking about it."

As the hobby has matured, it has become easier for beginners to have success, which is helping attract new hobbyists.

"I see the reef hobby growing because more people are able to keep coral alive successfully," said Lee Laimuddin, owner of Coral Reef Aquariums, a tropical fish store in Tampa, Fla. "Frag aquaculture is also growing by leaps and bounds."

Reef hobbyists are primarily focused on large polyp stony (LPS) corals, retailers reported, because these species are less difficult to keep than small polyp stony (SPS) corals but are generally in higher demand than soft coral species.

"We mostly see demand for LPS corals," said Cy Forell, co-owner of Barrier Reef Aquariums, a tropical fish store in Renton, Wash. "Especially the Euphyllia torches, and torches in particular, are selling well, but hammer, frogspawn and octospawn corals are all super popular right now."

Corals in the genus Euphyllia are especially popular, retailers reported, but many species remain strong sellers.

"In the last 18 months or so we've seen a big Euphyllia coral craze, with hammers and torches especially going through the roof," said Eric Russo, manager of Absolutely Fish, a tropical fish store in Clifton, N.J. "Beginners who are just getting into coral aquariums like to see something that's moving and that catches their eye. People are drawn to Euphyllia corals for that reason. However, we still do tend to sell a lot of other LPS type corals as well, such as a Trachyphyllia species and Acans. The Acans are still popular, as are a lot of the gold [torch corals] lately. Pieces like those tend to sell well for us."

Because SPS corals are thought of as advanced, many of the hobbyists who keep them tend to trade with one another.

"Close to 90 percent of what I sell is LPS," said Conner Folan, livestock manager for the Coral Reef Pet Center, a pet store in Norridge, Ill. "As far as SPS corals, people stick to inner hobbyist trades. A lot of them go to each other for stuff like that."

Indonesia Eases Up

Indonesia's ban on exporting the country's corals has had a huge impact on livestock availability, retailers reported. However, the country has reportedly reopened exports of maricultured coral, giving some retailers hope for the future.

"It's certainly true that we've heard the Indo ban was being lifted several times over the last year, but things haven't exactly panned out," Russo said. "To be honest, when we heard the latest, we were skeptical in terms of the policy and the politics over there. … But we quickly found out through the grapevine that what we were hearing was being confirmed by wholesalers. And we actually have started to see some of it trickle through in the last few weeks or so. … I think it's really just the beginning. We'll see what happens in the next four months in terms of what species will become available again."

There is considerable excitement for this development, with retailers expecting large impacts in the trade.

"With Indonesia opening in the last 10 days or so, immediately I'm seeing some new color variants popping out," Folan said.

Availability of Indonesian corals is still limited, however, and some retailers have had greater success getting livestock from the region in than others have.

"We got our first shipment last week, and we were lucky," Forell said. "I've heard there were only four or five companies that were allowed to ship in the first wave, and we were able to get in on that. … Because of a long-standing relationship [with a supplier in Jakarta], they gave us priority for stuff. It was fantastic. … We haven't seen a fox coral in two years, and I got three of them a couple of days ago and sold them within a day. It's so great."

Other retailers have not yet seen an influx of Indonesian corals, but the expectation is that availability will improve as time passes.

"We're not seeing Indonesian corals yet," Laimuddin said. "It will probably be awhile before it filters through to us. Hopefully, within a month or two, we'll start to see [Indonesian] species become available again."

With limited availability, distributors might be working to control shipments until trade is up and running again.

"I think they're going to treat the gold [torch] coral and all that 'Holy Grail' stuff like diamonds and just trickle them onto the market," Eliason said. "They're putting out one or two specimens at a time, so the prices don't drop."

The lifting of the ban might impact coral livestock prices, which are expected to head higher in the near term.

"I've seen multiple [livestock] lists out of Indonesia, and on some of them the prices have jumped an incredible amount," Forell said. "With our particular Jakarta supplier, who is our bread-and-butter supplier, the prices on a few things went up, but for the most part it's pretty similar [to pre-ban prices]. That gives us a better margin than what we were getting on Australia and Tonga corals, and all the domestically aquacultured stuff. My expectation is that once supply and demand starts to work itself out, prices will calm down. I don't know if they'll ever come down to where they were before the ban, because I'm being told the documentation costs are three to four times what they used to be. But there's always going to be that extra expense."

Consumer Education

Be the Best Source

With new customers entering the reef aquarium hobby, specialty retailers are focusing on education to maintain their competitive edge in the industry.

"Face-to-face interaction definitely helps," said Scott Eliason, owner of Artistic Oceans, a tropical fish store in Las Vegas. "Especially with a new customer who's just getting into the reef hobby. Those guys love to come in, take a peek, talk to us and see what's easy for beginners and what to stay away from."

Local fish stores are still the best source of information for hobbyists, even as many aquarists are better informed today through online sources.

"The average customer is better informed than in the past," said Eric Russo, manager of Absolutely Fish, a tropical fish store in Clifton, N.J. "Information is much more accessible now … that it's easier for beginners to get a good idea of what they need to do. However, I find that most new customers seem to be overwhelmed with information. They almost don't know where to focus because there is so much out there. With the internet, everybody's an expert, and you don't always know if what you're reading is true. Beginners come in a little overwhelmed. They really are looking for more succinct information about how to get started."

Customers still visit local fish stores to purchase livestock, and this is one area in the hobby where independents maintain a strong advantage over most competition.

"People still want to see corals and fish before they buy," said Cy Forell, co-owner of Barrier Reef Aquariums, a tropical fish store in Renton, Wash. "There's a little bit of distrust with the images on websites. And then there's the fear of shipping delays and losses. … Local fish stores are still the main suppliers of corals, but people definitely still shop online. … It's getting harder and harder, and local fish stores are just getting chipped away at. The garage operations have an impact. But I do still feel like the local fish store is still the main supplier for livestock."

Local fish stores are also able to compete on price, with several reporting they offer corals at rates lower than what is available online.

"I would say 80 to 90 percent of our sales are focused on livestock," said Lee Laimuddin, owner of Coral Reef Aquariums, a tropical fish store in Tampa, Fla. "I sell very few dry goods, mostly chemicals and food. Most dry goods sales have been gobbled up by online retailers. If a product has [minimum advertised price] MAP pricing, I will carry a little of it because I can compete at least somewhat. … I'm a lot more competitive in livestock. I see online livestock and compared to what I sell, I'm at least 20 to 30, and sometimes 50 percent, less expensive than online."

Marketing

Get Social With Corals

The line between online retail and brick-and-mortar is blurring, with many local fish stores offering coral livestock via social media or even through their own retail websites.

"We send out a livestock updates email every Friday," said Sean Rice, assistant manager for Reef To Rift Aquarium Store in Hatfield, Pa. "We also post pictures of coral that have the best color or that are really rare on Facebook and Instagram."

Turning to online retail is another avenue to create revenue growth, and in many ways independent retailers are well situated to take advantage.

"We advertise regularly on Facebook," said Conner Folan, livestock manager for the Coral Reef Pet Center, a pet store in Norridge, Ill. "A lot of [independent local fish stores] sell on the internet themselves. That's a gray area when you're really trying to define what an internet retailer is. A lot of people ship and have online catalogs, and a lot of their business doesn't even come from the actual storefront. We don't follow that model, but a lot of retailers do."

Local outreach through social media platforms is also an effective way to build rapport in the hobbyist community.

"We post every single livestock arrival on Facebook," said Cy Forell, co-owner of Barrier Reef Aquariums, a tropical fish store in Renton, Wash. "We also sponsor a couple very small, local online forums where we post our list with pictures. We also use Instagram and send out a newsletter periodically, but we don't do it every week for every shipment. Facebook has been fantastic for us."

Many retailers reported that local "garage coral framers" have an impact on their business.

"There's some competition now from all these home-grown coral guys fragging stuff out," said Scott Eliason, owner of Artistic Oceans, a tropical fish store in Las Vegas. "A lot of those sales are happening at swap meets. That's probably our main competition, honestly."

Establishing a symbiotic relationship with local hobbyists is an important part of building business and remaining relevant in the modern hobby. Retailers have leveraged their relationships with local coral fraggers to overcome competitive difficulties.

"You have to build relationships with customers," Forell said. "The same is true of the customers running coral garage operations in my area. I've known some of them since I got into the pet industry 20-plus years ago. Not only am I buying from them while they're competing against me, but because of the relationships we've built, they refer people to me. There's a little bit of cutting, but there's also a little bit of giving, so you build that too."

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