Just over the past few years, the landscape of the scooter market has shifted significantly as retail sales grow and Medicare sales dwindle.
“It is a challenging environment when it comes to reimbursement,” says Cy Corgan, national sales director of retail mobility for Pride Mobility Products. “With baby boomers they have the money, they have the disposable income, and we see it going more toward the retail environment.”
The scooter market is an area of home medical equipment that has been hit especially hard by Medicare changes, making it extremely challenging for providers to rely solely on government and insurance reimbursements.
Even though the 2005 National Coverage Determination gave a boost to the market because it led to doctors prescribing more scooters than power wheelchairs, today it is increasingly difficult for providers to remain profitable in the Medicare market, manufacturers say.
New power mobility device coding released at the end of 2006 significantly cut Medicare reimbursement for scooters, causing many providers to exit the market altogether. And for providers in competitive bidding areas, there is even less profit to be made from Medicare customers.
“It's tight. The products aren't cheap to manufacture and the margins just keep getting eaten away at. Everyone has different margins they have to make just to cover their overhead and operating expenses, and by the time you go through that there isn't much left,” says John Koster, associate products manager for Invacare.
DuWayne Kramer, president of Leisure-Lift, agrees. “I don't see many dealers doing a lot of good in Medicare Group 1 scooters. There's just no money there to make a living,” he says. “Unless you're doing something that's really special, it's difficult to justify the effort you can put into scooters when you can get a lot more money doing wheelchairs.”
But the bright side of this shifting market is that it gives enterprising providers an opportunity to increase cash sales without dealing with the hassles of Medicare paperwork, experts say. It also gives manufacturers the opportunity to develop more innovative — and often more expensive — products that providers can profit from.
“In the long run, if things continue to trend toward more of a retail market that's not strictly driven by reimbursement, [manufacturers will develop more] products that are more tailored to an end-user's needs,” says Koster. “They have more flexibility to design unique, differentiated products as opposed to being stuck designing something at a certain price point where a provider can buy it and be reimbursed at a level where it is profitable.”
Finding a Niche
Some manufacturers recommend exploring niches within the scooter market, which can often fetch higher prices and be extremely rewarding for providers.
“In order for you to be successful, you need to bring something new to the table,” says Juan Carlos Rivera, president of EV Rider.
One emerging niche is the luxury scooter market. EV Rider, for example, has a high-end scooter for the “discriminating customer” that retails at $3,500 and up.
“Not everyone can necessarily afford it, but there are always people who want to be different,” he says.
Many of these luxury scooters have features that people are used to seeing in cars. For example, EV Rider's high-end scooter is complete with blinkers, hazard lights, stoplights, full suspension, a powerful motor and speeds of up to 10 miles per hour.
“American people are used to getting a lot of power in their cars, and the same thing translates to scooters. They want speed,” Rivera says.
Many people who use these products are no longer able to drive but use the scooters more like a car to get around in their neighborhoods or go to the store, Rivera says. The company even has a scooter that allows more than one person to travel together, so a couple can ride together or a person can take his or her pet along.
“The appeal is that it is a smaller than a golf cart and cheaper,” he says.
Similarly, Shoprider rolled out a model that Sandy Phillips, national accounts manager, refers to as the “Rolls-Royce of scooters.” It also includes a number of bells and whistles such as a canopy enclosure, full-lighting system, windscreen wiper/washer system and removable doors.
Another attractive niche is the bariatric market. Not only is the demand for larger scooters growing as Americans become heavier, but these products also provide decent Medicare reimbursements, manufacturers say.
“There's more money at the end of the rainbow,” says Kramer, adding that bariatric scooters go for about $3,000.
Also, large ATV-type scooters for people who want to be outdoors are gaining popularity and are almost always cash sales, Koster says.
Portability Is Key
As the aging population is healthier and more active than previous generations, the demand for scooters that are easy to travel with continues to grow, manufacturers say.
“Obviously the demographics are in our favor with the baby boomer population,” says Corgan. “And we've seen that trend with the baby boomers in that they want to stay on the go, they want to stay active and they're not willing to sit back and stay at home. They're used to going and getting what they want, and that's what they're going to continue to do.”
One reason travel scooters are so popular is because they are more affordable than the standard-sized scooter, Phillips says.
“Travel scooters don't require an expensive lift or van conversion, and are currently the most common choice when choosing a mobility product,” she explains.
The trend is toward microportable scooters that are easy to assemble and take apart with no connector, says Koster.
“You can store it easily in your car and it gives you the most portability,” he says. “It's also something a provider can be profitable with in the current reimbursement climate.”
One overall trend in recent years is that scooters are becoming better looking. Consumers who are paying cash for a product, particularly baby boomers, want a design that is attractive, functional and less medical-looking, manufacturers say.
“We're seeing more updated styling, cup holders, baskets and personalization,” says Koster.
One way Pride has responded to this trend is by introducing a scooter with three interchangeable shrouds that allow the customer to change the color to red, blue or silver depending on their mood.
Another scooter recently released by the company has a new design with a low-profile look. Corgan describes the tires as having more of a “European, BMW look” with aluminum hubs. “It's a far sportier look more appealing to the population we're going after with the aesthetics of the product,” he says.
The black tires are also non-scuff so they will not leave a mark if the user bumps into a wall or turns sharply on a linoleum floor, similar to a scuff people might leave with their shoes.
Many manufacturers stress the importance of looking beyond the price tag and making sure they carry quality products that will not need frequent servicing.
“Competition is greater than ever before, and manufacturers are surfacing with low-cost power operated vehicles that are attractive in price but lack quality,” says Phillips.
Ted Raquet, vice president domestic sales for Pride, says the company is continuing to educate providers on the difference between acquisition cost and overall cost of the product.
“In this day and age, it's very difficult for providers to be profitable in doing warranty repairs if they're not purchasing a high-quality product and all they're focused on is a low acquisition cost,” he points out.
Kramer agrees, noting that a provider can't afford to perform multiple service calls if those calls cost $50 each and the company is only making $100 on the product. Further, negative advertising from dissatisfied customers can hurt providers in the long run, he says.
“[The scooter] is going to be their legs. They want to depend on it. They don't want it to fail the first time they take it out in the backyard or up the hill in their neighborhood,” says Kramer.
“DME dealers can't afford a negative reputation. If someone's unhappy with a product always breaking down, you get held accountable for that.”
Also, the scooter should be easy to service, and providers should make servicing scooters from existing customers a priority, he notes.
“If you're waiting for parts and that person is without their legs, it's going to affect not only your scooter sales but everything else,” he says. “They're not going to trust you with their oxygen if you can't keep their scooter running.”
As with other retail markets, providers are facing increased competition from others looking to cash in on the scooter market. Chains like CVS, Costco and Target as well as online retailers are marketing and selling low-priced scooters.
This competition makes it important for providers who want to do retail business with scooters to market themselves in their communities.
“Market yourself as a place where people can come in and pay cash for scooters and not worry about documentation,” Invacare's John Koster suggests. “Market yourself like a retail store and have a showroom where you have different scooters people can try out.”
It's important for providers who sell scooters to be well merchandized and have a selection of products, notes Cy Corgan of Pride Mobility. “You can't have just one or two scooters on the floor. People like to have a choice,” he says.
And make sure the products you feature cater to different segments of the market, recommends Sandy Phillips of Shoprider.
“Providers have to showcase the hottest products,” she says. “Not only do they need to carry a product that is appealing to the disabled elderly but [they also need to] advertise to accommodate the full spectrum of individuals that vary in age, condition, and comfort level.”
In addition to assortment, providers need to be bringing people in their stores on a regular basis, Corgan says. The most obvious way to do this is through traditional advertising.
“Often our products are not on the forefront of an individual's mind until they need them. They may not know scooters are available until a point in time where they feel a little weak walking through mall,” he explains. “If the provider has a consistent daily message out there, at the point in time when the consumer needs those products, they will know who the mobility specialists in their area are.”
But evaluate your community to find the best method of advertising, Leisure-Lift's DuWayne Kramer advises. First, look to see where other providers in your area are advertising their scooters, which may be in the newspaper around the obituaries, in the church bulletin, on television, on the radio or in a van that transports people in assisted living communities.
If no one is selling scooters in your area, look for ads for companion products such as hearing aids. It may be worth it to find a media buyer that can explain the area's exact demographics, Kramer says.
Jim Ernst, Leisure-Lift COO, also suggests marketing to current customers by calling them in and offering a free inspection of their current scooters.
“You either fix it up and do a good job and you have a customer later on, or you explain to them why they ought to look at one of your new ones,” he says.
And don't discount the importance of marketing your scooters online. Make sure to use keywords to draw potential customers to your Web site to get leads, Koster suggests.
“Even though we're talking about elderly people, they're getting more Web-savvy and their children are probably helping them out to research the products online,” he says.
Word-of-mouth advertising is sometimes the most effective way to spread the message about your products and services, Kramer says. He suggests giving a card to customers when they buy a scooter and offering that if they pass the card to someone else who comes in and buys a scooter, they'll receive a free item such as a basket, battery or flag. “I've known so many providers whose only advertising was word-of-mouth, and all they did was give away a $30 to $50 item to the person who referred the customer.”
Cy Corgan, national sales director of retail mobility, and Ted Raquet, vice president domestic sales, Pride Mobility Products Corp., Exeter, Pa.; Jim Ernst, COO, and DuWayne Kramer, president, Leisure-Lift, Kansas City, Kan.; John Koster, associate products manager, Invacare Corp., Elyria, Ohio; Sandy Phillips, national accounts manager, Shoprider Mobility Products, Carson, Calif.; Juan Carlos Rivera, president, EV Rider, Ft. Meyers, Fla.
