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6 Ways to Confront Internet Selling

Options for integrators against the Internet include reducing price, creating 'install prices,' letting clients buy online and charging handling/testing/programming fees, or simply dumping the client.


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The Internet is the bane of URC’s selling team, yet it’s fertile soil for marketers and shoppers. Putting strategies in place to handle the eventual pricing resistance from some prospects is a wise and necessary step (for both manufacturers and integrators).

Shoppers spent much more money online in 2011 than in 2010, and that trend will most certainly continue. Numerous sources of data clearly show the sharp rise in purchasing from online sellers; those of us in the trenches all understand this to be a reality.

While online shopping continues to become more convenient, it’s even more convenient for consumers to use as a research tool. As we all know, this research can prove unreliable and outright frustrating for dealers. Your customers are using the internet as a tool to check your credentials, confirm the brands you’re specifying and, worst of all, check your pricing. Your customers seek instant information gratification. We have essentially migrated to a “Point and Know” era of instant information.

Think “Point and Know” is just a problem for you, the custom installer? Think again! According to Automotive News, Honda late last year issued an ultimatum to its dealers: Stop selling cars below invoice price through websites such as TrueCar.com, or lose the per-car marketing spiffs from the factory. As you may know, these spiffs are an important source of funds for dealers.

The problem gets even worse when considering unauthorized resellers and online counterfeits. Last May, eBay announced an initiative with Louis Vuitton, Burberry, Microsoft and even Proctor & Gamble to address the rapidly growing problem of counterfeit products being sold online at tremendous discounts, which as we all know significantly reduces the value of legitimate goods while having an adverse impact on retailers.

Related: Klipsch Files Lawsuits Over Counterfeit Headphones

Honda, Burberry, Proctor & Gamble: If these companies are having a tough time addressing online “underpricing” and “undervaluing,” it should be no surprise that companies in our own little world of custom integration are struggling with it too. A consumer can find virtually any brand he wants online, and if he hunts enough he can find a discounted price. There’s no easy answer to this problem, though all of us fight this battle every day.

Manufacturers Set Policies
Most brands have very clear policies that prohibit online sales. URC has one for all of its dealers and distributors (we do have a separate agreement for a small handful of online resellers, with very strict policies that govern their right to sell online). Our “one strike” clause is pretty clear and simple: If we catch you selling one of our products online, we will cut you off.

One solution for URC is to make a buy online from an unauthorized source, trace the serial number to the company we originally shipped it to, and cut them off. Lars Granoe, URC’s vice president of sales, calls this the “Whack-a-Mole” game. Remember that arcade game? You get a big stick and smack moles as they pop out of holes, and every time you hit one, another pops up. That’s exactly what fighting unauthorized online sales is like.




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Article Topics

News · Business Resources · Urc · Legal · Sales · All topics

11 Comments (displayed in order by date/time)

Posted by scolburn  on  02/17  at  11:46 AM

As Mitch alluded to in his discussion of URC ‘s effort to limit their internet product sales, whenever possible dealers should carefully choose their product manufacturers and suppliers from the short list of those who actively search & destroy internet sales. Integrators benefit from supporting these manufacturers who recognize their value-added by restricting sales to qualified businesses. We do it at Triad Speakers; it’s not easy.

Posted by Disgruntled Guy  on  02/17  at  02:20 PM

I don’t know about the “Whack a mole” theory…the same dealers have been on Amazon for months and months selling URC way below what they should. If URC was actively pursuing these individuals, you wouldn’t see the same businesses on there for all this time.

Look at some other brands that are nowhere on-line. They police their lines. URC should do the same or at least show character by not pretending to.

Posted by bigscreenmadness  on  02/17  at  04:32 PM

You bring up a great point, Mr. Disgruntled.  These “dealers” on Amazon are NOT authorized dealers.  Due to the strong market demand for our products they advertise our models then secure them from dealers - much like yourself (in fact often they do not even have them in stock).  We are constantly making buys from these online “stores”, trace the serial numbers - to dealers just like you - and cut off the dealer, no second chances given.  Said online “store” just finds another “dealer” happy to make a few pennies and sell to them.  Here we go again.  Whack a mole.

We cannot cut off an online store if they are already NOT a dealer.  All we can do is find their source and cut THEM off.  Which we do, almost every day.

Read the article carefully.  You’ll find we are in good company, with such brands as Lois Vuitton & Microsoft facing the same battle.

I can’t answer why other brands aren’t as visible, only to guess that the demand isn’t there so these online stores don’t bother.

You’re welcome to be upset - indeed angry - about this.  we certainly are, and are doing something every day to battle it.  Rest assured there are very few viable legal actions we can take against these roque online stores.  If Microsoft and Proctor and Gamble can’t stop it with their enormous financial resources, I am hard pressed to come up with a way we can put a complete end to it.

I can go on and on about some of the ongoing tactics we are using, but suffice it to say you are totally out of line implying we are not policing our products.  To the contrary.  We do everything we can within the limits of the law.

I thank you for your passion on the subject and continued support of our products.

Posted by Whitevan Lifestyle  on  02/18  at  06:22 PM

@ bigscreenmadness, Thank you for that excellent post. That does describe the root of the problem and I would be willing to bet that you are right regarding other products.
In many cases it is not the manufacturers causing the problem but rather the trunk slammers who don’t give a damn about this industry or the integrity we work so hard to build.
Policing the online sales is a never ending battle that must be fought and also must be paid for. This drives up dealer cost and adds fuel to the fire.

Legitimate dealers need to do their part in overcoming this by selling the product they trust and believe in and not supplying clients with a shopping list. Stop selling parts and start selling systems. You are the professional and they called you for that very reason.

Posted by Its not working  on  02/18  at  09:04 PM

So, why don’t you go after the stores themselves?  Amazon has strict policies against selling “Unauthorized and unlicensed merchandise”.  And these merchants are not authorized to sell your equipment.

Posted by GR  on  02/19  at  08:28 AM

@bigscreenmadness - Are there any “AUTHORIZED” online dealers?

Posted by 39CentStamp  on  02/19  at  08:54 AM

Universal remotes are in much higher demand to the average amazon customer vs say speakers or AV Receivers.

With speakers there are dozens of options available but with remotes its Harmony or…

NOTHING!

Thats right… there isn’t any other option available to the consumer so they want URC or RTI. Now that Nevo and Pronto are gone (other favorite DIY options) the demand is even greater for side way sales.

The only way to control gray market sales 100% is to deal direct with the public and eliminate dealers. Since the URC business model is dealers only i dont think it will ever be possible to stop it completely but cutting off rogue dealers 1 at a time should keep it to a minimum.

Posted by John Johnsen  on  02/21  at  09:50 AM

I read this article with some amazement.  Here it is 2012 and these are the solutions to “battling” the Internet?  All due respects friends - these aren’t much of a strategy.  The problem isn’t so much the dealers as it is a problem with the manufacture’s distribution strategy.  Most manufactures are still loading dealers and distributors month after month.  Offering the best deals when you buy more or at the end of the month so the sales guy can meet his quota and get his bonus.  Add to this the dealer leveraging programs, tiered pricing, Gold-Silver-Bronze dealer incentive plans, volume requirements, rebates, contests.  The most clever agreements written by the best attorneys with the most threats won’t help either.  The piles (growing) of inventory are everywhere and this is the problem.  You reap what you sew…

The implication of this for a manufacture are enormous.  Most manufactures need to completely retool their go-to market strategy.  In the process they will be forced take a massive sales hit as they either buy back all the inventory in the field (not likely) or wait (likely many months) for it to dry up with minimal sales in the mean time.  Many manufactures would or could not survive the “change over”.  Sure there are other clever ways to get there.  It just depends on how long you want to take and how much (cost) pain you can tolerate. 

Sooner or later you have to deal with the Internet.  Amazon is not the problem - they are only the mirror of a manufactures distribution strategy.  Good luck all.

Posted by Chris dePaola  on  02/22  at  03:16 PM

Make it too difficult on the consumer to make a purchase that they feel comfortable with and they won’t make the purchase.

Everyone needs to realize that the internet is here and its here to stay. Consumers won’t put up with 50% margins and I don’t disagree with them at all!  Products aren’t being undervalued on the internet, they are being properly priced.

Posted by 39CentStamp  on  02/23  at  03:19 PM

URC cant survive in a world where they deal direct with consumers and they don’t try to. If they take that route all custom installers will drop them (ask pronto about that) and their sales will go to a handful of DIY guys who will drain their support network.

Every time i hear the “consumers wont pay margin” nonsense i point to apple. They seem do be doing pretty well and there is no discounting online or anywhere else. Stop trying to win the race to the bottom. Even if you win… you’re a loser.

Posted by Davewd4  on  02/25  at  05:33 AM

I am very happy URC does not sell to the general public for many reasons. I take a great deal of pride in my programming abilities, and feel that when I present a remote to one of my clients, I am presenting a tool that will help them enjoy the experience I promised. I don’t blame URC one bit, because their product will only perform as well as it is programmed [graphics included]. I can’t tell you how many times I have had to convince a client that it really is a great remote, and please allow me to show you what it can really do. I still get frustrated with bogus programming from “dealers” that give a great product a bad name. Marketing to DIYers would be a disaster..

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