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Monoprice Touts 141% Revenue Growth, 10,000 Installer Customers

Despite complaints its 'prices are too low,' ecommerce website Monoprice reports 141% revenue growth with $121M in 2012.


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Monoprice CEO Ajay Kumar says its new “No Logo Program” allows integrators to add margin to 100+ products that cannot be price-shopped by consumers.

Monoprice, the online ecommerce website that has targeted devoted techie customers for more than 10 years, might have found the ideal business solution for integrators looking for products they can markup while at the same time offering low-cost value to their clients.

The Rancho Cucamonga, Calif.-based company, which specializes in offering a variety of electronic cables, home theater equipment, networking and IT gear, mobile accessories and other computer components, is growing at a remarkable rate, thanks in part to the custom installation community, according to CEO Ajay Kumar. In all, Monoprice has 5,000 product SKUs available.

The company posted 2012 revenues of $121 million, a 26.4 percent increase over the previous year. Its website traffic has grown 81 percent and revenue has surged 141 percent over the past three years.

“We are in the right place at the right time with our business model,” says Monoprice CEO Ajay Kumar, who joined the company in July 2011. “We offer the same cable or accessory as national retail brands, but for much less cost. However, we are not cutting corners as we employ high-quality manufacturing partners who work with our specs. Our markup is much lower and we pass those savings to our customers. Monoprice brings them a value proposition they can’t find anywhere else. That’s what makes our business work.”

For integrators, that means they can purchase products “with quality just as good as name brands” for 30 percent to 70 percent below retail, according to Kumar. It seems to be resonating. Kumar told CE Pro the website has “roughly 10,000 installers purchasing on the site.

New ‘No Logo’ Program; 400% Markup?
“The word of mouth is growing,” says Kumar, noting that a significant number of dealers that visited his booth at the last CEDIA Expo “knew who we were.” He adds, “Not one integrator complained about product quality. In fact, the only complaint I heard was from an integrator who told me that our prices are too low. One guy told me that he marks up our products by 400 percent.”

But what about “showrooming” by clients? If the equipment is available online so cheaply to consumers, how can integrators earn any product margin and make any money?

Monoprice has solved that too. Last summer the company unveiled its “No Logo Program” in which products are offered on the site with no brand names, making them less “shoppable” for pricing by consumers. To date, the company has more than 100 products in the “No Logo Program.”

“An integrator can buy a six-foot HDMI cable from us for [inexpensive price]. He can sell it for $20 and the client is still going to be okay with that price point [because it’s still low],” notes Kumar. “Buying from us give integrators the best chance to still mark up products.”

There are no special discounts for integrators on the website, other than for buying in bulk. If integrators are charging appropriately for their labor, combined with the product margin available via the “No Logo Program,” profits are still there to be made, argues Kumar.

“Overall, the market is getting very price conscious,” he says. “It’s difficult to have a high labor rate and a high product markup. Consumers are savvy.”

Fast Customer Service, Tech Support
Those price points are combined with customer services that include no restocking fees, one-year warranties on electronics, lifetime warranties on cables, same-day shipping (if placed before 2 p.m.), a 30-day free return policy, and a live chat button for tech support that is answered in 15 seconds on average. The website also indicates the number of units in stock.

“We have excellent customer service and support,” says Kumar. “It is an essential part of our business model.”

So how can Monoprice do this? The company contract manufactures the products in Asia eliminating several layers in the sales channel, including distribution and not having the overhead of a brick-and-mortar business. (It also sources some products in the U.S.)  The company then sells these products directly to customers for much less mark-up than nationally branded competitors.

Home Automation, Tools on the Horizon
Kumar says Monoprice looks for product categories that are fragmented in which there are not two or three large dominant players taking up a large percentage of marketshare. Consumers are more willing to try products from new players in fragmented markets.

Currently for integrators, Monoprice offers cables, speakers, mounts, subwoofers and networking equipment of “similar quality for half the price,” says Kumar. He pinpoints tools (both hand tools and measurement tools) and home automation as future targeted categories. You won’t find commodities like flat panel TVs or computer hard drives on the site.

The company employs product managers for every category it sells to source the product from Asian factories and ensure the right features and functions.

To enhance its continuing growth, Monoprice has recently made a number of improvements to its business, including:

  • Adding a seasoned management for marketing, purchasing and financing
  • Upgrading its 173,000 square-foot centralized office and warehouse facility in Rancho Cucamonga with a warehouse robotic conveyor belt system
  • Expanding its work force to more than 250 employees, creating several full-time jobs for the local economy

 





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Article Topics

News · Displays · Mounts and Lifts · Audio · Speakers · Distributors · Home Theater · Networking · All topics

About the Author

Jason Knott, Editor, CE Pro
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California.

10 Comments (displayed in order by date/time)

Posted by Peasant  on  02/18  at  07:14 PM

Did you use a ladder to climb up onto that high horse?

Posted by jhamill1  on  02/18  at  11:13 PM

Why do Monoprice and Vizio remind one of Tommy Boy offering to take a dump in a box and slap a guarantee on the box? Oh yes, because someone took a dump in a package and slapped a guarantee on it. Only “CE amateurs” would lower their customers’ performance expectations to this level.

Posted by Dave Stevens  on  02/19  at  04:04 AM

I’m with you-

Posted by IHS  on  02/19  at  04:57 AM

This is 90% of customers performance expectation level.

HDMI cables and switchers that work well. What is the downfall? Display mounts that work as well or better than ones 5-10 times their price.

I am not saying the speakers and other items should be sourced by these types of distributors, but if you use the products that every manufacturer is just OEM’ing from China what does it matter if it is form MonoPrice or another distribution channel that doesn’t sell direct to the client?


If you know what to use from each distributor you can use multiple sources to make the best margins while maintaing the best prices for your clients in the price conscious world we live in.

Posted by jeffzek  on  02/19  at  06:28 PM

I wonder how many of the “10,000” integrators installed the CAT5 cable with the fraudulent UL logo the UL busted them on?

Posted by Fedders  on  02/20  at  03:51 PM

Jason, if Monoprice knew of an issue with non-compliant wire, then where is the recall notice that they released last year?  Yeah, I didn’t see it either.

Even if they did know about it, they didn’t do the right thing and recall all the wire suspected to not meet safety standards.

It is a big problem with these import distributors that don’t do any of their own verification of what they are importing from mostly unknown supplier who will print anything on the wire that you ask them.

Posted by Jason Knott  on  02/20  at  08:17 PM

@John and others: I reached out to Monoprice regarding the UL warning and received this official response.

MONOPRICE RESPONSE TO UL COMPLAINT :

“Unbeknownst to us at the time, Monoprice’s former vendor for the product in question was inappropriately labeling our product certifications.  Monoprice terminated our relationship with the vendor in question when we discovered these malpractices.  We apologize to both UL and to our customers for any confusion this may have caused.  To our knowledge, there have been no safety problems reported with these cables.

“Monoprice has a new process in place to evaluate that all UL certificates on our products are legitimate. We have since quarantined our inventory of the mislabeled product and have contracted with a new vendor to only sell verified UL CMR/CMP/CM bulk cable.  We also now employ a double certification process to avoid such occurrences from happening again.

“In fact, our new vendor provides a higher quality Cat 6 bulk cable that includes the critical fire retardant material called for in the UL complaint. Our new vendor also has certificates from authorized UL testing centers.

“Apparently, UL was not aware of our recent new processes when issuing their statement.  However, we have since been in contact with UL through our China office, and have made them aware of the situation.  We have informed UL of our new improved UL evaluation processes in place, and are awaiting their updated response.

Monoprice takes the legitimacy of our products and certifications very seriously, as we do the safety and well-being of our customers.”


Monoprice says the problem was corrected last year, however, it is waiting for UL’s response.

Posted by Dave Stevens  on  02/20  at  10:17 PM

At least when we call tech support, at least there will be no question that we’re calling India speaking to someone whose name is, “Tony.”  smile

Posted by Chris  on  02/21  at  12:43 PM

I just talked to Monoprice tech support chat a few minutes ago. The only products they have with no logo are some tv mounts :(  I asked if he was sure, he said yes.

Chris

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