Onkyo To Sell Through Walmart.com

TWICE Staff -- TWICE, 5/17/2010

Upper Saddle River, N.J. - Onkyo plans to begin selling 12 home audio products, including select A/V receivers, through Walmart.com in the coming weeks, the company said in an email to sales reps and key accounts.

Select Onkyo products are already available online through BestBuy.com and other sites, but Onkyo could be the first major audio specialty company to offer A/V receivers through Walmart.com, which already sells select Sony A/V receivers and a Teac A/V receiver at prices up to $278.

In the email, national sales manager Joe Petrillo said he expects his competitors to follow suit. "Our competitors are and have been in negotiation with Walmart.com as well," he contended.

Onkyo products available through Walmart.com will include five A/V receivers, two home-theater receiver/speaker packages, two home-theater speaker packages, a 2.1-speaker virtual surround system with A/V receiver embedded in the subwoofer, a mini system and an iPod dock accessory.  

In the email, Petrillo said all receivers and home-theater systems sold through Walmart.com will be priced below $499 "to preserve our present business model and protect our business partners." The products will be available only online and won't be available for in-store pickup by consumers, he noted.

Two of the products -- the HT-RC230 A/V receiver and AV-X280 receiver/speaker package -- will be derivatives of current products and will be available exclusively through Walmart.com. The models on which the derivatives are based are priced at suggested retails of $299 and $379, respectively.

Although 12 products will be sold through the site, Petrillo said in his email, "Based on the current average assortment of our key account partners, I don't feel that the models selected will create a conflict. Instead, I believe it provides you with a very solid step strategy."

The audio supplier contended the new distribution channel will expose the brand to more consumers and drive many of them to other authorized online and brick-and-mortar dealers for step-up Onkyo products.

"Onkyo has spent the better part of 60 years developing and cultivating a reputation in the market place that is synonymous with premium performance, build
quality and value," Petrillo explained.

"With the addition of Walmart.com, nothing changes. Instead, customers who might have never been exposed to the brand will have the opportunity
to get a small taste of the brand. They'll research the brand. They'll look for better products from Onkyo. Then, after their appetite has been stimulated, they'll be visiting
your stores or e-commerce sites for their main course ... If, when, this venture succeeds, and I have every reason to believe it will, you will sell more Onkyo products, and
you'll do it profitably."

Petrillo contended the relationship would not dilute the value of the Onkyo brand. "In my opinion," he said, "a ‘brand' loses its prestige in the marketplace when the products being produced are compromised from a build quality standpoint, no longer offer
any demonstrable benefits vs. the competition, and lastly carry no ‘real' perceived value to the consumer. None of these circumstances are present here."

He continued, "Changes in distribution and new business opportunities emerge daily. It's the vendor, the manufacturer, the partner that approaches these opportunities with honesty and heavy consideration for their existing partners that make these opportunities a success on all levels."

Suppliers, he noted, "can choose to improvise, overcome and adapt to the challenges that the market place throws at them. Or they can choose not to and operate under the same business model as they have all these many years. For most, not choosing to evolve has meant a drastic decrease in sales and lost revenue. For others that have embraced change and diversified their business model, they have consistently yielded a positive sales/profitability result regardless of the economic climate and further more realized growth."

Onkyo's addition of Walmart.com follows last year's addition of Onkyo A/V receivers and source components to the Magnolia Home Theater sections of Best Buy stores. Onkyo returned to Best Buy after an absence of about 15 years.