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Retailers Disappointed By Marketplace Bans

3/26/2012 12:01:00 AM Eastern

NEW YORK – New strictures by LG
Electronics and Panasonic against selling
their products through online marketplaces
has left independent dealers
in a quandary.

CE retailers largely laud recent
changes in vendor distribution and pricing
policy designed to restore stability
and profitability to the TV category.

But they argued that the marketplace
bans, which LG and Panasonic have
adopted in lieu of unilateral pricing policies,
are punishing established, authorized
dealers along with disruptive or
disreputable sellers that vie on eBay
and third-party marketplaces run by
Amazon.com, Buy.com, BestBuy.com,
Sears.com and others.

“I applaud the vendors for trying to
restore profitability but they’re penalizing
the best-of-breed retailers,” said
George Manlove, president/CEO of
Montana-based Vann’s, the award-winning,
five-store CE and appliance chain.
“And what are the consequences of
that? That you can only buy on Amazon
and Costco? Is that the kind of distribution
strategy vendors want?”

Manlove, an e-tail pioneer whose
15-year-old Vanns.com was among the
first e-commerce sites to receive CE
vendor authorization, supports aggressive
channel management by manufacturers
in the manner of Apple and Bose,
and believes the marketplace should
decide the selling price for near-commodity
items like TVs.

“In the end, the consumer
will tilt the scale
one way or another,” he
said.

Dave Workman, executive
director/COO
of the Progressive Retailers
Organization (PRO Group), a
buying consortium for specialty A/V
dealers including Vann’s, understands
vendor concern over “cage match” pricing
on online marketplaces, but believes
the ban will only exacerbate the problem.

“The decision to eliminate the thirdparty
markets won’t be as impactful as
vendors might believe,” he said. “Based
on past history, when legitimate, authorized
dealers are removed, they’re replaced
by unauthorized sellers who only
accelerate the race to zero.”

Workman is also hoping to get LG
and Panasonic to look at eBay in a
separate light. He argued that the ecommerce
platform, which PRO Group
partnered with in January to develop
dealer-specific stores, is simply a traffic
engine that doesn’t sell products and is
supportive of minimum advertised pricing
(MAP) policy.

“We consider eBay an exception,” he
said. “It’s a way for our dealers to get
more eyeballs, and its pricing tool is
more like a one-to-one transaction, so
lower prices are not telegraphed.

“We don’t see how using eBay’s traffic
is any different than Vann’s own traffic,”
he said.

Seth Brown, marketing director for
New York IT, CE and A/V specialist DataVision,
noted that marketplace bans
extend well beyond video vendors, and
often apply to specific marketplaces
only. Sometimes, he said, manufacturers
even prohibit sales through platforms
that they themselves employ.

“It’s certainly their prerogative,”
Brown said. “It’s their brand, their policy
and their product, which they spent millions
to develop.”

Nonetheless, “I don’t understand why manufacturers
wouldn’t want us to sell through the marketplaces,” he
continued. “We’re a direct customer, we’re using our
funds to promote their products, and we provide the
same level of service and support that we do in our
store.”

What’s more, the leading marketplaces have proven
track records and fraud-prevention tools, and consumers
are gravitating toward them because of the seamless
purchase, payment and fulfillment processes, he said.

Brown added that DataVision is happy to comply with
MAP. “We want a clean marketplace. We don’t want a
Wild West race to the bottom either. That way we could
all make more money, which would be good all around.”