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Onkyo To Sell Through Walmart.com

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.

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