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Sony Establishes E-Commerce Policy

Sony has set its e-commerce policy, and the company is initially siding with brick & mortar dealers who have e-commerce sites versus e-commerce-only retailers.

In addition, Sony is considering sales of its audio/video products to consumers using its web site, but a decision on that won’t be reached for the next couple of weeks.

That’s the word from Tony Piazza, president of Sony Consumer Sales, who told TWICE last week that the company is “rolling out the policy now to retailers during one-on-one meetings.”

At press time, Sony said it has not officially signed any retailers to the new program, and Piazza did not want to estimate how many dealers will be online by the fourth quarter.

Circuit City currently sells Sony product on its web site through a special agreement, but consumers must pick up those purchases at the store.

The Sony executive explained that retailers who want to sell through their web sites would have to sign “separate [dealer] agreements just for the Internet. There are customer service agreements involved, by product category. For instance, the customer requirements for a Walkman are far different than for a big-screen TV.”

“We will have to qualify retailers,” he added, “and not everyone that applies will be approved. We must be selective and see how it goes.”

Piazza would not discuss an issue that concerns many manufacturing executives regarding the web, namely price erosion, and how it is addressed by Sony’s Internet dealer agreement. But the Sony executive did acknowledge that “there is a concern about Internet sales by all manufacturers: How do you present value-added merchandise effectively? We believe that [for value-added products] it should be face-to-face, but generation-Xers are more frequent users and are used to the web, while baby boomers are more cautious.”

Commenting on Sony’s e-commerce philosophy, he suggested that it is flexible, and “we will be managing our e-commerce business closely. As it evolves, we will change.”

The most visible of all e-commerce sites,, entered the CE market this summer with transshipped Sony product – a move that troubled the manufacturer, to say the least. When asked if Amazon might eventually be allowed to become an authorized dealer, Piazza was diplomatic, and said, “We won’t close the door on them, however, we won’t open it prematurely either. Cyberspace is really another geographic territory. When you enter more markets it becomes tougher to make a profit.” However, e-commerce “provides a great opportunity, [and] if you are in the consumer electronics business you have to be there.”

When asked who might win the battle between brick & mortar retailers with web sites and e-commerce-only dealers, Piazza outlined the positions of each side: “Several brick & mortar retailers feel they have a strategic advantage because they know the CE industry. The e-commerce retailers feel they are the only ones who know the web, so they feel they have the advantage. My point of view is that we are in the initial stages of e-commerce with CE products. In order to be successful you will need knowledge of e-commerce and knowledge of the CE business. You can’t rely solely on one or the other.”

Concerning a possible decision by Sony to sell CE products directly to consumers via its web site, Piazza noted that “we currently sell our Vaio PC line on the site. We are reviewing CE sales. If we do, we could monitor the development of e-commerce and sell to those consumers” who are comfortable with web sales.

Piazza also commented on fourth-quarter sales at retail, saying, “The business looks strong. The hottest category is DVD, which is on fire, there will be industry shortages. Digital cameras, due to the popularity of the web, will be hot. Our Mavica line has been particularly strong. Big-screen TV sales are also strong.”

Finally, he noted that due to the popularity of DVD, “Pro Logic receivers sales are hot and will remain so for the rest of the year.”