Retailers Disappointed By Marketplace Bans - Twice

Retailers Disappointed By Marketplace Bans

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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.”

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