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  1. 2ndRick is offline Fully Magnetized
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    Major video manufacturers work to put margin back into their product lines

    5 Comments by 2ndRick Published on 02-28-2012 07:09 PM
    I knew that Samsung would be announcing a UMRP (unilateral pricing) strategy during CES, but I was pleasantly surprised that Sony did the same.

    With the most recent news, Panasonic and LG have announced MAP strategies and a policies which forbid sellers to put items on 'marketplace sites' (which means Amazon and eBay).

    The mid sized independent retailers who buy through group deals from HTSA, HES/BrandSource just got a massive break here.

    I think that the smaller dealers and the CIs who buy though distro may have also caught a break here too, although the distros may just take a deeper slice for themselves.

    http://www.dealerscope.com/article/l...ign=2012-02-27

    Quote Originally Posted by Dealerscope Article
    Panasonic and LG are instituting a policy that will prevent retailers from selling select TVs through third-party online marketplaces. The move should help stabilize prices, increase margins and protect independent CE dealers against cut-rate Internet sales, industry insiders said.

    LG will enact its new policy next month with the rollout of its 5700 series, followed by the release of other high-end 2012 models, said Jay Vandenbree , senior vice president of LG's home entertainment sales and marketing. Panasonic confirmed that it will enact a similar policy but would not provide further detail. The policies, in general, are designed to prevent retailers from selling higher-end TVs through third-party marketplace platforms, such as those run by Amazon.com, Sears, Best Buy and, in LG's case, eBay.

    "(LG's authorized) retailers can sell online, but they can't list on a marketplace site, which is just a pricing competitive site," Vandenbree said. "Everybody can still sell online, but not as a general flea market. This kind of resolves the downside of the Internet, while embracing the upside."

    The marketplaces, dealers and buying group executives said, have become a platform where authorized and unauthorized retailers essentially compete for the sale of the lowest price TV. The practice has greatly eroded pricing and has helped to strip what little margin is left on TVs.

    "It has allowed retailers to vie for the 'buy button' and drive prices down," Jim Ristow, executive vice president of Home Entertainment Source, said at the HES Brandsource Summit this week in Orlando, Fla. "Overall (the new policies) will be very good for the channel."

    The move is part of continuing efforts by TV manufacturers to figure out the right online sales strategy and, in some cases, to slow the losses many have suffered in their TV businesses. Sony and Samsung, for example, are rolling out a unilateral pricing policy that will set the price for higher-end 2012 TVs across all channels, including online and national accounts.

    "A lot of the vendors view third-party marketplaces as one of the primary points of instability in the market," said Dave Workman, executive director of the PRO Group. "It's a harvesting channel that doesn't create any more business. Instead, it creates this 'race-to-zero' mentality, and the manufacturers said 'Well, we're gong to stop it.' You get 10 retailers in the 'buy box' and it's like a Dutch auction. It's a bid to 0."

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    Re: Major video manufacturers work to put margin back into their product lines

    Here is the announcement from Sony and Samsung.

    http://www.dealerscope.com/article/s...nt-retailers/1

    Quote Originally Posted by Dealerscope Article
    Independent CE retailers and buying group directors hailed new unilateral pricing policies (UPP) by Samsung and Sony as a positive step in leveling the playing field against online retailers and big-box stores. The move, some said, could increase profits on certain TVs to 30 percent.

    "This will help to bring some sanity and stability to pricing," said Jim Ristow, executive vice president of Home Entertainment Source, during the opening reception for the HES and Brandsource 2012 Summit this week in Orlando, Fla.
    Samsung and Sony, which recently announced the changes to its dealer base, will impose UPP on the higher-end models of specified TV lines and some of Sony's high-end projectors. The policies essentially set fixed prices of certain products, mainly TVs, across all consumer sales channels, including e-tailers and big-box retailers. Independent dealers said similar policies by Bose and Epson have stabilized prices and help them to compete more effectively.

    "I have to applaud Samsung and Sony; they're both courageous for doing it," said Tom Priola, owner of Primetime Audio/Video in Rockford, Ill. "The policy will help stop price erosion and allow us to start making some margin on TVs."
    Executives from the TV manufacturers could not be reached for comment last night. One source said margins on the TVs will range according to their model series. He said margins on the new line of Samsung TVs, for example, will run between 15 and 28 percent, while another dealer said margin on a higher-end Sony set could hit 30 percent.

    "If the policy increases margins, than it's a tremendous benefit," said Vance Pflanz, CEO of Pflanz Electronics, Sioux City, Iowa. "What always happens in this industry is price and margin erosion, and I don't think this industry can stand any more of it."

    Unilateral pricing on Samsung TVs will start with the release of each new 2012 series, the first of which is expected to hit the streets in April or May, sources said. Sony's 2011 XBR series will have unilateral pricing beginning March 1, while new Sony models will also carry UP as they're released this spring, sources said.

    "I like it. Now the question is whether they'll be supportive of it," said Bjorn Dybdahl of Bjorn's Audio Video in San Antonio, Texas, about UPP, echoing independent retailers' general suspicion of any promise made by TV manufacturers. "If it's not all about pricing (to the consumer), then we'll have a better shot at winning the sale."

    Other products, such as Sony's line of 4K projectors will also have UPP, but it's unclear at this point what other categories will fall under the new policies. One source said the new policies will also include some product bundling and financing restrictions.

    All dealers interviewed said they would go out of their way to carry vendors that made similar moves to help independent dealers and contemplate dropping others that didn't. "We're going to align ourselves with manufacturers that support these types of priorities, while we probably won't consider vendors that do not," Priola said.

    Besides stabilizing prices and increasing margins, dealers said UPP is important because they no longer have to worry about losing a customer if he or she finds a better price of a TV online. Now that the price of the main component of a home theater system is set, dealers said they have the confidence to focus on selling more services and add-on components, such as audio and installation.
    Dealers said they'll also be more comfortable providing in-depth demonstrations of high-end products, knowing that the consumer won't using their store as a showroom to see, touch and learn about a TV before buying it online a cut-rate price.

    "It's important that the independent retailers and vendors work as partners because, over the last few years, it seems as if the TV manufacturers have forgotten about the independent dealers," said David Pidgeon, CEO of Starpower in Dallas. "But, if the manufacturers handle it right, they have an opportunity to turn a bad thing good, and it's pretty bad. There is no CE retailer who is happy with the CE manufacturers right now."
    Rick Murphy
    Tandem Marketing - Michigan
    248-376-8315 cell/text

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    Re: Major video manufacturers work to put margin back into their product lines

    Thumbs up to this. Just my speculation, but I think it's finally hit a threshold that matters to the manufacturers -- the big box stores and major brick-and-mortar retailers.

    As anyone who gets the trade emails has seen, there have been numerous articles about Best Buy's race to obsolescence, and how consumers are going there for a product demo, then whipping out their mobile devices and ordering online.

    Also, it would seem that the race to the bottom might finally be catching up with the manufacturers. Just a guess, reading between the lines of the latest press release from Panasonic.

    Seems like things might be stabilizing from the top down for little guys like us getting profit margin from displays. Here's to hoping.
    Ryan Posner
    Frog AV

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    Re: Major video manufacturers work to put margin back into their product lines

    I'm staying optimistic...will believe it when I see it.

    I still wish the manufacturers and disty's would understand the way sales tax works (despite volume of sales). If they move a TV to a vendor that they've given permission to sell it online...that vendor should immediately be charged at least 5-7% more than the CI dealers. Heck, those same vendors are already moving thousands of units (probably each month), where we might only do a thousand or a hundred a year. The can stomach staying competitive and the 5% increase shouldn't make a difference to them.

    But it certainly makes a difference to us.

    Disty reps...you listening ! ?
    Chris Linthicum
    HiTech Upgrades
    Severna Park, MD

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    Re: Major video manufacturers work to put margin back into their product lines

    Looks good on paper but personally I think its rubbish and will never be enforced. Didnt sharp claim the same on their higher end models and what happened? You can get them online for cost of below. Same with Samsung ES series. For now, customers can source their own TV's as far as Im concerned.

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    Re: Major video manufacturers work to put margin back into their product lines

    Quote Originally Posted by Tx Red View Post
    Looks good on paper but personally I think its rubbish and will never be enforced. Didnt sharp claim the same on their higher end models and what happened? You can get them online for cost of below. Same with Samsung ES series. For now, customers can source their own TV's as far as Im concerned.
    We stopped selling TVs in 2009, customer sources there own display, with the condition that if we cant make it work, they have to source another and another. They accept this and we charge on a cost + basis. If the client is not interested in sourcing there display as do most of the upper end we give them MSRP. Of course in the long run it works out more economical for the client and us in the first option. However in the second option they get a lot more value for a small % our markup, win win both ways

 

 

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