Transshipping: Your comments

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We were amazed by the depth and breadth of the comments posted on the Sonic Electronix and Al & Ed’s call to action stories regarding transshipping and MAP (Minimum Advertised Price).

We will follow up on the topic but for now, in the hope that some constructive actions might be taken on the problem, we offer some of the key takeaway points and questions raised from your comments:

Is MAP still a useful tool? Should we get rid of MAP?

Or, should retailers go to the other extreme and stick to only brands that strictly enforce MAP?

What should suppliers do when they have 2,000 units left that none of their authorized dealers will buy?

A thoughtful post from “Steve” says retailers are to blame in an unexpected way:

“Wanna know why customers go to the net? It’s not always about price! Look at your stores, most are dirty and ugly. Most employees are too busy playing on the internet or their phones to actually learn anything about the products they sell. Look at your inventory, you cherry pick the lines because you want to clerk the easy stuff not actually sell anything. Do you actually advertise to the youth in a way they understand or do you just yell “1000 watts amp $99!” Most independents act like the internet. In the words of Eddy Kay “With all things equal, I’ll shop at the lowest price”

Should specialists organize in some way to fight discounters?

Thank you for the great comments and we hope you add more!

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  1. How difficult is it for a manufacuturer to order a product from an unathorized e-tailer and track the serial number to see where it came from??? Seriously. Cut the transhipper off without warning. But that means an exec will probably lose thier 100k Benz and we all know that won’t happen. This has been an issue forever. Ask Kicker as they are the biggest sl*ts of the industry. We’re all screwed and no one will do a damn thing about it. All of us that got these corporations this far are being thrown under the bus while they keep bank rollin! I have even had a rep tell me,” go dig throught thier dumpster and get a box from an amp to get the serial number” after reporting a local shop transhipping Kicker in. Now what does that say? Oddly enough, this rep is another one that only calls at the end of the quarter or month to ask for orders and nevers offers sh!t. Even while at CES this half-azz “rep” didn’t know squat about any product I was there to see. Same song, different day. Gotta love Car Audio!!

  2. Abe, Making a deal with the someone who doesnt follow the the rules by purchasing product from transhippers in LA is also the problem. I dont know what fantasy world you live in! There signitures on the dealer/distibutor agreement is worthless since you cant trust any of them (Sonic,Woofer ect, Audio Savings, or who ever) and were taking profits away from legitamate dealers. And as far as small margins, all these web sites do is clerk sales on price and could keep things on an even playing field by keeping to MAP and make more(simple concept isnt it). But if you want service, expert advice, expert installation, warranty protection, and the pleasure of walking into an actual building and speaking with a human being, margins are going to be higher.

  3. I think we should stick to MAP, I mean, collusion is what this COUNTRY was built on, we need to monopolize the industry. But let’s not stop at MAP–we should get congress to write some legislation that will bring back payphones, ban cell phones, and most importantly pull the plug on this ol’ left wing invention of the INTERNET, the downfall of us all! Goddammitall I don’t like change

  4. This is simple, support the lines that allow you to make a profit and don’t support the ones that tie down your cash and make you waste your time (because kids will buy them on-line), right? Almost…Actually you might need to do a balancing act, carry some popular (profitless) brands and more of the profitable ones. True, this is more an art than a science. Push the profitable brands and pay higher commissions, if a kid just wants to buy brand X or he walks away and you will loose the sale, just sell it to him…is better a little profit than a no-sale. Use the popular brands to get customer into your store and then SELL them what makes you money (of course products that wont fail and give you headaches or your customer might feel you ripped them off). Educate and motivate your sales team, to help them make a harder sale (read profitable).

    You need to spend time to make a sale on a profitable product (earn you profit, you are SALESperson), if you just want to take money from customers, just carry the popular brands (be an order taker). If the brands that you love are across the street, flea-market or all over the internet…WAKE UP!!! They don’t love you back (profit)! You need to get a new love, brands that are not everywhere, that are strict about MAP and protected territories.

    AHH but I used to make a lot of money with X brand…Stop whining, you said it “used to”. Move on, look for other brands!!

    Hey, don’t get me wrong both types of business models are good business practices, the low-margin-hi-volume (aka transhippers, eBayers, etc) and the higher-margin-low-volume (aka the specialists, mom-n-pops, etc).

    You just need to decide which one you want to be and carry the products that makes sense to your pocket.

    Remember, the easier the sale, the lower the margin and viceversa, so look for new brands!!!!!

  5. This industry has pushed itself in a corner and has force manufactor to go the way of online retailer. Some store are not the greatest as far as customer service and the product that they sell. Some stores don’t display the products and make hard for customer to make a buying decision based on there own opinion. Some stores are just a place to buy a box. The sales staff aren’t even sales people. They are clerks! There are going to be shops that make the industry look great and there is going to be shops that make a idustry look terrible. We must remember that when all things being equal, customer will shop for the lowest price. It is just human nature.
    So I think MAP is a far gone in the retail market.

  6. WOW! feelings run high on this a 30 yr veteran of mobile electronics and 17 yrs owning a retail store i can say that map is almost meaningless.we do not sell on price,we sell on service which i feel is the number one product an independent has to offer.i have personally lost sales because i refuse to discount anything below what i consider a resonable profit.however that said we have built a reputation of being honest and fair ,doing quality work. Our install bay is very profitable and we do not ever discount labor,if you are shame on you!it is harder to make it in these times however its not just mobile electronics taking the hit. look around there is not a single industry that’s not hurting to some degree.Do you stand behind your products? do you make exchanges on defectives as painless as possible? do you have a lifetime warranty on your installations?this alone is a great selling point!sorry I digress!MAP is not going to make your business profitable, you are!

  7. I think alot of dealers don’t understand what the concept of transhipping is and in fact most of them are active and willing participants. Buying product from another shop/retailer is TRANSHIPPING……Selling product to a neighboring shop is TRANSHIPPING, yet because of the horrible supply chains our industry has, its a requirement.

    Easiest way to curb ALL of the issues we face is simply do away w/ ‘distributor programs’ all together. If you step up to the plate and buy direct you should pay the same price as ANYONE ELSE that buys direct. If a ‘distributor’ didnt buy something for 40% less than a decent direct dealer, there wouldnt be such a DISCONNECT between factories and retailers.

    Distribution prices should ALWAYS be higher than standard dealer cost, don’t pay for the distributors business models (moving boxes), instead let the distributors or ‘transhippers’ charge 10-20% higher than going direct and let them make their money THAT WAY. This would keep alot more dealers from bitchin about price, because if they WANTED to participate in the same type of ‘ebay/amazon’ selling they COULD…… would also allow ANY TRUE DEALER the opportunity to price match, while still making money.

    But, should MAP disappear? No, not neccessarily, but its a restriction thats only enforced on the ‘honest dealers’ which is not fair. It either needs to be enforced to ALL DEALERS ACROSS THE COUNTRY or none at all!

  8. Yes, MAP is still a useful tool.

    When used as it was originally intended, it provides a fair playing field to all those that rely on advertised pricing to lure prospective customers into their establishments, taking away the “best price” advantage that one seller might have over another. Particularly those sellers that possess greater buying power and therefore the ability to sell at a lower price than their competitor can, and still maintain as much, if not more, profitability in identical products.

    No single element of the industry can be blamed completely for the current state of the industry, all parties share a portion of the responsibility, to what degree each party is responsible varies depending on the angle from which you are viewing the problem. Right now, the single most effective measure that can be taken is increased MAP enforcement, but this is going to be a long uphill battle. There are no quick fixes, at least not any that will provide the desired solutions to all parties without negatively affecting someone along the way. Everyone wants to stay in business and maintain profitability, manufacturers, distributors, and dealers alike, but any radical actions to enforce MAP policies carry with them the potential to undermine the economic stability of one or more of the parties involved.

    Should the dealer’s buying decisions be based solely on the MAP enforcement practices of their vendors? I don’t think that that is entirely possible. Some dealers are forced, by consumer demand, to carry product lines that appeal to their consumer base but are considered unprofitable when compared to other products on the market. Whether it’s a need to offer a popular brand, or one that fits a particular price range, the dealers need to weigh their buying decisions carefully. But they also need to get back in the habit of “selling.” Selling themselves and their services, instead of standing around waiting for the customer to walk through the door and throw money at them. This industry offers products that people want, getting the consumer off of the couch and into your store is not the biggest concern, making the most of the sale experience, and creating a reason for the consumer to throw said money at you, is.

    Map is good, it serves a purpose, but it also has a shelf life. If at some point in the life of a product it becomes apparent that that particular product is not moving as expected, regardless of the reason, MAP restrictions for that particular product should be able to be released by the manufacturer. Mistakes are made even in product planning, and if dead product is just tying up funds, everyone involved should be granted the ability to get out of the product as they see fit. How the manufacturer compensates the dealers that have stock on hand, and that might have to take a loss on the product as a result of the relaxation of MAP restriction, would remain to be seen and be up to the particular relationship between those parties.

  9. MAP should be eliminated. IT hurts the market. If we allow for a truly free market, where suppliers and manufacturers sell their product at a fair market price, instead of one hopped up under the idea of MAP, it will greatly help us all, especially consumers. Without consumers our business will not work.

    Sure eliminating MAP may hurt in the short term, like getting rid of any sort market subsidiary, but in years to come our industry will be better for it. Particularly if manufacturers and suppliers will stop wasting time fighting “gray market” and “back door dealings” we can actually spend time creating better product.

    If your company can’t exist without MAP your company doesn’t provide a service or product worth selling.

  10. if a supplier (distributor) has 2000 units of something he can’t move to auth retailers he needs to be fired. I realize buying for a huge supplier can be tasking but why not buy what you know your going to move not what you hope to move, That’s what successful independents do every day

  11. the manufactures are the one to blame, there worries about sales, and closing there month. every end of the month i get this phone call from my rep trying to push more and more product to me, and if i said business is slow and cant buy it, the next day he find a new dealer, even if it online guy they don’t care anymore, all those company’s are now selling direct to eBay and amazon!!!
    wake up before its to late!!!!!

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