MESA Defies Amazon’s Installation Program

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The Mobile Electronics Specialists of America buying/marketing group, MESA, which represents a quarter of a billion dollars in car audio buying power and 231 storefronts, said it will ‘not support in any way’ the new Amazon plan to offer car stereo installation through a network of installing specialists.

Ryan Gunter of MESA
Ryan Gunter of MESA

MESA’s board of directors said it believes Amazon’s program would aid transshipping and further Amazon’s use of unauthorized dealers to sell products.

A MESA statement said, “This is certainly detrimental to retailers, manufacturer’s consumers, and the industry as a whole in both the short and long term.”

The group’s executive director Ryan Gunter said, “Professional installation is one of our members’ greatest assets; and removing product sales from the transaction would drive business away from our stores, not to them.”

The announcement that Amazon will offer to its customers the option to install car audio at local retailers, created a firestorm reaction among car stereo specialists. (See comments below story here).

We polled some leading retailers and suppliers on theirs views on the Amazon program.

Car Toys, based in Seattle, with 50 stores said it had “no comment” at this time.

The Al & Ed’s chain in Southern CA, is evaluating Amazon’s plan (see later in this story)

JVC Mobile’s Ron Trout said “Amazon boxesThe devil is in the details.”  He said a program that drives traffic to retailers may be good for the industry as floor traffic is a key industry problem.  But he is concerned that the program would legitimize unauthorized retailers.  “That’s my beef with Amazon; they won’t help police their Marketplace.”    JVC Mobile has not sold to Amazon since it implemented a “Marketplace” for third-party sellers.

The MESA buying group is concerned that retailers would be left holding the bag on faulty product sold on Amazon that is brought to the brick and mortar shop for installation.

“Consumers would expect the local authorized dealer to warranty any defective merchandise; resulting in consumer outrage directed at the local dealer instead of… – Amazon,” said Gunter.

Mitch Schaffer of 1sixty8 media
Mitch Schaffer of Mobile Edge and 1sixty8 Media

John Haynes of Al & Ed’s said the first reaction of a retailer is to assume working with the online giant only strengthens Amazon, a competitor, who has taken sales from specialists.   But he said,  “Once you work through the emotional response, one realizes that this might be a great opportunity. One of the things all store front retailers need is more customer visits, and if Amazon helps direct install labor to a store, it’s certainly better than leaving it up to the purchaser and hoping for the best.”

Under the program, the installer would set his own fee and then pay Amazon 20 percent of the job.

Mitch Schaffer, an award winning car audio specialist said he is vehemently against the program.  He cited some of the reasons noted by MESA.  Setting prices on online would also be a problem for specialists, he said, because they often need to see the customer’s car to quote an accurate price.   “When a price is quoted on Amazon and the client arrives only to find out that they need an extra widget that costs $50-100, we, as local retailers are going to look bad…. ”

He also voiced skepticism that Amazon would ultimately drive customers to brick and mortar retailers rather than trying to recapture them and retain them for itself.

Schaffer  added,  “And while this may be a bit of sour grapes, Amazon and their marketplace need installers for this program to succeed.  Why would we want to provide a service that supports and props up our competition? ”

Source: MESA and CEoutlook

 

 

 

 

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25 Comments

  1. Mike,

    Eloquent & well said.

    Managing business with such clarity is sure to produce better results than using hope as a strategy and demonstrating frustration as a tactic.

    I am reminded of the last paragraph of chapter 3 Attack by Stratagem. Just for fun and accuracy, I reviewed my well worn copy of Sun Tzu’s The Art Of War. “If you know your enemy and know yourself, you need not fear the result of a hundred battles…”

  2. Before I begin, I’d like to make a few things clear:
    1. Custom Sounds will make a business decision, not an emotional decision, regarding this, just like all the other decisions we make. This will not change.
    2. We are not “taking a stand”, making a futile attempt to thwart the internet, making an emotional decision, or any of the other belittling things that have been said to create the impression that anyone who does not agree to do business with the Great and Powerful Oz is burying their head in the sand. I have never been accused of burying my head in the sand. This will not change.
    3. We’ve been told numerous times that guys like us could not compete with: The Automobile Companies, The Power Retailers, The Big Boxes, The Internet, and now Amazon. We are still here. This will not change.
    4. Amazon is a competitor. They are the enemy and we will treat them as such. We will treat them just the same as the competitor down the street. Different business model, still a competitor. Custom Sounds is not in the business of assisting competitors. We are in the business of making their lives absolutely miserable. We don’t want our fair share of the business. We want all the business (just like Amazon), even though we know we can’t get it all (just like Amazon). This will not change.
    5. Amazon sees us as a competitor, not an ally. We won’t be deceived by enemies (or their hired minions) bringing us gifts. I can assure you they are not in business to help us. This will not change.
    6. We have never agreed to pay our competitors for the luxury of installing something they bought from the competition. This will not change.
    7. We have never refused to install something they bought from a competitor. This will not change.
    8. We have never hesitated to match ANY competitors price. This will not change.
    9. While conditions may change, our core principles do not. This will not change.

    Makes our decision regarding how we will go into battle against our competitor fairly clear and easy.

    Thus, what is of supreme importance in war, is to attack the enemy’s strategy.
    – Sun Tzu

  3. Keith,

    Thanks for the kind words aimed my way. I do believe that you were also very kind to, and perhaps a little soft on the supplier community.

    It is true that the program will work for some and not for others exactly for the reasons you articulated.

    Your advice on the decision making process is dead on and should actually be the decision making filter used for all business decisions made by business people.

    1. Ray, I have plenty of criticism for the supplier community – I just didn’t think that making a populist rant against manufacturers would have been productive when discussing the merits of the Amazon program.

      Retailers should look at the program very dispassionately so they can decide whether to participate. I think Steve Medeiros made some excellent points on assessing the program that everyone should read.

      Good luck with this program, Ray. You might have a tiger by the tail…

  4. Some people are having trouble posting a comment. You may send your comment to me in that case (only if you’ve tried unsuccessfully) and I will post it.

    On behalf of Keith Lehmann:

    I can fully understand the pros and cons of a program such as this, and thought that I’d offer the standpoint of someone on the supplier-side of the business for three decades.

    First off, product from most suppliers ends up on Amazon from numerous sources at prices well-below MAP. Even suppliers that have strict and enforced Internet policies find product being sold in places (and at prices) that were not intended. Retailers should understand that there are degrees of policy enforcement by suppliers, with some suppliers choosing to sell direct to Amazon and accepting the real possibility that the product will be heavily discounted. That should be taken into account when choosing which brands to support every year.

    The Amazon installer program is a separate matter entirely and should be evaluated on its own merits, irrespective of how you view Amazon’s retail business practices. If you cannot separate the two, you’ll never be able to objectively assess whether this program is in your best interest or not.

    The program will work for some retailers and will not work for others. If you accept that this program will deliver new customers and the chance to sell them up or retain them for future business, then this program could work for you. If you believe this program is devaluing your installation services, cannot be easily administered or unfairly strips you of your sales potential, then you should not sign up.

    Ray Windsor’s involvement in this program should be viewed as a positive for those who choose to participate. There are few in the 12 volt industry that have advocated for the specialist retailer over the years harder than Ray. As the program develops, there will likely be adjustments made resulting from the feedback from participating retailers, and based on history I’m sure Ray will continue to be that advocate.

    For those retailers that reject this program, make the decision not as a futile protest against Amazon but as a reflection of your own best business interests. In the meantime, be sure your overall walk-in installation policies are well defined and consistent with your business principles.
    Suppliers that care about distribution integrity will support your decision. Make sure you support them back and they won’t likely sell Amazon direct in the future.

  5. We can’t stop Amazon from selling our products at cost. But it’s up to us if we crawl into bed with them or not. Ray will pitch this bigtime at CES. Some of us will sign up. I would expect most will not. Will be curious to look back at this in six months.

  6. Dean,

    Well said and I whole heartedly agree with everything you said. The third party providers. The more productive use of the 20%. The miserable unsustainable profit margins. MESA’s stand. All of it.

    There are however some things that did not get said which are perhaps at least as important to, and responsible for, this terrible set of conditions the Internet has helped to bring us to where we are today. If I know you, I am confident I would agree with you on those too, if you said them.

  7. I have had the good fortune of being in the 12 volt indusrty for over 45 years. During that time period I, as all of us have, have made many business decisions – some good some bad. I feel the decision made by MESA not to engage and participate and not being an enabler in assisting 3rd party internet selling to be very wise and rock solid. 3rd party internet selling at negligable proift margins is extremely unhealthy and a plague to our industry. When we do encounter customer problems, more than likely a 3rd party sale is at the core. I’m extremely confident we could take that 20% install ” referral fee “, spend it on our own marketing and generate more traffic to our stores than through referrals. Good on MESA

  8. Jason

    BINGO. I contend that you have seized on a significant portion of the problem and identified a bit of a conundrum.

    FIRST: If all of the installers would get together and speak with one voice the opportunity for Amazon to have an installer base to which a referral could be made, would dry up. PROBLEM SOLVED. I’ve been dealing in one form of fashion with the installing retailer constituency for some 35 years. I have not been successful at getting them to see a thing in one general way much less make the hard decision and take the action. I think you eluded to this in your observations.

    SECOND: The CONUNDRUM of communicating price AND value at the same time over an Internet site that a consumer will look at for just a few seconds at best. We can refuse to discuss price in other than face to face conditions. Consumers usually get an impression under those circumstances. We can just lay the prices out there without any support and hope the consumer figures it out. Or we can elect to engage with the consumer where has elected to make his purchase and present our case.

    I believe however that you remained silent on a significant component in the making of today’s conditions… IF the Internet guys, Amazon included, were not able to be successful at securing the products in question, selling those products to what otherwise would be your consumer, at near your cost (I would add, not so near their cost) they would not have the ability to successfully attract your consumer to their site.

    I wonder if there is way to create that condition which at base solves this and many other laments we have…?

  9. While I’m not surprised that Amazon is trying to get into the 12v installation business, I am surprised that one of our industry veterans has jumped ship and gone against everything he has preached over the years in his weekly letters that he would send out. Ray you said in one of your reply’s earlier that “if you can’t beat them, join them and give them direction”. Do you really feel that the right direction is to take 20% of a shops labor? If you are going to give them some direction then why don’t you start with getting them to follow MAP policies? Get them to do that then you might get a little more respect towards the installation program. I will not give up 20% of my labor just to get some cash in my till. I would be surprised if any shop that has respect for their techs and the profession they are in will as well. Ray good luck because you’re going to need it. You have a major uphill challenge ahead of you. Looks as if you have 213 stores including myself called the MESA group that won’t be offering our installation services to you.

  10. Steve,

    Eloquent and well said as always. Supported of course, with substantial skills and expertise. We should always do all possible to tilt the field in our favor. Do business in a way where Profit, Identity and Predictability are the filter through which all business decisions are passed. You, and I am sure a number of the MESA guys, even guys who are not MESA guys for that matter, are supremely capable in this area. You and the MESA guys are not unique in this capacity, but you sure do stand out. You should not have to allow the importance and value of your physical presence, expertise and completely professional installation to be diluted, ever, by sharing it with inferiors or others who would lead you in any other direction. That said…

    Working toward a set of business conditions that facilitate such a state has been something I, and others to be sure, have worked to create for many years and at some risk. I don’t know if you think we are there. I, for one, do not think we have arrived there. Therefore I perceive it is best to understand the current conditions, their trend and our individual place in that continuum. With that understanding in place we have to make and execute the decisions that are best, FIRST; for our individual business and SECOND, for the business category in which we wish to continue conducting our individual business.

    You don’t need to hear this from me… BUT you are to be congratulated for your position on this issue and more importantly your ability and strength to grow your business and defend its place in what is a somewhat challenging time.

    1. Well said Ray, I agree that we are not, nor possibly ever will be, at a state of absolute excellence. A place where a customers wants and needs are met and exceeded at all times. I find in the last 35 years that these needs not only change as a sort of evolution in the marketplace but can change drastically daily, and for that matter, customer to customer. I sit with eyes wide open and understand the new realities of eCommerce. I see the continuum as a place were the consumer has a choice. He has a choice to buy the so called “commodity” type product, where price rules and all else comes in a distant second. Something that eCommerce excels at marketing and fulfilling. Surely, all things do not fit in this category. And to that point eCommerce does not fit all buying circumstances. I for one believe that there is an absolute need for our products and services. It is our responsibility to meet and exceed the expectations of our customers and to add value to what we do and offer. I propose that that eCommerce is no different than most big box competition from days past, every attempt is being made to diminish the importance of the “specialty” aspect of our products and services and to make it fit the commodity standard. It is our choice to fight this lowering of perception. Our battle does not lie with Amazon or eCommerce in general, but within ourselves. Be relevant and important to your customers. Offer excellence not commodities. Listen to them. Give them what they need and they will return the favor.

  11. The problem for the facilities like mine is, when the customer on Amazon Market place see that my Install for an amplifier is 3 hours @99.00 an hour and the local chain store is $65 for a install price, who do you think the customer on Amazon is going to choose. Chain store base their entire “model” off end numbers then profit.
    Retailers: I have spoken at many events over the last seven years about this internet topic. If you want to see the internet go away, Stop installing the products off the internet. The problem would go away over night. The Issue is Bob down the street is slow today so he would take on the job!

  12. Hiru,

    BRAVO! You are indeed part of a group that is and has demonstrated superior retailing and other business skills. I have been proud to do business often rather rewarding business, with many of its members prior to the forming of the group.

    That said I’d like to make two small but important corrections to your understanding of the Amazon process. ONE; The installer sets the install price. Period. TWO; The installer confirms with the consumer IN PERSON while looking at the car, prior to the installation date, parts, pieces, time, etc necessary to meet the expectations of the consumer and the installer. Nothing happens blindly unless the installer chooses that path.

    I respect your decision for sure. Who wants to share identity and margin with a third party like Amazon? Not many. I do however contend that decisions should be contemplated and made with as many of the facts as are available, if one expects to defend his decision, to himself, on the facts and results.

  13. Scott Huffman,

    I agree with all you said EXCEPT the “throwing the towel part”. If you can’t beat ‘em join ‘em is partially accurate as well . To complete the whole idea as I see it… If you can’t beat ‘em, join ‘em and give ‘em direction in order to do the least damage and perhaps even to help; in the world in which we currently try to do. We have indeed proved that we cannot beat ‘em. If that were possible we would not be here tody.

    Stop manufacturers from allowing their brand to be sold on Amazon… Stop retailers and distributors from transshipping to Amazon and the other Internet guys… Stop consumers from knowing about and using Amazon… Maybe but maybe not.

    FOR SURE it is best if you can have the consumer’s attention from beginning to end. As a brick & mortar installing specialty retailer you should do all possible to achieve, maintain and defend that profile. Many comments in this immediate discussion regarding that desire and certainly many many discussions over the years between, retailers, reps, distributors and suppliers. Indeed I was intimately involved in some of those discussions.

  14. We live by the often quoted axiom that if all things are equal the consumer will make his buying decision on price. So I wonder, should our efforts be directed at diminishing our unique strengths and allowing for a more “equal” playing field? Done properly, we as brick and mortar retailers have an decided edge that Amazon would like to co-op with this new strategy. We have a physical presence, have the ability to take a customer through his choices, help him select whats best for him given his unique circumstances. We can listen and learn his wants and needs and make a considered recommendation. We can then offer and complete a professional installation. We can demonstrate the use of the product(s) and offer our help after the sale if need be. Sure Amazon and other e-tailers can offer a version of some of these benefits, but can they really compete? eCommerce would like it to be about price over value, convenience over correctness and average over excellence. Face to face physicality, installation expertise, product and system knowledge should not be handed to (or worse yet paid to) a competitor in the name of store traffic. eCommerce may have some advantages, but these do not exclude us from being more than competitive. We as a company and MESA as a group are up for the challenge.

  15. Sorry, I should have read the posting from Robert Heiblim. On that note, I have further comment. While it is very true that Home Depot establishes a network of qualified installation technicians in the local area for each of their stores (such as for garage doors and openers, doors for the house, sinks & toilets, etc.) those very products are not purchased on a marketplace, but rather, directly from the authorized retailer (Home Depot). That is a very different proposition than a marketplace that encourages sneaky transshipping of products, violating the very dealer agreements those folks have with the respective manufacturers. The consumer does well under the Home Depot business model but does not fair well under the Amazon Marketplace design. I have personally experienced loss due to that design and simply do not go back to Amazon any longer, period! Also, please consider that not all manufacturers are bad folks. True, there are some who look the other way and/or even encourage transshipping. That can be from small, medium or large manufacturers. That can be from first tier or even third tier manufacturers. However, most of the manufacturers in our industry have good intentions and some spend a grand amount of time “policing” their brand in order to maintain brand equity and profitability for their network of retailers. Unfortunately, it is some (just a small sample) of the retailers who do the transshipping, violating their dealer agreements and causing harm to so many. Please, think thoroughly through this and see it for what it is. This plan with Amazon is not good for our industry, no two ways about it.

  16. Don’t listen to Ray’s BS responses. He is doing his best to convince you this new Amazon direction is a good thing for your business. The reality is that he is doing all he can to create a new job for himself, at the expense of the entire industry; from manufacturers, to retailers, and even to the consumers. Yes, even to the consumers. All of those folks who unsuspectingly purchase a transshipped product from Amazon are in disbelief if/when the need for warranty service arises and find they have no warranty. The people they stand in front of (that would be the installing retailer) are now “the bad guys”. There is nothing good about this program. Unless, that is, you are Ray Windsor and land a healthy paying job out of it. So, I still say to Ray…Traitor!

  17. Dealing with customers that need installs for products purchased on line can be a quite a challenge as it is. To work for Amazon, have blanketed rates and blindly quoted install pricing is a potential nightmare, and can only result in disgruntled customers and horrible reviews. I am filled with pride to be part of an organization like MESA that unilaterally makes a stand against working “for” Amazon. Not only will working with Amazon aid transshipping but I strongly believe it will hurt the reputation of quality installers rather than benefit business.

  18. When Amazon allows their subseller marketplace (and themselves) to sell brand name electronics at wholesale, with sketchy warranty- it is in violation of the Mfr. policies and is considered trans-shipping. By letting a legitimate retailer “legitimize” this transaction does not make it ok. I didn’t build up my company just do be an installation depot for Amazon, and to give them 20% of my labor. After paying my installer, my salesperson, managers, I DON”T even keep 20% of my own labor. Darned if I’m going to pay Amazon to poach my marketplace. YES I’m no dummy I know the internet is here to stay. BUT make Amazon adhere to the same MAP we all do and we can talk about it again. They are so big the vendors are afraid to enforce MAP policy.

  19. Sometimes this industry can seem like an uphill battle and I guess everyone has their breaking point so I do understand the “if you can’t beat em, join em” philosophy that Ray has on this issue. I might throw in the towel myself someday but at this point I am going to keep fighting and do everything in my power to stay strong and secure so that we can provide the very best possible experience to our customers. I think MESA’s stance on this issue is the correct one. Sure Amazon will find dealers to install their products but hopefully it will be the low end shops that will provide a poor experience for the customers and consumers will learn the benefits of a full service shopping experience that only a brick and mortar store can provide.

  20. Warranty concerns. Very valid point indeed.

    Consumers who shop at Amazon have a very high standard of satisfaction regarding warranty issues. Even further Amazon consumers have come to know that they can return shoes that don’t fit or they just don’t like the way they look. 12 volt products provide a fairly unique set of challenges…

    DOA failures are not often discovered until after the time and energy of an installation have been invested by the installer. Some of us bench test all products and/or products purchased elsewhere. BUT there is a cost of time and energy for bench testing too.

    Failures inside the manufacturer’s warranty are also problematic. If the failure occurs the consumer WILL come back to the installer. The consumer WILL expect the installer to solve the problem. The consumer will expect an OTC (Over The Counter) exchange of the defective product. This is true regardless of where the consumer purchased his product. Direct from the authorized installer. From the swap meet down the street. From Amazon. Direct authorized retailers have a way to effect an OTC exchange regardless of the manufacturer’s policy of return for repair. It is lots more difficult for the installer to perform so well for brands that he is not authorized for. In the Amazon case to add injury to insult the installer sacrificed 20% of the install labor fee just to be able to have to deal with the warranty problem and its costs.

    Simply put, this is a business decision where risk must be taken into account. By all means if the potential for this problem keeps you awake at night, don’t participate in the Amazon program. That said I bet Amazon is devising a way to take away a significant portion of the pain for the installer. They have done a decent job of that with other installation dependent electronics, size and fit dependent consumer goods and clothes, and other categories of product.

    See next reply…

  21. “They won’t help police their marketplace”… That is also an interesting point. Amazon representa a fairly unique type of marketplace. Amazon is a retailer. They purchase products. Take inventory risk. They sell and ship this inventory. Amazon is a drop-ship warehouse (FBA Fulfilment By Amazon). They hold other retailer’s inventory and ship that inventory for those other retailers upon instruction. Amazon is a “traditional marketplace”. Amazon provides a gathering space for lots of similar and dis-similar re-sellers to be in front of shoppers and pitch their wares.

    I contend that any brand who wants to can indeed prevent most transshipping most of the time. Track serial numbers. Terminate re-sellers who violate the transshipping policy. Dry up the source and the marketplace will fill demand only through authorized channels. This endeavor does not require help of the offender, it requires the desire, capability and conviction of the brand.

    Kinda like the idea that if professional installers do not participate in the Amazon program, no professional installation will be available to consumers through the Amazon program.

    See next reply…

  22. Dealing with large entities like Amazon is always fraught. While it is true they are not great at policing their marketplace, is this them alone, or the market itself? Where do the transshipped items come from, not Amazon. While fear of the large entity is natural, it should be balanced with looking at the specifics and seeing if improvements can come from engagement. What Amazon and others are good at is aggregating traffic and customers. Just look at Home Depot or Sears who both provide installers with a host of business and customers and often higher end product sales once engagement occurs. Change is not easy, and is certainly scary but that does not mean it is not something to embrace. Without knowing the specifics of the offer it is impossible to judge, but I would advise talking about it and trying to improve rather than rejecting. in this economy we will surely see installers taking up the offer. It is hard to compete if you are not in the game, so what will be the alternate path? This is the omnichannel today, it is best to leverage it.

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