Both Sony Car Audio and Kicker (Stillwater Designs) say they have sacrificed millions of dollars in sales by cutting off discounters of their car audio products.
Sony said it has been cutting off unauthorized sellers for more than six years as part of a corporate Sony-wide effort to stop discounters.
Kicker’s Tom Heath said the company intensified its efforts to stop unauthorized sales and discounting when he took his post as Domestic Sales Director about 2.5 years ago. “Yes, we’ve sacrificed millions and millions of dollars. It’s very expensive to do this.”
Sony Tech Team Representative Anthony Tozzi also said, “A lot of retailers don’t see the double-edge sword behind Internet compliance. It’s good on the surface for everyone and we’re very happy about it, but the cost to manufacturers is millions of dollars worth of revenue. If you just want to dump things on the Internet and sell them for little to no profit, we could do literally millions extra in revenue,” he said, adding that Sony made the decision to focus on profit and not revenue.
Industry members continue to cite Internet discounting as one of the chief problems of the 12 volt aftermarket. Some estimate that as much as 75 to 90 percent of sales of car audio on the Internet are below the Minimum Advertised Price (MAP). Two industry members said the figure may be higher than 90 percent.
Sony has severed ties with a couple dozen dealers in the past year alone, and it has eliminated some distributors, it said.
“If you go back about 5 or 6 years, we were probably one of the worst offenders.” Tozzi now claims Sony is one of the cleanest lines.
Sony and Kicker are two of a handful of top brand suppliers that are making strides in reigning in 12 volt discounting. MTX also revamped its sales process in 2013 to stop online discounting. Retailers also mentioned JL Audio as taking effective measures. Both were not available for comment.
Photo credit: Grey Suit Retail
This is deffently a problem when I can log onto my distributor’s webpage price a product then look it up on Amazon and find the same item 20 bucks cheaper then I can buy it for. The only way I can make a dime is labor. I’ve got no room to mark up the retail price. It’s not just manfactre that should be protecting the brands but reps and distributors looking out for the retailer. If nothing else offering a warranty after the sale at a brick and mortar or in person retailer over online sales. With a few ecptions like catalog retailers that stick to map pricing. I’ll even be so bold to name one of the worst offenders,. Kenwood!
Why should I continue to sell your products if your not going to show any support, your not the best brand. Don’t you care about price erosion and the idea a cheep product is junk? You still make a good product, but the precive notion is it’s getting cheep. Thanks kicker, Sony, jl, and other brands for backing up your lines. A contract to sell at a certain price point is a 2 way street, the manufacturer also has to keep up with his/hers part of the bargin. Trust me when I say you need retailers more then you think, and more then ever now. Cars are not getting easier to work on, they are getting a lot harder to deal with. It’s almost to the point it’s not a diy job anymore.
Good ‘PR move’ for these “leading-brands” to ‘make the case’ that some companies are now (finally) trying to be “part of the solution, instead of part of the problem.” Having been grossly over-distributed for years, chasing every dollar, I’m sure many 12V retailers all-across America are going to shed tears for these poor brands and their ‘lost millions’…
Every company, large and small, must evolve and adapt to prevailing market conditions, but some are responsible for contributing to the specialty retailer downward spiral, while others, “not so much.”
Retailers should opt to vote w/ their PO books and shift gears to actively “sell” brands that clearly have made the decision to ‘invest’ in their mutual, future success, and a long-term symbiotic business relationship.
The ones that have fully adopted and integrated this strategy into their retail business, continue to prosper…
That is the funniest bit of PR BS I have seen in years. You have just highlighted the worst “sold-everywhere for cost” brands in the business.
Oh? Show me a Kicker KX amplifier or L7 subwoofer discounted online. At one time, sure. But as the article states, less and less and less.
Sony has been a great partner for us!!!!
Manufacturers spend millions of dollars on research, development, engineering and those three show no value when a product is discounted especially heavily. Retailers who slow down and educated their clients are punished when there is internet discounting. The internet and heavy discounting is what ruined 12-Volt. And if you wear Oakleys they never discount so you should respect other manufactures who see the value in what they build.
Oakley… Funny you mentioned that.
Oakley is owned by Luxottica. Luxottica owns aproximately 90 plus percent of the market share in the eyeglass world. Not only is it just manufacturing but also many retailers, brands, and companies that sell their products, etc. They actually have been known to pressure the brands not owned to sell at competitive prices to theirs or they will make sure the brands cave by ruining their sales.
Oakley is not a good comparison to our market.
“Sacrificing millions” makes for nice copy but is self serving for those manufacturer’s mentioned.
Here are the facts:
* There is only 1 “pie” which is comprised of consumers who are looking to purchase mobile
electronics. Typically like most consumers,they want to purchase the product at the lowest
price available to them. In couple of keystrokes they can find that price. To imply that by
not allowing them to find a discounted price, they will not purchase Sony or Kicker product
is disingenuous. We have seen brands blame retailers for their lack of business and go to
internet only. How did that work out? Now those same brands are telling us that they have
“seen the light” and are restricting internet discounting.
* When brands demand that their dealers and distributors purchase more product than
needed to “Get the right price” or maintain their authorized status, they create the situation
where their product will end up on the internet at discounted prices. It’s really quite simple.
I applaud those brands that are looking to support profitability for all of their customers. Some authorized internet accounts do a great job of describing the product features and answering questions when contacted by the consumer looking for that brand. If there is pricing parity, many of those looking to make a purchase will then go to a retailer to purchase and install that product.
They may be leaving ‘millions’ on the table, but they are also gaining millions from shops that still sell their product due to its protected nature.
Luckily our dealer direct brand Image Dynamics has never really had this issue it has been sold at MAP online for many years without issue. However our split Distribution and Dealer Direct line PowerBass did have years of issues with this until we implemented PROWL from ORIS intel last year and we have been able to really narrow down the violations as we can see updates every 3 hours and know who has started the downward trend etc and track accordingly. Again as said in the article this is not cheap and it does directly impact sales numbers but it does enable lucrative business partners to shine which in turn should allow the business to grow again on a level playing field for all. One thing I have noticed is that most brick and mortar retailers do not want to cut profits simply for the hope for more volume they want to make as much on each item sold as they can but 75% of the violations come from either Distributors with their own spin off site for retail or customers of Distributors that have no brand loyalty and are happy with minimal profit due to low overhead working from a garage or non physical store location. A better vetting process on the distribution side would help with this as well and for that we now hold all Distributors accountable for their dealers actions and we have had some great success with Distributors getting behind this and helping us push out those selling under MAP even if it is their own customer.
I hope all dealers get behind manufactures who do what Sony is doing. We have been pushing both Sony and MTX because of their “dealer protection” as I like to call it. We don’t want our customers coming in and shopping us only to find something for much less expensive online. It makes us look bad in the consumers eyes. When brands offer price protection and we are all the same in store and online it allows us to use our advantage over online, a storefront for people to play with products.
And Kicker
Sony is making it profitable for all of its dealers. They are at the forefront and doing an amazing job policing their pricing online. They are having long time Pioneer stores stop selling Pioneer and moving to Sony cause they can make real world profits (yes profit is not a dirty word in 12v). Sony has set the bar high and Alpine Kenwood, and especially Pioneer need to wake the hell up and realize they can also be very profitable instead of just pushing boxes out the door for a loss.
can you say wholesale house and three kings?
Yes!!! Its About Time The Madness Stop!!! Selling hugely discounted products online and expecting the brick and mortars to lower our price to match is financial suicide on our part, period!! Its the manufacturers responsibility to “police” pricing for us to be profitable. “No More Internet Show Rooms”!!
Make sure you heavily support brands that are doing this. Help them help us.
BULLSHIT!
Care to expand on that a little?
please explain that thoroughly thought out comment?