Vendors That Compete Against Their Own Dealers

by

BrokenChainWhy has the industry allowed so many vendors to compete against their own dealers through online sales? Shouldn’t everyone respect the supply channel? Or do some vendors have legitimate reasons for selling directly?

Two years ago, I was attending an annual meeting of MIC members when a guest speaker told the 200 assembled vendors that they all should be selling online. “The most important way for the aftermarket to sell is the Internet,” the market analyst said. “Companies used to be worried about how it would affect their retail establishments. That way of thinking has gone by the wayside.”

This comment surprised me. When the analyst asked for questions, I asked whether he believed motorcycle dealers in particular no longer cared whether their suppliers sold directly. He gave a quick affirmative and left the stage.

As we dispersed for a coffee break, a vendor rep came up to me and said that he was glad I had asked my question. Vendor sales to consumers, he assured me, were still highly controversial.

Well, perhaps the speaker had misunderstood my question, so I confronted him during the break for clarification. He said that he’d been speaking generally, but that, yes, he believed the idea also applied to suppliers and dealers in the powersports industry. He qualified this by saying that supplier websites could link to dealership sites or incorporate dealers in profit sharing. When I noted that many — probably most — dealerships did not partake in e-commerce, he shrugged his shoulders.

Again, this was two years ago. In hindsight, it seems that the analyst was on to something. The idea of wholesalers bypassing their dealers is not as controversial as it once was. Why is this?

What’s particularly bad is when suppliers sell products for below wholesale. “That’s what we’ve seen more often — is them selling directly to the public and undercutting us,” Crystal Ashby, marketing manager for Chaparral Motorsports in San Bernardino, Calif., told me in late August. “For instance, we’ve seen particular companies selling close-out merchandise on their website for below our cost, and then we’ll call and say, ‘OK, we want to buy that for a customer at that price.’ And they won’t sell it to us at that price. They want to sell to us at our higher dealer cost.

“Any company, any distributor that sells direct to the public is really robbing everyone of a sale,” she said.

Some suppliers claim that they must sell consumer-direct to survive — or they claim they retail only noncurrent items.

Ashby is skeptical. “They’re saying that because we [the dealers] can’t facilitate all of the business, they need to help out,” she said. “Well, if they were to supply me with everything that I needed, then I could probably facilitate all of the business. But they’ll run off X amount of inventory for their distribution company and then they’ll run off X amount of inventory for their direct-to-the-public inventory. Then, when our inventory runs out, they won’t pick from that retail inventory because they’re making double, triple the margin they would be making by selling it to us.”

Another excuse I’ve heard from vendors/retailers is that in many parts of the country, no dealer exists that stocks their products. “How else can people buy our stuff?” they ask.

Ashby has an answer to this question also. “Now there is a dealer in every area because of the Internet,” she noted. And she wasn’t referring only to big Internet operations like Chaparral. Any-sized dealer today can afford e-commerce thanks to companies like ARI, 50 Below and PowerSports Network. “Every small dealer could grab a hold of one of those Internet providers,” she said. “They provide a really good package that is really easy to work with. It doesn’t take a lot to get started.” (Click here for a comprehensive buyer’s guide for the three website providers mentioned.)

FoxRacingSo which vendors are selling to the public? The first big names that come to mind are Fox Racing and Shift. The company that owns those brands has been doing it for many years, seemingly without compunction. And in my last blog posting about MAP policies, I mention Scorpion Sports’ relatively new shopping cart.

But as far as I know, neither of these companies is undercutting its dealers, the ultimate sin. I didn’t ask Ashby to name names when she made her comment about such suppliers, but perhaps I should have. If you know of any undercutting vendors, post a comment below. Please provide links supporting your claims.

Now, at this point, I pretty much have to address one of the industry’s longest-running rumors: that Parts Unlimited is somehow the true owner of prominent online retailer Dennis Kirk. If true, this would be a big story. Accordingly, a few years ago, I investigated by contacting Minnesota’s Secretary of State office for Dennis Kirk’s articles of incorporation. There are two sets of papers, which is not unusual as companies often form more than one corporation to separate assets. Dennis Kirk Inc. was incorporated in 1977; Dennis Kirk Store Inc. (the online operation maybe?) was incorporated in 1995. The sole board of directors for the latter corporation is listed as Fred Fox, the founder of LeMans.

FredFox

But unless I’m mistaken, this doesn’t indicate ownership. A high-level Parts Unlimited executive once ensured me that LeMans does not own Dennis Kirk. The truth of the matter, he said, was that Dennis Kirk had long been a favorite customer of Fox’s. This alone explained Fox’s being the initial board of directors. It also explained, I suppose, past off-the-record reports from employees that Fox visits Dennis Kirk’s facility with an authoritative air.

At the time I was doing this research, Dennis Kirk declined to speak with me. But the special attention from LeMans could be reason enough for it to shy away from the trade publications.

In conclusion, I won’t assume LeMans owns Dennis Kirk when both companies deny it and I’ve seen no proof to the contrary. Besides, look at it this way: LeMans is roughly a $1 billion company. Motorcycle Superstore, the country’s largest online powersports retailer, reportedly had sales of $43 million in 2008. Even if Dennis Kirk’s sales approached that number, it’s hard to believe that LeMans would risk the goodwill of its entire dealer base just for the extra margin on such relatively small volume.

Baker[1]But enough about that. Let’s get back to the vendors that we know are selling to the public. It always amuses me when I get a press release from a vendor about its new shopping cart on its consumer website. What great news to share with your dealers! The latest companies to make such announcements are Baker Drivetrain and Saddlemen. Click here for Baker Drivetrain’s story. A Saddlemen rep said that the company is willing to sell directly but prefers customers to buy from dealers. As if customers give a rat’s ass about the vendor’s preference!

Instead of selling directly to people, established brands like Fox Racing, Scorpion and Saddlemen could be linking to their retailers’ websites. Or they could do what Kawasaki once did with respect to its online sales: give the nearest stocking dealer its usual margin for each sale. [Update: Several dealers have since told me that Kawi only paid about 3 percent.] I say Kawasaki once did this because it eventually decided to end consumer-direct sales altogether. 

Another option for dealer-respecting suppliers is Shopatron, a company that specializes in allowing manufacturers to sell online without cutting out their retailers. Suzuki is just one of Shopatron’s latest clients. Click here for a short article explaining how the system works.

Before I sign off, let me say that there are some legitimate excuses for consumer-direct sales. After all, many small vendors begin by selling their wares to the public, before slowly building a dealer network. There’s a transition period. When that period should end is hard to say.

And even established vendors typically sell directly when they attend the big consumer events like Daytona or Sturgis. I suppose it’s only fair for them to recoup their costs as they market their brands. An exception would be the semi trucks of the major distributors. More than once I’ve confirmed that all such semi sales go through a local dealer.

As inventory levels remain high — and retailers and vendors struggle to survive — excessive discounting is going to tarnish some brands. Similarly, look for more and more vendors to use the economy as an excuse to become your competitor. Don’t take it lying down. Make some noise. Remind your suppliers that barring a few exceptions, the supply chain shouldn’t be broken.

Readers can contact me by e-mailing aredwine@dealernews.com or calling 800-854-3112, ext. 8657. Or post a comment below.

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60 Responses to “Vendors That Compete Against Their Own Dealers”

  1. michael milstaed Says:

    Vendors selling direct to the consumer has put a huge hurt on my business. Most of the products I have promoted for scooters where never even consider for scooters until I started buying them from vendors. Denis Kirk is biggest vendor killing my online sales which pays my bills. A huge Exhaust vendor does and directly takes my business. There is only a few who do not. An after market giant does the same and has taken many sales from me when the products they offer they do not understand until scootertronics came along. I have taught them what sales now they sell direct.

    It has killed my business period. But I will continue to offer service they can not and never will be able to , personal knowledge of the products they sell only I know.

  2. motodude Says:

    Mr. Milstaed-

    ….yet you still probably buy from Parts Unlimited don’t you?

    Take a stand kick them out out of your store like I did. I dont even want to know what their margins at Dennis Kirk are…

  3. Todd Shafer Says:

    Good write up Arlo…

    I’m going to have to do a column on this subject again. I touched on it a while ago when I had my Open Letter column to OEM’s that they needed to get a clue when it came to facilitating online transactions. OEM’s and Disti’s need to be spending their time creating an electronic distribution channel whereby they offer product merchandising information (photos, videos, descriptions, etc.) that can be easily integrated into a retailer’s e-commerce system.

    There’s a reason that successful channel strategies work for successful companies. But I’m willing to bet most of the firms making these decisions don’t even have a dedicated channel person on staff. Or if they do they are looking at a short-term profit picture rather than a long term view that requires a healthy and diverse retail channel.

    They are foolish to be spending one dime on their own retail/e-commerce sales site. Does a mfg or disti really want to staff up and operate the kind of customer service operation that it takes to sell/support their stuff? Do they really want to spend the money it takes to do the B2C marketing it’s going to take to keep selling to the end customer once: 1) the dealers/retailers get pissed off enough to stop selling the stuff or 2) the dealers/retailers go out of business because there’s nothing left for them to sell that customers want that they can make enough margin on to stay in business?

    When I was at my previous dealer I was floored by the lack of business sense and the level of greed displayed by numerous manufacturers and distributors that decided that it made more sense to sell directly to customers and/or set their MSRP at such a ridiculously low level that it was impossible to make enough net profit on the sale.

    Even after demonstrating to one distributor in particular that my site sold more product than the rest of their other retailers, and that their own site was literally unknown, they wanted to go direct. Last I checked they were hurting.

    These kinds of business decisions further reinforce the evidence that our industry is still lacking in a level of business acumen. There are of course pockets of brilliance, but by-and-large it’s still a mom & pop mentality even within large companies driven by ego, hubris, and ignorance.

    P.S. The whole Dennis Kirk thing deserves it’s own post if you ask me.

  4. Robert Yezek Says:

    Well here an example similar to Kirk and Lemans, How about Midwest motorcycles and Jireh Cycles, The son of midwest owns Jireh and sells below dealers cost, they are the best and worst example of the story above

  5. CrazyTed Says:

    I even find it in my small, trackside support company. I struggle to even find vendors who will sell to me without a brick and mortar store. It seems dealers like me are treated like lepers. Yet, I’m the guy there every weekend working on customers’ bikes at the track and supplying the gear they need in order to race and enjoy their sport. I try and stock and carry the stuff the racers need each and every weekend. Funny thing is, around here you can’t go to a local dealer that has a shop and buy these items as they won’t stock them.
    I worked at a dealer and tried forever to get him to stock what I knew the racers need. He would never do it and they would go elsewhere for their products.
    Now I run my own company and try to be that supplier. My major problem now is finding vendors who will actually sell to me. It’s a shame as I’m the guy out there on the actual front line of racing that can really put a company in contact with their target audience and the big companies all ignore that market.

  6. Arlo Redwine Says:

    From the author: Again, how do some of you know that the Fox family owns Dennis Kirk? The website says only that the company is privately owned. Dennis Kirk also sells several brands not sold by LeMans: Fox Racing, Joe Rocket, O’Neal, Powertrip, Shift, Shoei. It offers nothing from Tucker Rocky or WPS, but that’s just more circumstantial evidence.

    I guess the easiest way to end the controversy would be for Dennis Kirk to say who or what owns it.

    Another journalist told me that he once traced Dennis Kirk’s ownership to a blind trust. But I myself haven’t.

  7. Suggestion Says:

    Corporation usually have to file a Statement of Information, which shows who owns the shares of the stock in the corporation.

  8. Bruce Ashby Says:

    Crazy Ted,
    I have to respect the companies that do not sell to you without having a solid dealership built of brick and Mortar. I would suggest that you work out a deal with the dealership where you used to work or another in your area. Most dealers will work a pretty good margin of discount for those customers that are high volume purchasers. You could even mark the items up a little more for track support and do quite well for yourself, without killing the people who place their necks on the chopping block supporting this industry with their Mortar, Brick and Blood . They are the ones with the high overhead and not just a race trailer full of parts and accessories. When you experience the headaches of truly running your own business not a side shop without large expenses you will understand.

  9. Matthew Says:

    CrazyTed,
    As a brick and mortar retailer, I sympathize with your desire to sell parts, but the problem that the industry is trying to get away from is what I call Pajama Dealers. These are guys who sell on Ebay or even have a site, but do no direct sales since they work out of their homes and therefore do not mind making 5-10% profit on a sale. When you have no overhead you can afford to do that, but it hurts legitimate dealers since they can’t complete. The simple truth is these Pajama dealers are here today, gone tomorrow and this is a disservice to the customers they served and the products they represent as well. While you may be more of the exception to the rule given your particular way of operating, your local dealers (who should carry what customers need, but that’s another conversation) are at the disadvantage of having to buy and support a building and personnel, and you have the cost advantage of not having that overhead. Have you considered actually opening a store and being in the business instead of just dabbling in it?

  10. Matthew Says:

    I completely agree that distributors and manufacturers should not sell direct to retail customers, or in the cases pointed out about that require them to do so, it should only be done at 100% retail, not a penny off. Otherwise, where is my incentive to carry hundreds of thousands of dollars worth of inventory only to have those distributors/manufacturers undercut my prices by selling at (or even below) the cost I paid for the same item? I had one manufacturer who I was buying over $20,000 a year of a single product from them. I had arranged a group buy with a club and we were discussing the details on a forum. This manufacturer decided they would rather have those sales, so they contacted the forum members by joining up and offered to sell them direct to customers for only about 3% more than I paid for them. To say the least I was shocked. I immediately sold all my remaining inventory, and no longer carry their products. Furthermore, they have lost a number of sales from me as I badmouth them evry opportunity I am given (even though they have a good product. In my mind it takes more than just a good product to make a good company, and if you have no integrity, you have NOTHING.

  11. CrazyTed Says:

    That would be a good deal but,,,the dealership went under. Seems no one wanted to come in and buy the leftover, two year out of date products on the shelf or bay MSRP for the bikes. I also understand the Ebay argument and I only sell direct to my customers. Most of the local dealers only support the street bike side of things and carry no offroad products. We have one of the oldest offroad series in the US here in Virginia. We do have one dealer that is not really local to me that does a great deal to support our offroad sport and I have, on many occassions, sent customers to them when they want products I can’t get.
    I would love to have a building but in my area, that would be way too cost prohibitive as the city here is way overbearing. It is expensive enough to have all the proper permits and licenses and insurance they require for me now.
    I don’t think of myself as just dabbling as I also do repairs during the week as a KTM four-stroke tech but my main business is working at the tracks. It just frustrates me as I’m the guy really working hard, trying to do it the right way for the customer and at every turn, my hands are tied. As for low overhead, I’ll agree that the brick and mortar folks have more overhead but I certainly don’t have low overhead. I have to pay to setup at the events and pay a yearly fee on top of that as a sponsor the qualify for the privileged of paying each week to be there. Then the travel expenses and equipment to get there aren’t cheap either. When I’m at tracks where the local dealers actually come and setup, I don’t compete with them on the same products. I try to have respect for them and their territories. I went to one event and the local guy was charging $80 to do an off-bike dirt tire change. That’s just crazy.
    Some day, I will have a store, it just won’t be in this city. When I do, I hope to apply all the things I read about here and what I see from the dealers who are doing it right.

  12. Matthew Says:

    On the Parts Unlimited/Dennis Kirk Rumor: I think the above clearly shows that there is a conflict of interest at the very least if not an absolute violation of the policies meant to prevent the very practices they are now employing. If Mr. Fox is on the board, that is a conflict of interest. If he sees any compensation directly or indirectly from Dennis Kirk (other than from profits on sales made from PU to DK at the same pricing available to all dealers) that is a conflict of interest. In this case he appears to be the ONLY MEMBER OF THE BOARD, so who in their right mind would not see this as him being the owner of the company. If I own 100% of the stock in a company, would I not be the De Facto owner, regardless of whether I had an office in the building or my name on the letterhead? Mr. Fox should remove himself from any dealings with Dennis Kirk and this includes having his ownership handled under a third party (girlfriend, relative, shell company, etc.) If you want to see how this affects dealers, here is an easy example:http://www.denniskirk.com/jsp/tpl/tire/atvtireproduct.jsp?skuId=&store=&catId=&productId=p652811&leafCatId=&mmyId=
    . This tire is on their site at $39.67 with free shipping (although there is a $5.00 tire fee). This item sells to dealers at Parts Unlimited (with no further discounts allowed) on closeout for more than the price. That means a retail customer pays less than a dealer does for that tire. How does Dennis Kirk sell this tire (which was/is distributed EXCLUSIVELY in the US through Parts Unlimited) for less than a dealer can buy it for (and then ship it for $5.00, when NO ONE can ship an item of that size and weight even 20 miles for anywhere near that amount. I welcome Mr. Fox’s, I mean Dennis Kirk’s rebuttal for that question.

  13. Matthew Says:

    One more thing: I hope these comments don’t disappear from the site like the last time I saw someone criticize Parts Unlimited. If they do, I guess we can assume Mr. Fox also owns this media outlet? 😉

  14. Todd Shafer Says:

    I think referring to brick and mortar dealers as “legitimate dealers” with an insinuation that guys like CrazyTed or e-tailers are “illegitimate” is wrong. I can pick any random e-tail site that ranks in the top 10 on a Google search for “motorcycle parts” and get better pricing AND selection AND customer service than I can from pretty much any physical dealership or retail operation within 100 miles of where I live.

    And guys like CrazyTed are WAY more “legitimate” when they are willing to be at the track where the folks are riding. A “legitimate dealer” would be there, but they are not, so they have opened up a market opportunity for CrazyTed. I’d be surprised if he’s living off discounting, as it seems to me that a retail setup like that would be able to follow the 7-Eleven or other convenience store model and actual sell at a premium because of lower price elasticity. You break a lever, goggle,etc. when you’re 50 miles from home on a Sun. when no one is open anyway how price sensative are you going to be?

    Anyway, that “legitimate dealers” comment seems overly hostile to me. Retail is retail. And since we all know that TR, PU, etc.’s “insistence” on physical stores is a joke and a charade that a lot of the big e-tailers get around by selling out a window in their warehouse they should focus more on that than selling direct themselves.

    But again, the issue still comes back to inconsistent MAP enforcement I think as Arlo has covered elsewhere.

  15. Matthew Says:

    Todd, I think you may have took my term out of context. You seemed to really stick to the word instead of the meaning of it. If you read it in the manner I referred to it you will see my real issue is with the Pajama dealers, which are not the same thing CrazyTed is doing. He is grouped into the same category (not by me, but by the decision makers at distributors (like Parts Unlimited to name one) as not legitimate since they do not operate a store dedicated to the powersports industry with normal hours of operation. Regardless of the margins he works off of, or the level of service he provides to his customers, he is not legitimate by the “industry” standard. I think I have a right to comment on this because I once was one of these guys who only existed in the manner he operates in, but the “industry” told me to ante up or get out of the business. I am not both a brick and mortar store and E-tailer, and I will put MY PRICING, SELECTION, AND SERVICE up against anyone. I may not be the absolute best every time, but I do not see the need to hang my head over what we provide in any of those areas. The choice to move to this step was not one taken lightly and led to me buying out my former partner in the business since he did not want to take the risk of investing the money to meet the standards of a “legitimate” business. The end result is that this choice made me even more committed to taking care of my customer base since walking away was not financially or legally an easy option, as it would have been before. While I certainly see the value in what CrazyTed is offering (especially if there is no one else in his area doing it), it does put him in the same group (again, not by me) as the Pajama dealers. I suppose you are also going to defend the Pajama dealers (some of which give great customer service I would imagine). The problem with those Pajama dealers is that many people who ride a motorcycle, atv, etc. decide they want to “get into” the business, and for some this means a single $1000-1500 order for personal use with distributors willing to set them up with no real attempt at verifying they are in business to service the industry. They also have no intention of ordering again, unless they or a buddy has a need for more parts. For others it means opening an eBay account, or setting up a simple site on Godaddy and then selling for little profit. Their attitude is that if they make 5% on a sale it’s great since they just check their emails when they get home from their REAL JOB. Common sense would tell you many of those will soon tire of the minimal profit and move on. I personally have helped dozens of their customers over the years that bought something off Ebay and then after not getting the correct product were left hanging when the “dealer” would not reply to messages left through Ebay. People seem to thing contacting Paypal would be the fix for this, but the truth is Paypal is not that interested in making sure you have the correct item, but more interested that you got “an” item. For a “dealer” who sold a $300 sale and made $20 profit they do not want to have to deal with the hassle and expense of correcting a mistake so they just ignore problems after the sale. After a while many of these dealers decide to stop moonlighting, leaving customers in the lurch when they need service after the sale. I can give you examples of this. Unfortunately, there are 10 guys who get the same brilliant idea about the same time 10 of those others decide to leave the industry. This all leads to our whole industry being less than legitimate in the eyes of many. How can you justify this way of doing business?
    On the issue of MAP, I agree that enforcement is a joke. Many companies have tried it over the years, but with little success. Customers hate it since they consider it a form of price fixing. Some dealers love it since it helps protect margins, while other dealers hate it since it stifles their attempt to advertise the pricing they want to sell their products for. Some manufacturers claim to love it since it keeps their products from becoming devalued, but many of those same manufacturers will turn a blind eye to violations since they are in the business of selling goods, and punishing someone selling your products who is being successful at it is a conflict with the bottom line.

  16. Matthew Says:

    Should have been “NOW both a brick and mortar store…”in the earlier diatribe.

  17. Mike Says:

    We’ve been fighting many direct-to-consumer companies for years. Many of the Mfg’s sell at or below dealer cost at the track. Many of our customers know and buy there as I cannot match pricing having to mark up and charge sales tax. They also buy for friends and family members which takes multiple customers away from my business. We loose thousands of dollars in sales after promoting these products for these companies that are under-cutting us. If someone comes into our shop and does not want a specific brand name, I steer them away from the sell direct companies that do not support the shops.

  18. William Fredericks Says:

    DG Hard Krome, and especially DG itself we just quit carrying. After being a direct DG dealer for years, we gave up on them after their online treachery.
    They sell to “DIRT OVERSTOCK” on Ebay almost exclusively all of there vintage pipes, and we are forced to buy from them.
    Everytime we called DG they told us “out of stock” with a BAD attitude. But, sure enough “Dirt Overstock” had many of the same item.
    Finally they just said to us: “if you want to buy 50 pipes at a time, we will sell to you” all with a bad attitude on the phone.

    WE ARE DONE WITH DG and DG HARD KROME

  19. Todd Shafer Says:

    It still seems to me that there’s an air of entitlement here. I get a fair amount emails from dealers that have this feeling that “I’ve invested all this money in this big shop, trained techs, bought lifts, etc. etc. etc.” so now I’m owed a “fair” return and how dare any of those ‘internet retailers’ STEAL my business away?!

    Seriously… That’s the attitude that comes across in some of these emails, and in person after my presentations in Indy. I realize that a lot of these shops are family businesses that many people have put a lot of emotional stake into, but they are still businesses. They are not fiefdoms entitled by noble birth and due homage by the moto-peasants.

    No one is entitled to anything. I don’t care if you build your shop out of gold and give massages to every customer that comes in, you are not entitled to make money or stay in business.

    The pressure for dealers/retailers to radically adapt to the new (or soon-approaching) reality is larger than ever. And it’s going to happen fast because of this economy.

    This ‘conversation’ based on Arlo’s post has got me thinking even more that the ideas I have about this industry (which you’ll read about in more detail in the Nov. issue of DN) are probably more right than wrong.

    I’ll be interested to hear/read what kind of comments that column generates. 🙂

  20. Matthew Says:

    I see no feeling from my end that I am “entitled” in the manner you describe, but I do think it’s a realistic expectation that if a manufacturer/distributor requires me to have a retail operation with normal business hours, it should do the same of all it’s dealers. There should not be an “A” class and “B” class that the rules are different for based on what group you are in. If I am required to follow those rules, then everyone should. By the same token, I think ALL of us are “ENTITLED” to expect the very suppliers/manufactuers we support by stocking their products will not undermine our ability to sell them by selling direct for less than MSRP (which is the price THEY decided their products should be sold for). If I am investing my own money in $10000 worth of a particular brand, do you feel I should not be upset, (or better yet pissed off) that the same brand is suddenly being offered to the end user by a manufacturer/distributor for close to what (or even under) what I paid for it? Where is my incentive to ever carry that product again? You seem to feel we should all just suck it up and get over it, but I am (as I mentioned before) both a brick and mortar and an E-tailer. I do give discounts (where allowed) and have no problem competeting against other dealers who purchased at the same pricing structure and who are bound by the same rules I have to follow. When a manufacturer or distributor sells direct for less than MSRP, they are obviously making a profit based on their cost, not what a dealer pays and this is not fair to the dealer who purchased that inventory with the understanding that they could expet to make as much as 35 points on it. You can not convince me or any other sane businessperson that it’s not fair to expect that a vendor will not undercut it’s own dealer base. In the case of a guy like CrazyTed, should he and anyone else not have to play by the same rules that the industry forced upon us when we decided to make this our career? If not, then please explain why you think not. If you want to change things, convince the policymakers that those standards are obsolete and get them to drop those requirements of all dealers. Unfortunately, if you were sucessful, you would suddenly see a ton of the Pajama dealers pop up. As much as you want to defend their rights to play in the sandbox, you know as well as I do that the lack of standards and professionalism some of them would bring would not be good for the very industry that provides you with a career. At the same time, many of the brick and mortar stores would disappear, taking the experience and stability they provide with them. You may not care, but I would have to say that was a very shallow and short-sighted viewpoint if you did not.
    I understand the market is changing, and I feel we were well ahead of the curve on this (much to the chagrin of my local retailers who felt I was giving away the store years ago when they charged 10% OVER MSRP for all P&A). That said, at the end of the day, those competitors all paid the same thing I did for the products so they COULD choose to compete if they wanted to. This is completely different than what we are talking about regarding vendors selling direct for less than MSRP.

  21. William Fredericks Says:

    ITP tire packages, you can Buy on EBAY, Free shipping for $650.00 Our dealer cost is $725.00. I called ITP and told them WHY? How can I compete? I called Tucker Rocky, they came in a little better, but in the end, I lost all 3 sales.

    THERES NO ENTITLEMENT here, and I’m not asking for that. I’ll tell you whats going on, and its quite simple. The distributors are doing high dollar back door deals, and coming WAY OFF dealer. Thus these online sellers are depending on VOLUME to make their profit. In turn they cheapen the brand, and I lose the sale.

    How can I compete with this? In the end, I wind up handling the hassle of warranty issues and all that goes with it.

    ALL I ASK IS THIS, IS THAT YOU DISTRIBUTORS HONOR YOUR DEALER PRICE.

    I dont care if its sold online!!! BUT NOT if its at BELOW what I pay for it!!

    Im the one paying the heating, insurance, health, lights, and all the other bills that make my store a brick and mortar.

    The way its working now, some computer geek, with a cheap computer, in the back of some cockroach infested apartment can compete against me, and HE NEVER EVEN STOCKS THE PRODUCT.

    That is what this article is all about people!

    Whos the worst? There isnt enough room on this forum to list all the rats undercutting legitimate dealers. It makes me sick.

  22. Matthew Says:

    Careful William Fredericks- The “Legitimate Dealers” comment seems to raise the hair of some around here. 😉 at TS

  23. Todd Shafer Says:

    On this subject, but outside of the powersports industry (at least the full-size powersports industry) I found this today :
    Mattel website lets shoppers buy direct

    http://www.reuters.com/article/ousiv/idUSTRE59K6CY20091021

    NEW YORK (Reuters) – Top toymaker Mattel Inc (MAT.O) is taking its toys directly to shoppers in time for the holiday season with a new website called MattelShop.com.

    Add this to other big brands that sell directly online like Lego and it seems that soon being an offline retailer, regardless of market, is going to be harder and harder to pull off.

  24. Todd Shafer Says:

    “If I am required to follow those rules, then everyone should. By the same token, I think ALL of us are “ENTITLED” to expect the very suppliers/manufactuers we support by stocking their products will not undermine our ability to sell them by selling direct for less than MSRP (which is the price THEY decided their products should be sold for).”

    I agree 100%.

    But I don’t think that things are going to change until someone with deep pockets steps up or the government gets involved and throws down on places like PU, TR, etc. for price fixing, collusion, unfair trade practices, etc. Which if the above stories are true, it’s quite obvious they are doing.

    Controlling MSRP/MAP is understandable and we know that on a case by case basis it’s legal. What’s not legal is what you guys are saying is going on . Selling through various channels at different prices is pretty much cut-and-dried illegal according to Sherman, Clayton, Robinson-Patman, etc.

    See: http://www.enotes.com/business-finance-encyclopedia/pricing
    “The Robinson-Patman Act of 1936, which is technically an extension of the Clayton Act, further prohibits a company from selling its product at an unreasonably low price in order to eliminate its competitors. The purpose of this act was to prohibit national chain stores from unfairly using volume discounts to drive smaller firms out of business. To defend against charges of violating the Robinson-Patman Act, a company would have to prove that price differentials were based on the competitive free market, not an attempt to reduce or eliminate competition.”

    “Theoretically, these laws would protect a specialty business from larger businesses that could sell the same products below cost and drive smaller, specialty stores out of business.”

    It would be nice if the dealers and retailers had a legitimate and effective lobbying arm in D.C. The OEM’s do via the MIC but the MIC doesn’t even have the polical balls to end the lead-ban which is so out-and-out retarded it’s comical. You think the MIc is going to help you/us with this issue?

    Organizations like http://www.nationalmda.com/ would have to be the ones to rally around this issue. But having seen some of their presentations, it’s obvious they are pretty much powerless because they can’t get dealers to give a shit about supporting them.

    So here’s the contact info:

    Address
    National Motorcycle Dealers Association
    9346 N. 94th Way
    Scottsdale, AZ 85258-5510
    United States

    OR

    P.O. Box 4800
    Scottsdale, AZ 85261-4800
    United States
    Phone/Fax

    800-717-7970 (Phone)
    480-860-0425 (Fax)
    Email/Web

    Web: http://www.nationalmda.com

    General questions: info@nationalmda.com
    Executive Staff

    Chief Executive Officer: Gaylen Brotherson gaylenb@nationalmda.com
    Membership

    Member Services: Marjorie Smith marjories@nationalmda.com

    Give them a call and see if they can start some legal action against the OEM’s and Disti’s that are pulling this stuff.

    If this kind of thing continues, with other trends in this industry, the independent retailer/dealer as it exists now will be gone in 5 years.

  25. Matthew Says:

    Todd,
    Thanks for the links and info. If I am understanding this correctly, why would Walmart and Home Depot not be in violation of these laws? It seems they have driven many smaller stores out of business over the years and I certain they would have been stopped had it been illegal. I am not at all disagreeing, just asking for clarification.

  26. Todd Shafer Says:

    @Matthew

    I think the issue we’re mainly talking about/dealing with is the OEM’s and Disti’s charging different prices to various retailers or selling direct at a lower price than they allow other retailers to sell at in a fashion that almost seems like restraint of trade-ish… IANAL so I’m talking “seems like” from a rational standpoint, not the B.S. legal standpoint that companies hide behind.

    Big retailers like WalMart do things like control their own vertically integrated supply chain from production to retail so that’s different in some cases. In other cases they are selling individual items at a loss (loss-leader) to get larger amounts of overall business.

    Still waiting on a response from NMDA…

  27. Tim Calhoun Says:

    Dear dealers,
    I have read all of the posted comments, as well as the response on the Dennis Kirk issue. Arlo, you are a reporter, investigate it and find the real answer and then have the gusto to print what you find, that is real Dealer News. Whether they are or are not the owner isn’t as important to me as is that if you are going to even bring up the subject, take the time to fully investigate this and report it, all of us have heard and read the rest before. As a manufacturer we have had to walk the high wire that makes up most of these issues. We have a direct website that sells at full price plus shipping.
    Our consumer sales, (which represent around 5-7% of our total sales) are then processed through Shopatron. We have had Shopatron in place for over twelve, (12) months. In that time frame we have had less than twenty-five, (25) dealers utilize this tool. I have ten, (10) consistent dealers who use it daily. We utilize Sponsorhouse now as well and are going to be one of the BETA stores that will create a sponsorship program that drives these rider sponsorship sales through Shopatron as well for dealers to capitalize locally on our national sponsorship program.
    In other words we will sponsor riders but these deals will be offered up through Shopatron so that these riders will come into your local store to pick up these exhausts. It is the first time that I know of that a manufacturer is actively creating a rider support discount structure that will give the rider a solid deal on an exhaust and will also reward the dealer with a sale on a sponsored rider purchase and pull that local fast rider into your dealership to offer an opportunity for an add-on sale or relationship building opportunity.
    The reason I am posting is to make the dealers reading this aware that not all of the manufacturers out here are trying to do an end around on you and quite frankly we have invested a fair amount of resources and dollars to try and create these revenue streams that run through your dealerships. I came from behind a counter over twenty years ago, worked as an outside sales rep for several distributors and manufacturers; I have worked for an OEM and was a national sales manager for a large distributor.
    I am aware more than ever of the current state of revenue streams for all of the varied dealer business models and commit to you now that we will continue to invest in our dealer support programs and racer support programs that will pull racers back to your stores. We also want and do give dealers every opportunity to sell any and all closeouts, refurbished exhausts or racer returns through your own stores or e-commerce sites and at a price that a profit can be made.
    What I both want and need to happen though is that more dealers to commit to Shopatron or more dealers contact us for monthly listings of our closeout and discontinued lists. We will provide you with assistance on getting everything from images to technical drawings and assistance with your loader docs for e-commerce sites, simply by signing our licensing agreement and MAP agreement. Many other manufacturers have similar programs just for the asking and are waiting like us for these programs to be acted upon.
    It is difficult to look at continually investing millions of dollars in engineering, manufacturing, marketing and racing as well as develop this free technology for our dealer network to only have it underutilized. There are many other manufacturers that are making this same investment in Shopatron as listed below:

     AFE
     AGV Helmets
     AGV Sportswear
     Big Dog Motorcycle
     Braking USA
     BRP
     Bully Dog Winch
     LeoVince
     Motion Pro
     Nitrous Express
     Patriot
     PIAA  Qlink
     Racing Optics
     Sun Star
     Scott USA
     Smith MX
     Suzuki
     Soumy
     Spy Optic
     Tamarack
     Twin Air
     Yuasa

    There are also several other manufacturers that have just chosen to take the direct route to the consumer and I hope that you as our dealers will pay attention to who these companies are and be willing to ask questions of them and hold them to a higher standard. If any dealer has any questions about our business practices I will make myself available to speak with them. My answers will be truthful and pointed as that is how I have always conducted my business in this industry. I simply ask that before anyone jumps to any conclusions about any manufacturer please do your homework and make the calls and ask the hard questions.
    Taking pot shots is easy, but I know many companies that are currently working there collective tails off right now trying to find better ways to run their businesses more effectively while support all of you as dealers . It is imperative that we work together to push forward through these challenging economic times so that we all land on the other side of this downturn and realize a more stable and profitable market for the Powersports Industry.

    Tim Calhoun
    Executive VP
    LeoVince USA

  28. Todd Shafer Says:

    @Tim Calhoun
    Great response Tim. Thanks for taking the time to offer your perspective.

    What I think you’ve seen is what I’ve seen over the years… There’s such a small percentage of dealers out there that “get it.”

    99% of dealers/retailers in the US I think are like cavemen (sorry Geico Cavement…) that don’t even understand that fire *exists*, so the thought that they could ask for cooked food doesn’t even enter into their mental construct of reality.

    You work to build the “right” infrastructure and you get 25 dealers to use it. That’s retarded! I can guarantee that in the past 12 months I’ve gotten more than 25 emails from dealers complaining that they are getting screwed, going out of business, don’t know what to do, etc. etc.

    I’m stuck in the middle on this… I’m one that would take advantage of more advanced infrastructure technologies (Shopatron does not fit in with the stuff that I want to do), but there’s so few that most OEM’s/Distis that would get it that it doesn’t make sense for them to build it.

    I talked to TR like three years ago about building a type of online product merchandising data warehouse that could be pulled from and used in a shopping platform and they basically said I was high. That besides me there might be like five other people on the face of the planet that would use it so there was no way they were going to invest in that.

    Of course none of this addresses the pricing/cost issues, anti-competitive activities, etc.

  29. Todd Shafer Says:

    It also doesn’t help that Shopatron’s website makes it almost impossible to “get” what they do… So much of it is set up for Mfg’s… I’ve been digging and if I didn’t know what they did already and ran or worked in a dealership, visited their site, I’d leave in under three minutes because I would haven’t a clue what the deal was.

    I’ve requested some specific white papers or case studies for the motorcycle/powersports industry. We’ll see what they respond with.

  30. Tim Calhoun Says:

    Hi Guys,
    Thanks for the response. I am going to contact Shopatron and see if I can get them and Arlo together maybe to discuss getting some insight for dealers to better understand this. I also wanted to mention that Todd that we have built and offer all of the online data for our product line that you are asking for. We are in the process of updating these loader docs but we fully understand that e-commerce is important and a large part of most dealerships business today. You guys also might check out 50 Below as they are offering some interesting platforms that will bring dealers and manufacturers closer together. March Karger is the program manager for Powersports and you can contact him at 866-468-9342 or mkarger@50below.com. They are way ahead of the game and interface directly with Lightspeed as well.

  31. Mike Jackson Says:

    Why hasn’t Polaris been brought up – they are the ONLY OEM still selling consumer direct.

    BRP, Kawasaki both learned their lesson and Yamaha thought about it but didn’t go down that path after seeing the pushback Kawasaki received. I understand BRP is going back down that road, but this time with Shopatron which drives the consumer to the dealer FIRST (but if a dealer doesn’t have it in stock then many of the Manufacturers do the fulfilment – thus selling consumer direct when dealers don’t have the item in-stock).

    This is just a sign-of the times. Aftermarket distributors can always be boycotted, or you can buy from someone else – you can’t do that with OEMs.

  32. Rick Dorfmeyer Says:

    As a distributor rep I have been in the middle of all of these issues at one time or another. The fellow who shows up at the track on Sunday is welcome to open a store that is open the rest of the week and the company I work for and all of my competitors will be glad to set him up. Part time dealers are on their own. All of my customers rely on the ability to serve the customer on a regular basis. They are easy to find when a problem needs to be solved, such as exchange, warranty, or a special order.
    Shopatron has done a lousy marketing job. Who are they, and what is the deal? They have done a nice job of selling themselves to some of the most popular vendors in this business, now they need to sell the dealer.
    Motorcycle dealers have long been the backbone of the power sports industry. They have provided the service that manufacturers, distributors , and consumers have needed to make our sport work. Dealers are the real connection. Online business will continue to grow. Online business’ that are part of a power sports dealer are legitimate. Dealers have a responsibility to serve the customer. Distributors have responsibility to serve the dealer. How hard is that to understand?

  33. Kevin Veltfort Says:

    As noted in the posts, Motion Pro offers consumers the ability to purchase our product online from our website. These orders are sent to the Shopatron system and fullfilled by participating dealers. Over the past several years we have done numerous dealer direct mailiers with detailed information about Shopatron, we have had staff at Indy, including the CEO of Shopatron, dedicated to explaining and selling dealers on the benefits of using Shopatron, and we have used every opportunity we can to get dealers to use this system. Why? Because it supports the distributors that carry our products and because it supports the dealers that sell our prouducts. Nevertheless, we find that a very small number of dealers have chossen to participate. Pricing is full retail plus a freight allowance. Why the low dealer participation rate? I really don’t get it. The ones that do, make pretty good money on it and are selling our product at full retail. I would have expected to have hundreds of dealers, but currently its just a half-dozen. Again, it’s not for lack of exposure. And what’s to “get”? Shopatron is not some complex rocket science to understand. Orders are placed on mfg web site, order gets posted on Shopatron, dealers goes to Shopatron and requests order, order is assigned to dealer to fullfil, dealers ships, end of story. There are no free lunches out there, and doing what you did yesterday will not guarantee survival tomorrow. Innovate or die. If you don’t take the effort to learn new technologies and take the time to understand even simple things like Shopatron, you are putting yourself at a disadvantage that your competitors will use to take business away from you. So, take the time today to learn about Shopatron, sign up (yes, its FREE) and fill some orders. You have nothing to loose and lots to gain.

  34. Todd Shafer Says:

    @Tim Calhoun

    If you have a contact/email @ Shopatron, can you let me know (todd a-t radicalpowersports.com)

    I’ve sent them an email asking if they have any specific case-studies or white papers aimed at the dealer/retailer in the powersports industry. I’ve not heard anything back from the general inquiries. If you have a targeted email address please let me know.

  35. Harold Olaf Cecil Says:

    As a young, start-up brand, selling directly on the web has enabled us to get our company off the ground faster. However, we have implemented a Minimum Advertised Pricing (MAP) Policy to eliminate a “rush to the bottom” for pricing on our products, which are about quality and not price point.

    On our website, blog and email newsletters we also provide direct links or phone numbers for our dealers, and we happily steer our customers to local shops because the internet does not reach every customer, and we want our dealers to succeed, as this is integral to our mutual long-term success.

    Outstanding dealers who provide excellent service and build relationships with their customers have little to fear from online retailers. These are the dealers who move the most of our product.

  36. Todd Shafer Says:

    Here’s an interesting vector on this issue from the online book price war. If this kind of investigation is possible for the ABA then why can’t the Dealer’s Association step up for dealers/retailers?

    http://www.npr.org/templates/story/story.php?storyId=114156791

  37. Ed Stevens Says:

    Thank you to everyone for your thoughts.

    The best place for information on how Shopatron works for dealers is http://support.shopatron.com. You can paste this into your browser. Also, there are links from our website http://www.shopatron.com.

    There is no doubt in my mind that, in a challenging economy, rules change. Smart dealers will put more products on the shelf from manufacturers who help them sell product.

    We have seen an increase in inquiries from manufacturers who are strong enough to think about the long-term. It takes good strategy and a good balance sheet to build a business for the long-term.

    Some manufacturers who sell direct do it out of desperation. Their short-term focused management tries to pump up the current quarter’s numbers, without worrying about 2-3 years down the line. Ultimately, lack of support and shelf space at cool, local dealers will eat into brand value.

    Shopatron could do a better job getting the word out. We are working hard to streamline dealer signup and shorten “time to first order.” Much of this will be seen in Q1.

    Still, we have grown an average of 80% in revenues in the last 2 years. That says a lot about where things are going. Operating in 30+ industries in 10 countries, Shopatron enables manufacturers to serve consumers at the brand website while driving sales to local dealers.

    The smartest dealers are the ones that make it through recessions. Those are also the dealers who figure out that brands who push online sales to partners are a better bet for the long-term.

  38. Andy Says:

    Just wanted to vent a little about a bad experience I had a few years ago. A customer wanted a Yoshimura pipe, he could get it from Motosports Outlet for the EXACT same price as Parts Unlimited would sell to me, and CHEAPER than my cost from Yosh direct! I called Yoshimura and asked why, they said they have a price protection policy, but somehow “they got around it”. No further explanation, that was it. I will sell a Yoshimura pipe if a customer asks for it, but if they are shopping around, I steer them another direction. Every time.

    I know I will never hurt Yoshimura’s bottom line, but some companies have bad business practices that I don’t accept, and I definitely won’t support them. I get scumbag customers, and I have scumbag vendors.

  39. Brick and Mortar Says:

    Here’s one, my friend used to work at Cycle Gear (2008), he pays cost
    +10% on his purchases. I know most people won’t believe this, but his cost was $38.50 for a rear Dunlop 756 tire, 100/90-19″. I know Cycle Gear buys about 100 times the amount of tires I do, but my price is around $63, while they paid $35! From Tucker Rocky!

    I know I don’t know all the details, maybe they bought 50 pallets of tires, maybe they got some crazy one time deal, I don’t know. But he showed me his receipt, and he says they order them from Tucker. But I can’t shun Tucker, because Michelin does it at Miller Motor Sports, I bought 12 rear Pilot Powers at the track because it was about 20% cheaper than buying from Parts or Western Power Sports.

    I hope by posting this I don’t get black balled by my vendors, but I just want others to know about my experiences. And I’m sure 99% of the “Brick and Mortar” dealers deal with the same thing on the tires.

  40. uberVU - social comments Says:

    Social comments and analytics for this post…

    This post was mentioned on Twitter by cafe_racer: powersports dealers heads up: Vendors That Compete Against Their Own Dealers [Dealernews Blog] http://bit.ly/39BpQH

  41. Mike Says:

    A few of my customers just picked up new HMF exhausts @ a GNCC race for nearly half of what I pay as a dealer. They purchased full exhausts @ $150.00 and slip-ons for $100 directly from HMF. How can I compete with that when I pay nearly double that?
    HMF has taken at least 10 customers away from me this year (that I know of) just by calling them and telling them you will pick it up at the track. All 10 of them tell others and it multiplies quickly. When possible I steer my customers away from HMF, and will only sell one if they insist on that brand. It’s a shame because I’ve always suggested them when a customer comes to my shop. Is this the way a Mfg should act?

  42. Todd Shafer Says:

    @Mike The only way this is going to change is if the Dealer Association (which I’ve yet to hear from or is yet to reply here) grows a pair or another similar CoOp was able to be formed. Individually dealers/retailers “could” say a big you-know-what to companies that do this kind of thing and suddenly they will realize that undercutting their channel is a really, really, really stupid thing to do. I way this happen in silicon valley with electronics and software in the early 90’s. The “less than visionary” heads of OEM’s that are playing this game are not thinking this through.

    But you see from some of these comments, and I see it in e-mails, that dealers are unwilling to take a stand for risk of being “black balled” by suppliers.

    If that’s not a restraint of trade I don’t know what is. But the dealers are left without a legitimate, viable, modern lobbying organization that can collectively represent them. Until that happens, the OEM’s and Disti’s have all the power and the dealers are left as whining plebs.

  43. Todd Shafer Says:

    @Tim Calhoun

    Can you shoot me your email address todd a-t radicalpowersports.com?

  44. Christi Kapp Says:

    This is a great thread – Tried to tell the “Motorcycle Industry Panel” that in Sturgis this year (they didn’t listen), and heard about Drag Specialties selling direct through a consumer company owned by their parent at less than dealer cost while in Sturgis also. Here’s an email I sent to a product manufacturer earlier this year…

    Dear [Vendor Name]

    I had offered consulting expertise for free to [company investor] the day that [we] drove up to [city withheld]. The initial offer was to provide you with assistance in building and leveraging your dealer network with your highly technical, non-bolt-on product. [we] took a detour that day intentionally because we believed in your product …

    You … may also have not known that the company that I founded and sold in 2000 was a success – it was one of the fastest growing IT companies in Central Florida in 1996.

    Part of my companies success was because its primary supplier, Microsoft, was (and is) extremely good at building and supporting their dealer network through qualification, training, and mentoring, They protected the integrity of their channel to avoid disenfranchising it, and very clearly defined the boundaries and rules for selling at different levels and markets. They provided more marketing support than anyone could ever use. As a Microsoft product dealer, I had a level playing field upon which to play, and in that environment, could be a success.

    It does not seem that the motorcycle industry has learned some of the concepts needed to build a dealer channel, and how critical that is in the long-run to a product companies’ success. I have thoughts on why that is the case, but that’s for another conversation.

    Anyway, if you would like to have a dialogue on your channel strategy, please call me …. I am not sure that pushing [product name withheld] through a channel that pulls products off the shelf and sends them directly to someone to bolt on is the correct approach in the long term, although I do understand how it would be a short-term fix to cash flow concerns.

    Regards,

    Christi Kapp
    Art In Motion, LLC

  45. In the Industry Says:

    I could see why some USA manufacturers are selling retail direct. We have a difficult time selling a higher priced, better quality component. The customer always gets our recommendation to go that direction but most purchase the imported, lower quality knock-off part.

    Their manufcturers troubles are greatly associated with the distibutors that used to carry their products. Now these same distributors knock-off the part in China and their margins are huge. They are so good that they think they do not need the dealers. One distributor near us sells like everone is saying, far below the dealer price. No service, no tech, just cheap parts.

    For all dealer out there, small and large, I will say this and truely believe it…..Stop buying from them, they may have 10-20-30 million in internet sales but they still need us! We are still the bulk of their sales. What do you think a distributor would do if thousands of their customers simply just stop doing business with them. When that bottom line is affected they will get the message.

  46. Todd Shafer Says:

    Just got this today…

    ***********************
    Ducati is launching a new online store dedicated to North American customers

    Hi XXX,

    To celebrate the release of Ducati’s 2010 apparel collection and just in time for the holiday shopping season, Ducati is excited to launch its exclusively North American Online Ducati Performance Apparel and Accessories Store.

    The new North American Online Ducati Performance Apparel and Accessories Store includes the full line of new 2010 apparel recently introduced at the 2009 EICMA show in Milan, Italy as well as Ducati Performance accessories.

    Shop online now to find the perfect gift for every Ducatisti on your holiday list, including yourself!

    ***********************

    Looks like they are using Shopatron.

    Funny, I actually suggested this EXACT thing to Ducati many, many months ago when I knew I was looking to make a change and leave the dealership where I was working. Looks like they listened to me! 🙂 More free consulting… I gotta stop that.

  47. Dealernewsblog Top 20 Viewed Stories of 2009 « Dealernews Blog Says:

    […] Vendors That Compete Against Their Own Dealers […]

  48. Adam Southam Says:

    Kudos on an excellent article, Arlo. I would like to present some thoughts for everyone’s consideration. Dealers have every reason to be upset with vendors who compete with them by selling direct to consumers on the Internet. Selling at full price is no consolation to a Dealer. In fact, it’s even a greater offense for a vendor to take away a full-paying retail consumer from the Dealer.
    The vast majority of products a vendor offers are not in stock and readily available at the Dealers. It’s just not practical to have thousands of parts or dozens of models on the floor. So, when a vendor sells these parts/models, consumers gravitate to the vendor website to meet their needs.
    Retailing is tough, especially today. If vendors don’t work to assure the health of their Dealers and the Dealers go away, how is the vendor going to get its product to market? Even if this could be accomplished, who’s going to service the product once it’s sold?
    What about loyalty? Who “made” companies like Polaris and Harley Davidson? The Dealers did! Every vendor brand has a lifecycle and Dealers are the incubators of every brand and every product. Even if you throw the idea of loyalty out the door as archaic, how will vendors bring new products to market without their Dealer network?
    Harley Davidson is one of the best collaborative models I have ever seen. Product purchased at its website are credited to the Dealer chosen by the consumer. Their only flaw is their current lack of direct-to-consumer delivery. Time is everyone’s greatest asset and nobody has time to waste picking up a light bulb from the Dealer when it could be delivered to our front door. Additionally, the cost to the Dealer of accepting that part into inventory, managing it and selling it averages just over $74.00. If the Dealer is asked to reship it to the consumer, costs rise further and profits decrease. In the Automotive Industry, the supply chain cost of parts supplied for collision repair could be reduced by as much as 18%. Hmm, efficiency could have been a better bail out! That 18% savings could be SHARED with the Dealer; imagine that!
    By the way, a collaborative commerce program with Dealers is the best way to attract new ones. Now, I have to declare my personal bias in all of this. I’m Chief Strategic Officer at Reshare Commerce and we offer one of three channel management models available today. Shopatron and Channel Intelligence offer the other two. In my opinion, Channel Intelligence offers an exceptional solution for large vendors that supply large retailers and retail chains. On the other hand, Shopatron offers a tremendous solution that works for small retailers like those that exist in the Powersports Industry. Reshare, however, offers the only solution that enables a vendor to sell direct to consumer whereby the consumer chooses their preferred Dealer. In our patented model, all parts are shipped from the vendor (or a third party fulfillment company or distribution), making the entire product inventory available at all times. Other models rely upon retailers having inventory to fulfill consumer need, failing which the vendor must still provide fulfillment. Because of our patents and ingenuity, no other software provider can offer consumer choice without having that consumer leave the vendor website.
    Although it may sound appealing to Dealers to have the consumer at their website on the surface, Dealers do not have the budgets the vendors do to up-sell, cross-sell and truly represent the vendor brand. Further, the liabilities associated with mis-information on a Dealer website (even if repurposed from the vendor), are gigantic.
    In closing, Dealers need to inspire vendors to look for win-win-win solutions where the Dealer, vendor and consumer all win. That is the path to greater profitability.

  49. Enforce MAP Comrade! — E-commerce and Internet Marketing for the Motorcycle and Powersports Industry : [R]adical Powersports Sales and Marketing Says:

    […] These may be overt (i.e. the apparently special relationship between LeMans and Dennis Kirk that Arlo Redwine has detailed on the DN blog), or they may come down to the MAP enforcer choosing to just turn a blind eye on transgressions by […]

  50. Todd Shafer Says:

    Hello there everyone. I just wanted to drop a note here that I’ve just posted a fairly long write-up on the topic of Minimum Advertising Policy (a.k.a. MAP) on my site.

    http://www.radicalpowersports.com/enforce-map-comrade/

    While MAP is the primary jumping off point, it also delves into some pretty serious issues for our industry as they pertain to channel conflict, market manipulation, etc. that will (in my estimation) result in a dramatic shift in the nature of our industry over the next 3 to 5 years.

    If you are a dealership or powersports retailer I’d love to have you read the post and let me know what you think about it. Am I being paranoid? Should I resort to two layers of tin-foil lining in my helmet? 🙂

    I also encourage you to use the newly formed public forum (i.e the comments section) of this post (http://www.radicalpowersports.com/report-all-map-violations/) to report any and all MAP violations as well as (and perhaps more importantly) any apparent non-enforcement of MAP policies on any site, e-mail, print, radio, or TV ad.

    If MAP is something that’s going to be forced on us, then we need to have a way to make sure it’s 100% fair.

    Personally I think it’s illegal, immoral, and wrong like all forms of cartel-like price-fixing schemes. But if we gotta play the game, at least we can make sure it’s all out in the open.

  51. michael Says:

    Well everyone dkscooters.com which was denis kirk which is parts unlimited closed down no more failed

    I am at the track, I pick up scooters for repair and bring back to my shop which I must have to get he products I buy from WPS, they are just aboyt the only vendor I have that does not go direct and under cut my prices on my site and in my store which I have had for 7 years way before any of them sold the products I sell there is one other I company MRP Martin Racing Performance that does not under cut me or go direct

    I still smoke everyday any of the places that undercut me because they have no staff or anyone that understands the scooter products I sell or how to repair and of the scooters I repair or sell

    I am a dealer, B&M, repair shop and I get the shaft everyday by most of my vendors who simply sell online and ebay

    I am not going to mention the Huge scooter name here in the states that screws me everyday, sells me their scooters, their parts and acess then sells them all online and undercuts my price that I can sell for how they watched me and took my ideals and products

    contact me Tood you want a story I have a great one everyday

    michael milstead
    scootertronics.com

  52. michael Says:

    Shoptron copied my model for selling scooters I do not like shoptron

    there is a way for all this to work, I called shoptron out a long time ago when they tried to rebrand and sell them online dropshipped to the consumer, shoptron has no staff that understands the very product they sell

    Greed drives all of this period but do not look now another power sports place closing down can not out sell their vendor on ebay

    products I was selling in 2005 2006 2007 bought me many things now when I sell the same product I can not afford the insurance never less buy them

    No I do not buy from Parts Unlimited

    dkscooters went to my web designer, my artist, my hosting and then my vendors and sold the same product that I developed for scooters that was never sold for scooters so happy they closed

    If I was at one of these companys I could make them millions why I know the products they know how SKUs or the price but why I would get nothing for my experience and knowledge I learned from using and selling the products everyday ohhhhh I am so upset

  53. Kevin Says:

    Michael – Certainly understand your frustration, but inventing stories about Shopatron and what they do does not help to further this discussion in a productive way. Shopatron does not sell anything or compete with you in the way you describe. They provide a simple service to manufacturers, dealers and consumers that benefits everybody in the 3-step distribution chain. The only function Shopatron serves is to provide manufacturers such as Motion Pro with a system for us to send orders to dealers that were placed with us on our web site. The Shopatron system works like this: a customer comes to our web site and places an order, at the time of checkout the order is redirected from our web site to the Shopatron system. Shopatron collects the billing information and then post the order on their list of open orders. Participating dealers can then log on to the Shopatron site and look at open orders and offer to fill any orders that think they can fill. The only caveat is that the dealer must have inventory on hand to fill the order and the reason for that is to insure that the customer receives their order as quickly as possible without any delay. If multiple dealers offer to fill the order, Shopatron awards the order to the dealer located nearest to the customer. Price is full suggested retail and Shopatron deducst a small (I think 2 or 3 %) fee from that to cover their services. The benefit to the customer is that they can order product directly from the manufacturer’s web site without having to search around for it and have the order filled from the dealer nearest to them. Dealers benefit because they get customer orders that they would not otherwise receive. Manufacturers benefit because they don’t loose customers that come to their web site ready to buy without shortcircuiting the 3 step distribution system. Motion Pro product purchased throught the Shopatron system is sold to distributors who then sell it to dealers who in turn sell it to customers that placed their orders through Motion Pro web site. Bottom line is that everybody wins with the Shopatron system. There is no cost for dealers to sign up to participate in Shopatron and I would suggest you do that today and stop missing out on a new stream of revenue.

  54. Michael Milstead Says:

    Nobody invented a story. Shoptron told me when I offered a service to them to prep and deliver the Qlink scooters that was needed and it would be shipped direct if a dealer was not close. I offered to end that problem with my prep and delivery service which I do offer on every scooter I sell as long as distributor has no problem with it. Which has worked well when there are no dealers customer can get scooters from they want and get service.

    I am a dealer who offers a lot of products Shoptron offers, can you see my point.

    If my comments are wrong and do harm please remove and let me know, I will keep to myself, but distributors who sell on ebay are killing my business. Its happening right now. More and more distributors are building their own sites to sell, I am just not happy because I have done it for years and as soon as I showed it was good they steeped in.

    michael

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