Supreme Court Rules on Advertised Minimum Pricing

[bandphan]

http://www.cepro.com/article/why_minimum_advertised_prices_will_revive_product_margins/

Some say it amounts to price fixing, but even internet retailers are said to benefit...

 

[tom67]

Too bad it's too late for most American Mfgs....aside from speakers, most electronics made off shore now and I'm not as concerned about the fate of foreign companies....let the best man win and the American consumer be the winner...

 

[Davemcc]

The way I read this, it's going to be a way for local retailers to protect their market by shutting out competition, essentially gaining more profit for doing less and offering little or no added value or service to the average consumer.

 

[fredk]

"Hey fellas. Our margins are going up but its going to be good for you, trust me..."

 

[sholling]

Some say it amounts to price fixing, but even internet retailers are said to benefit...

Only the consumer loses - big time!

 

[BMXTRIX]

I struggle with this as I have worked in the industry for about a decade now. The reality is that as a custom integrator you always run into people who DO price shop against you with online pricing constantly. A $3,000 projector which sells online for $2,900 may only have $50 of profit in it at the online price. Warehouses in the Midwest with very low rent and labor rates are marking product up less than ten percent. Meanwhile consumers are then getting professionals to specify equipment lists in proposals or are going to B&M stores to audition gear that they then buy online for less.

At some point it makes zero sense for the custom installer to help the consumer at all. If you don't want to pay for my time to design it and you don't want me to make any profit on what I have to order, research, and warranty then why should I waste my time?

I think we have seen what happens when price competition rules all by the best products in the industry being unable to make a profit and compete at all. All the consumer is left with is shoddy prduct. Pioneer Kuro displays are a good example of this. Perhaps better is looking at the typical quality of service delivered by a cable or satellite installer who may be making less than twenty bucks an hour and is expected to cut holes in your home to run wiring in less than an hour for free installation services. Since nobody wants to pay for those services anymore, why would consumers expect quality at all?

It is very hard for me when I know that most mechanics have labor rates over $100 an hour and I run 30% less than that and still hear people complain about the cost. If I had to provide benefits for employees, pay for a warehouse, and had to provide other overhead costs I would likely lose money on every hour billed.

The Internet is a good thing for sure. But it has definitely been cruel to those who provide a store for you to walk into and buy gear from after a nice audition of that gear. It also has significantly devalued the work effort of those who value a quality installation over cheap or free services.

This is all a very mixed decision IMO.

 

[fast1]

Too bad it's too late for most American Mfgs....aside from speakers, most electronics made off shore now and I'm not as concerned about the fate of foreign companies....let the best man win and the American consumer be the winner...

haha i certainly hope so too

 

[murl]

I was a remote start, keyless, and security installer on cars and ran into the situation that someone bought this at walmart and couldnt install it and needed advice. That did make me angry that they were unwilling to pay and felt that we owed them an explanation of how to do something that they were incapable of doing. However the store I worked for was not a chain and this guy charged sooooo much for his retail products. He would hardly ever sell anything if he wasn't going to make at least a 100% on it. He wasn't doing it just to keep the doors open, it was lining two pockets, his left and right. I felt guilty selling these products to people for what they were paying, we started selling home stuff and hired an installer who I highly respect and think alot of but the margin on that stuff was higher than the car electronics. It was just a hard pill for me to swallow trying to convince someone they were getting a deal on a $40 HDMI cable because best buy was selling it for $55, hell we only had $4 in it. I agree 100% that people should be willing to pay for installation and professional services but man I feel bad for people who buy electronics at retail prices. I typically do all of my shopping online and I buy alot of used stuff. I just hate spending my hard earned dollar on something that has been marked up 800%. I think retail is a screwed up system, if we all knew how much we payed the middleman for everything we get I think it would make us sick.

 

[bandphan]

its tuff debate, as intergraters and retailers it adds needed profit margins, as consumers who want everything for less, well........

 

[Hydrazine]

A lot of interesting points brought up in this thread.

 

[sholling]

I struggle with this as I have worked in the industry for about a decade now. The reality is that as a custom integrator you always run into people who DO price shop against you with online pricing constantly. A $3,000 projector which sells online for $2,900 may only have $50 of profit in it at the online price. Warehouses in the Midwest with very low rent and labor rates are marking product up less than ten percent. Meanwhile consumers are then getting professionals to specify equipment lists in proposals or are going to B&M stores to audition gear that they then buy online for less.

I feel for you my friend but times change and so does what works as a business model. I've been there with a photography business in a poor part of town. I made a good living until Kmart introduced the 99 cent specials. I left it and settled into IT.

In your case the business model changes to making a living for your time and expertise and not much off of hardware. Hardware is a commodity in both businesses. Quality service and expert support become the prized value added.

 

[murl]

I ran into this the other day in the auto mechanic industry as well. I needed some work done on my car and wanted a price on the labor alone, the reason being is my friend owns a parts/repair place and gives me a huge break on parts. The guy says well we like to get our own parts so we can guarantee them, and I asked where he got them, "oh well we get them at the dealer." They then of course mark them up when they don't even get a discount. So I am suppose to pay more for the parts than the dealer sells them for, then of course pay $80/hr for labor. I disagreed and left. I was always happy to work on other peoples cars even if they didn't buy the products from us at the labor rate we charged. I do agree that you can't guarantee the "part" because it didn't come from you, but I still guaranteed my work.

 

[FNG212]

Reads like a lot of socialism to me.

I understand the B&M vs internet debate. B&M will never fully go away but only the strongest are going to survive. Free markets need to be Free, not Free* (some restrictions may apply).

 

[murl]

Reads like a lot of socialism to me.

I understand the B&M vs internet debate. B&M will never fully go away but only the strongest are going to survive. Free markets need to be Free, not Free* (some restrictions may apply).

Agreed 100%!

 

[BMXTRIX]

Reads like a lot of socialism to me.

I understand the B&M vs internet debate. B&M will never fully go away but only the strongest are going to survive. Free markets need to be Free, not Free* (some restrictions may apply).

Actually, the question is whether or not MAP requirements by manufacturers are price fixing or not.

As a private manufacturer, if I go to a store and tell them that I am willing to sell them my product at $X price, only if they agree to my reseller terms, then, they have the option of agreeing or not.

So, as the private manufacturer, do I have the right to not sell to someone who won't abide by my rules?

The question of who gets to make the rules is up in the air, and there are plenty of devalued brands which are fighting commodity levels, and lowering their quality, as well as their customer service to meet demand, while other companies demand a maintained level of margin, and insist upon keeping that margin in order to allow places with a higher level of customer service to maintain that level of product and make a fair profit on it.

While you may think that the online etailer should have unlimited access to all products, it is typically the right of businesses to refuse to do business with anyone as their own choice, and this has been declared one of the reasons why they can refuse to do such business.

 

[adwilk]

The way I read this, it's going to be a way for local retailers to protect their market by shutting out competition, essentially gaining more profit for doing less and offering little or no added value or service to the average consumer.

I see what you're saying, but will present a different perspective

With prices even across the board (allegedly) in any given market or even on a macro level, it just may be customer service that ultimately thrives.

Where would you buy a product if the prices were the same? I'm going to assume at the place where the service is the best? Hopefully it'll push retailers to go above and beyond to earn your business instead of taking advantage of slim margins and mediocre service...

 

[Davemcc]

Where would you buy a product if the prices were the same? I'm going to assume at the place where the service is the best?

To most retailers, service is an expense, maybe a talking point but rarely something to count on. Where competition is limited and the price is the price, the incentive for the consumer to shop for deals is limited at best and the B&M's will rest on their protected market for sales even as their service goes by the wayside.

When your sales territory and margins are protected, you don't need service to give you an edge. In fact, you don't need an edge at all. If the consumer wants your product, they pay, pay, pay because your competitor will have the same deal with his manufacturer and if the consumer goes there, he will pay, pay, pay for that product too.

 

[adwilk]

To most retailers, service is an expense, maybe a talking point but rarely something to count on. Where competition is limited and the price is the price, the incentive for the consumer to shop for deals is limited at best and the B&M's will rest on their protected market for sales even as their service goes by the wayside.

When your sales territory and margins are protected, you don't need service to give you an edge. In fact, you don't need an edge at all. If the consumer wants your product, they pay, pay, pay because your competitor will have the same deal with his manufacturer and if the consumer goes there, he will pay, pay, pay for that product too.

Believe me, Dave, I get what you're saying... I'm just wondering what the effect would be if multiple B&M's in any given market were put back on a level playing field and one particular location decided to make service a premium... would you be more inclined to shop there?

 

[adwilk]

Is it at least fair to say the retailers that have always placed a premium on customer service would be ahead at this point?

 

[Davemcc]

Believe me, Dave, I get what you're saying... I'm just wondering what the effect would be if multiple B&M's in any given market were put back on a level playing field and one particular location decided to make service a premium... would you be more inclined to shop there?

It's hard to say. It depends on how the market develops. Service is an expense. That is to say that the store that offers service will have higher costs. The store without service will have higher margins. It would be up to the store management to make service a point that increases market share to compensate.

Yet it really doesn't apply much to me. My market's too small. Outside of BB and FS, there isn't much duplication. We just got our second Denon dealer who will offer discounts. The first wants MSRP or close to. I can't pretend to guess which will offer service and which won't. I've only got one B&M for Yamaha, Pioneer, Marantz, Onkyo, etc. Take away the option of internet shopping and I'm fubar'd when it comes to negotiating.