A group of pool and spa retailers, service technicians and builders in Arizona are banding together to call out manufacturers who fail to enforce their minimum advertised prices (MAP) online.
If Internet prices continue to drop, the entire industry’s profit model is under threat, according to members of the Arizona Pool Dealers Association.
“If this situation keeps deteriorating, retailers, distributors and independent sales guys won’t be able to compete. Direct sales will be the only option left for manufacturers,” said Dale Howard, president of B&L Pools in Phoenix and an APDA member. “And that model doesn’t support a quality product; it supports the cheapest product possible.”
While Howard emphasizes that some manufacturers do police their MAP effectively, many others have assured retailers that they’re investigating the problem — while prices for their products online continued to plunge.
For the past several years, brick-and-mortar retailers have been growing increasingly frustrated with the situation.
“We’ve got customers coming in to return products, telling us we’re ‘crooks’ for charging so much more than the Internet price,” Howard said.
“And, of course, those customers won’t be coming back to a brick-and-mortar pool supply store after that. From then on, they’re Internet shoppers.”
Thus, in February, Howard decided it was time to take a stand. He began drafting a proposal for a program of “preferred dealers” and “preferred manufacturers.” The process would involve a mutual agreement between a manufacturer and a dealer. For its part, a manufacturer would sell products and provide incentives only to dealers who abide by its MAP, while dealers would be obliged to provide reliable sales and support for that manufacturer’s products.
“Manufacturers are losing their own market share against people on the Internet who are selling thousands of units at very low profit margins,” Howard said. “These online retailers are controlling the market through sheer volume.”
While online sellers do bring in a lot of volume, their actions can hurt the industry overall, especially in terms of quality control, APDA members said.
“The manufacturer has to take a position on how they want to sell a certain product,” explained Bart Mitchell of Litchfield Park Pool Service in Litchfield Park, Ariz. “If we’re going to sell the product, warranty the product and educate the customer about it, then we should be able to make a profit when we sell it.” Mitchell also was involved in drafting the agreement proposal.
Meanwhile, even some online retailers agree that such an arrangement would likely prove beneficial for them as well.
“We strongly believe in adhering to MAP pricing on the products we sell,” said Sarah Brown, product development manager at Aquabots.com in Boise, Idaho. “It’s a system I agree with because it keeps us from ending up in price wars.”
APDA plans to present the agreement to manufacturers later this year, after an official draft is approved by its members. Though manufacturer acceptance may not be universal, those who adopt the agreement are likely to win faithful support from the retail sector.