At first, Sabina McPherson chalked up her store’s drop in sales to a weak economy.
But when she happened to check the Website of SwimWays Corp., one of her suppliers, she discovered something she’d never suspected.
“It looked like a sales site,” said McPherson, manager of Aqua Leisure Pools & Fire Shoppes in Virginia Beach, Va.
The manufacturer had set up online sales of its products, with free shipping on purchases over $100.
“The prices on there are less than what I can retail [those same items] for.”
Selling products online is nothing new for the pool and spa industry, and the lower prices found via the Web have been a source of frustration for many brick-and-mortar stores.
“There’s widespread price cutting on the Internet, on literally 95 percent of the things that are being sold to the pool industry,” said Bill Kent, president of Team Horner in Fort Lauderdale, Fla. “It’s been going on ever since the Internet became a popular way to shop.”
But some industry manufacturers now have begun pursuing a more aggressive strategy by directly undercutting their own dealers via sites targeting consumers.
Yet undercutting dealers was never the goal, said Monica Jones, director of marketing at SwimWays. “We care deeply about our pool dealers,” she explained, adding that as far as she knows, the free shipping discount only applied to one item. “We wanted to move discontinued items that we have in stock, and have a place to move products that retailers aren’t selling. Now, we are selling more than just those [products], but we aren’t selling every item [online].”
Scott Rolenc, president of Aqua Palace Spas & Pools in Council Bluffs, Iowa, had drafted an exclusivity contract with his supplier, Splash Superpools Ltd. Then he discovered the firm was enforcing minimum pricing in his store while undercutting those prices and selling directly to consumers.
“They wanted us to retail a certain pool for $11,999, and our dealer cost on that is $6,000,” Rolenc said. “But if you go on the Splash Website right now, they’ll sell it for $5,999.”
Rolenc found out about these online-only prices from consumers, who told him they’d found a better deal on Splash’s Website after visiting his showroom to see the product.
In addition to hurting profits, this online price slashing also can damage the credibility of dealers with the public.
“If a customer comes into my store and sees that my price is [almost double the price] on Splash’s Website, 90 percent of customers don’t even give you a call-back to ask if you can meet that price,” Rolenc said. “And they probably won’t be back to my store again.”
Representatives from Splash Superpools did not return calls for this story by press time.
For Rolenc, there’s no question this business tactic is shortsighted. “You’re taking the Website your dealers use and [employing] it to solicit business away from those dealers,” he said. “If they continue down this path, they will fail. This goes against our contract, but even more than that, it goes against common sense.”
Despite Splash’s decisions, Rolenc continues to meet with the company’s staff, hoping to open a more effective dialogue. However, he doubts this situation can drag on much longer before something snaps.
“Are you my competitor, or are you my supplier?” he asked. “You can’t be both. You’ve got to choose.”
Most manufacturers are likely to avoid such competitive behavior, though, Kent said.“I think [these cases] are isolated,” he added. “I think they’re outliers, and the reason is that the big [manufacturers] have too much to lose with the brick-and-mortar part of the industry.”