In a recent interview, Axis NA Director of Sales proclaimed:
"The simplicity of the model and its design have created a channel that implicitly trusts Axis, and creates loyalty like no other."
The 'two tier' channel model is that Axis only sells direct to a small number of big distributors and they, in turn, resell to others. More 'loyal' Axis partners get progressively higher volume discounts and other benefits (authorized, silver, gold, etc.).
The biggest problem in engendering loyalty is that Axis allows their distributors and distributor customers to resell Axis products almost anywhere:
There are lots of positive things that can / could engender loyalty / trust to Axis. Their customer support, sales support, breadth and reliability of products, etc.
But, the most consistent complaint we hear from Axis partners is that it is difficult to make money off of Axis products because they are so widely available. And that is a direct consequence of their channel model.
It's an aspect that conversely makes Avigilon dealers so rabidly loyal to them (see Avigilon CEO: Axis Model is Win - Lose).
Overall, the Axis channel model is better for end users and the industry not to restrict availability. However, as long as rivals provide tightly controlled channels that allow their dealers / integrators to make more money, this will be a hotly contested aspect that undermines loyalty for more open channel models, like Axis.
Nothing screams channel loyalty like handing a customer a quote full of Axis stuff, and the customer responding "I can buy all that stuff cheaper myself. How about you just quote me install labor?"
The vast majority of online "resellers" are at or slightly below MSRP. You cannot say the same for Panasonic, Sony or the like. The resellers hawking those products are within one or two points of our cost, so Axis truly does a better job of policing the internet than the other big boys.
100% disagree with that statement from Axis. We are a gold level dealer and don't go 2 weeks without looking at other manufacturer offerings. The quality gap is lessening, the Axis margins aren't good (the project registration price protection is a joke), and they have worse RSM turnover than anyone else in our region. Their model of 2 Sales Engineer to 50 RSM is completely out dated and inefficient. The whole Camera Companion Incident has left us completely untrusting of anything Axis marketing puts out. Within 8 years one of the large Chinese manufacturers will buy them.
While Axis makes a good product, the challenges for them is that the competition also makes a good product. Like most of the integrators in this business, we have established contracts with our clients that offer pre-established discounts from the MSRP. With Axis product, this is really not possible since the difference between cost and MSRP is 10%.
There is a difference between selling a commoditized product and installing it. Most corporations want someone to be 100% responsible. For those IT departments that just want your smarts and they provide the parts, your hourly rate for the smarts would be triple or more just to cover overhead, etc.
Pick and paste from 2010 interview, Newmans guy is still there, so maybe policy still there.
Newman: We have seven distributors in the US, period, which is very restrictive compared to our competitors. They in turn sell product to integrators, resellers, dealers. They do not sell to end users.
Me: And Amazon is one of those resellers. Newman: Amazon is a reseller. Axis does not sell direct to them. Axis very honestly sells only to the seven distributors, and we dont restrain trade in any way. We dont tell them who they can or cant sell to... We publicly list the MSRP of the product, but what I would always challenge folks to do is go on to the Amazon and look for any Axis product and see what percentage off list price you can purchase an Axis price for. We monitor weekly our pricing on the web. Our web pricing is relatively close to MSRP, where the majority of our competitors you can find their products 40-50 percent off MSRP, because they dont police the web.
Me: So what level partner is Amazon?
Newman: Amazon is not even an authorized partner. They dont have any relationship with Axis at all. Their relationship is through distributor... The channel program is a solution program. It was never designed for the web resellers.
Me: So, if you see a too-low price on the web, what do you actually do?
Newman: The first thing we do is see if theyre in the channel partner program. If theyve signed that agreement, agreeing to not sell exclusively on the web and not below MSRP... And weekly we do remove people. If theyre not in our channel partner program, then legally I have no recourse to go after them becauese they have no relationship with us...
Me: So you're not worried about some rogue web site undercutting prices.
Newman: I say fine, go do it, because I know its not real. By monitoring our web pricing every single week, and removing partners weekly who violate our program, we have full transparency to everybody, and people constantly applaud us for being one of the very few who physically monitor the program on a weekly basis.
Me: So there's really nothing you can actually do if somebody wants to sell far below what an installer is selling a camera for?
Newman: If you want to purchase products from us, and sell it for 50 cents, I have no legal right to go after you.
Me: But you can monitor the price the distributor sells it for, and that's the only way the web site can get it?
Newman: ... I cant tell them by law how much they can make or lose. Its illegal for us to dictate margin. ... Thats up to their business sense.
"We monitor weekly our pricing on the web. Our web pricing is relatively close to MSRP, where the majority of our competitors you can find their products 40-50 percent off MSRP, because they dont police the web."
We discussed this earlier in the thread. Its not because they 'don't poilce the web' it is because they have a different discount structures.
"If you want to purchase products from us, and sell it for 50 cents, I have no legal right to go after you."
Their legal right is to stop selling to that company or to stop selling to that distributor who sells it to them. This is a fairly simple thing that Axis' competitors do all the time. If they find a direct customer is re-selling to someone who is causing problems for their other channel partners (like a low ball online reseller), they instruct that partner to stop or the manufacturer cuts that partner off.