Cutting Out The Integrator - Why Shouldn't I Be Able To Buy My Hardware Directly?

Lol, 1, I have an idea for a new revenue stream for IPVM. I am going to sell virtual pitchforks to integrators to throw at you :)

"Why shouldn't I be able to buy my hardware directly?"

Mostly, it is protectionism. Constraining competition allows integrators to profit more, just like professional licensing allows licensees to make more money.

The standard counterargument is that integrators know how how to install, optimize, service, support, etc. However, in yours and many large end users, they often have that expertise in house.

I do think some really knowledgeable integrators can help in optimization, selection and design ('smarts') but most integrators want to sell the whole solution (see the debate here - What National Integrator Will Only Do Labor, Not Sell Products?).

I am looking forward to hearing the responses from integrators. Thanks for bringing this up!

As another end-user site where all security system work is handled in-house, I side with Und 1's position to a large degree. Especially for onesies or twosies - would an integrator really want to be bothered flipping cameras on a small scale ?

But for an end user that is well versed in his/her (microaggression?) system and knows the cameras he/she wants .... if a distributor feels comfortable selling direct to that specific customer, why is that an issue.

Such end-users are the exception so on the one hand it wouldn't seem that big of a deal.

But I believe the problem would be the classic slippery slope. One day you are selling to knowledgable self-supporting end-users, the next day you sell to anyone who can call out part#'s, and the day after that you're driving the van in the parking lot rolling up on 'end-users'.

Joking a little, but who exactly should the disty let buy? Anybody who swears up and down they don't need an integrator? Anybody who asks?

Do you have a resale license? I obtained one for an unrelated business, and now it's not a problem buying from distribution. Though I rarely do.

Anyway, if you can support yourself and if you are not talking about exclusive product, what can't you find on the Internet?

I had a customer that managed to get an account at Anixter without any problems (ADI refused them, I believe). The second biggest issue, in my opinion, was that Anixter was charging them full MSRP for all equipment orders. The first was that Anixter stole a client without letting us know what was going on.

It's not impossible to get the equipment direct depending on where you are located. You can absolutely find reasonably priced product online if you live in the US, not so much here in Canada.

The client buys from us again, simply because we sell product to them for less than Anixter and make a profit - everybody wins (except Anixter, oh well). If you have a good working relationship with your vendor, set a reasonable price target and see what they say. It still takes the integrator some effort to put the order through, pick up material and deliver it (unless you can get it shipped directly to site).

Best of luck, I have also been on your side of this equation. I really did not appreciate 100-200% mark-ups on equipment and found a supplier who was willing to work with me on reasonable terms. Perhaps your access control integrator is not the best company to be dealing with for cameras?

"But for an end user that is well versed in his/her (microaggression?) system and knows the cameras he/she wants .... if a distributor feels comfortable selling direct to that specific customer, why is that an issue?"

Because this sets up a situation where the distributor is competing with their customers and creates channel chaos. But I think your main issue is you don't feel you should be paying a 50% markup on products where there is no value-add from your integrator. Did your distributor tell you that you had to buy from an integrator or just a reseller of some sort? Your distributor should be able to put the business through a box-moving reseller who will take the business for a few points. If the manufacturer only works through integrators that is a different story. In my view this is a flawed strategy precisely because of the situation you are in, but that is another story. Not to denegrate integrators, but from our vantage point we see half the fortune 1000, universities, and government organizations having inhouse capabilities such as yours, sometimes exceding those of their local integrators. You may want to consider products with less restrictive channels.

Sherman Anti-trust laws is a good start, and may distributors have no provisions to collect retails sales tax, some states require retail licenses, and of course manufacturers control how their products are distributed.

https://en.wikipedia.org/wiki/Robinson-Patman_Act

We've seen companies create a company, and a camera vendor signs that company up as a dealer to buy direct, all with the help of manufacturer Rep Firms. It's a slippery slope, and the fact that you have these resources, does not mean anyone else can do the same...

Work with your integrator to reward them for bringing to you creative ideas for the future.

I guess I over simplified that - eh! based on these words, the value of the integrator is in question with regard to video assistance. What's the value of the integrator if they stop helping on the access control? How much knowledge and value walks out the door? My point was until they get what they want, "Direct Purchasing" they have a preferred vendor helping with one aspect of the business, and not so much with another. It's time to negotiate an acceptable markup, and payment terms, and coupling that with the continuation of the access control services and support that both parties can accept. As a re seller, filling pre-paid, credit card, net 5-10-15-30, orders all get different prices and benefits.

"The integrator we keep on-site helps a lot with Access Control, but has done literally zero on our camera systems, other than fill hardware orders, and license key renewals."

Why shouldn't I be able to buy my hardware directly?

There is no truly defensible reason for why you can't. The security industry is still going through the process of coming into the 21st century. We already see companies like Hikvision selling direct, even if it's under a thinly veiled sub-brand.

The average camera and VMS system is not that hard to setup and maintain. And even as far as support goes, many manufacturers will support end-users already. Even if this model caused support costs to go up, the manufacturer could easily make another 15 points selling direct, and that would cover increased support requirements.

We're still in the model and mindset of things being required to go through a dealer, just to maintain an outmoded channel and avoid hurting feelings. That is changing though.

This answer is going to sound heavy-handed, and I apologize for that. It is Thanksgiving and believe it or not, I am in a decent mood despite what the following might indicate.

This topic raises its ugly head on these boards from time to time. There are plenty of threads about it, but, no one bothers to research and read previous discussions. That is one problem the entire sales channel has with selling direct. Those that want to buy direct don't bother to read (and I know plenty of integrators and installers that don't read either). If you won't read threads, you won't read instructions either, and for the most part, we know it. I have written novels on how to use the simplest things we offer and no one bothers to read them. So no matter how well versed you may say you are, and very well may be, there are plenty who aren't and don't. End users are very often their own worst enemy.

Protectionism is near the last thing on my mind to be honest. What is on my mind is that my vendors (distributors too) expect me to market and support (sales) their product. As much as I despise doing their marketing, okay, that is the deal. If I am going to put that much work into it, there has to be some reward. If not, I will stop doing it. Plain and simple. If I generate interest and you sell direct, I am through with you. Short and sweet. I hope you can see how plain that is.

We have sold lots of equipment directly to larger end-users ourselves at far less than MSRP over the years. The only requirement I have is that they go to the same schools my staff attend. I know they know how to use the product properly. That is the only requirement. You know what, we will continue that practice. Someone, somewhere has to make sure that the installer knows what they are doing. When they call with a problem, we stand behind it all the way. An ounce of integrity is worth a pound of apologies. The poster has done that, and in those cases I, his integrator would have no issues selling him what he wanted at a far reduced cost. It is just good customer service.

There are other issues that distributors have to consider. Yes, sales tax is one, so is support, relationships with their customers etc. If that distributor knows or suspects that you saw the product at a lunch-n-learn conducted by an integrator, it would be bad faith to sell to you direct. It is just not professional and breeds distrust. Sometimes they can't know where you got the idea from, so as a policy they don't sell direct. Selling direct, disrupting the supply chain might not bother you because you got what you wanted, but these two have to work together tomorrow, and the day after that, and the day after that. Selling a one-off item to you satisfies you, but it creates a mess that you don't have to stick around and clean up.

I do wonder if the OP ever once asked his integrator to supply the product at a reduced price? Did it ever even come up? Chances are it did not. If a customer of mine were to come to me and ask, I would be glad to help them.

Not that the original poster would do this, but many would: So you buy some part of your security yourself, connect it in some way to your VMS (for example), something goes wrong and you hold them responsible. How fair is that? We spend hours if not days unraveling a problem that you created all because you wanted to save a few dollars. Then you get my bill. Sometimes you even expect me to cover it under the service contract. How fair is that?

This month is Small Business month. I have read a ton of support for local businesses. Some go into detail as to what happens when you do; what the dollars mean to that business and the local community. Why does that get lost? Is it the money? Is there a price on community support?

Another question is why some think they have an absolute right to or an entitlement to disrupt an established supply chain? Earlier last week one person asked why is it so hard to find integrators that will only provide labor. Couple that with the on-going effort to cut out the perceived middle- man and what will you be left with?? I for one know full well what the market will be left with and it is not pretty.

And while I am at it, (this has nothing to do with the OP) integrators are not middle-men. We do re-sell products yes, but that is not all we do, not by a very long shot. It is but a fraction of what we do. We do not run a retail store. This is not the same as Best Buy, Target, Walmart or Sams. They have systems they sell there. Would you really ask Sams Club to lease the equipment to you? Would you expect them to refund your money because you can't make it work? I would ask you to go into a Best Buy and ask the young person working there, just starting out in life, how many days of storage the hard drive will furnish? Ask him for ideas on how to mount the camera under the eave of your house or business? Ask the person working at Target if they know why the PTZ joystick doesn't seem to work, or why the cameras freeze up? Maybe if you ask nicely the clerk at Walmart can help you pull your cable or troubleshoot your wireless for you. But I am not here to beat up on them or anyone else.

If that is what you want, by all means; there is a supply chain for that. It is out there. But when that equipment does not perform up to your expectations, please don't get into my ear about how "unfair" the system is. Better equipment performance requires knowledge. If you think I am wrong, ask why IPVM (just to name one of many) offers certification training.

Sorry, this went way over the top and lasted a lot longer than I expected.

Happy Thanksgiving!!

I think the discussion of integrators providing value other than product and reducing prices is a moot point. It's not what's being discussed here.

OP is stating with all sincerity that he and his staff can handle camera installation and maintenance, even having some certified people on site. So if we're taking him at his word (and I have no reason not to), he's qualified.

The only reason to not allow a qualified person to buy a widget is protecting the channel. We can debate whether that's a good reason or not, but it's the only reason.

Even if an integrator were to reduce prices, if ultimately all that's expected is that they'll supply product and everything else is handled in house, why would a qualified end user want to pay any markup?

Everything is negotiable - margin is margin regardless of the cost basis.

Without debating the ethics about disintermediation, I'm wondering what the problem is for end-users who can walk the walk and talk the talk, and are as determined as some seem to be here.

Again, once I had a resale cert, I had little problem.

Wouldn't a small in house security group in a much larger company just setup as an integrator if there was significant money to be saved?

Maybe there is something illegal about not paying tax on the purchase even if one still collects it on the self-sale?

I know of several large retail chains that have done that, with the vendor and reps all knowing and condoning the practice.

This release of pent-up frustration is causing my head to hurt.

Upper management used to have a slogan at Ingram Micro:

Don't meddle with the middle!

More like a threat...;)

I wonder if any manufacturers would sell direct to the consumer if they had a product that is as strong as Apple? In my opinion, yes they would in a heartbeat. They would disrupt the channel, cut integrators' throats, sell us out, call it whatever you want. Apple products are sold direct, in Apple stores, buy retailers worldwide, on-line etc. The price of a given product (new) is nearly always the same if you are buying apples to apples (same options). Apple (and everyone else who sells their product) sells at MSRP and bank billions doing it. Why doesn't a manufacturer design, build and sell a plug and play IP camera? One that will plug into any VMS, and perform up to expectation. The fact is that there are not enough consumers who can or will install or service the products to warrant a factory direct channel.

You want to see a protected channel? Sell a fire alarm for awhile. They will show you protection.

It is not the integrator who is protecting the channel. They don't control it; they don't set the price; they don't set the terms, supply, none of it. When the channel changes, so will the integrator or they will die.

As an integrator I thank you. Great reply. We spend a lot of time and money training and certifing employees. This would not be possiable if we were just wire pullers.

I think this is an interesting and useful discussion. Obviously where you stand depends on where you sit.

We are a (fairly new) manufacturer of an end-to-end cloud based site camera system - a niche within security. We happen to have a product that was designed for "self installation", can can be delivered without an integrator.

However, as we enter this market, we struggle with many of the same issues illuminated above. Here is how I think about this:

1. Integrators provide several (potential) sources of value to the End Buyer.

• Reach - direct interface to customers.
• Trusted Expert - a "neutral" 3rd party that customer can rely on for decisions about how to go
• Design & Installation Services -
• One-stop-shop - if the customers wants/needs components from multiple manufacturers, the Integrated can make it one-stop shop.
• Post Sale Support - Obviously manufacturers like this IF IT IS DONE WELL. Otherwise it is a liability, since our brand depends on customer interaction with the product, which can be strongly impacted by support quality.

2. From our perspective as a Manufacturer:

Reach - yes, this is valuable to us. Direct internet sales helps but does not replace for customers that want a "local" contact. However, past experience shows many integrators do not market well, and do not always provide great follow up on sales leads.

Trusted Expert - this is valuable to us - if they are indeed trusted, and an expert.

Design & Install services - Even for products that are designed for DIY/self install (as ours is) there are always customers that want help.

One-stop-shop - this is valuable to manufacturers in general - TO THE EXTENT that the integrator quotes us in their product! To the extend products are interchangeable, this is where the integrator gets their power over the manufacturer. At the same time it truly is a value-add for the End Buyer.

3. In general, as a manufacturer, we want End Buyers to be able to acquire our products in the most convenient way for them (and with considering the most profitable way for us).

So, I put this question out to the Wisdom of the IPVM:

If you were a manufacturer entering the market with a product that could be end-user installed, would you sell direct, through integrators, or both ?

Parts-and-labor jobs are going to dry up, because it's going to get harder and harder for integrators to hide what their margins are. If it can be installed by an end-user, I wouldn't even bother trying to attract integrators because a lot of them are going to collapse or radically restructure over the next decade. Go directly to the end users from the outset.