Subscriber Discussion

Manufacturers, Why Won't You Sell Me Direct?

U
Undisclosed #1
Jan 19, 2017

I don't like to buy from Anixter, ADI, etc. I'd rather just purchase direct from my manufacturing partners.

Why won't they allow that? Can we convince them to change?

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RS
Robert Shih
Jan 19, 2017
Independent

...are you serious? Let's just start with what volume you would buy at to even make manufacturers bat an eye at your mention?

Would the logistics to sell to and support every little Tom, Dick, & Harry be worth it? Do you realize they don't and won't have the technical support department that can possibly handle the volume of calls from the ignorance that is the end-user masses. They can barely handle their distributors as is and imagine the additional load of amateur installers.

Secondly, what the hell are you on IPVM for if you're just looking to cut out just about everyone else in the industry and crash the market?

If you're a distributor, you work your ass off, sell a lot, and get the attention of a manufacturer by proving you can move a lot of product. This is what SavvyTech did.

If you're an integrator, you need to basically do enough installations to be outpacing your traditional supply chain and moving enough product on your own to be enticing as a single account.

However, if you're a cheap, penny pinching end-user that thinks they know what they're doing and you're not even a part of the bitchy, whiny, moany Fortune 500 club that feels like they deserve special privileges (that we're already complaining about), then please, just shove it. You refuse to let distributors and integrators make their cut for getting the product and support it for you and you want to devalue our labor. Go shop on the ****ing grey market or get a cheap retail box and leave us the hell alone.

It sounds like you're an "integrator" though and you want to chop out your distributor. Cute, I bet you'll understand totally when end users do that to you.

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U
Undisclosed #4
Jan 20, 2017

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U
Undisclosed #6
Jan 20, 2017
IPVMU Certified

However, if you're a cheap, penny pinching end-user that thinks they know what they're doing and you're not even a part of the bitchy, whiny, moany Fortune 500 club that feels like they deserve special privileges (that we're already complaining about), then please, just shove it.

Hold on now, that's not the case with me at least!

I am a clueless, wasteful end-user who is blissfully ignorant of even the most basic technical knowledge regarding my system.  I am comforted by the fact that my trusted dealer has taken the time to insure that I won't ever need to know things like the "root" password or even the true manufacturer of my equipment.  

I also like the fact that his quotes are so easy to understand, e.g "8-camera HD system/w free install and activation $4,999. Omitting actual part numbers keeps me from price shopping off the Internet, which saves me valuable time.

Finally I welcome as many layers of diatribution as possible, since I know my value-add increases with each and every middleman that can insert themselves into the channel.  

This way I never have to worry about crashing the ****ing market on everyone upstream that depends on me for their livelihood.

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Robert Shih
Jan 20, 2017
Independent

Right, and in your sarcasm you would rather DIY to the max, go to the imager manufacturer, make your own housings, and compile your own firmware, right? I mean if you're so smart, you can even make XiongMai work. Hell, let's go to HiSilicon or Ambarella and you can fab your boards with a 3D printer!

At a minimum, your importing distributors deal with the import fees, the foreign language barrier, time zones, and the manufacturer's overall BS.

We do everything we can to get the product here at a low cost, in a quantity that can support installations, and in areas where we have low lead times for domestic shipping to our market.

Then comes the dealers/installers/integrators who are prepared (theoretically) with the tools, knowledge, skills, and manpower to get the cameras installed.

Can you do everything yourself? SURE! However, I'm sure that the greater percentage of end-users lack time, knowledge, and the experience/consistency to get their equipment installed reliably.

So you can mock the channel all you want and claim we are price gouging end-users and purposefully maintaining their ignorance, but I'm sure most people aren't going to actually bother to learn every single detail to do the job when they could much more easily have someone else do it at a reasonable price.

Are there maybe a couple too many extra middle-men at times? Yeah, but at the very least, integrators need to be valued along with the (as far as foreign products competing in our market) importing distributors who do the legwork to support the products they bring in from overseas.

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UM
Undisclosed Manufacturer #9
Jan 23, 2017

Robert, Blacksmiths worked very hard also.

The times they are a changing...

UM
Undisclosed Manufacturer #2
Jan 19, 2017

You don't pay for freight charges, you won't stock my product for large customers, and you don't pay your invoices on-time. 

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UM
Undisclosed Manufacturer #3
Jan 20, 2017

You sound like a support nightmare.

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UM
Undisclosed Manufacturer #5
Jan 20, 2017

Not so many manufacturers can do the direct sell success like Dell.
Sales, logistic, support are need a lot of money.

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Josh Hendricks
Jan 20, 2017
Milestone Systems

Full disclosure - I work for Milestone, and while I think this is a well formed response, it is a personal reflection and does not constitute an official company response. My membership is also not subsidized in any way by my employer.

I suspect this question was intended to be provocative - perhaps to help generate ideas for how to address this question when received from real world customers.

To that end, I think the biggest reason we do not sell direct to end customers in this industry is because the industry essentially would not exist without the channel.

Companies like mine (Milestone), our competitors, and even larger companies such as a number of camera manufacturers do not have the resources to handle all of the technical support, sales inquiries, billing, marketing efforts, etc to address and support end users en masse. In order to sell to and support end customers directly, manufacturers would need to scale up various departments which would eventually negate any potential cost savings you might expect.

Due to all the above, there would be much less choice available to you in the market. As has already been mentioned - our distributors handle shipping/import/warehousing, they frequently absorb currency risk where quotes/billing are not in native currency, they provide a layer of support to resellers, and considerably expand market reach (hence the term distributor).

Then our resellers (and distributors) put considerable time, effort and expense into training and certification on a wide range of products they install. They work with these products day after day, and over time they generate a wealth of internal knowledge on the products, their capabilities, limitations, and all the "gotcha's" so that, in theory, you don't have to duplicate their efforts.

When it comes down to it, you would not save much by buying direct, and if the industry worked that way, hundreds of thousands of jobs may simply not exist. Buying through the channel supports your local economy, the channel, and in theory should improve your range of options and ultimate user experience.

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U
Undisclosed #6
Jan 21, 2017
IPVMU Certified

...if the industry worked that way, hundreds of thousands of jobs may simply not exist.  Buying through the channel supports your local economy...

When you are the end-user, say buying some expensive jewelry, is this sentiment something that would influence you?

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Josh Hendricks
Jan 21, 2017
Milestone Systems

Some people may be influenced by it, some people may not care. I won't wager as to what the ratio would be. When I started with Milestone in 2006 I wondered why we don't just sell our licenses direct to the end user online. I was young (21) and inexperienced, and at the time it seemed like so much wasted effort working through "the channel" which was a new concept to me.

Over time I came to understand the value of the channel and how our distributors and partners become "force multipliers" enabling you to do more with less resources, maximizing your efforts and building a healthy business and ecosystem.

I am certainly not the best person to consolidate this into a pill an end customer is happy to swallow, but ultimately (I think) my point is that customers would not necessarily pay less if manufacturers sold direct.

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Josh Hendricks
Jan 21, 2017
Milestone Systems

To more directly address your jewelry analogy, if I was educated by the jeweler about their channel and I realized the only way I could get the rock bottom pre-margin price was to essentially buy gold and silver from some folks overseas, spent tens of thousands of dollars on equipment to smelt/cast/polish/etc my own metals, I would probably begrudgingly pay the margin at Shane Co down the road and get on with my business.

If we all bought direct from an actual jeweler and they didn't have a large network of stores stocking, marketing and selling their wares, they would have to increased the price as they probably wouldn't have near the same revenue, so in the end, you pay around the same price, have less selection, have more difficulty finding and purchasing etc etc.

Note - I am as far from an economist as it gets. This could potentially be complete rubbish, but it makes sense to me.

U
Undisclosed #6
Jan 21, 2017
IPVMU Certified

...spent tens of thousands of dollars on equipment to smelt/cast/polish/etc my own metals...

That's a bit of an extreme counter-example, no?

How about you found about a gem factory outlet that provides polished and certified diamonds without a setting, without financing, and without a showroom?

But the stone is half of what it would cost you from a full-service jewelry store.

So let's say it would save you $5,000 in the end, in return for some uncertainty, more legwork and less convenience. 

Maybe you would do it or maybe you wouldn't depending on your situation, but my question is only:

Would supporting the local jewelry economy and/or the potential loss of gem middlemen jobs weigh significantly on that decision?

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Josh Hendricks
Jan 21, 2017
Milestone Systems

For the DIYer, probably not. But that factory outlet store maybe doesn't exist if the factory cannot also sell large orders out to hundreds or thousands of showrooms. And chances are to achieve a $5k discount at our theoretical outlet store jewler, you're spending $55k. There's a good chance I want the setting or financing so I'm not feeling a great value proposition here.

But in many consumer markets, companies do sell direct through outlet stores. Sometimes, but not always, the price is considerably more appealing, but the quality of goods are frequently lower than standard retail stores as well. And outlets are few and far between.

One could argue that there are products available to the security DIYer already from manufactures who do not follow the channel model. There are free, cheap and open source software solutions and some manufacturers or OEMers who sell direct or nearly direct. They aren't as easy to find, and in some cases may not be as high quality or full featured, but they exist. They may not accept returns/RMAs, or provide support, and the shipping may take six to eight weeks, but that may not matter to everyone and that's OK.

In this industry, if major players started selling direct, they would have to be prepared to survive selling exclusively direct going forward. There would be no incentive for distributors to stock and market those products and resellers would make no money off of them either. Most security brands are unknown by outsiders as is - we're not like Coke and Pepsi, known the world over. We don't survive without distribution and your choices dwindle to a potential monopoly/duopoly.

I'm tapped out, thanks for the thought experiment.

U
Undisclosed #8
Jan 22, 2017

I always buy my diamonds wholesale, straight from the dealer. It's not my job to help Jared's make payroll. It helps to know a guy, of course.

JR
John Richardson
Jan 22, 2017
I don't think this is the fairest of comparisons as Jewelry won't require installation, configuration, support, maintenance and training to use. I don't feel products such as this would see as much benefit from such a structured channel aside from distribution and marketing benefits.
U
Undisclosed #8
Jan 22, 2017

Why shouldn't it be up to the buyer to determine whether they need or want all those services? Yes, most end users will want configuration, support, maintenance and training, but does this justify forcing them all to pay for it?

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UM
Undisclosed Manufacturer #7
Jan 21, 2017

Trunkslammer, I bet...

U
Undisclosed #1
Jan 21, 2017

Trunkslammer, I bet...

And you are the CEO of AXIS?

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UM
Undisclosed Manufacturer #7
Jan 24, 2017

U1,

So what type of volume do you do on a monthly basis that would make the manufacturer want to bring you on direct?

U
Undisclosed #1
Jan 24, 2017

minimum $100,000 a month / $1.2 million a year

too small?

UM
Undisclosed Manufacturer #7
Jan 24, 2017

Impressive.  Is that total sales or CCTV ONLY?  

U
Undisclosed #1
Jan 24, 2017

CCTV only sales

U
Undisclosed #6
Jan 24, 2017
IPVMU Certified

...$100,000 a month / $1.2 million a year

That's a lot of trunks :)

U
Undisclosed #6
Jan 21, 2017
IPVMU Certified

Trunkslammer, I bet...

You mean valued reseller, no?

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Mark Palka
Jan 23, 2017
IPVMU Certified

This is the way things are going buying direct does not pose any logistic issues in fact the manufacturers would benefit as they could arrange for payment in advance of shipping eliminating their bad debt. But the real issue boils down to competition and to be competitive everyone including the end user is searching for the best deal and unfortunately that sole criteria is price 

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U
Undisclosed #4
Jan 23, 2017

"But the real issue boils down to competition and to be competitive everyone including the end user is searching for the best deal and unfortunately that sole criteria is price"

The first part is true... the bolded part is unsupported supposition based on (imo) erroneous data.

In lower camera count installations (SMB commercial and residential), price is certainly a key criteria, but even at this level it is rarely the 'sole' criteria - except maybe first-time buyers of Sam's Club surveillance offerings.

Anyone who buys the lowest-price anything can not realistically expect this thing to be of any quality or dependability.  This is simple economics.

However, many of these lower camera-count installations mentioned above are just fine with what Sam's Club provides.

Imagining that all customers need to spend the money associated with integrator installations to use this kind of technology is equally as dumb as the person who buys the piece of shit expecting superior quality or dependability.

U
Undisclosed #6
Jan 23, 2017
IPVMU Certified

Anyone who buys the lowest-price anything can not realistically expect this thing to be of any quality or dependability.

Oh, but they do :)

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U
Undisclosed #4
Jan 24, 2017

 

well, then they are stupid.

and if we accept the wisdom of the words of Ron White, i.e. 'you can't fix stupid' - then it sounds to me like you are targeting the wrong types of potential customers.

MM
Michael Miller
Jan 24, 2017

Which manufacturing partners are you looking to convince?

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