Straw Security Purchasing: Good, Bad, Ugly?

There are many security brands that sell 'exclusively' through protected channels... you must be an 'authorized reseller' or 'dealer' to buy product. The integration channel especially appreciates this, because it 'protects' profit margins by preventing end users from directly purchasing equipment on their own through the mass market (ie: eBay,, et al). In many cases, the manufacturer requires some form of sales or installation training before granting reseller status.

This situation facilitates 'rolled-up' pricing for both equipment and labor in a single quote - manufacturers benefit by having 'trained' installers handle their product, and integrators benefit by being protected against price scalping.

However, what do you think of 'straw purchasing', where an authorised reseller buys product for an end-user (performs only as middleman) because a product is restricted? The customer may have it's own group of skilled labor and is not in the market for installation labor, but seeks a 'channel brand'.

End-users, Dealers, Consultants, and Manufacturers: What do you think? Is straw purchasing good, bad, or just ugly?

As the camera marketplace becomes more commoditized this straw purchasing is inevitable and happens all the time. Some manufacturer's such as Avigilon have a great policy to protect the dealer, try to buy anything of theirs online. Then do a Google shopping search for Axis cameras and you'll find hundreds of them. I have had customers that purchased cameras from online outlets like CDW for a few points less and then call us up and want to send them back to us because we are an "authorized dealer" for warranty repair. That double hurts...

I actually didn't know it had a name! But I have seen this before many times.

Here's an example that's more integrator friendly. Often a protected line will only have a few dealers in a region. An end user might want to use a preferred integrator but that company is not authorized (typically because the manufacturer wants to protect existing dealers, etc.). Because of that, either the end user or integrator will buy through a third party from a different area that is willing to just sell parts / products.

The problem one hits is support. If the end user (or non authorized integrator) has a serious problem and needs tech support from the manufacturer, this could be a problem if the manufacturer refuses to talk to non authorized / non certified people.

John - I was thinking of it more in a perspective of an end-user customer that is somewhat self-supportive. For example they want to add a few cameras and had their IT department or cabling contractor pull the CAT6. At that point, what do you need an integrator for other than to do a box sale for a few cameras and maybce connection licenses for the VMS.

In your scenario, it's probably not a good idea for an end-user to hire an integrator that isn't factory certified in the products they want, especially if they are new. Does it happen all the time? Sure. For cameras it's pretty straightforward, and a minimal risk, but as an end-user I would have a hard time buying a VMS from a company that could not support it.

Another pain point is that I have had customers that purchase newer systems installed by us but when it came to supporting their legacy systems at ohter locations, we weren't able to do more than basic troubleshooting as we could not get tech support or parts for them. I hate to refer them out to someone else or hire that company as a subcontractor, but ther really isn't another choice.

I've seen situations where the techs are previously certified but the integrator they work for is not (they got their training at past jobs). In these situations, it's not a aptitude or experience issue, but a dealer protection one.

I agree John... You don't unlearn factory training you have by switching jobs. But this is also why you frequently see fine print and company names on factory training certificates. I have seen a few in my day that indicate that the individual's certification is only valid while employed by the company listed or another authorized distributor/dealer/partner/installer/reseller.

Either way, they sell the eqipment and provide support to the company, not the technician or installer. I have techs that worked for other companies that have certification on other products but if the company isn't factory authorized, we get bupkus for parts and support regardless if we have a certified tech on staff. The straw purchase will get the equipment but it doesn't help for parts or support. I find what works best is to develop friendly relationships with some of our competitors (not necessarily in the same geographic location) and support each other as needed. I have had to bring their tech on site and vice versa, but this is usually to support legacy customers, not for new installs.

it also works the other way, I have seen instances where a large national integrator gets someone certified or signed up with a particular product in one branch, and then all their branches become "certified" or "authorized", usually as the purchase orders come from a central location. Just beacuse someone in the Des Moines branch is certified it deosn't mean that a technician in Dallas has a clue on how configure or repair it, but at least they can get tech support and parts. How does that make any sense?

I have said this numerous times before in many posts within the same vein. I will never install a product that I cannot buy myself on the open market. Period. There are numerous reasons for this, but some of the reasons mentioned above are some of them. Integrators/dealers switch lines, techs leave, companies are bought, technologies change, etc. etc.

If I cannot be certified on a product or have one of my staff be certified it is useless.

Ross - What "open market" products/systems do you use?

In the CCTV field it is AXIS cameras and Altronix power supplies. Before I went to IP it was Pelco cameras.

Systems are a whole other story, while systems are MUCH better than even 5 years ago they are still too locked down for my taste. Particularly our BA/FA system. We cannot even get a glass break or door contact ourselves which is ridiculous and I am doing everything I can to change that.

Our card access system requires us to get a tech out to call the access company, officially “sign in” and then hand us the phone. The techs while trained and licensed for the system have no clue, but since we cannot call direct to fix simple issues they need to come out and call for us. Any update we do now will be Mercury panels and nonproprietary cards.

Ross - You sound like my customers that have/had sytems that were locked into "sole source" systems mostly using large national integrators.

At least with video surveillance, most of the peripheral components are fairly open (cameras, power supplies, servers, workstations), but you still have some items such as VMS software and licenses that have to go through an authorized distributor. My suggestion is to pick one you can get from multiple sources.

Access control is still a bit more restrictive depending on the manufacturer. Systems that use Mercury boards or HID Edge/VertX hardware and HID readers are good as they are common components to several manufacturers. It makes it easier to switch to a differnt platform if necessary without necessarily having to change controller hardware and readers. I believe IPVM has an article on Mercury boards in their archives. There have been some issues with knock-off boards or ones that have been made proprietary in some form.

As for fire alarm, you are pretty much stuck with what you get, there is not much interoperability or interchangeability with fire alarm components (except maybe horns & strobes) due to UL864 listing rquirements. It's best to pick a major brand that several local companies might carry (examples: Notifier, Silent Knight) so you are not locked into a single distributor. Always get digital copies of all panel programming and do no allow the installing company to install a passcode on your system that you don't personally know.

Many sides to this issue the most important in my mind is not a gross margin issues but rather protecting the "quality" of the manufacturer brand/solution and overall reliability/availability of the system. When systems go upside down the manufacturer, system integrator and consultant are typically the easy targets for an end user to point fingers without a great deal of thought on their own culpability to the situation. The more important question is what percentage of end users are trully capable of installing, servicing, updating, reversioning and staying current on the systems they own? They like system integrators are tasked with multiple systems to deal with, geographical logistics and taking on significant negligent security risks while dealing with the realities of corporate budget issues. There are some that meet these challenges but in my opinion a very small percentage.

What about licensing? Should the requirement to have a low voltage or other contracting license play a part in being able to purchase low voltage products?

Most state, city and/or county governments restrict the installation of low voltage systems by requiring an entity or individual to submit an application for a permit necessary to install a camera, burglary, fire, access control or other product or system. Assuming you and/or your company have a license to install low voltage electronics, does that now entitle any entity or person to purchase technically advanced products and systems?

Licensing requirements can vary greatly from state to state. Here in Florida, state statute 489.503 offers a bunch of licensing exemptions. Subsection 6 pretty much grants an exepmtion for a building owner. 14(b) exempts installation of computer network cabling, which is what IP video surveillance systems run on. If the owner of a building wants to pull their own CAT6 cabling and install their own cameras in a commercial building, as long as it's under $75,000 and they don't plan to sell or lease it within a year, there isn't much of a legal roadblock to stopping them from doing that here in Florida. There are additional exemptions for federal facilities, school boards, and so forth tucked in the statute as well. I doubt many building inspectors are going to bust owners for installing cameras on their own premises. Fire and burglar alarm systems are likely a different story.