Hikvision Europe Cutting Out Unauthorized End User SalesBy: John Honovich, Published on Aug 15, 2017
The days of anyone buying Hikvision from anywhere off the Internet are numbered, at least in Europe, if Hikvision's plan comes to fruition.
In this note, we examine Hikvision Europe's plan, comparing it to the Americas, the debate the European plan has triggered, and the potential winners and losers of this move.
Hikvision Europe's move has 2 major components:
- Cutting out online sales: Pricing will no longer be allowed to be disclosed on online stores. Plus, only authorized Hikvision dealer / integrators will be allowed to buy from online stores.
- Introducing HiWatch, a lower end Hikvision offering, historically offered in developing countries, will be available for sale to anyone online, at notably lower prices but with markedly lower capabilities.
Hikvision explained the channel changes in a 'Distribution Management' 'Customer Notification':
Benefits of Online Sales Restrictions
Not allowing pricing online and restricting purchasing to authorized dealers is a major change and is atypical in the video surveillance industry, where most brands are loosely controlled allowing easy location of pricing and purchasing online.
This is a clear benefit and boost to Hikvision's authorized partners as it will make it harder for end users to price shop or to buy Hikvision from low cost, low support rivals.
Not only would it help partners but it could increase the brand recognition of Hikvision as a limited, higher end offering that is not available from any random source.
Challenges to Online Sales Restrictions
What remains to be seen is how much Hikvision Europe, and as an extension Hikvision HQ, is willing and able to block other sources of Hikvision products from selling in Europe. For example, Amazon UK has thousands of Hikvision listings:
This is no easy task given the large volume of Hikvision distributed from China and from other sources around the globe.
Vote On Move
While Hikvision branded products will be restricted from direct end user sales, HiWatch products will be introduced and generally available, starting in September 2017. Here are a few examples (note the low prices) shown from CCTVTEK:
From what we have seen, the HiWatch products will be lower total resolution (4MP), no H.265+, no true WDR and overall limited to more basic feature sets.
The UK also has Hikvision Ezviz, though they currently have only consumer oriented cameras, unlike the US that has full kits.
Debate In The UK
It has been made clear to us that we will not even be allowed to supply further HikVision-branded products to our existing customers with existing systems, nor to fulfill open quotations that we have provided to recent enquirers.
HikVision have introduced this ‘new global strategy’ with ridiculous haste. HiWatch products are not even available in the UK yet.
We anticipate that these changes will cause their brand a lot of ill-feeling, when customers learn that they can now purchase HikVision-branded products only from Trade Installers.
Additionally, Use-IP questioned how Hikvision could accomplish this online restriction given the broad availability on eBay UK, etc.
Later, a debate amongst UK professionals on LinkedIn covered the same topics - pro and con.
Great Upside For The Professional Market
Dealers benefit from restricted product. It reduces competition and allows them to increase their margins.
If Hikvision can follow through with this, and that will not be easy so it should be simply assumed, there is a lot of upside to build greater loyalty with larger and more sophisticated dealers.
Compliments Well With Higher End Product Expansion
This also fits well with Hikvision's international product expansion to higher end products like the deep learning NVRs, multi-imager cameras, DarkFighter, the forthcoming DarkFighterX, etc. None of those products, given their price and relative sophistication, make much sense available through online stores direct to consumers.
Risk To The DIY / Direct Base
Hikvision internationally first achieved success in the DIY / hobbyist / direct purchaser market as early adopters looked for lower cost offerings. Hikvision has built a significant customer base and loyalty among those users. This move effectively cuts them off, driving them to buy from integrators, which these users fundamentally look to avoid given their own technical skill level and desire to minimize out of pocket expense.
How large this market is and how that compares to Hikvision's professional market, we do not know. However, if Hikvision can successfully convince more mid to large scale integrators to sell high volumes of much more expensive cameras, we expect that gain would far more than offset the loss in the DIY area.
Openings For Competitors
For Hikvision's lower end competitors, this might be good news. The additional barriers that Hikvision is placing for buying Hikvision opens up an opportunity for other companies to fill that void in low-cost, direct to anyone market.
North America Position
Hikvision North America is not following the same plan as Europe.
However, Hikvision NA emphasized to IPVM that they "only sell to authorized distribution partners", and that "outlets selling unauthorized products in North America" are not supported by Hikvision NA. We believe that but there are numerous online sources in North America that sell Hikvision, with or without Hikvision NA permission, as this Google shopping screencap shows:
As for HiWatch in North America, Hikvision responded, "We are currently evaluating the product portfolio. Time frame for decision has not been set.
Outlook - Cautiously Positive
We think this is potentially a good move for Hikvision and for the overall health of the industry, as it could simultaneously make Hikvision more of a respected industry brand that does not conflict with itself through selling everywhere and diminish the race to the bottom. On the other hand, Hikvision's overall global channel complexity and historic focus on selling to everyone, present challenges in executing this plan fully.