Hikvision Hits Record 'ALL PRODUCTS' Sales Run

It doesn't take talented sales people to sell the cheapest product on the market

Hikvision does not see themselves as selling the 'cheapest product' on the market. They point to a range of options, from their own OEMs (e.g., LTS branded Hik), grey market Hikvision from China, Dahua sometimes, the whole host of Shenzhen / South China companies (e.g., Longse), etc., etc.

But the counter is that Hikvision is not selling 'just' a product. They are selling sales support, tech support, advanced replacement, local in-stock supplies, hopefully a premium brand ('the art of video surveillance", etc.) that none of their lower cost competitors offer.

In other words, Hikvision should be able to demand a premium relative to those that are 'cheaper' than them considering Hikvision spends vastly more on sales, marketing, support, etc. than the cheapest options. Hikvision is still heavily discounted compared to other organizations that spend on direct, local sales, marketing and support (like Axis and Avigilon, e.g.).

Aside from distributors drinking the security industry equivalent of Jim Jones Juice

Serious question - are not these sales good for distributors? Sales create urgency and considering Hikvision is the one eating the discount, distributors benefit from this? Yes/no?

Let's not forget Dahua, who looks like they're dropping their pants equally as far.

We have not seen Dahua do as many of these sales as Hikvision, though as we show in the report, Dahua is currently joining Hikvision in this week's sale.

A company with proportionately equal amounts of overhead

I would suspect, proportionately, Dahua's (USA) overhead is much larger than Hikvision's. Dahua has over 100 USA employees now but far far less (5x or less) than Hikvision USA revenue. Dahua USA's overhead is amazing as they ramped up so quick. Maybe the legion of newly hired sales people in the last year start pouring in massive amounts of revenue, but given their competitive positioning, I am doubtful of that.

I disagree, when will this 'awakening come'? 2 years? 5 years? It has been several years now that Hik- has led the Industry with Sales and Support so how long do we have to prepare for the eventual downfall of Hikvision?

At one point, in the past, I would have agreed that the "making it up in volume" was a valid go-to-market strategy, however experience has changed my mind. 

To your point, $250 sale, about $50 in profit, assuming a good margin of 20%. The $50 in profit requires: 

• Sales support, phone/email
• Shipping
• Inventory
• Support
• Outside sales
• Inside sales
• Accounts payable 
• Accounts receivable
• Travel expenses
• Beer, lunch, dinner, golf
• etc, etc. 

At some point, the volume needed to support the over-head necessary cannot be scaled to the level needed to make a total gross-profit. In many ways, sales is a numbers game. In that sense, the numbers need to support the investment required for sales and must be scaled and supported by the sales team. 

From a sales reps perspective, assuming a 5% commission on gross-margin (seems to be the average) a sales rep would make $2.50. Is that even worth the time picking up a phone call or sending an email...? 

I still think they run these sales as an advertising tool to pick up and entice new dealers who otherwise wouldn't have chosen them.

For sure, that's a fundamental goal of a sale, whether selling cookies or cameras.

Im not so sure these sales are necessarily used to move a ton of product to existing Hik dealers like everyone is alluding to.

But Hikvision's own sales flier clearly markets this to move product to existing dealers, i.e., the big stock up message:

They are simply using it to create awareness.

As the flier above from Hikvision shows, that's simply wrong.

Beyond that, when the sale is being run 4 times in 7 weeks, it is literally hard for Hikvision dealers to avoid buying on sale.

Finally, recall that last year many of the Hikvision sales were not 'double dips' and existing dealers did not benefit whereas now each of these 4 were 'double dips' that explicitly gives the savings to existing dealers.

Well it's end of quarter ever seen how Napco runs sales

Agreed, end of quarter sales do happen. But running 3 across the board sales in the weeks prior to the end of quarter and then a 4th the last week of the quarter is atypical.

if they didn't serve a purpose they wouldn't do it

What do you believe the purpose of Hikvision's 4 sales in 7 weeks is?

Another issue is the camera and recorder selling prices have fallen exponentially quicker than the growth of the market

From what we have seen the overall (non-China) video surveillance market, in terms of revenue is effectively flat (roughly speaking, plus or minus 5%). So unit sales are up greatly over the last few years but unit pricing has fallen comparably.

This is simple Math 101 which is unsustainable.

For who though? If I am Hikvision, my argument is that I am taking share from incumbents (whether its Speco or Nuvico or Everfocus, other Taiwan and Korean manufacturers, etc.) So for the latter incumbent companies, this is quite unsustainable. But if Hikvision can continue to scale up in foreign markets, they can better cover their local costs and hopefully one day raise prices as rivals exit.

I certainly think there are problems with that approach, but right now it seems more unsustainable for Hikvision's rivals than it does for Hikvision. Agree/disagree?

Not the first industry a dominant company had gone for market share to knock out competitors. 

I really don't see any harm in these sales from my perspective. I just wish they did more of the double dip sales. Usually, the sale prices are slightly above my normal pricing, but the double dip is really nice for the bottom line.

For the second month in a row (July and now August), Hikvision is back with a double dip sale but again only on the Value & TurboHD products:

Why are we not ragging on FLIR and Honeywell for offering a sale instead of only attempting to figure out the Hikvision strategy?