Restricting Resales of Cameras Important to Integrators

Do integrators care if the products they deploy have restricted resale availability? How important is it to them? What impact might this have on end users? In this note, we review our survey results that dig into this often heated topic.

Overview

Security products sales can broadly be categorized as falling into one of two camps:

• Allowing anyone to resell / buy one's products.
• Restricting resale access to approved partners.

While manufacturer have many tools to manage / control their sales channels, ultimately each manufacturer tends to fall towards one of these two sides.

Integrator Response Overview

We asked integrators:

"When selecting cameras, how important is it for a line to have restricted resale availability? (i.e. hard to buy online or through other dealers)"

And here's the breakdown of their responses:

Selling Restricted Camera Lines: Important

Almost 75% of the responses to this question voted that reselling restricted product was at least 'moderately important', with over 40% voting 'very important'. Cross analysis also reveals that these integrators install an average of 25 cameras per job, a much larger average than those answering the question with 'not important'.

Respondents in this category mentioned a myriad of justifications for this protection. Commonly, integrators noted that their investment in product and installation training separates them from 'trunkslammers' and that pricing protection helps to cover the overhead costs. While restricting product to a few resellers might limit brand penetration in certain markets, the overall successful install and servicing of that product will facilitate a favorable nad opinion when it is resold through competent and well trained integrators.

Some of the clarifying details these responses offered were pointedly critical of manufacturers and distributors who choose to 'sell direct'. Many responses went as far as saying that they actively avoid reselling product that is not restricted and is eligible to be purchased by the public:

• "We do not support companies that sell online. It looks bad when a customer can buy a camera online cheaper then we can sell it to them for."
• "Integrators like us who invest heavily in training and knowledge need an operating margin higher then trunk slammers so a percentage of the camera price is of the utmost importance to our business model. this cannot be so if cameras are bought online cheaply."
• "Very, Very important that the customer cannot see a price online. When the customers see cheap prices online, starts arguing that we cannot ask for so much money."
• "Customer only see the value of product .They do understand the integration wiring /cabling cost and skill required"
• "I recently specified a job for a customer and then he turned around and had his electrician walk into ADI and buy all the parts. Thanks ADI. Almost anybody can walk into their local branch and buy hardware."
• "This is a sore spot with me because it is very difficult for me to make a buck for our efforts when the parts are readily available online or can be purchased from anybody and everybody. I'm in the service industry and if a customer starts working my prices and comparing them to what they can pay online then have a nice day. I don't want to deal with that type of customer. I provide a service by evaluating the install, selecting the right parts, making it all work and the supporting the products I install. If the customer can take my hard work and turn around and buy my products anywhere then I'm wasting my time. We deserve to be able to turn a profit on the products we sell or this is all a waste of time."
• "Too many of our product offerings are available from internet retailers (sometimes at costs even lower than our "industry suppliers")."
• "We have been with Mobotix for years, but are constantly frustrated with the lack of protection of VARs in dealing with both Web-box stores and people who can become "resellers" without applying any effort."
• "Products like Axis, which are arguably reasonable quality, are still not in our selection, due to the constant online competition selling the products at very near to our cost."

Selling Restricted Camera Lines: Not Important

The respondents in this group do not view reselling hardware and software to be the crux of their business; rather they view the design and installation skill sets they possess as their value to the market. Integrators in this category are aware that many of the manufacturers of the products they resell have 'loose' channel resell policies, and they often find themselves competing with online resellers moving product close to 'cost' pricing. Despite this circumstance, the integrators will recommend the 'best product' for the job, regardless of how it may impact their potential profitability.

Rather, these integrators choose to demonstrate their value in other ways. While anyone might be able to buy product, being able to install and pull everything together is a different proposition altogether. End-users value these integrators for their ability to professionally install and service product, not for their buying relationships with manufacturers.

These integrators represented only about 25% of total responses. In addition to a minority opinion, these integrators install an average of 18 cameras per job which represents a smaller job average that those in the majority.

Representative comments from this group include:

• "These clients tend to accept your expertise and are willing to pay for it. They therefore don't waste their time Googling cameras to try and save a buck. They have bigger issues to contend with in their own line of expertise."
• "I look at it this way: if I restricted my choice to hard-to-find gear, I'd be restricting my own options as well as the customer's."
• "We may not be the cheapest around but we sure have the best Support and never let our costumer get in a tight spot. Sometimes we may lose money to keep the costumer, but since he will come back next time we win money."
• "We are looking to differentiate ourselves from other integrators by provided superior customer service and expertise. The services we provide will be our reason for success, not the product line."
• "Not important - we sell solutions rather than products and our value-add is in the solution"
• "The more important issue is added value and cost. Most projects are up against $700 analog systems sold from the back of a truck."
• "Our policy is to avoid products with very restricted availability. If a camera needs substitution or the client needs to expand his system, then availability becomes critical."
• "We are selling our expertise and our services, not selling the features of a specific product."
• "Having potential customers shop your prices suck, but it is a part of life. Many customers buy integrators for skilled service, not access to product."

Risk to End Users

With such a high percentage of integrators valuing restricted resales, this raises concerns for end users. Integrators often walk a fine line between designer and product salesmen. Many integrators take pride in offering independent consultation. However, if integrator's recommendations are being impacted by resale policies, what does this mean for the end user? End users should be cautious that some integrators will steer them away from viable products simply because those products offer less attractive financial terms.

We examined this risk in our 2011 report, "Owning the End User."