Wed Apr 11, 2018
The following publisher's letter appeared in the April print edition of RV News magazine.
I recently spent time talking with RV dealerships about aftermarket parts and accessories and the impact of online retailers such as Amazon. I spoke with a dealer who said he saw little to no value in updating the appearance of his aftermarket retail store or putting in new merchandising materials.
This naturally piqued my interest. One of the points he made was how his own business was the primary customer of parts and accessories and that over-the-counter sales represented only 10 percent of his aftermarket sales annually. Most aftermarket sales were to the company’s service/repair department. He expressed frustration with competing with online retailers’ pricing.
He was exasperated because he felt suppliers were either selling directly to Amazon, which makes the products available at a cost lower than at what he as a retailer could buy, or suppliers were selling to someone who, in turn, was selling on Amazon at a price lower than he could buy for.
He said the impact of this practice prevented his dealership from taking good care of its customers or being profitable in aftermarket retail, but also made the dealership, and in a broader sense the RV industry, look irreputable.
“It makes it look like me, as a person who sells RVs, is attempting to rip them off on these products because my prices are way higher than what they find online. It’s not a huge leap in thinking that if I’ll rip them off on low-cost items, I’m probably ripping them off when I sell a vehicle. Online RV dealers who sell RVs for low to little margin only reinforce this thinking. Then later, when they come in to get service from me, when they get scheduled behind my customers who bought from me and have extensive wait times to get a repair, once again the whole experience makes our industry look like a bunch of crooks. In my market, I’m the only RV dealer for many miles around. I represent the RV industry to my area,” he said.
Sadly, I had to tell him some suppliers don’t care how their product moves through the channel or ends up in the consumer’s hands. They care about gross sales and consumer demand. The consumer ultimately decides a product’s value and will buy at the lowest price if no other additional value is built in. I quickly backed that statement with the qualification that there are suppliers who very much care how their products are sold. They care who sells their product and at what price. Dealers can choose to offer aftermarket products only from those suppliers.
What I didn’t have the heart to tell him was I’ve heard countless reports there is allegedly at least one, possibly two (and maybe more) warehouse distributors who are now selling direct-to-consumer, or via Amazon. Allegedly, they are directly competing with the very dealers to which they supply and sell aftermarket parts and accessories.
These reports have been circulating for some time. Such reports are always hard to investigate because online retailers can make it difficult to track who exactly is selling a product. Sometimes, even tracking the location from where it shipped can be deceiving. Because so many products do not have individual part numbers, it’s hard to say how the product ended up online and who is selling it. Without hard evidence, as a news organization, it’s hard for RV News to call out these companies and I’m not sure I should if I knew (and I probably do). I’m reluctant to endorse one business model over another because, as I said earlier, the consumer is the ultimate judge of the viability of a business model and/or channel.
I will say I have heard these reports often, from numerous sources, and the dollars and cents of the product pricing doesn’t lie. I believe there are either warehouse distributors doing this or there are entities posing (to get discount pricing from suppliers to sell at prices dealers can’t compete with) as warehouse distributors doing this. The pricing indicates it. If companies are open and honest about this go-to-market plan, and people choose to do business with them, then I am not sure that’s a problem at all. If they are competing secretly, which seems to be the case for some of these, it may be problematic.
I DO BELIEVE the dealer/consumer relationship is vital to our industry. I also believe two-step distribution is the most efficient way to move aftermarket products through the channel and help consumers avoid safety issues.
The one thing I do know is, “someone runs the credit card.” In journalism, they say “follow the money” and everything becomes clear. If dealers bought product online and followed the money, they could eventually find out if they are potentially “in bed” with someone competitively working “in secret.”
Like I mentioned, I don’t endorse business models or business plans. We live under a system of capitalism and a free market. Businesses can and should do what they individually need to do, to compete and be profitable. That said, the dealer’s comments did get me thinking. Because I love the RV industry, things that threaten it get my hackles up. The big questions on my mind now are: “Can the AFTER-market, have an AFTER-effect that sullies our entire industry? Is what is happening with RV parts/accessories a danger to RV dealerships? Does the impact of this contribute to a terrible consumer experience? Long-term, is this a danger to our industry as a whole?”
I haven’t really decided what my answers will be yet. I know there are some really smart minds in our industry. If collectively our industry (or just dealers for that matter) decide this is a threat and they make a point to find out from whom and from where online product is coming, ultimately those facts will be discovered and revealed. Will companies then regret their decision and suffer long-term consequences because of their choice of method to market? Are they instead the front-runners of a proven business strategy and it’s the dealers who need to innovate and change? You tell me. The one thing I know is when businesses can make informed, intelligent decisions and choose who they do business with based on comprehensive data, the “cream” of our industry always rises to the top.
RV News Magazine Owner, Publisher