Supreme Court hands legitimate RV dealers a victory
In a 5-4 ruling last week, the U.S. Supreme Court overturned a 96-year-old law that prevented manufacturers from setting minimum retail prices. The decision puts a dagger in the heart of low-price cyberstores that are causing havoc for legitimate RV dealers.
Before the hate mail and phone calls start accumulating, I define a “cyberstore” as an INTERNET ONLY business with no serious brick and mortar storefront. Dealers who sell units, parts and accessories online AND from sales lots are NOT cyberstores. They are legitimate RV dealerships that attract, educate and serve customers online, but which also have a trained staff committed to serving customers offline, too.
Cyberstores are companies that have RVs built to order and when the unit arrives, the firm calls the customer, collects a check and hands the buyer the keys. Need service? Go somewhere else. Don’t know how to use the RV? Read a book. Want to return the product? Nice try!
If anyone has any doubt as to which companies are cyberstores and which are not, simply open the yellow pages and call a legitimate RV dealer who actually pays to advertise somewhere other than Google and ask him for the name of an online retailer that gives him migraines. Chances are there are less than a dozen cyberstores in North America that cause serious problems for the thousands of legitimate RV dealers.
Don’t get me wrong, I’m all for free enterprise and allowing the market to dictate prices. And this ruling will do little to hinder competition or eliminate price shoppers, but it will do plenty to improve value for and service to our industry’s customers.
I’m also in favor of a level playing field. This industry has struggled with customer service issues for decades. For every 1,000 RV dealers who are making huge investments in creating the infrastructure to provide exceptional pre-sale and post-sale service to their customers, there is often one RV dealer who undercuts them all, pockets his meager profit and thumbs his nose at his customers and the industry at large.
With the ability to set minimum prices, manufacturers and suppliers now have a way to control the impact cyberstores have on the industry and their legitimate dealers. We hear lots of talk about taking care of the customer. We hear lots of lectures from OEMs and suppliers alike that RV dealers need to step up and serve their common customers. We’ve heard how dealers need to invest in infrastructure, how they need to maintain adequate levels of inventory and how they need to train their staff to serve an exceptionally picky and demanding customer base. Now we can find out which firms are serious and which are all talk when it comes to helping their dealers deliver the best service for their customers.
Those manufacturers and suppliers who are serious will quickly send a message to their dealers that the companies are willing to establish minimum prices to ensure adequate compensation for dealers who must pay for service bays, trained technicians, property taxes, employee health insurance and a score of other costly expenses incurred by legitimate businesses. They’ll come out and admit that it’s in their company’s long-term best interest to ensure solid, profitable dealer base that will be in business next year and 10 years from now to handle any problems that may occur and to ensure that customers are happy and satisfied.
Those firms that are all talk will suddenly clam up. Their deafening silence will enable and empower cyberstores to continue pounding the profitability of legitimate RV dealers by making it possible for online retailers to collect a 10 or 15 percent markup on parts drop-shipped to customers or units delivered without inspections or customer orientations. These manufacturers and suppliers will shout a message to dealers that they are more concerned about selling a single item a single time than they are in creating a long-term revenue stream for their companies and business partners.
Since the advent of the Internet, manufacturers and suppliers have hidden behind the idea that there was nothing they could legally do to prevent cyberstores from drastically undercutting other dealers. And because of that restriction, these manufacturers and suppliers haven’t tried too hard to clamp down on cyberstores as long as the units and parts roll out of their assembly lines and go somewhere. Finally, they’ll now be forced to formally address the issue.
Bill Gates, of golf equipment maker Ping, was quoted in USA Today as saying, “Not every consumer is a bargain shopper. Some consumers are looking for quality, innovation, personalization and customer service when they shop.” I agree. But nearly every consumer who knows how to work a mouse will research prices online and use their findings to beat up legitimate dealers by suggesting they are “ripping off consumers” by charging more to cover their considerably higher costs of doing business.
July 21st, 2007 at 2:41 am
Bob…
You left out the giant…Giant RV. They happen to have both a conventional sales and service environment and a very active internet business.
Competing with the price choppers is a marketing adjustment from the “front-end” to the “back-end”. Let us not forget the trade, which if bought right is a big profit maker. Also a certain percentage of buyers are more concerned with service relationships and are willing to pay a little more for convenient servicability.
Bob, I do agree with you that this is a fair market economy and there are many ways to provide an RV dealership with “differential advantages” besides a “price-drop”.
By the way, the ruling will have little affect on the price-choppers, because they will increase trade values and sell trade difference.
Most of the noise comes from the moaning complaints of the salesperson who lost a deal and wants to justify why he/she lost the deal instead of looking inward and examining where he/she could have taken different steps to “earn” the prospects business.
Thanks…EJ
July 12th, 2007 at 6:46 am
Since when was sales or business in America designed to be played on a level playing field? What makes this country great is our ability to create our own success and the opportunity to do something better than our competition. In the end, the person, or company, that gets the order must have done something quite different to win. If what they do is fair, ethical, and legal under the rules of our government and in line with good business practice, then let the games begin. Sam Walton started with a single store, but everyone likes to bemoan their success. Lazydays started with two trailers on a small lot in Tampa. We use to laugh at Honda when they introduced their first car in America. Why do we like to take shots at people who found a way to be successful and blame our own failure to succeed on somebody elses’s success rather than taking personal responsibility for what we do in business every day - ourselves?
Do you really want the government setting the regulations on how you can do business, or how the companies you represent can do business?
If there are RV companies that support these renegade Internet only bandits, then just stop doing business with them and tell your business associates, suppliers, and even your competitors (that value good business practices) to do the same thing.
They will get the message, or they will go out of business. And it can happen without government intervention.
In the short term, instead of worrying about the companies that only sell over the Internet, or the customers that are stupid enough to buy from them - worry about your current customers and build the best company you can within the framework of the people and markets you serve and the companies you choose to do business with.
If you are starting out in the RV business today with two trailers on a small lot, you have the opportunity to become the next Lazydays, LaMesa, Guaranty or Beaudry. If you don’t want to be that large, that’s ok, but don’t complain about those that do and found a way to make it happen.
July 6th, 2007 at 7:25 pm
Computers are here. They are the present and our future, get over it. People do more research online prior to buying anything nowadays. Not because they don’t appreciate quality, but their free time is considerably more limited than years before. I’m sure that when the phone company first put out phone books, people complained then too.
I am certain that they are also looking for more unbiased information before they agree to part with their hard earned money.
Ebay isn’t complaining.
YOu supply the truth of what I am saying, simply by virtue that you are “online” now.
July 6th, 2007 at 4:04 pm
You do your best to compete with the cyberstores, but you still have to pay the bills when they come in. The only way this will hurt the internet only selling stores is for the manufactures to step up to the plate and help us all make this a level playing field.
July 5th, 2007 at 3:31 pm
GREG,
I will agree with almost everything you are saying, but
there is a few MEGA stores out there with 150 service bays and 150 plus live salespeople that are hurting the
rest of us just as bad. They sell (at reduced prices) and promise great service ect. but they have to come back
to their dealership, because very few dealers will give them the care they need. I know some will say that it is
all warranty, but what about the education of how the thing works, whats this gadget for ? ect ect,. Who pays
for the sales time or service techs time ? No dealer that
I know, and I have been in this business for about 30 years, needs or wants these customers (who are locked in
a upside down deal) and cant trade out. What happens then. Their comment is I will buy my next from you. If
you are still in business 12-15 years from now. We have
had to limit our service to our Customers,then transit
Customers and if any time left, to People who Bought from that mega store, and there has been no time
left.
July 3rd, 2007 at 2:57 pm
Not all cyberstores are strictly limited to internet-only sales, especially some of the more renowned (reviled?) ones. Some actually do have a “brick and mortar” presence, meager or not. I could name 2 or 3 right now, but I’m not certain whether that would be allowed so I’ll refrain (many of you may already know of whom I speak).
But I would disagree that the consumer is not price focused, because I think they are. In my opinion, quality has suffered dramatically over the past decade primarily due to that. How else would you explain Walmart and all the inferior crap they sell? Truth be told, the general buying public seems to have forgotten that quality really does matter. Look no further then your own cell phone for an example. Like most everything today it’s probably a flimsy piece of junk that will get disposed of in a year or two. Myself, I’d rather buy high quality stuff and keep it for a long time, but apparently I’m in the minority today.