Cadence Sound is the latest company to announce it is shifting to a dealer direct model and cutting off business with Internet sellers. Earlier this year, SoundStream and Precision Power did the same, while Pioneer announced it was strictly enforcing its Minimum Advertised Pricing.
Many other suppliers in recent years have implemented procedures to cut out Internet discounters including Kenwood, Kicker and MTX. Maxxsonics has also been gradually offering dealer protected brands to mix.
Suppliers say that Internet sellers have squeezed margins to the point that dealers can’t make money on their products and so they are shifting to a price protected model.
Cadence Monday announced, “We have decided to cease business with Internet resellers and put our efforts into dealer-direct as well as our own e-commerce website.”
Cadence lost a quarter of its business last year when it cut off Internet discounters. And it let go of the last of its 10 distributors about 10 days ago, said Hernando Mares.
“By cutting out two-step distributors, Cadence is able to lower the price to the end user and still give a profitable margin to our dealers while also giving them lower pricing,” said the company.
In addition, Cadence has hired an online marketing team that is focused on controlling Internet pricing, and “making sure the official Cadence website is the only place for online sales,” it said.
The internet! The death of many companies who don’t deal with this selling channel properly. The rush for the increased sales the internet provides companies ends up slowly dissolving the account base you built up that made you successful in the first place. One by one retailers and distributors both start dropping your line regardless of the quality because they can’t make money and no one wants to just trade dollars to sell a line. Large internet companies who have minimal or reduced expenses compared to a traditional retailer or distributor make large purchases from a supplier and receive deep discounts which allows them to sell “direct to the consumer” at prices traditional accounts can’t compete with. Years ago accounts could buy a subwoofer and double their money selling it to the consumer thus making them profitable to stay in business, pay their bills and usually make a good profit. What happened to that mindset??