Price increases and fixing among aftermarket performance parts resellers

[Mark Rinker]

As an avid motorhead, I am constantly pricing, buying and testing performance parts from aftermarket resellers - many online using Ebay. I have noticed a few obvious examples of price fixing (http://en.wikipedia.org/wiki/Price_fixing)among these resellers - most recently and most notibly those reselling Superchips products. Here is an example:

Searching Ebay on the keywords 'Superchips propane' (http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle=superchips+propane&category0=) returns results from six different resellers with exactly the same product - all selling at exactly the same price. None are being sold at auction, where the product could potentially be sold for under list price. My guess is that all have been instructed by Superchips that they can sell on Ebay, but only at list price, and NEVER at auction, only under 'fixed price' listings - otherwise someone would undoubtedly break rank and lower their price, offer auctions, or accept online offers from potential buyers in search of new customers.

Try searching on 'Superchips Flashpaq Duramax' (http://search.ebay.com/search/search.dll?sofocus=bs&sbrftog=1&catref=C6&from=R10&mppfqy=superchips+duramax&_trksid=m37&satitle=superchips+duramax+flashpaq&sacat=-1%26catref%3DC6&fmmk=&fmmd=&fylo=&fyhi=&mppfqy=superchips+duramax&sargn=-1%26saslc%3D2&sadis=200&fpos=ZIP%2FPostal&sabfmts=1&ftrt=1&ftrv=1&saprclo=&saprchi=&fsop=1%26fsoo%3D1&coaction=compare&copagenum=1&coentrypage=search) and you'll see $399 is all the rage...another mandated minimum, it would appear. A similar search on 'Edge Duramax' (http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle=duramax+edge&category0=) returns a variety of prices and fixed price auctions, some with 'Make an Offer' enabled for brand new product, by comparison.

Whether price fixing by Superchips and/or their resellers is at play, and whether its illegal or not, is up to lawyers to interpret. However, this consumer's observation has led me to look elsewhere for products marketed with less obvious control over price.

[JeepSJ]

We used to see a lot of web based discounting of software products that we sell. The MFG could only provide a suggested list price, they could not force the on-line retailers to set a specific price. Their lawyers said that price fixing was illegal. So, they did the next best thing...if any of the retailers advertise a price that is below SLP, then they lose margins and other benefits from the manufacturer. They basically created a new margin/support level that is specifically for people who advertise at the below SLP prices.

I did some work for one of the big cam/crank/rod mfgs a while ago and they set me up as a customer. In reading through their agreement it basically said the same thing, that if their customers advertised prices that were below a certain level, then they would automatically get bumped to the lowest margin tier.

Price fixing by the mfg is illegal, but they can certainly legally do things to make life uncomfortable for people who do not follow the pricing rules.

[More Power]

What JeepSJ said....

Manufacturers set the retail pricing structure primarily because of the Internet. The brick & mortar retailers are the mainstay of the industry. They have more overhead, and as a result are better risks for consumers because of their permanence (managing warranties & service). The Internet provides an opportunity for tailgate vendors to compete with the brick & mortar vendors. If unchecked, the brick & mortars would stop selling because they can't compete with a vendor who has no overhead. Before the Internet, this wasn't a problem.

Talk to any registered and certified home builder in any state, and they'll tell you they can't compete with a tailgate carpenter who isn't bonded and insured, and doesn't pay the various taxes or workman's comp. Mark might have some stories about the freight hauling business as well.

Jim

[Mark Rinker]

If they have problems with 'tailgate resellers', then they need to raise the bar on who they are signing up at SEMA to represent their products. Maybe require them to have a retail site, chassis dynamometer, auditable/proven sales figures for the last 5 years...

Most of the 'pricing guidelines' I've seen comes back to preventing turf (territory) wars between resellers, not defending 'brick and mortar' resellers from 'tailgaters'. There is less and less brick and mortar in the motorsports industry anymore - in fact it could be argued that its far and away an internet sales model. Look at Summit Racing and Jegs, for example.

Forward thinking companies have come up with ingenious ways of preventing turf wars, while providing for a reasonable level of price competition. Check out www.h-d.com (http://www.h-d.com) and see how they have managed online shopping relative to dealer territories.

Manufacturers that promote their resellers, driving traffic to their doors, showing them how to bundle products and services, etc. while providing warranty support will succeed in the end. H-D is a great example of a mega manufacturer that knows the importance of their dealer channel.

[Kennedy]

If they have problems with 'tailgate resellers', then they need to raise the bar on who they are signing up at SEMA to represent their products. Maybe require them to have a retail site, chassis dynamometer, auditable/proven sales figures for the last 5 years...

Most of the 'pricing guidelines' I've seen comes back to preventing turf (territory) wars between resellers, not defending 'brick and mortar' resellers from 'tailgaters'. There is less and less brick and mortar in the motorsports industry anymore - in fact it could be argued that its far and away an internet sales model. Look at Summit Racing and Jegs, for example.

Forward thinking companies have come up with ingenious ways of preventing turf wars, while providing for a reasonable level of price competition. Check out www.h-d.com (http://www.h-d.com) and see how they have managed online shopping relative to dealer territories.

Manufacturers that promote their resellers, driving traffic to their doors, showing them how to bundle products and services, etc. while providing warranty support will succeed in the end. H-D is a great example of a mega manufacturer that knows the importance of their dealer channel.

I'm not going to get sucked into this, but I support what Edge has done. This forces resellers to sell based on salesmanship, product knowledge, and product support rather than simply hiking up their skirt and saying "$50 a pop..."

The problem with your suggestion is that there are so many different resellers involved that the offenders always got product from someone and it's about impossible to get the main distributors to scrutinize who they sell to. When I first became a Banks dealer I had to send a picture of my ship and sign to prove that I really had something more than a pot to piss in...

[tanker]

When I buy something that requires some thought on installation, or I may have a question, I always buy from someone who knows the product and can give me an answer when I call. I don't like being passed down through the cracks. Buying from someone who only sells it, has no service or technical personel is always an issue when something does not do what it is supposed to do.
I also must give credit where credit is due. I have been buying products from John Kennedy for a number of years , both for my 6.5 Suburban and now my 05 D-Max. When I have a question, John has the answer's. John has been using these products on his own fleet of trucks. Johns trucks perform well and the numbers show it.
Yes I may be able to find a lower price, but there is a comfort level in doing business with someone who cares about their customers.

[FBJR]

Whether price fixing by Superchips and/or their resellers is at play, and whether its illegal or not, is up to lawyers to interpret. However, this consumer's observation has led me to look elsewhere for products marketed with less obvious control over price.

A seller can sell a product for any price they chose, even below MAP and cost to promote business. This was a suit just settled after being overturned as MAP being the final word before.

Of course this does not mean the Manufacturer has to sell to them if the price has not been adhered to.

We see alot of this in the hobby business with people selling from thier garage and hurting the brick and morter guys. Many manu. have caught on only sell to "real" shops now.

I too find myself looking for deals, but from a rep business. Ebay has really turned into a giant retail store though now.