An Open Letter To Manufacturers To Enforce Internet Pricing

I have been in the plumbing supply industry for 37 years and was twice recognized as “Wholesaler of the Year” by Supply House Times. Since 2000, I have operated the leading Web site for decorating plumbing and lighting products for consumers (www.Faucet.com or www.Lightingshowplace.com) and for pros (www.Build.com).

Industry manufacturers, wholesalers and showroom operators have faced and overcome many challenges during my time in the business. None were as all-encompassing as the challenge of how to integrate the newest channel (the Internet) into the existing distribution channels.

I’m writing this open letter to plumbing industry manufacturers to encourage each of you to implement an IMAP (Internet Minimum Advertised Price) policy. We have been an online merchant since 1994 and have worked with the leading industry manufacturers to develop incremental online opportunities without channel conflict.

We live in a multi-channel world. Consumers and trade professionals go online to research products of every kind, including decorative plumbing products. Taking nothing away from many of the quality manufacturer sites, consumers and pros more frequently visit online merchants because many of these Web sites have ALL the industry brands in one easy-to-navigate site and have qualified people available on the phone to answer questions.

Less than 4% of decorative plumbing faucets and fixtures are sold online. Conversion rates (the percentage of visitors to a plumbing Web site who make a purchase) is less than 3%. That means that 97% of the visitors are doing research and will transact with a more traditional channel member (showroom or retail store). ALL the information the visitors get from an online merchant can and should be supportive of the brands and supportive of assisting the transaction that ultimately takes place in a showroom or retail store.

This can happen ONLY if the price advertised online is consistent with prices that are typically charged in showrooms.

For several years, we delivered on all of the things we proposed to plumbing manufacturers in 2000 and complemented the efforts of industry showrooms. In the last few years, barriers to entry have come down. The Internet has been flooded with new Web sites and pricing for your products has deteriorated rapidly. This has created conflict not only for the legitimate online merchants like us, but more importantly for ALL of your showroom customers who have made a significant investment in representing your company and your product line. While we thought the deterioration had abated, it has recently picked up and we expect that it will get worse. For example, there are Internet merchants selling major brands for more than 50% off list and shipping the items for free one at a time.

The decorative lighting industry in which we are also active was confronted with a similar challenge. They chose in late 2004 to start implementing and enforcing IMAP policies and have since then re-issued, strengthened and enforced the policies and improved the business and profitability of ALL of their channel members (particularly their showroom customers). The process has been so successful that most lighting industry manufacturers have raised their IMAP from 1.8-times dealer cost to 2.0-times dealer cost effective July 1, 2008.

We would expect that complaints from your showroom customers about pricing offered by some Internet merchants will grow, particularly as everyone is going through a significant downturn in business.

We have become experts in IMAP. We understand the challenges involving the different parts of the supply chain and can at the very least provide you with information that could help your internal discussions. While many manufacturers will only take action once many others have, I would suggest to you that those who move first and do it the right way will have a competitive advantage.

Please let me know if we can help in any way.
David Berman, CEO
Decorative Product Source Inc.
877-650-8030 x124
dberman@dpsource.com
www.dpsource.com

Electric Floor Warming Issues

I am the product marketing manager at EASYHEAT. I recently read Dan Holohan’s article on Hydronics Talk: “And In This Corner” (Supply House Times, June 2008, page 138) and took exception to a comment he made about electric floor warming in showers and wet areas. I have attached our architectural detail of installations using a waterproof membrane for our UL-approved application of floor warming in showers and wet areas. There is absolutely no danger of electric shock when properly installed, as is true with any proper installation. It is acceptable to point out competitive advantages and disadvantages, but not misconceptions.
Kathleen Scranton
Easy Heat Marketing Manager
East Granby, CT

Dan Holohan responds:
I wrote, “Some folks will continue to get antsy when it comes to stepping all wet and dripping out of a shower onto a floor that contains a heating pad, though, so time will tell with this competitor.” I think that’s true; some will get antsy, and within the context of this article, that resistance does pose a challenge to anyone marketing electrical radiant products against hydronics. The article is about the competitors of hydronics. I didn’t say that the product was going to electrocute anyone; I said that it will make some people antsy. I stand by that.