Selling Direct: To Fight or Not To Fight?
There are many external factors that have an impact on HVAC contractors’ businesses. The most notable is the weather. We all know what extremely hot or cold temperatures can do for HVAC contractors’ and distributors’ successes. A lot of planning goes into yearly budgets based on weather conditions.
But what about other external things that tend to wreak havoc on planning, budgeting, and most importantly - profitability. Are there just some things, besides weather, that can’t be overlooked and need to be addressed? Or is it better to concentrate on the core business and not worry about things beyond your control? That’s a tough question. One that has been magnified is the growing menace of businesses that prefer to cut out the middleman and sell directly to the end user.
I’m talking about Internet retailers who sell HVAC equipment directly to the end user and cut out the distributors and contractors, thus robbing the brick-and-mortar businesses of profits made on equipment markups and warranty work, all in the name of cyber-profiting.
I’ve written about these Web portals before, back in the heyday of dot.coms and the effects that online buying had on established neighborhood businesses. I even took my argument to some manufacturers and one replied by saying its company only saw online selling as a regional problem, and that it wouldn’t impact its business. The newness of the Internet probably kept others from commenting on its impact because there wasn’t enough established criteria to make an informed opinion.
Well guess what? There is enough criteria now. The problem just may be: how to wean the needed information, i.e., sales figures, from Internet HVAC retailers or manufacturers whose products these retailers sell. The former may be willing to share those totals while the latter, I’m guessing, might not.
On the other hand, you could blame the manufacturers for allowing their equipment to end up in the hands of these retailers, whether the retailers bought them directly from the manufacturer or through a third party.
I do know that most, or hopefully all, manufacturers automatically void the warranties on their products if they are sold directly to consumers. That is a good and obvious move that all manufacturers should make. I know they are in the business of selling boxes but their real customers are contractors and distributors, not the end users. You can debate that with me if you’d like but you won’t win the argument.
HVAC contractors can fight back by not installing equipment that they did not sell to the customer - period. It doesn’t matter where the equipment came from. By not installing it you are telling the end user, and the Internet retailer, that the Web is not the place to buy or sell HVAC equipment.
Or, you could do what some businesses choose to do: ignore this practice and continue to do what they have done for many years. That is, offering the best service possible backed up by experience and trust.
Maybe there are HVAC contractors who can profit by fixing the mistakes of others who choose to install their own equipment. And maybe there are HVAC distributors who can profit by selling parts needed to correct a faulty installation. Heck, there is always money to be made fixing other people’s mistakes.
Just be aware that Internet selling is not a blip on the screen - it is here to stay and getting even bigger. How you choose to deal with it is entirely up to you.
Publication Date: 08/27/2007
But what about other external things that tend to wreak havoc on planning, budgeting, and most importantly - profitability. Are there just some things, besides weather, that can’t be overlooked and need to be addressed? Or is it better to concentrate on the core business and not worry about things beyond your control? That’s a tough question. One that has been magnified is the growing menace of businesses that prefer to cut out the middleman and sell directly to the end user.
I’m talking about Internet retailers who sell HVAC equipment directly to the end user and cut out the distributors and contractors, thus robbing the brick-and-mortar businesses of profits made on equipment markups and warranty work, all in the name of cyber-profiting.
THE PLAYERS ARE EASY TO FIND
Most of you probably know some of the companies I am talking about. There is no need to give them any extra ink in this column. I’ll say for the record that I don’t like or endorse their methods of doing business. A lot of good businesses are affected by what they do - HVAC contractors and distributors who have taken many years to build up a good business, long before the Internet, only to see Internet profiteers chip away at their customer base.I’ve written about these Web portals before, back in the heyday of dot.coms and the effects that online buying had on established neighborhood businesses. I even took my argument to some manufacturers and one replied by saying its company only saw online selling as a regional problem, and that it wouldn’t impact its business. The newness of the Internet probably kept others from commenting on its impact because there wasn’t enough established criteria to make an informed opinion.
Well guess what? There is enough criteria now. The problem just may be: how to wean the needed information, i.e., sales figures, from Internet HVAC retailers or manufacturers whose products these retailers sell. The former may be willing to share those totals while the latter, I’m guessing, might not.
WHO IS RESPONSIBLE?
I’m not going to make a judgment about which parties are the most responsible for cutting HVAC contractors and distributors out of the profit picture. On the one hand, you could blame the new kids on the block - Internet retailers who attempt to sell HVAC equipment and parts to anyone with an e-mail address, credit card, and deliverable address (and despite the fact that they are selling equipment to people who, by law, cannot install it).On the other hand, you could blame the manufacturers for allowing their equipment to end up in the hands of these retailers, whether the retailers bought them directly from the manufacturer or through a third party.
I do know that most, or hopefully all, manufacturers automatically void the warranties on their products if they are sold directly to consumers. That is a good and obvious move that all manufacturers should make. I know they are in the business of selling boxes but their real customers are contractors and distributors, not the end users. You can debate that with me if you’d like but you won’t win the argument.
HVAC contractors can fight back by not installing equipment that they did not sell to the customer - period. It doesn’t matter where the equipment came from. By not installing it you are telling the end user, and the Internet retailer, that the Web is not the place to buy or sell HVAC equipment.
Or, you could do what some businesses choose to do: ignore this practice and continue to do what they have done for many years. That is, offering the best service possible backed up by experience and trust.
Maybe there are HVAC contractors who can profit by fixing the mistakes of others who choose to install their own equipment. And maybe there are HVAC distributors who can profit by selling parts needed to correct a faulty installation. Heck, there is always money to be made fixing other people’s mistakes.
Just be aware that Internet selling is not a blip on the screen - it is here to stay and getting even bigger. How you choose to deal with it is entirely up to you.
Publication Date: 08/27/2007