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EDITOR’S FORUM


The “Territories” Excuse is Killing Our Business


By Solomon Daniels Editor-in-Chief


This industry has ignored the online dilemma long enough. It’s time to recognize there’s no room for exclusion when it comes to the Internet.


Our Internet strategy for retail — or lack thereof — isn’t working. The reason is simple: we are trying to apply a brick-and-mortar model to a virtual environment. Manufacturers have struggled with the notion of maintaining territorial exclusivity online, but the rules are different. Exclusive territories are about keeping people out. The Web is about letting everyone in. And the Web is only getting bigger. The longer we wait to make a change, the worse it will get for traditional retailers. They will be squeezed as they rely on a declining in-store selling experience and are not able to expand to sell online. This will result in even more resentment for the already strained opinions toward online giants like BestBuy.com, Crutchfield.com and SonicElectronix.com. What we have tried so far has not worked. Shopatron was touted as a solution, but it only ben- efits the manufacturer. Retailers do not get branding, nor are they allowed to advertise products online. Essentially they are only service providers, and have to scramble for even the privilege to do that. So despite our Web woes being common knowledge, no major changes have happened in the past 5 years — except the fact that, in addition to Black Friday, we’ve also got a Cyber Monday just for online shoppers — in which 95 percent of our retailers cannot participate. Manufacturers are taking a short-sighted approach to this. Those who allow Crutchfield.com and SonicElectronix.com to sell online — but not joescarstereo.com — are essentially throwing the issue under the rug as long as they can, waiting for somebody else to make the first move. And those who staunchly talk about retaining territories and not allowing anyone to sell online are promoting an increasingly unrealistic business practice that will net them profits in the short term while they watch our retailers go out of business. It’s time we switch gears, and as an industry start to take the Web seriously. We start with these two goals: 1. That we understand the Web’s true purpose and leverage it to help our businesses. 2. That in order to survive, our retailers need to be able to participate in the online retail experience. Territories don’t exist online because they are not manageable without a significant investment


in Web-related monitoring. So what if we took away territorial restrictions as an excuse online, and let all authorized retailers sell? Of course, the immediate mention of eliminating territorial restrictions in any sense of the


Those who staunchly talk about retaining territories and not allowing anyone to sell online are promoting an increasingly unrealistic business practice that will net them profits in the short term while they watch our retailers go out of business.”


word puts many industry people ill at ease. They fear losing their only competitive advantage in an already struggling marketplace. The reality is, they’ve already lost it. Online retailers outsell any of us individually every day of the week. So all we’re really protected against is the guy down the street, and both of us are losing sales to the Internet. On the manufacturer side, the fear is that they would be unable to control how their brand is


8 Mobile Electronics December | January 2012


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