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OPINION: TireMinder stands up to idiots

OPINION: TireMinder stands up to idiots

By Greg Gerber
Editor, RV Daily Report

Minder Research, the company that developed TireMinder tire pressure monitoring systems, deserves hearty applause today for taking a stance against retail giants Amazon and Walmart — and RV dealers should be delivering a standing ovation.

Yesterday, the company issued a “do not ship” directive to its wholesale distributors to block further shipments of its product to Amazon and Walmart. Why? Because a computerized pricing battle had dropped the price of TireMinder products to a level that even wholesale distributors couldn’t match.

Walmart’s computers and Amazon’s computers were locked in an epic struggle of price matching to the point both companies were willing to lose money in order to claim the lowest price. When stupid companies have nothing else to offer customers, they can always compete on price.

It’s the age old philosophy that a company may loose a little on every sale, but it will make it up on volume. Which, when you think about it, is how once-healthy companies wind up bankrupt.

“See,” they tell the bankruptcy judge, “we delivered on our promise that nobody would ever sell a product for a lower price than we would.”

For too long, online retailers have undersold brick-and-mortar stores on almost every product they sell. More retail stores have closed in America since January than closed in all of 2016, and we have seven months left to go. Nine U.S. retail chains have filed for bankruptcy and 90,000 people have already lost their jobs. You can read about that at National Public Radio.

But, when companies like Amazon deliberately sell products at prices lower than they can buy them at wholesale, just to drive a stake into the heart of a competitor, then no retailers are safe.

Not even Emperor Marcus Eralius Augustus Tiberious Lemonis, the part-time CEO of Camping World and full-time star of his reality TV show, The Profit, could compete. Although he has been known to adopt the same predatory pricing strategy against targeted dealers in certain markets, not even The Profit can compete against the Amazon death star.

Last year, Amazon clawed in $137 billion in revenue and dropped $2.37 billion to the bottom line — a profit of 1.7 percent. Walmart, on the other hand, raked in $485 billion in sales and dropped $13.6 billion to the bottom line — a profit of 2.8 percent.

The financials currently show Walmart is the bigger company. But, its revenue has grown just $9 billion since 2014. During the same period, Amazon’s revenue grew $46 billion.

Because Amazon has no retail stores, it brings in $398,322 in revenue per employee, while Walmart manages $210,932. Which company is more efficient?

You can verify all these numbers at Market Watch. Just look up the profile and financials for Walmart (WMT) and Amazon (AMZN).

Unless more companies like TireMinder work to reign in these monopolies, the future is very bleak for retailers. How bleak? Imagine your closest shopping mall transformed into an Amazon warehouse stocking everything from groceries to clothing to electronics to auto parts to appliances — you name it.

All other retail outlets in the city are forced to close because they can’t operate at a bottom line margin of 1.7 percent while Amazon uses robots to handle products and delivers whatever people need directly to their homes in an hour. Impossible? Amazon has already rolled out its Prime NOW program to 30 metropolitan cities offering free delivery in less than two hours.

Minder Research did the right thing in suspending shipments to these profit-busting monopolies.

The weakest link in the company’s stand-up-to-idiots strategy now lies in wholesale distributors honoring the request. Are those firms willing to sell out their dealer customers in order to deliver a product at a loss to Walmart or Amazon in hopes of making it up in volume?

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About Greg Gerber

Greg Gerber is a freelance writer and podcaster who has been writing about the RV industry since 2000. He is the former editor of RV Daily Report and can be reached at greg@rvdailyreport.com.

9 comments

  1. Reading this, all that comes to mind is RV Wholesalers, Lakeshore RV,…..

    • john f chmielewski

      i can agree with you to a point. but some dealers jack up those prices that people cant afford to buy a safety product, so they look for the best price. many of your sellers keep those prices up so high. they dont think about personal safety over there high prophet.

  2. Greg, as always your Editorials are insightful, but I would like to offer a different point of view based on methods that were once used by manufacturers that successfully addressed this problem. I’ll use a product that was once a staple of the living room for this example…the VCR.

    In the 1980’s I worked for Panasonic and its products were sold in a variety of retail and wholesale channels. Back then there was no internet sales channel, but VCR’s were heavily discounted and used as “door busters” and many times became highly advertised loss leaders to get traffic into stores. Yes, Crazy Eddie’s prices were insane!

    What Panasonic and other manufacturers did to keep the distribution channels clean was to offer derivative products. Their VCRs were sold in high end audio/video stores, catalog showrooms, chains such as Target, department stores (remember when they had electronics departments?) and yes, Walmart.

    Each mode of distribution had a slightly different (derivative) model of what was essentially the same VCR. For example, Walmart might get a stripped down model that could be advertised and sold at a bargain price while the department stores and A/V stores had a model with additional features and more desirable specifications that could command a higher price point. This also gave the consumer choices. Did they want a bargain basement basic VCR to simply record and playback programming or did they want one that included enhanced video quality or even a step-up remote control?

    While I haven’t used the Tire Minder product, I can only wonder if it’s possible for them to make slightly different models of their products that would offer features designed for specific modes of distribution? A stripped down model could be sold at Walmart or through Amazon and a more robust, feature loaded version could be sold at RV bricks and mortar stores.

    Where there’s no simple solutions, I suggest this as I’ve never been a fan when manufactures adopt a minimum advertised or sales price program as it seems that in many cases, the consumer loses. I have the same feeling about manufactures who advertise unrealistic MSRP prices that only uneducated buyers pay. I agree with you in that the convenience of shopping online and having the product delivered to your door has changed the game and it’s made it easier to comparison shop than ever before. This has hurt the little guys, but if they had a product that can compete on merit and not just on price, then the playing field might be leveled.

    While there’s two sides to this story, this side is just my opinion.

  3. Jim Farnsworth

    Andy,

    At one time Panasonic, Sony and a host of other name brands meant quality. To me when they started offering lower spec products under their name they cheapened that name. Better to separate the lower spec with a new name.

    • Jim,

      I agree with having an alternative brand name, but the example I cited was from the 80’s when both Panasonic and Sony were known for quality products.

  4. I see this a lot, with “prices too low to advertise”. You have to put the item in your online cart before you can see the price. It’s an easy way that retailers get around their contracts with the mfrs. It’s not their fault if the consumer abandons their cart without buying and the price doesn’t show up on a search engine shopping search.

  5. Perhaps some of you can help me understand this better, but I thought the manufacturers sold their items to distributors, or other wholesalers. Why would Minder Research care if distributors and wholesalers were willing to loose money. Wouldn’t Minder Research still move their products?

    • Frankly, some companies do have excellent business ethics. They do care about the Mom & Pop businesses, and I’m glad they do. Now, I wish some in the RV industries would take note of what it looks like to practice good business ethics.

  6. I guess my harsh attitude is that old “why do I care?” The manufacturer, while he may have a business ethic that is unsurpassed, he is still assembling those gadgets using the least costly components and quite possible even partially assembled ‘elsewhere’ from components, also from ‘elsewhere and maybe even have a made in USA sticker on it if final finished here. This is a competitive world with many sources fighting for your dollars. My dollars are spent at a competitive source which is especially important to me since our almighty government and my former company’s meager pension have not kept up with the COL. Thankfully we have decent savings but do not like to draw it too far down as, again, recently past government in their practices have made entrepreneurship a bad word for new leading edge companies in the US. As far as a lower quality item by a company, caveat emptor is always an important consideration. Tire Minder withholding shipments from big retailers – their prerogative, but eventually, it is their bottom line.

    A further note, Walmart and AMAZON prices – they for sure aren’t always the cheapest, often exceeding that mythical MSRP, in today’s world but they are usually convenient vs. running around for hours looking for an item

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