Totally unethical business practices.
 

The more time I spend in this business, the more I am disgusted at the greed I see in the motorsports market. Today I hit the last straw and have to vent:

SO I have a long time customer that owns a custom car that uses a Toyota Supra flywheel. He wanted to upgrade to a Tilton style. Turns out that some time in the last 12 months Tilton granted exclusive sales of this product to a company called Titan Motorsports.

So we call them and ask for a quote. It is normal in the industry to extend a courtesy business-to-business price to other business to allow both parties to make a little money on a part. IN 2011 we sold this flywheel from Tilton for around $600. Titan quoted us over $1000 for the part. Needless to say the customer balked at the price.

Well so we completed the rest of his order and later on got a note from him that said Titan sold it to him for $695. So they boosted the price to a dealer by 50% and then sold it direct to our customer for less?! Are you kidding me? This is nothing but greed. They denied the business to us so they could make another $50?

I ran into a similar situation with Racepak. When they first released their IQ3 logger dash they had trouble keeping it in stock and kept telling me they couldn't fulfill our requests for stock orders. I'd be waiting on stock for months and find out that my customers were able to buy it directly from them. They were holding back stock to steal business from their own dealers! Happened 3-4 separate times before I flat out refused to do any business with them any more.

You don't need to tell us, you need to tell your customers. Print out this thread, and put it on the wall.

This does sound really crappy; however, it sounds like the customer won out in the end. I mean, if Titan HAD sold you the part for $600, what would you have charged your customer? I'm sure it would have been more than $650...

Guy,

We used to SELL it for $600. That's not what we paid....

I suppose I should take my own advice about reading comprehension I used in another post...


Well, yeah that's pretty much crappy all around, then.

The customer is also put at a disadvantage, because if he bought the part from the shop and had it installed by the same shop, if the part failed under warranty, he would most likely be covered, but now he supplied the part to be installed and if something goes wrong, the customer would need to pay the labor again.

I hear you brother. I have a small independent motorcycle shop. I was a dealer for a certain brand of exhaust. I go to the local swap meet and the manufacturer of the exhaust is there with a big trailer full of exhaust with a few flunkys selling pipes at below my dealer price and installing them for free. All cash. I told him to come pick up his pipes I had in stock. Nothing like screwing your dealers.

Titan, I remember reading about some of their 1000hp Supras. Guess Tilton flywheels for Supras won't get used unless they install them down in Florida at that shop.

That ought to be good for business

I went through the same thing when I had my online motorcycle race parts store. I ended up dropping several manufacturers because I was tired of competing with them. Especially when they held "group buys" on forums and sold product for less than my cost. Nice.

Mahle is exactly the opposite.

If I buy directly, they boost the price. If my mechanic buys them, then P&Cs are much cheaper by a few hundred bucks.

Happens in other industries as well. There are a few well known shooter supply type catalog sellers online that won't do business (via website) with customers in a couple of states since they have retail partners in those states. And, many firearms stuff manufacturers sell to the public at MSRP, so you can often find better prices thru dealers (both brick-n-mortar and online) that carry those products.

Mfg should have fixed pricing from now on to protect their dealers. Group buy on the net is Bull siht.

Look at the bright side. If it fails, it's on your customers dime and you won't have to eat the labor on a rebuild.

That's not the point. It makes the OP look or sound like a greedy dumb ass. That's BAD for business. you have just lost the most important part of business, trust. I deal with this stuff on a daily basis. Internet, local or Craigslist guys and what not.

If it helps. Businesses that do this sort of thing generally don't last very long.
They may run some good numbers initially but in today's market customers want value and they don't like being taken for granted.

IMO... If you're running your own business you must not focus on profit alone. The ethics you practice are a big part of how your business is perceived.

Suppliers that do not provide a discount to installers are being shortsighted.

People like you boost their sales, if they can't figure that out then they can't be too bright. The discount is not a courtesy as much as an incentive for you to sell the product.

I don't see it as an ethics issue at all. There are different models to sell product.

A race shop, offers the customer the advantage of being able to buy things all on the same bill.

Selling to a race shop, offers the producer the ability to sell multiple in one order, and not deal with individuals.

If race shops are not likely to buy that product from the producer in quantities above single units, you might run into manufacturers seeing little difference between dealing with the end user vs a shop.

Eithics comes into play, when say, a dealer takes the time to design an entire system for a job, and he never gets payed for that design work as the manufacturer stepped in and sold it direct.

So maybe its bad business practice for the industry, but I don't see it being an ethics issue as outlined in your post.

The ethics comes into play when they raise the price 50% to prevent the consumer from purchasing from us after securing an exclusive deal.

Zero dealer selling support is a really a stupid way to do business with wholesalers and retailers. As a manufacturer, you NEED stores, wholesalers to market and sell the product. Burning the lot by undercutting the guys who buy and then sell your product is a good way to get your product kicked out of the store.

A retail store is really a giant marketing company, they figure out ways to sell the product to the end user.

As a manufacturer, you sell the product at full MSRP, maybe free ship if the cust buys directly- to protect your wholesale distribution. The retailers such as cstreit are to undercut that price.

If you aren't going to make money sell the product, why would you sell that product? I would call up the rep at Titan and knock his head off, then drop the product line. Let the Manufacturer market and sell the product themselves...

Manufacturers who undercut their retailers get dropped, same with manufacturers who let their product line get whored out by letting their product get advertised by retailers at low margin. A good manufacturer protects their product line by cutting off retailers who ADVERTISE the product at low margin, making it tough to make money with the product.

Drop them, find a another product sold by a Manufacturer that knows what they are doing. These guys are morons..

rjp

PS as a manufacturer, you NEVER discount the product- you advertise a high MSRP on the manufacturer website- it establishes the product worth in the mind of the consumer. When they shop, a discount off MSRP is now a "good deal". If you advertise a discount as a manufacturer, you make sure the wholesalers are also involved with giving discounts. Whoring out your product line by letting it be sold anywhere for cheap and no margin is a good way to destroy said product line. No one wants to sell something they can't make money off of.

I'm a direct sales person for a company that I represent. The problem I have sometimes is that we have distributors that buy and sell from us. I find myself selling against my own company and distributors to undercut a price that we sell to distributors. Nightmare.

Document it. Go back to Tilton and turn them in. Titan may be in breach of their contract which would forfeit their exclusive rights.

IDK if reporting this stuff to Tilton is going to make any difference. That may fall on deaf ears. But I think it's worthwhile to let OP's customer know about the pricing shenanigans, to avoid the impression that the OP's shop is trying to gouge him. Keep the trust of the customer that there are things out of the shop's control.

Yes. You want to treat customers like each is a friend.

Buy a bunch from an outside source and then blow out at cost on ebay.

rjp

It's really bad as a merchant when you buy the stuff to stick in stock, and the manufacturer does lowball stuff like that. You tied up your money in merchandise you'll never make a profit out of.

Email OBX and ask them to pump out 100. That'll sink the market... It's the Southwest Airlines of go-fast parts.

This... lol :cool:

^^^^^^^^^This as well or something like it where you; the dealer, takes the initiative and seeks out another supplier or manufacturer for similar or possibly the same product. And if finding one tell them your story. Adds fuel to the competition.

I have had this happen to me on smaller scale in the past and found that seeking 'work-arounds' from someone else is more productive than 'complaining' to the re-seller or manufacturer. In that instance those people already know they are f**king their dealers so that and time and effort is lost only to you.

Also, explaining further in instances like this Titan Motorsports agrees to share / bare some of the development and initial material procurement costs with the actual manufacturer plus committing to purchase minimum quantity over a period of time. These 'agreements' may run for a few years or more. Of course risk is bourne on both sides.

A personal experience: When dependable, BIG cubic inch - HP aftermarket crate Harley engines appeared they would break drive line components like match sticks. To be fair with stock Harley stuff some of these engines were triple the HP/TQ of the stock configuration. The factory drive belts would not withstand that amount of power so they would break or shear the teeth off especially in heavy models like the FLH's (dressers). Now, Harley had been working with Gates belt/rubber company to develop a drive belt that would withstand large initial shock and loading that the bigger engine they were developing and planning on installing future models.

All the bikes guys gave up and simply converted to rear chain drive. Well this wasn't for me as it's like a big step backwards in technology or the equivalent of putting snow tire on your Porsche. I already knew that Gates supplied Harley with their drive belts and they also did a lot of commercial drive belts for manufacturing companies. I called Gates directly and told then my issue and if they had a solution. I just happened to get a good guy on the other end there and he said they did have a solution but could sell it me as there is an existing agreement between them and Harley where a Kevlar drive belt was developed and ready for their upcoming models. Problem is I couldn't buy one from Harley yet and Gates contractually could not sell it directly to me as they had a 5 year deal locked .................................................. .....BUT he asked if I has a little flexibility in length/teeth number and width fitment. I said yes - to a point. He replied that even though Harley had significant $$$ spent with Gates on R&D and they are contractually obligated to abide by it Gates used that to do Kevlar drive belts for other commercial applications. So in essence Harley funded some of the initial costs of Kevlar drive belt in that particular size to meet their requirements.

He said he could sell me a Kevlar drive belt that had 1 more tooth and was 1/8" width narrower that fit some other commercial application for a grand total of $89.00!!

This ^^^^!

Advise Tilton why you are no longer selling or dealing in any of their products and give them proof of how their product is getting a bad name in the market...

I remember back in the day at Circuit City getting so angry at corporate for posting online only sale items, then allowing customers to pick up in store, but absolutely barred matching the price in store. They had the theory that to compete in the internet sales age they needed to teach existing customers to buy online instead. We see how well that move worked for them.

The internet makes it very easy to sell just about anything to anyone. The old hierarchy of MFR sells to Distributor, which sells to retailer, which sells to the public will likely fade away for most products, removing several greased palms from the process. It would be in Tilton's best interest to bar this sort of price gauging, but better for them to end any exclusive agreement at all. Sell the product themselves online (because it can literally be done by 1 person now) at strictly MSRP prices. They can have certain dealer rates for different dealer levels (Titan may still get the biggest discount available if they sell more Tilton products than anyone else), but under no circumstances would a dealer be charged more than a retail customer. It's a change in Tilton's business practice that makes sense on all counts, and you can only shake your head wondering why they would sign an exclusive deal with anyone.