Dealers Taking Issue With New Sony Warehouse Club Program

A new Sony program with warehouse clubs packaging a three-year warranty with EX501 and EX701 series TVs has opened a rift with some regional retailers, according to several merchants we polled. The contention coincides with the arrival of a new minimum advertised price (MAP) policy from Sony. Sony executives weren’t available for comment by our Friday deadline.

Outside the warehouse clubs, the EX sets carry a standard one-year warranty, retailers said. That allows dealers other the clubs to sell a three-year extended service plan for $299. To match an $899 warehouse club price on a EX501 series 40-inch set with a three-year warranty, for example, other retailers must reduce their price on the set to about $600, little more than the $550-560 cost, since service plans aren’t discounted, dealers said. Warehouse clubs sets are labeled as the EX501 and EX701 series, but the have the same features and pricing as the EX500 and EX700 sets available more widely, they said.

Sony increased the length of the warranties packaged with the warehouse-club 301 and 401 series TVs to 18 months from 12, but the EX500 and EX700 models are better-featured sets, dealers said. The EX500 line is made up of 32- ($699), 40- ($899), 46- ($999), 55- ($1,899) and 60-inch ($2,299) LCD TVs. The EX700 has 32- ($999), 40- ($1,399), 46- ($1,699), 52- ($2,199) and 60- ($2,999) models. Both lines are 1080p-capable and have 120 Hz panels. But the sets in the 700 series use the Sony Bravia 3 video processing engine and LED backlighting. If “the TVs are priced exactly the same” in warehouse clubs as at other retailers, but with a three-year warranty thrown in, “who would buy them from anybody but a club?” one retailer said. “I wouldn’t."

The new MAP policy, which formally took effect Feb. 1, adds digital cameras to the MAP program adopted in the fall, a Sony spokeswoman said Thursday. The earlier plan covered TVs and AV gear, she said. The new guidelines make the sets more profitable for dealers once the standard 10 percent discount from MAP and an instant rebate are applied, retailers said. On an LCD TV that sells for $1,999, a $300 instant rebate is applied, then a 10 percent discount, providing $30 that wasn’t available under the earlier program, a retailer said. The earlier plan required dealers to apply the discount before the rebate, the retailer said. Sony revamped its policy last fall (CED Aug 31 p1) as it sought to step up enforcement of MAPs on the Internet and in print ads.

With the introduction of 3D TVs, Sony wants to ensure “that our resellers can confidently advertise products with the knowledge that they can profitably sell them,” the company said. To underscore this, Sony is “streamlining” its distribution and revising the U.S. MAP policy, the company said. While most retailers have “embraced” the new program, some are “not in total alignment with our strategy,” Sony said without elaborating.