Thule has launched a Web site, www.Racks4Cheap.com, selling products of its rival Yakima that came into its possession. After finding that the website was selling Yakima at prices well below established retail prices, Yakima initiated its own investigation. That resulted in CEO Gerald Heinlen last week sending a letter to its 5,000 U.S. dealers explaining that the website is not an authorized dealer, as well as its connection with Thule.
In its investigation, Yakima found that the site launched about two weeks ago had no contact information, no physical address, and sales policies stating that all sales were final. It also found that publicly-available records show that Thule, Inc. owned the telephone number that appears on Racks4Cheap.com invoices.
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In an interview with The B.O.S.S. Report, Thule CEO Fred Clark acknowledged that the website is being run by Thule. Thule came into possession of Yakima inventory after it was working on some retail accounts that had to clear older Yakima product first to make room for Thule product. Since Yakima was declining to restock and help resell the product, Thule acquired the inventory. He said its a fairly common occurrence when accounts change across many categories.
Theyve decided theyd rather carry our brand than Yakima and we had to fix the inventory problem they had, said Clark.
Thule then tried to liquidate the Yakima product by selling it to other existing Yakima dealers as it has done in some similar situations in the past. However, not enough buyers could be found given the economy.
He also said racks overall are a challenging category to re-sell at sites such as overstock.com or sierratrading.com. As the only alternative, Thule began selling the product itself through www.Racks4Cheap.com
He also said the website doesnt claim to be an authorized dealer and Thule decided to keep the websites connection to Thule somewhat secret to avoid confusing consumers. Clark also declined to reveal which retailers Thule had acquired the inventory from and how much inventory it had acquired.
Clark said Thules website should only offer 10% off Yakima MAP prices unless it is older, discontinued product. He admitted that some product was sold below established pricing levels when the site was first launched.
We did screw up on the beginning but our intent is, was and will be to sell in line with the MAP policies, said Clark. Were not trying to compete with retailers but just deal with an inventory problem. He said the site will be closed once the inventory is sold but couldnt estimate on how long that would take.
This is not a permanent part of our business model, said Clark. Its just to address an inventory issue. We just dont know how long it will take to sell this product.
Heinlen told B.O.S.S. that his company sent out the letter due to concerns about potential confusion in the marketplace.
Dealers need to know that we support our policies, said Heinlen. We dont set up unauthorized dealers to sell our product and we dont allow authorized dealers to violate our programs. We felt compelled to tell the dealer community that we dont condone, support or enable it.
But he also said the practice of ‘lifting and dumping competitors inventory is an unsavory business practice since it misleads consumers and results in unauthorized retailers selling product without any of the brand benefits of good service, right to return product-all those things we work hard to bring to market and embedded in our Yakima brand equity.
Sales to unauthorized dealers, according to Heinlen, also can lead to situations where items are sold that may be returned product, product with missing parts, and even items that have been tampered with.
He also said Yakima continually works with its authorized retailers to improve their businesses and resolve problems, but inventory sales to secondary channels arent allowed under sales agreements.
We appreciate the efforts of authorized retailers who support the Yakima brand and our policies, said Heinlen. Yakima dealers are not permitted, under our program, to sell inventory outside of retail.
Dealers who violate this policy risk losing their status as a customer in good standing and may lose the privilege of selling Yakima products in the future.
Heinlen declined to comment on any further action Yakima might take to resolve the issue.