BEAVERTON, OR (BRAIN)—Thule is selling Yakima products it purchased from a retailer through a dedicated Web site, Racks4Cheap.com.
Jerry Heinlen, Yakima’s CEO, said the Web site came to Yakima’s attention about three weeks ago when it received calls from authorized dealers and consumers about a Web site selling Yakima products at prices below its established retail prices.
Heinlen subsequently sent a letter to Yakima’s 5,000 U.S. dealers last Tuesday to inform them that Yakima did not sanction or service the Web site. “A lot of dealers were very upset by it. Our goal was to make sure they knew we were not the ones causing the problem,” Heinlen said.
In the letter, Heinlen stated, “Racks4Cheap.com is not currently, nor ever has been, an authorized Yakima dealer. In fact, from our investigation, it appears that Racks4Cheap is directly connected with Thule, Inc., in Connecticut.”
Thule president Fred Clark admitted Thule set up the Web site, which does not anywhere bear the Thule brand, to unload a large amount of Yakima inventory it had acquired from a former Yakima retailer. “We came into possession of quite a bit of inventory that was from an account that had flipped from Yakima to Thule,” said Clark.
According to Clark, Yakima initially told the retailer it would take back the inventory for a restocking charge but later went back to the retailer and refused to take it. At that point, Thule offered to buy back its competitor’s product at the dealer’s cost. “Yakima had the opportunity to take care of this inventory issue and decided it didn’t want to. It left us with no choice,” Clark said.
Clark said the value of the product was larger than Thule was able to write off so it decided to liquidate that inventory online. He said Thule’s intention was to match dealer pricing on product currently available but it had to discount quite a bit of dated inventory. “Our plan all along was and is to sell the current product in line with retail policies so as to not offend customers, and anything older to sell at a distressed price,” Clark said.
However, Heinlen said discounts on Racks4Cheap.com range from 20 percent to as much as 50 percent or more off Yakima product that is actively being sold through authorized channels.
And, he said, the issues go beyond discounting. “A key concern is that unauthorized retailers do not offer consumers the brand benefits that authorized Yakima dealers provide,” Heinlen said, citing rights of return, excellent customer service and, potentially, a manufacturer’s warranty.
Heinlen said Yakima also has concern over the condition of inventory that has been outside the control of Yakima’s authorized distribution system since it could include returned goods, damaged product, or even product that could have been tampered with.
Heinlen called this practice of “lifting and dumping” competitive inventory deplorable. “We all thrive on good competition, but we believe there are some ethical boundaries that should be followed,” he said.
In his letter to dealers, Heinlen wrote, “We are concerned about the confusion and inconvenience this situation is causing. We hope that those responsible for it decide to do the right thing and cease and desist from this unfortunate choice of business practice.”
Clark said Thule’s goal is to move through this inventory and then shut down the Web site. “This is not a business model we see going forward,” he said. “This is an attempt to clean up this inventory in the field that no one else wants to take care of.”