A few years ago we did some research about private labeling in the electrical industry, which still attracts callers. They mainly inquire about non-electrical distributor web sites that offer all sorts of product. Occasionally we get calls from contract manufacturers looking to expand their customer base to distributors.
Recently we’ve had a number of inquiries are about breakers and where they might come from. Some ask questions about counterfeit products that look and ‘feel’ the same as the legitimate product. And others ask about reconditioned and tested product. Some of this is most probably driven by the increased awareness of counterfeit products generated by a joint NEMA/NAED effort.
One of the overriding problems is that some of the web sites offer all brands of NEW product at sometimes below what authorized distributors sell the same product for.
If these websites are offering new and unused product, where does it come from, especially if they are not authorized product distributors/resellers?
- Gray market surplus companies?
- Private labeled product?
- Counterfeit Manufacturers?
- Legitimate Electrical distributors
And then we get the call like we did today. A distributor called inquiring what we knew about a breaker broker they had used. Product had been ordered, that was shipped by some distributor on the West Coast that our caller hadn’t heard of (and neither had we). The product was defective and the caller couldn’t identify where the product came from. They called the manufacturer and provided a serial number.
Now we don’t know how the story will end, but, if you’re not purchasing products from an authorized distributor, from the manufacturer, or from a reputable firm, do you know what you are getting? While distributors don’t like to admit that they purchase products that they are not authorized for from other distributors, it may be better to have “reciprocity” with people whom you know than taking a risk to serve a customer (remember, that risk could cost you if there is a liability claim).
Take a moment and share your thoughts. What do you think about “third party” breaker providers? Do you use them, and if so, why?
4 Comments
We have a firm policy that prohibits purchasing circuit breakers from any source that is not an authorized distributor for the product. We must acknowledge that many of the grey market products are legitimate and simply take advantage of manufacturers pricing lunacy and greed with regard to the delta between project, OEM and stock pricing. As long as manufacturers maintain such a “stick it to ’em” approach to stock pricing, the grey market will exist. That said, the risk of loss of life, property damage and the resulting product liability litigation, coupled with the damage to our gear supplier relationships, makes the marginal improvement in profitability that comes from dealing with the breaker houses a bad choice – at least from my perspective.
We suspect that there are some unethical electrical distributors and vultures in the market that will sell to these entities regardless of what policies a manufacturer has.
“Let the buyer beware” should be a thought that is passed along.
If you have more than a dollar’s worth of equity in your business; if you have more than a nickel’s worth of common sense, you need to make buying from unauthorized sources a hanging offense.
Not a week goes by that I don’t run into an end user, contractor, or buyer crowing about the great deal on something on EBay. The selling advertises the product as “new and in the box”. Is it? Or was it a defective item or factory recall wrestled from a dumpster or pulled out of the truck taking it to the recycling center?
It’s not just about authentic vs. counterfeit – it’s about chain of ownership. Even good product can be sabotaged. And if your employees step outside this line – even for a second they are risking your money, your business and your good name.
Sometimes purchasing from an “Authorized Distributor” may not get you the authorized new product.This especially true if they are out of your local market. Then there is the fringe area smaller distributor who could sell product on a direct ship to your customer.
With direct delivery (UPS/FedEx) to your customer with a label that makes it look like it came from your place of business, is an open invite for product substitution and you become the first line on a lawsuit.
The other part of this, is that we’ve noticed that there are a couple of manufacturers that have started selling direct to the customer. Hopefully they are actually using their own product.
ED on the West Coast
Leave a Reply
Trending Now
The Right Inventory, and Pricing, Drives Sales and Profits
