Are New Product Lines And Extended Warranties Enough To Help Pool Builders?
By Andrew Lisa
Today, at least one in 10 retail dollars are spent online; in 2001, internet purchases accounted for just 1 percent of total retail sales. e-commerce grew by 14.6 percent in 2015 alone. Statistics could run the length of this article, but pool builders, suppliers and service providers don’t need data to understand how the internet has changed retail businesses.
Online Retail: The Great Disruptor
For the pool industry, the rise of e-commerce was a double-edge sword.
Suddenly, consumers could buy everything from chemicals to accessories at prices big-box retailers couldn’t possibly match — all without leaving their homes. Compounding the problem, the internet gave buyers limitless information with which to self educate.
As online juggernauts like Amazon undercut retailers pricing on brands local business owners had spent decades cultivating, mom-and-pop stores hemorrhaged customers.
Frustration reached a boiling point.
As more of their merchandise moved through bare-bones websites, manufacturers were at risk of losing the very retailers that for generations served as their strongest advocates, educators and brand ambassadors.
The biggest manufacturers responded — although later than some dealers would have liked — with programs and incentives designed to empower retailers to stay competitive in a rapidly changing landscape.
Developing New Product Lines to Keep Buyers in Stores
In an effort to slow the exodus of customers fleeing for cheap online parts, Hayward Pool Products, Pentair Aquatic Systems and Zodiac Pool Systems developed product lines designed to shut out online retailers.
All three manufacturers report a positive response from dealers. David J. Hawes, president and CEO of H & H Pool Services, Inc., is among them.
“The introduction of equipment only available to the trade is a great tool some manufacturers are using,” Hawes says. “The public cannot go online and buy those units.”
Hayward released the Expert Line, which contains the company’s most premium products. It is only available in brick-and-mortar stores.
“The products offered through the Expert program may change as needed to accommodate new trends and innovation, ensuring dealers can showcase our newest products firsthand,” says Mike Massa, Hayward Pool Products vice president of sales. “Each Expert Line product will typically have an extra feature or technology that is better than the open-line model.”
Expert Line products offer longer warranties, product-specific consumer rebates and Hayward-funded consumer incentives for professional installation.
In 2013, Zodiac launched Bullseye Rebates, which keeps customers in stores by giving money back to consumers who purchase products at a certain price. Buyers are free to shop anywhere they like, but customers who go for the cheapest price — which is usually online — lose the rebate.
“In most cases, buying at a higher price with the rebate is better than buying it at a lower price without,” says Zodiac vice president of marketing Michelle Kenyon.
Zodiac also launched Trade Series, a product line that can only be purchased in physical stores. The company will pull Trade Series products from any dealer found selling them online.
Pentair established the TradeGrade line.
“TradeGrade products come with special, trade-exclusive incentives including select rebates, extended warranties, higher reward dollars in our Partners Incentive Program and more,” says Marcus Phillips, director of marketing at Pentair Aquatic Systems.
So far, the response from dealers has been positive.
“It’s helped tremendously,” says Tom Cucinotta of Cucinotta’s Pool Service, which sells Pentair. “I tell people, ‘This is the latest and greatest. You cannot buy this on the internet. You can buy the older model online and get a two-year warranty. Or you can buy the new one from me and get a three-year warranty.’ ”
Extended Warranties: Helpful, But Hardly Free of Confusion and Frustration
As Cucinotta discovered, warranties are often as powerful a selling tool as price, so manufacturers developed beefed-up warranties on products purchased at physical dealer locations.
Zodiac, for example, began offering extended one-year warranties on certain products purchased in brick-and-mortar stores.
But there is a downside. Customers often want the best of both worlds — the low price of the internet and the personal warranty service of their local professional.
“They have changed the warranty coverage to help those of us in the field, and the requirement that a professional install the equipment has been helpful,” Hawes says. “But a lot of the public still purchases on the internet and then seeks an installer to meet the extended warranty requirements.”
For Cucinotta, this has led to an avalanche of customers — wooed by the lure of online “bargains” — who end up buying outdated or incorrect models without understanding the impact on their warranties.
“I’ll get a warranty call for a salt system or a pool pump, get there and discover that it’s from 2010 or 2012,” Cucinotta says. “They don’t know what they’re getting. They never asked why the price was that much lower. They have no idea they’re buying old technology.”
Phillips says these issues can be catastrophic to brand perception. When a customer buys an old or shoddy part online and can’t get their local dealer to service it or honor the warranty, the manufacturer’s name and reputation is the common thread tying the whole fiasco together.
“These complications are seldom considered by homeowners who buy equipment online,” Phillips says, “yet they often color a customer’s experience with Pentair.”
Cucinotta worries less about brand perception and more about unqualified homeowners buying equipment online and installing it without a contractor’s license. He’s seen overpowered main drains strong enough to create “water tornadoes” from the surface to the bottom of pools that children use. He’s encountered customers who didn’t know their small filter and 3/4 horsepower pump wasn’t built to handle the three-horsepower variable-speed pump they bought online.
“People are blowing filters apart; they’re blowing pipes apart,” Cucinotta says. “Someone is going to get killed or very seriously hurt. When someone does get killed, who are they going to go after? The website they bought it from or the manufacturer?”
Easing Tensions Between Dealers and Manufacturers
Representatives from the major manufacturers seemed to express a genuine empathy for what their dealers are up against.
“We understand the issues pool dealers are facing when they take their time to educate a consumer on the products in the market, only to have a consumer take this knowledge and do a sku search for the lowest price online,” Massa says. “It costs them time and money to educate themselves, as well as their counter and service teams. You can understand why giving this knowledge away for free is very frustrating.”
Although they haven’t solved every problem, the manufacturers have taken tangible steps to address dealer concerns. “There’s no silver bullet out there that allows you to solve all of the channel conflicts,” Kenyon says. The crisis gave manufacturers a greater appreciation for the value their dealer networks provide, however.
“A pool professional is more likely to be familiar with the customer’s pool,” Phillips says. “And even though nearly anything can be thoroughly researched online these days, it’s hard to beat personal, on-site support when it comes to installation, product education, training, troubleshooting and repair. This added knowledge and field experience also leads to lower warranty claims, which in turn makes for happier customers, pool pros and manufacturers.”
Each manufacturer interviewed insisted dealers are the tip of the spear for brand awareness, consumer education and product loyalty.
“Any branded manufacturer that sells a technical product should care about where and how their product is sold,” Massa says. “Proper sizing, installation and programming are so important with many of today’s pool products. We understand some consumers choose to do their own research and buy online. But the very best products installed in the wrong application can give the consumer a bad experience, and it reflects poorly on the manufacturer through no fault of their own.”
For Kenyon — who provides her dealers with lead generation, digital marketing, national advertising campaigns and local event support — losing control of dealer networks means losing control of the brand.
“It comes down to product erosion and brand erosion,” Kenyon says. “Imagine premium products being sold at rock-bottom prices. It impacts our own product life cycle. Dealers protect and strengthen our reputation and brand image. If they can’t compete, we lose tremendously.”
For Hawes, however, the original question remains unanswered.
“They show concern for our position, but cannot or will not explain how internet pricing is, many times, cheaper than the distribution channels we support. We are happy they are moving in the direction of giving us tools to make us competitive, but we would like to see more.”
HAYWARD POOL PRODUCTS
Hayward Pool Products Expert Line contains Hayward’s most premium products. It is available in brick-and-mortar stores only. Expert Line products have an extra feature; a different model name and number than the open-line model; MAP pricing when applicable; and the ability to earn additional Totally Hayward Partner Program points with every purchase.
Expert Line products offer longer warranties, seasonal product specific consumer rebates and Hayward-funded consumer incentives for professional installation.
Massa says programs like Expert Line benefit Hayward and its customers while also soothing frustrated retailers. Hayward plans to continue and expand the program into 2017 and beyond.
“These products and programs have been received with open arms by our dealers around the country,” Massa says.
ZODIAC POOL SYSTEMS
Zodiac developed brick-and-mortar exclusive product lines as just one element of a multipronged attack that also includes rebates and extended warranties.
It offers Bullseye Rebates, which gives money back to consumers who purchase products at a certain price. Zodiac’s Trade Series, a line that can only be purchased in stores, will be pulled from any online dealer found selling them. Trade Series started with two products in 2014 and added one in 2015; three more in 2016; and will have 11 going into 2017.
It also offered its dealers an extended one-year warranty on certain products purchased in brick-and-mortar stores. Finally, it armed dealers with the sheer muscle of their global corporate brand.
If dealers opt into sale events called Polaris Days and Zodiac Days, Zodiac rewards them with substantial resources.
“We give them promotional materials and conduct national advertising on their behalf in support of their events,” Kenyon says. “We do digital marketing and lead generation. We create and design 1,000 free postcards for them to mail to their consumers. We send merchandising kits, give them freebies to give away at their events and offer promotional pricing. We sponsored more than 3,000 events last year alone and mailed over 160,000 postcards on behalf of dealers.”
PENTAIR AQUATIC SYSTEMS
Pentair established TradeGrade, which is available only in physical stores. TradeGrade products come with trade-exclusive incentives including rebates, extended warranties, higher reward dollars in its Partners Incentive Program and more.
“Dealers have been overwhelmingly positive about our growing line of TradeGrade products,” Phillips says. “They feel valued and appreciated for their expertise, and with a more level playing field, feel much more confident they can justify their added value to pool owners.”