Is this like Filene's Basement for security?

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08/21/2009
Interesting press release (sorry, no link) out of Pelco HQ this morning: Pelco Announces Strategic Relationship with Northern Video Systems But this isn't your standard manufacturer-distributor marketing relationship:
Clovis, CA (August 20, 2009) – Pelco has entered into a strategic relationship with its Distribution Partner, Northern Video Systems of Rocklin, California, to market and sell Pelco Select Goods inventory. Pelco Select Goods are products that could be overstock products, discontinued products, products being replaced by newer models, and/or Factory Refurbished products. Unlike other companies, these products all carry the same Full Factory Warranty as all Pelco new products. Northern Video will actively market these products at a substantial savings to Factory New products. Since there is a varied supply of these products, quantities and availability will be unpredictable.
The bolds are mine. Maybe this is standard practice in the industry and I've just never come across it before, or maybe it's one of those things where you hear about it once and then all of a sudden hear about it all the time, but this is the second time in three days I've heard a manufacturer talking about inventory and overstock. On the Mace call, Dennis Raefield said they'd reduced their inventory by some $1.7 million by getting rid of overstock and older products. Hey said they actually created their own overstock web site where they're even willing to sell other people's products. They even used eBay. Seriously, eBay for video surveillance products. Who would have thought? Anyway, now Pelco seems to be doing something similar - trying to make some profit of used, discontinued, and overstock items. Is this the sign of a company in trouble? Mace is certainly struggling, if not "in trouble." They need to get to profitability and a strong balance sheet, if only to please the stockholders (they've got a decent amount of cash on hand - though if they keep losing $2 million a quarter the cash from the car wash sales will eventually run out). Is Pelco "in trouble," or is the company just being creative with new ways to find revenue? From what I've heard from smaller dealers looking to increase margin any way they can, I think this idea is a good one on Pelco's part. I know when I was broke and looking for a Mac, I always checked out the refurbished section on the Apple site. Same basic principle applies here: refurbished is good enough if the price is right. Here's Pelco's explanation:
These products have long been available from Pelco but have not been widely sold to its customers. The company believes this is simply due to its limited sales and marketing efforts around these offerings. With Northern Video Systems building a sales initiative around the distribution of these products, Pelco management feels that many more of their customers will be able to take advantage of these great savings. Northern Video will soon be marketing the availability of these products to the industry and have an energetic sales force ready to help customers with choosing products that will satisfy their requirements.
So, they've always had these products sitting around but never thought to sell them before? Doesn't that roughly translate to: "We were riding high on the hog for a long time and didn't care much about selling these products, but now we could use the cash so we thought, 'Hey, why don't we sell this stuff, too?'"? (Sorry for the weird punctuation - my point stands.) (Oh, and if you're not from New England, you may not know that Filene's Basement was this great store in Boston for finding cheap clothes that didn't get sold at Filene's proper. Of course, Filene's Basement closed. I'm not implying anything with that.)

Comments

This is way more common than you'd think. Pelco is just hoping that people will figure that a refurbed Pelco is better than a new Samsung.

Why not, it works for Mac.

You have no idea how many manufacturers have been trying to dump stuff on me. Overstock, discontinued stuff, soon to be discontinued stuff, refurbished stuff... and, yeah, sometimes I get a good deal, but unlike many of my Internet brethren, I care about consistency of supply, so I hesitate about adding an item I may not be able to supply down the line (for whatever retarded reason, it is way easier to add something to my site than it is to remove something).

I've always been suspicious of anyone offering me a deal on anything, but it's gotten to the point where the deal has to be incredible for me to pick it up. Like, when a few months ago a Famous Maker offered me a 16 channel DVR with a 160GB hard drive installed for $599.95. And now I hear a rumor that said Famous Maker is going out of the DVR business.

Forget about the refurbs and the soon to be discontinueds, theres a ton of overstock out there and manufacturers are desperate to show a short term gain at the end of the month and the Internet is a good way of doing that- sometimes. It's a big morale boost to be able to tell the troops "we moved 1500 units this month!" for all that 100 of those units moved through me at a 3.5% profit.

People are looking for any gain they can.