Monday, September 27, 2010

How to Make Money Selling CCTV on the Internet

Every CCTV manufacturer is asking themselves the same question: should we sell product on the Internet? If so, how? How do we go about it? Won’t we make our core customer base- the integrators- mad? If we don’t sell product online, can we compete with manufacturers who do?

Can you sell professional grade product online and make money doing it? Well, that’s the million-dollar question, isn’t it? The entire CCTV industry is trying to figure out a rational end-user reseller strategy that helps their bottom line without alienating the integrator. I firmly believe that in the future, manufacturers who embrace e-sales will eat the lunches of manufacturers who are married to the channel-only model. That said, the current paradigm shift the industry is experiencing is just alienating integrators, e-sellers, manufacturers, and end users alike.

The main reason that online sales leaves a bad taste in the mouths of manufacturers is not due to any inherent flaw in the concept. Rather, I feel as though the marketing model most in the industry have followed is flawed on a very fundamental level. In the past, every manufacturer sold plain brown boxes via distributors, where there was very little differentiation between product and integrators simply bought a name on a box. Manufacturers marketed themselves, not their products, and relied on the integrator to market their product to the customer. I know, I was an integrator for a decade before becoming an Internet reseller. My family has been security integrators since 1979. I know lots of integrators, and I know exactly how they purchase product. Even today, a lot of them do not look at different products within the brand beyond, at most, form factor. You go to ADI and tell the guy behind the counter “I need five Speco bullet cameras, three domes- whatever’s cheapest- and give me an 8 channel Everfocus DVR with a 500GB hard drive”.

They’ve seen Everfocus and Speco at the trade shows and counter-days, drunk the free coffee and eaten the donuts, have spoken to tech support, and shop a brand based on 1) price, 2) past history of defective product, and 3) whether the tech support associates were able to help them with that weird question that one time. Sure, sometimes a rep will tell them about an interesting new product, or they will have an unusual application and the rep will suggest a product with a unique function, but beyond that there isn’t much product research.

End users, of necessity, shop very differently. For starters, they will have to live with whatever product they purchase for the next three years, so they need to make sure that the product they choose will do what they want it to do with not much trouble or downtime. They’ve never heard of 95% of manufacturers and have no way of judging them. They choose product based on 1) features and 2) price.

If an internet retailer knows nothing about surveillance or security, they have no way of explaining why one feature would be more desirable than another, or which specific product will be perfect for the particular application. This causes mad customers to jam the manufacturers’ tech support lines with angry phone calls, not understanding why the lipstick camera connected to the half CIF DVR recording at 7FPS doesn’t identify faces at 200 feet like on that TV show. Yes, let’s all pause to giggle at the stupid customers, until we remember that CDW and Newegg make a living selling the kind of high end computer and networking equipment that would have been science fiction seven years ago, and somehow they do not have to deal with calls from angry customers mad that the netbook they bought won’t hack the local traffic. That’s because the computer industry has done a terrific job 1) educating their potential customer base in what computers can do (darn near anything if you have enough free time) and 2) explaining what computers can’t do (power on after the warranty has expired).

Everyone knows that end users seeking to purchase product online are doing so only to save money, and are only interested in the 16 channel kits for $400 from eBay. Like a lot of things that everyone knows, this is wrong. First off, if the customer is shopping for product online, it’s because they do not see the value the local security dealer provides. Is it because the local security dealer provides no value? Not usually. All too often, the local security guy doesn’t understand that his job isn’t to sell security products; his job is to sell himself as a security expert, who uses security products to get the job done. The sales pitch rarely rises above the level of “buy this cause it’s awesome… or buy this other thing because it’s a little cheaper.” I shouldn’t be in business, or, at least, I shouldn’t be able to make money selling Pelco and Axis and Exacq. The reason I get away with it is because my customers are willing to spend extra money if only someone will tell them why it’s worth it.

But this post isn’t how security integrators can beat the internet reseller- I get it, sales is hard work and some people just can’t hack it. The topic is, how do manufacturers sell product to the people the integrator just isn’t reaching. So ignore the integrators whining about the race to the bottom, the integrators scared of the internet reseller were never selling to those customers anyway.

I agree that Costco and Amazon will never be able to sell anything more complicated than the $500 boxed kits, because selling security requires knowing security. But there are companies out there that know security and want to sell security solutions, not box kits, and they need your help, CCTV manufacturers. Invest a bit in marketing. Throw us some advertising. Make your stuff a little more user friendly. Heck, that last bit couldn’t hurt, even if you never end up selling direct. Basically, we all need to stop acting like the end users are idiots who need special handling by integrators. Trust the end users to be smart enough to be make informed decisions, given enough information, and the smart ones will end up being profitable.

The dumb ones will still buy $500 box kits from Costco, so what have you got to lose?


מצלמות אבטחה said...

The CCTV market is not at its peak...

Vance said...

I think you definitely need to market your product. If you are a business then you will understand the importance of a good investment. In fact a business - no matter what it is - is based around investments. One way or another you are putting money and time into projects and ideas that you hope are going to generate more value that you originally put in. This then could be something along the lines of a property - you rent it out with the hope that you earn more from it. Or staff - who you pay to do a job with the hopes that they will earn you more. Or it might even be investing in stocks and shares - which is what many of us associate with the idea of investment. You shouldn't spend money on anything as a business - as a rule - unless it is eventually going to earn its keep by earning or saving money

Sarah said...

Great article here. Some valid points.

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