Amazon.com CE Sales Controversy

Since the July 13 launch of Amazon.com Electronics, the companyís enormous transaction-oriented 10-million-strong customer base has seen an ever growing offering of home entertainment, home office, computing and telecommunications products from such brands a Diamond Multimedia, Hewlett-Packard, JBL, JVC, Nakamichi, Olympus, Panasonic, Sony, 3Com and Toshiba. Features include product reviews, detailed product information, product images and customer comments.But the site is now drawing controversy due to questionable sourcing practices. Reportedly, vendors, whose products appear on the site, are not selling directly to Amazon.com. Instead the products reportedly are said to come from independent distributors and transshipments from other retailers. For CE manufacturers, this is a serious problem. The entire industry is watching and evaluating just how the Internet will impact the future of consumer electronics business.For Sony Electronics, seeing its product line on Amazon.com was a surprise. According to Sony, the company adamantly denies selling any product to Amazon.com. Sonyís authorized dealer agreement forbids online sales of its products. In light of the situation, Sony says it will be issuing an online sales policy within 30 days that will tighten its distribution policies and hold accountable dealers who transship to anyone but end users.For Amazon.comís part, the company maintains that the Electronics site buys inventory direct from manufacturers or form independent distributors. This is a very interesting scenario because on the one hand e-commerce will continue to grow, yet on the other, manufacturers do not want to jeopardize their retailer relationships. The implied fear is that any full-blown entry into e-tailing ñ even on their own sites - will infuriate their existing brick-and-mortar retail distribution base. The end result, while potentially beneficial pricing wise to consumers, could be to either crumble brick-and-mortar retailing or turn such distribution into online fulfillment, which potentially could be profitable for brick-and-mortar store-base retailers.