Cyclone FPV and Fat Shark Part Ways Over MAP
On December 24th 2019 Fat Shark Retail Support contacted me via email and informed me that my sale price on the HDO2's violated their MAP (minimum advertised pricing) agreement. For those of you who are not familiar with MAP, it is a very common practice where manufacturers tell authorized dealers what we are allowed to post as our lowest price to the public.
Even here in the USA you will see big retailers who will have the words "See Price In Cart" where the price would normally be posted on an specific item. This is one way to "tell" your customers that the price is below MAP but also stay within the guidelines of the MAP agreement set forth by the manufacturer.
Now, while MAP is something that manufacturers claim to be used to "protect" dealers, it has also been used to abuse power and "force" dealers to maintain a pricing structure that could potentially cause losses. For example, let's take Fat Shark. They recently released their new HDO2 goggles with a MAP of $499.99. Great! That seemed ok but what it did not do is take into account the fact that DJI's new Digital FPV Setup now has an analog work-around which now makes their setup a "Go-To" for many FPV pilots.
Seeing that their goggles are within the same price range, offer much better quality, and now have a work-around for analog, the Fat Shark $499.99 price tag is insane. It's like someone trying to sell you Ford Mustang with a v6 for $30,000.00 and then someone else releasing the same Mustang but offering it with a v8 for the very same price. If Ford is not your brand just go along with this. You, as the dealer, need to now figure out what to do. You know your customers are going to ask you for the V8 but your money is tied up in the V6. Ford tells you that you cannot advertise that car for less than $30,000.00 but if you don't sell it then you will not have the cash to buy the V8 which is what your customers really way.
So, what do you do? Well, you do what you have to in order to survive. After all, you are simply the reseller of a product that is priced too high and offers too little. That is not your fault. You still have to pay rent, paychecks, utilities, and so on. Now let's look at Fat Shark and see what brought this to light.
Here are a few facts that Fat Shark failed to own up to:
- October 28 - Fat Shark informs dealers that orders will start in a few days and shipments will begin to ship on November 17th.
- November 1 - Order placed by Cyclone FPV for Fat SharK HDO2 goggles
- November 11 - Fat Shark sends an email to dealers that orders exceeded their initial estimates. They stated that shipments will be delayed about one week "so that all the major retailers that placed large orders will receive their goods around the same time". I suppose the small guys can piss off. Fine...
- November 26th - Fat Shark sends another email discussing delays due to "an accident" with one of their suppliers. Now they are talking about pushing the dates for some of the deliveries to be before the start of their Spring Festival in January 2020. WOW.
- December 12th - Fat Shark sends an email asking for payment for the order that was placed on November 1st. Almost 1.5 months after the order is placed, and a few delays, my order is finally ready to be paid. WOW. We missed Black Friday and now we are going to be squeezing into the Christmas sale period if there are not shipping delays.
- December 17th - I write Fat Shark asking for some sort of an update. My wire was sent to them a week ago and I have not heard back.
- December 22nd - DHL Delivers my shipment with two days left to sell. The chance of moving these is slim to none.
Imagine, it took more than 1.5 months to get the order to arrive with most of the delays due to Fat Shark's own business mistakes, yet they found it in them to threaten my dealer status just two days after receiving the late shipment.
In fact, here is the full exchange that took place between December 24th and December 25th:
- December 24th 2019 - 9:04PM Fat Shark email to Cyclone FPV
- December 24th 2019 - 9:26PM Cyclone FPV reply to Fat Shark
- December 25th 2019 - 7:21PM Fat Shark reply to Cyclone FPV
- December 25th 2019 - 7:40PM Cyclone FPV reply to Fat Shark
Imagine, first we are told that our goggles are delayed because they need to supply the bigger retailers first, and then, when they finally get around to the smaller guys like Cyclone FPV, they ship late, leave no time to make sales during the Christmas sales event, but manage to find the time to threaten my dealer status on Christmas Eve! Over $50.00!
I have been a dealer for over a year now and during that time I have not had one violation of any kind. I have been patient, allowed Fat Shark to send my inventory to larger retailers, and sat back while Fat Shark had my wired money in hand and yet still did not have a product to ship. Then, when you think it cannot get any worse, some ignorant fools think it is ok to write me on Christmas Eve and threaten to stop taking my orders and cancel my dealer status if I don't raise my price back to $499.99.
The inability for Fat Shark to take responsibility for their own mistakes, coupled with the email exchange that took place, further strengthens my belief that principle over profit is the only solution and with that, the following letter was submitted to Fat Shark:
- December 26th 2019 - Cyclone FPV Letter to Fat Shark
I want to thank you, my customers, for your support through these changes. I am well aware that some of you may not agree with my decision, but at the end of the day I feel it necessary to do what I feel is best in order to uphold my "Principle over Profit" business plan and move on.
Tarek I. Maalouf