Feeds

Sony in internet 'price-rigging' rumpus

Ramps up wholesale cost to UK e-tailers

Protecting users from Firesheep and other Sidejacking attacks with SSL

Sony and other manufacturers have been accused of asking online retailers for 10-15 per cent more for wholesale electronic goods than they charge their traditional counterparts, The Times reports.

This "dual pricing" strategy - designed to narrow the price differential between net and high street - was allegedly initiated by Sony and quickly adopted by other suppliers. Big-name retail chains have exerted pressure on the CE giants at a time of falling high street sales in the face of cut-price internet offers.

Online retailers have naturally cried foul and will meet today to decide whether to "name and shame" the guilty parties. Sony already faces Office of Fair Trading (OFT) and European Commission examination of its pricing strategy.

Sony has a specific interest in supporting its branded Sony Centres, of which there are around 100 in the UK. It has the clout to force the issue too, as one website's MD told The Times: "If you are seen to be a troublemaker it can have a detrimental effect on supplies. If they want to, they can just put you out of business. We are struggling to stay in business and some companies have already gone to the wall."

The manufacturers' case was put this morning by Edward Whitefield of retail consultancy Management Horizons. He told the BBC's Today programme that this "variable pricing" strategy was designed to create a "more even playing field between different channels of distribution". He noted: "The high street retailers are already suffering thin and declining margins. It's becoming very unprofitable to retail electrical goods on the high street."

According to Whitefield, the cost of distribution through the internet is about 20 per cent of sales, compared with 45 per cent of sales for a bricks-and-mortar store, and consumers have greatly benefited as a result of online operations. They'll continue to benefit, too, added Whitefield: "Even after this 10, 15 per cent, the internet price points will still be 15 to 20 per cent lower than comparable high street stores."

Asked if it was legal to charge different wholesale prices to different retailers, Whitefield asserted: "Yes it is, and it recognises that there are actually different costs of distribution in running a market stall and an expensive high street store". He added that if internet retailers complain to the competition authorites "they will find that they that they are up against not only Sony but they're up against the whole industry".

Whatever the OFT decides in the matter, e-tailer spokesman James Roper, of the Independent Retail in Media Group, told The Times that manufacturers face a backlash from millions of online customers. "For the major brand which has instigated this policy, this appears to be an extremely risky step which will upset a lot of consumers," he warned. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Hey, Scots. Microsoft's Bing thinks you'll vote NO to independence
World's top Google-finding website calls it for the UK
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
OECD lashes out at tax avoiding globocorps' location-flipping antics
You hear that, Amazon, Google, Microsoft et al?
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.