Rheem Partnering with Distributors to Thwart Unauthorized Online HVAC Equipment Sellers

March 1, 2007
While the Internet has revolutionized how people shop for and purchase consumer goods of all kinds, consumers often do not realize the risks they take

While the Internet has revolutionized how people shop for and purchase consumer goods of all kinds, consumers often do not realize the risks they take when purchasing bigger-ticket items that require customized, professional job-site assessment and installation. In recent years, the Internet has spawned numerous third-party and auction websites that offer direct-to-consumer sales of HVACR equipment.

Although homeowners are often attracted to claims of lower prices online, few realize that HVACR systems are unique to each structure, requiring proper sizing and professional installation to operate as designed. Consumers are prone to underestimating the complexity of applied products such as HVACR, custom audio and home alarm systems. They often mistakenly assume these products are similar to other home appliance and electronics products that they are able to take out of the box and plug in. Direct sale of applied products threatens to compromise product performance, customer satisfaction and brand perception of unsuspecting homeowners — even for the most skilled do-it-yourselfers.

The Rheem Heating and Cooling Division has seen this trend build momentum in recent years and is the first manufacturer in the industry to address this issue by establishing a formal Internet policy and use guidelines. At stake are the consumer's best interests and well-being, as well as the sizeable, legitimate investments made in their businesses by independent distributors and contractors in order to serve and protect consumers. Also at considerable risk are the company's intellectual property and the integrity and reputations of the Ruud and Rheem brands.

“Rheem is proud to be the first HVACR manufacturer taking aggressive action to fight Internet piracy and all other unlawful uses of our intellectual property that threaten to undermine the value of our brands,” said Rheem Manufacturing President J.R. Jones. “Our top priority is to help Rheem and Ruud distributors and contractors grow their business by providing innovative, high-quality products programs and services that result in delighted customers. Our aggressive action today ensures that everyone in the supply channel knows that Rheem Manufacturing Co. is committed to protecting our mutual interests and businesses.”

To accomplish its goals, Rheem is working with its distributor partners and contractors to put these unapproved e-tailers out of business. The company is using powerful legal muscle and an internal reporting mechanism to accomplish its goals. Then there is the reality of the mushroom effect. As soon as the shadiest of the online-based resellers' sites is shut down, they are quickly “repackaged” and pop up as a “new” site with the same offerings. Rheem wants to not only put an end to these practices but to change the fundamentals that reward these unscrupulous resellers for the risks they willingly take. One of the places to start is for others in the industry to follow their lead, thereby increasing the level of vigilance to an industrywide level.

Distributors are supporting this initiative and are happy someone is taking a stand against unapproved sellers and the commotion they cause.

“We are 100 percent behind Ruud,” said Richard Laurens, president and CEO of Dealers' Supply, a Ruud distributor serving most of Georgia, with 12 branches stretching from the Tennessee border down to Columbus. “Consumers think they are buying from an authorized source and that they are getting a good deal, but they are not.”

“I think they did the right thing,” said Patrick Thompson, sales manager at MCN Distributors, which serves southeastern New York. “Homeowners are not supposed to install products. It should be done by professionals who know what they are doing.”

Many of these websites misrepresent themselves as “authorized” or “factory direct” sellers of Rheem and Ruud equipment. The Rheem policy makes it clear that the company does not authorize Internet sales of HVACR equipment that does not include a local on-site inspection by a qualified HVACR contractor. While Rheem is committed to ending these unsavory practices, it completely acknowledges and supports the legitimate right of contractors to use their websites to promote their companies, product offerings and services in a manner that results in the sale of correctly specified equipment, a high-quality professional installation, and the promise of locally available after-sale service and maintenance.

More and more distributors field calls from contractors who are receiving calls from consumers that have seen HVAC equipment online. “Can you beat the price?” they ask the contractors. This can put distributors and contractors in a difficult situation unless they are prepared to explain the inherent shortcomings of many of these Internet transactions.

“Our policy is intended to protect our distributors, our dealers and our customers from a bad experience,” says Division Sales Vice President Bill Hanesworth. “We're trying to ensure that our product is installed in the right atmosphere, in the right application, where the consumer has a more than satisfying and safe experience. I'd rather lose a sale than have a negative light undeservingly shined on our product and brands or on all those distributors and contractors who work hard every day to do the right thing for their customers.”

Many distributors see contractor and consumer awareness as a big key in getting the word out about these types of renegade sellers. Rheem sees its contractors as being completely on board. “I would say 99.99 percent of our contractors are livid about this unauthorized Internet selling trend,” says Division Marketing Vice President Jack Sinkler. “We want our customers to know that we can't be successful without a network of highly committed and trained contractors. These contractors must know what they're doing on the installation and service side of the business. So, part of this policy is intended to protect the channels we think are necessary to complete the sales and service process.”

Rheem warranties now contain exclusions for “covered equipment sold to consumers via the Internet or an auction website, and that have not been installed by trained, qualified HVACR professionals.”

Rheem has also added a highly visible, flashing “Consumer Alert” warning and information link on their consumer websites at rheemac.com and ruudac.com.

“It's crucial that we, as an industry, communicate to consumers that buying products over the Internet is unwise, can be unsafe and will likely end up in a transaction they will not be happy with,” Sinkler concludes.

Distributors have harsh warnings to those interested in beginning their own unlicensed, online HVAC equipment sales business:
“You're violating trademark and distribution rights, and are asking for a lot of trouble — more than you bargained for,” concluded Laurens.

For more information or to read the actual policy, visit www.rheemac.com or www.ruudac.com.

Michael Maynard is a business writer based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at [email protected].