Retailers raise concerns about Sonos selling direct to consumers

Early last month, ERT was informed about a direct-to-consumer promotion launched by audio giant, Sonos.

Emails had been sent to existing Sonos product owners, who had registered and accepted marketing preferences, advertising a one-off 15 per cent discount on their next purchase with the company.

Recipients of this email were advised that they could make their purchase directly through the Sonos website (sonos.com) within three weeks.

In addition to this, the manufacturer also offered the customer the chance to share this same promotion with up to three friends so they could also make a saving.

Further down the same email, users were given the chance to shop in store; they had to “submit a claim for 15 per cent back” if they purchased from “an authorised retailer”.

“Totally unacceptable”

One particular retailer who shared his concerns with ERT, and who said was “deeply upset by the way this manufacturer has treated its retail partners with respect to this promotion”, was Paul Mead, Managing Director at Tavistock Sound & Vision.

Mr Mead said: “Retailers like us in the UK have made Sonos into the market-leading smart speaker brand that it is today.

“The company must realise that, had it not been for us recommending its products in the first place, it might not have got the sale. For Sonos to then use our customers as its silent sales force to gain additional customers, cutting out retailers altogether, is, in my view, totally unacceptable.”

With the retail market struggling in the face of declining high street footfall and dwindling consumer spending, Mr Mead referred to Sonos’s promotion as “the nail in the coffin” for retailers. He added that the 15 per cent discount with this promotion was “massive” and that any sale Sonos got through this promotion “is one it has deprived the retailer of”.

Howard Saycell, CEO of Retra, told ERT that it’s time for manufacturers to be honest about their chosen route to market. “This will then enable retailers to decide who they give their support to,” he said.

The whole electrical retailing sector should be concerned about Sonos’s business model, according to Mr Saycell. He stated that Retra firmly believes that manufacturers selling directly to end consumers is ultimately not in the consumer’s interest.

“Brands that wish to engage directly with the consumer should be willing to be open about their direction.”

However, he added: “Sonos is one of several brands that actively promote a direct relationship with the consumer.”

Mr Saycell said while he understands the complexities of the supply chain, he would like to see brands selling different products if they are going direct.

Paul Giles, Managing Director of Snellings/Gerald Giles, commented that when products require email registration and software updates from the manufacturer it is difficult to stop them making direct contact.

“However, when they have a new product that needs demonstration, they need showroom retailers. Manufacturers need to focus harder on forming closer partnerships with committed retailers that support their brands, because when there are no independent high street stores left and they are being dictated to only by large national retailers, they’ll want the indies back again.”

Issues need to be discussed

Discussing his thoughts for a potential way forward, Mr Mead added that a commission structure between the manufacturer and the original supplying retailer could be a fair compromise. “Ultimately, I’d prefer them not to sell direct,” he continued.

“Manufacturers should be manufacturers and retailers should be retailers. Sonos is not a bad company to deal with; they do have some exclusive products for custom install retailers. However this promotion included all of the ‘bread and butter’ models, such as Beam, Sonos One and Play 5.

“They cut us out the loop with this latest promotion, which saw a bigger discount on the whole spectrum of products, compared to the previous promotion via retailers. And I think that’s wrong.”

Mr Mead said that communication needs to improve. He explained that he spoke to his Sonos rep at the end of July, who confirmed there were no upcoming promotions at that time. However, 48 hours later, he received the 15 per cent consumer offer.

“It is, of course, the right of any brand to decide on what they consider to be their best route to market,” Mr Saycell added. “Many brands talk about their commitment to the independent sector. Some deliver to promise and some don’t.”

ERT received a statement from Sonos on this issue, that said: “We are committed to our relationships with independent retailers and partners.

“We hear from Sonos owners all the time that they love introducing their friends to our products. So we provided a limited-time offer allowing them to share a unique 15 per cent off code with up to three friends (and they get one too). The codes could be redeemed on Sonos.com, via cash back or from an authorised retailer or dealer.

“We will continue to invest in our third-party retail channels and our direct business.”