Over the weekend two different dealers sent me emails about Best Buy's D3100 price. Every source I talked to says the MAP (Minimum Advertised Price) for this camera is still US$699 for US camera dealers. If an individual camera dealer were to violate this, they would be immediately threatened with losing NikonUSA advertising support. That's a significant threat, as the coop advertising program support from Nikon are what most dealers rely upon to put ads in local newspapers, something that's critical this time of year.
So the question is: did Best Buy lose NikonUSA advertising support? Somehow I doubt it. Note that B&H has matched Best Buy's price, but they've honored the MAP agreement by not directly advertising it: you have to add the product to your shopping cart to see the price, the usual way online dealers skirt the MAP. Amazon, too, has done the same thing, and you can see their explanation here.
According to my sources, the D3100 is scheduled for a US$50 instant rebate soon, but NikonUSA reps are also telling dealers that the camera will be in short supply and that they may not be able to meet all their orders. So which is it, Nikon? You shouldn't need to rebate a camera that's going to go out of stock. And will NikonUSA do something about Best Buy's violation of the MAP?
But this is not just about Nikon any more. One of the dealers in question revealed to me that he's going to take money that he was going to commit to Nikon advertising and inventory and instead put it towards a bigger commitment to Sony for the upcoming Christmas season.
I've seen this game before: a manufacturer gets a little to heavy-handed with and a bit unfair amongst their dealers and next thing you know some dealers start reducing their stock of that maker's equipment and put their money elsewhere. Right now I'm told by dealers that their profit margin on a US$1000 sale of Sony gear works out to as much as five percentage points higher than if the sale was for Nikon gear when all the paperwork behind the scenes gets done right and the various kickbacks and support moneys get paid. Considering how slim the profit margins are to start with, that's a significant difference.
So if you or someone you know goes into your local dealer this holiday season looking to buy some Nikon gear and gets cross-sold to another brand, you'll know why. It all starts with dealers getting mad at a vendor for not enforcing their policies equally and fairly. First Best Buy jumped the gun on D7000 sales. Now they've jumped the gun on discounting the D3100. What's next?