Rise of the Agency Sales Model

Will there be a different price based on the location of the selling agent and customer?
Will selling agents in different locations all be paid the same commission and expenses?

The costs of a premium location show room in downtown Capital City vs the through road of a major regional city are likely very different.

I’m one to think that for certain products there will need to be differences in the product delivered price and for a seller what they can earn.

Will this lead to fewer outlets, less choice in store stock and fewer opportunities to see the product before one purchases?

Two consumer questions:

  1. Does the ACL and ACCC provide protections that ensure agency agreements do not work against consumer interests?
  2. For warranty purposes does an agency agreement change the responsibilities and weaken consumer rights to compensation? Consider the consumer guarantees point to the retailer in the first instance.
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You know and I know you know that is not a worry according to the ACCC. Evidence of that is the approval of MB joining Miele, Asko, Honda, and an increasing lineup of others that have adopted agency models.

There has to be enough profit built in to cater for compensating the most expensive order taker. Local differences would assuredly be attributed to local (state) requirements, not economics. Also reference the link, below. How full or empty the glass is may be gleaned from this 2021 article.

Extrapolating this to more products is unavoidable, especially if the antagonists adopting agency models have ‘profits up’.

An interesting reveal following on from the article commenting new car sales only accounted for 4% of a dealer’s profits.

The FCAI data also showed used cars as making up eight per cent of profits, finance and insurance at 20 per cent, parts at 22 per cent and servicing the most lucrative at 45 per cent. This means that dealers – or agents – will maintain the most profitable parts of the business and will still be paid for each new-vehicle sale, too.

Also of interest when considering using third parties for servicing, repairs etc and why there may be such a significant difference in the cost.

For the typical white goods retailer, not quite the same depth of opportunities. Although for some it likely explains the enthusiasm to offer finance packages and extended warranties. When purchasing recently a Miele product we had the option of Miele delivering and installing or the store. Both at an added cost.

While a jog to the side of the agency model it appears the time honoured experience of buying a new vehicle is changing. Enter Costco. Enter shopping centre order taking kiosks (not the dealer type). Imagine the joy of dealing with whomever or manufacturers when one gets a lemon or has a serous problem with one.

Because of sales power and volume it might provide an unhappy consumer with more leverage through their sales channel even while distancing the parties via an ordering system. Would an importer abandon Costo if it provided a significant part of their volume but also demanded the importer ‘pay attention’ to otherwise fobbed off customers?

Whether or not to buy an EV, ICE, or any of the alphabet soup variants is changing from visiting the showroom to clicking a buy now button. Historically Costco acts as a broker between their member-buyer and the seller for ranges of non-warehouse goods from A/C to coffins to blinds and it has generally worked.

Will the market shift or will this be and remain a niche marketplace populated by just the few?

Has anyone in the Community tried buying a vehicle from Costco in those few stores where they could?

Freudian slip? :slight_smile:


Ta, fixed :slight_smile:

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