In recent years, the independent product servicer has faced every kind of assault possible to his existence.  The independent servicer has proven time and time again that he is up to the challenge of supporting sales of consumer products with pride and professionalism.

There has been much discussion and speculation this week regarding threats to the independent service community. It is important to separate rumor from fact so we would like to shed some light on this issue.

The concept of a national service company is not new; it has been tried many times.  Major manufacturers have tried, major retailers have tried and some independent servicers have tried.  They have all failed, but this fact will not stop others from proposing a national solution for warranty and non-warranty service.  Several companies have recently entered the arena in an attempt to provide a national service solution.

The following is a list of the facts as best we know them.

• When Montgomery Ward went bankrupt, Sears took control of the M-W service division, A&E. Sears made a deal with Sharp Electronics to be the primary servicer nationwide for Sharp microwave ovens, both in and out of warranty. Sears (or A&E) gets the first referral when Sharp is contacted for service on microwave ovens. NESDA officials met with Sharp executives and tried to explain the obvious reasons why we opposed this venture. Sharp had already signed the deal with Sears. They also stated that they had no plans to expand this plan beyond microwave ovens.

• Shortly thereafter, Whirlpool announced that they were folding their service division into A&E and that Whirlpool technicians would become employees of Sears. Whirlpool customers would be referred to A&E Factory Service for both in and out of warranty repairs. NESDA representatives along with PSA leaders met with Whirlpool service executives to explain our opposition to this deal.

• Recently Sears (A&E) has approached some of the major electronics manufacturers in an attempt to become their national service provider for the country.

• Sears has invested heavily in A&E and they are aggressively seeking to expand their business in appliance repair. This expansion involves extended warranty providers as well as the major appliance manufacturers. They claim to  have over 63% of the countries’ zip codes covered.

• Other companies are also proposing in-home service on a national scale. Computer repair companies are looking to make inroads into in-home service on high-end televisions and monitors. Despite lacking extensive component level skills, they are focusing on newer technology displays, which will not require component level repairs. One such company is Decision One or D-1 who currently provides service for Gateway monitors.

• In addition to these in-home proposals, UPS is performing depot service on a national scale. The resources of UPS extend way beyond their shipping capabilities. Since acquiring Mail Boxes Etc. they have over 3000 drop off locations nationwide. (See link, http://www.ups-scs.com/)

Consumers outside major population centers are entitled to (and in some states have the legal right to) the same level of service that customers within major population areas receive.  National service programs will find this to be cost-prohibitive.

The level of competency for service technicians required to service today’s high-tech products will not be attainable when knowledge of all brands is required.  Manufacturers whose products are not in the top 75% of national sales would find that their products are poorly serviced, or not being serviced at all.

Should a national service plan deplete the customer base of the independent product servicer, the independent service community would vanish, leaving consumers with  few or no choices, which would not sit well with consumer advocacy groups or those wishing to retain consumer’s loyalty and business.

The NESDA Board and our advisors have looked into this proposal and although Sears has the necessary infrastructure in place for appliance repairs, it appears that they do not currently have the technician base to accomplish this monumental task in electronics. They are apparently looking for some kind of commitment from manufacturers before they will actually attempt to find and hire the staff required. In addition, as the technology shifts toward board level repairs, they hope that in-home electronics service will more closely resemble their current in-home appliance service model.

Three years ago NESDA leaders met with Rick Legleiter of InFocus, a major manufacturer of high-end digital projectors. We outlined in great detail the requirements for world-class service and how NESDA members could provide this service. On November 24, 2003 InFocus selected UPS as its nationwide service provider. (See link, http://www.ups-scs.com/about/PR/11_24_2003_release.html?pr=true),

The NESDA Board met twice this week to discuss these developments and agree that we are not capable of stopping others from attempting to expand their interests in the consumer electronics industry and further eroding an already unstable market environment. However, this does not mean that we will stand idly by while others negotiate for our piece of the shrinking service market or allow consumers the fair and reasonable choice they want and deserve.

Sears is making an attempt to distance themselves from A&E. They understandably do not want retailers to view A&E Factory Service as Sears. It is important for all concerned to realize who A&E really represents. Dealers who may be inclined to use A&E as a service provider should be made well aware of exactly who it is they will be inviting into their customer’s homes.

Sears has the money and the clout to go forward with this proposal. They can exert pressure (and undoubtedly already have) on manufacturers to become authorized agents for warranty fulfillment for companies other than Sears.

Most major manufacturers are not anxious to enable Sears to be the national provider of warranty fulfillment. They have first hand knowledge of the difficulties in trying to provide a national service solution. In addition, even a failed attempt by a single entity would severely damage the current independent service network, negatively impact consumers and the market, and will leave consumers with no credible alternative to a single service provider. The ensuing monopoly could control the industry.

Nobody does it better

The relationship between NESDA, its members and the manufacturers and other key industry sectors has become very strong. We have developed a mutual trust and a desire to work in the best interest of our mutual customers and consumers.  The independent service community brings experience, technical training and customer relations skills to effectively repair units regardless of whether board level or component level repair is required. This flexibility coupled with the passion for our industry cannot be underestimated.

Possessing the skills to perform component level repairs puts us in a unique position. Despite the promise of a gradual change to board level repairs, we have already seen instances of the need for component level options. These options have the ability to save thousands of dollars in expensive returns as well as saving expensive board replacements. 

What can we do?

We must reach out to dealers and let them know that we can be the solution to the service needs of their customers. We must learn to better understand fragile consumers, confused and frustrated by sophisticated new expensive technologies.  We must utilize our strong relationship with the manufacturers and other industry sectors to communicate problems before they escalate to a level resulting in needless exchanges.

Servicers who wish to further demonstrate their professionalism should seek to become certified through the Certified Service Center Program.  This shows manufacturers for whom they perform service as well as the consumer public that they have formally attained and certified their additional competencies in areas such as customer service, technical certifications, and business management.

Independent local service companies have the experience and flexibility to outperform any national service company. When coupled with the network of the NESDA family we offer the ability to solve both technical and logistical problems quickly and efficiently. It is true that Sears has some progressive servicing strategies, (see link, http://www.motient.com/Content/IntheNews/PressReleases/1998PressReleases/sears.htm), However, NESDA has embraced similar progressive strategies through the introduction of FieldPower. (See link, http://nesda.fieldpower.com/)

NESDA remains responsive to the changing needs of manufacturers, and others, assisting our members in constantly updating their technical and administrative capabilities. We have encouraged our membership to realize their cost of doing business and use this information to negotiate fair rates for providing quality service. We are opposed to any pricing structure designed to corner the market in service.   The manufacturers and others are aware of the damage that can be done by any attempt at developing a single entity national service solution.

An independent servicer brings more experience and better training to the business equation, benefiting the manufacturer as well as the consumer.  One of the manufacturer’s most pressing challenges, achieving a reduced rate of return, has a direct impact on improving the manufacturer’s bottom line.  Trained, experienced independent servicers can help the manufacturer reduce the rate of return by offering capable service, discouraging returns and encouraging satisfied consumers.

In Conclusion

Challenges to the independent service network will continue. We should take them seriously but not panic. Yet we cannot afford to be passive. We need to seek out retailers who need quality support and then provide that support. NESDA must continue to improve our relationships with retailers, manufacturers, parts suppliers, and extended warranty providers as well as other industry associations, who are not intent on setting up any type of monopoly or unfair or anti-trust business practice. We must work with them and commit ourselves to understanding their needs and developing solutions. We must remain vigilant in our campaign to upgrade the image of the independent service network. “Nobody does it better.”

The End

This is most certainly not the end to this issue.  In fact, it is the beginning of bringing all of the known facts to the light of day. The NESDA board, our industry advisors and our staff will continue to search for truth and fair-play for our fellow servicers.

The information contained in this white paper is copyright 2004 by

NESDA -- The National Electronics Service Dealers Association

3608 Pershing Ave., Fort Worth, TX  76107-4527

817/921-9061 – www.nesda.com

For over fifty years, NESDA has been the industry voice of the independent product servicer.  It is the premier trade association for professionals in the business of repairing consumer electronic equipment, appliances, or computers. NESDA's mission is to help independent servicers to be successful through today's challenging times.