Buyers are looking for discounted equipment regardless of where or from whom they are purchased. After that, their expectations include finding someone to install the equipment and service it in the future. That type of thinking has thrown a monkey wrench into the HVAC distribution channel, and it has caused some interesting new dynamics. Some contractors avoid installing equipment they have not sold, and others are agreeing to install the equipment for a variety of different reasons.
One contractor, Doug Holland of Aircom, Safety Harbor, Fla., listed five reasons why he wouldn’t touch a piece of equipment that a homeowner bought online.
“One, customers are not generally knowledgeable enough to select the proper system or component and thus it would not meet their needs,” he said.
“Second, handling warranty parts can be an issue. Third, an EPA license is required to legally purchase equipment using refrigerants, and I would suspect most customers don’t have the proper licensing. Fourth, it means lost revenue for our company. Fifth, the system or component could be stolen or obtained illegally which could create a black market for our products.”
Some contractors will install equipment purchased online — with strings attached. “I would install this equipment but would not offer any warranty on it,” said Brandy Winston of John Bouchard & Sons Co., Nashville, Tenn. “The warranty would only be on materials installed and leaks. The labor rate for this install would be higher than if I provided the equipment.”
The Cons
Most HVAC contractors who commented for this article said they wouldn’t install HVAC equipment purchased online — or would only make exceptions under certain circumstances.
“We get a few calls from people wanting us to install furnaces they bought online, and we pretty much turn them all down,” said Dave Darhower of AirMax of Little River Inc., Myrtle Beach, S.C. “How are we going to warranty that product, and do we actually know where it came from? Is it a knockoff or a brand new unit?
“If a customer wants to buy it online, they are not going to save any money because we are going to charge the same price to put it in that we would make after we put one of our own furnaces in.
“There are too many companies out there that are catering to this activity online, and the legitimate manufacturers do not warranty anything that was bought online — and they say it is illegal to resell their product online. The industry as a whole can be better if we ourselves quit trying to sell units online to people to make a couple hundred bucks. There are a lot of contractors who buy from their wholesalers and then try and sell for a profit online.”
Steve Mason of Mason Mechanical, Mesa, Ariz. said that everyone loses when HVAC equipment is purchased online. “In my opinion the consumer loses, the contractor loses (the markup on the equipment) and the manufacturer loses, too,” he said. “A handyman can now install the equipment so it may be installed incorrectly. The customer is unhappy and this creates a bad name for the brand.”
Dave Cardamone of Griffin International LLC, Chesterfield, Mich., is an HVAC equipment manufacturer’s representative. He said warranty issues are the biggest problem involving online purchases.
“Generally new equipment from the manufacturer has a one-year parts warranty and the labor warranty is from the installation contractor,” he said. “The problem arises when a component goes bad and the labor is not covered. The savings is and can be quickly eliminated by a single service issue requiring labor and a truck charge.
“When an end user has a problem he generally says ‘my unit does not work!’ The contractor informs him the labor is not covered. The end user is not very quick to pay a service call. They spend a lot of time tracking down the rep or manufacturer to solve their issue at no cost to them. This results in a lot of unpaid time.”
Robert Jones of Autumn Heating & Cooling Inc., St. Clair Shores, Mich., said that warranties are the first reason he wouldn’t install online purchases. “If the customer is that cheap to buy online, he will turn out to be a big pain in the butt,” he said. “And I would never support a company that does sell online. I handle Rheem/Ruud equipment and they will not let a dealer sell over the Internet. If they catch them they lose their dealership.
“I think the HVAC industry should strongly recommend that contractors do not do installation of online equipment.”
“I would at this point refuse to do the install for equipment purchased online by the customer,” said Brian Braley of Guymon Heating and Air Inc., Guymon, Okla.
“However, I have learned over the many years of contracting that we have to eat our words from time to time. If the HVAC manufacturers go the way the ice machine manufacturers have, contractors will be forced to consider taking on the dreaded install only. But the consumer must realize that the contractor has margins to keep and must charge out to match his desired profit. Without equipment sales in our arsenal, the labor cost will be extremely expensive.”
Glenn Storm of Hartley Sheet Metal — Heating & Cooling, Coffeyville, Kan., thinks it’s time HVAC contractors took a stand. “We should explain to other HVAC contractors that we can’t survive by selling labor only,” he said. “If we don’t stand our ground, it will only get worse due to all the new technology and access from computers, smartphones, etc.”
The Pros
For some HVAC contractors, selling labor and increasing installation markups are enough to justify installing online purchases.
Paul DeLaiarro of Johnny’s Oil Company Inc., Bridgewater, Mass., said, “I would install a product from a customer who purchased online as long as the following are met: it meets UL standards, meets our state codes for oil, gas, solar, etc., and if I felt it were safe to use and that we are not responsible for warranty issues with it.
“The Internet is here for all to use. If there is a way for people to get what they want, it is the way it will be until the first lawsuit sets a precedent.”
David P. Krejchi of Dalton Plumbing Heating & Cooling Inc., Cedar Falls, Iowa, sees the potential for future business if his company installs online purchased equipment. “We use NSPG for our flat rate and just charge them the profit we would have made in our flat rate book with our labor — and we do not guarantee the product,” he said.
“We keep our service level at the best level and continue to sell our own products and service agreements — things we do well at. Those consumers learn quickly that they do not save money trying to buy online. Besides, the HVAC contractors that don’t price themselves properly in our market tend to go away.”
“We have installed equipment furnished by an owner in the past,” said Teresa Fulford of Fulford Heating & Air Conditioning, Supply, N.C. “We do not offer any labor warranty if there is a problem with the unit only for the install part. We are not that happy about owners buying their own equipment because we lose out on any income we could make on the equipment.
“Just within the last two weeks we had a past customer call us to put a cover over his package unit he bought and installed himself. He had no electrical done, the existing duct was in terrible shape, and no permits were pulled. No heat elements were included, so we had to get them for him and finish the job.
“Consumers should only be able to buy replacement parts.”
Merle Aaron Jr. of Aaron Mechanical, Humble, Texas, tried installing equipment a customer purchased online — once. “We did it once about four years ago; a customer bought a unit over the Internet,” he said. “He already had installed it and well I might add, and we just brazed it in and started it up. Within the first year he had a compressor fail and he had to pay us to change it. Sometimes I feel that there is no difference than anything else you can buy over the Internet, like ductwork, thermostats, and filters — and the manufacturers are selling stuff like filters direct to our customers.
“I don’t think the trade will be able to stop the installation of products sold over the Internet — I think we have to stop the sale from the wholesaler’s side. The wholesalers are the ones selling to whomever is selling the product online.”
“If a customer is adamant about buying their own appliance, we will install it but cannot offer the warranties that we would with our own products,” said Howard Oven of H.O. Electric, Belmont, Mass. “We only install and warrant what we sell. We believe that a customer buys from us and not from a specific manufacturer.”
International franchisor, Aire Serv Heating & Air Conditioning, Inc., issued a company statement about online purchases. Thomas Dougherty, retail sales director for Aire Serv, said, “It can be difficult to understand why a manufacturer of HVAC equipment would sell directly to a consumer, but when the shoe is put on the other foot and we place ourselves on the inside of their business it is also just as easy to see why they would.
“As an organization, Aire Serv knows that there are certain things that are beyond our control, like the decision to sell equipment directly to a consumer; however, other things are completely within our control. We control how we, as a brand, will adapt to the ever changing business we are in. We know that in the end, the customer will still need a world class company to design the system correctly, install it correctly and most importantly, to deliver the promise.”
Manufacturers, Distributors
Carol Baker, vice president of marketing for Nordyne, explained her company’s policy. “Nordyne uses a two-step distribution; we sell to wholesalers who sell to contractors,” she said. “As such, we do not sell our equipment to anyone other than a wholesaler. Our product warranties state, “Equipment ordered over the Internet, other than from the manufacturer, is not covered.” We will not honor warranties on any equipment that is sold online by contractors or distributors.
“Contractors are independent companies, and we cannot dictate how they run their businesses. But we will not honor the parts warranties for equipment purchased online. Hopefully, this will be a strong enough reason to dissuade contractors from installing this equipment. A homeowner who purchases online without the benefit of an in-home comfort analysis, load calculation, and duct analysis is really hurting themselves in the end.”
Mark Chafee of Taco said, “We have a policy where we set a minimum advertised price for Internet sales. Legally we cannot set the sell price but current law does give us the ability to protect our brand by making sure Internet retailers are not advertising a price which we feel would cause brand degradation.
“We have a number of stages of non-compliance penalties mostly surrounding not having access to product for increasing lengths of time and if the retailer does not correct their price then we or our sales reps will stop doing business with the retailer. It has been a very successful policy and the major Internet retailers have been accepting of it, they too just want to make sure everyone is playing by the same rules.”
Tom Roberts of cfm Distributors, Inc., Kansas City, Missouri and HARDI Council Chair, gave his viewpoint of online purchasing. “Internet sales of HVAC systems pose problems for HVAC distributors, contractors, and consumers on a broad front,” he said. “While appearing to represent cost savings to the consumer, this is rarely the case when shipping costs, installation costs, and field service issues and the potential for increased warranty services are tallied.
“Of particular concern to the distributor are the high likelihood for a mismatched system to be sold, resulting in potential field service and warranty issues that utilize distributor resources that the distributor hasn’t been compensated for, as well as under qualified personnel performing the installation. Additional damage to OEM brand name reputations, which most distributors invest heavily in, are a likely consequence.
“Finally, a lack of local accountability often isolates the consumer from an effective resolution to any performance or reliability issues. HVAC systems, applied individually at each jobsite by a team of contractors and their distributor partners, just do not make good fodder for point-and-click shoppers.”
Publication date: 11/28/2011
