China-Based TV Supplier Looking to Expand Private-Label Business in U.S.
Tier 3 China-based TV supplier Broad Electronics is seeking to expand its private-label business through regional U.S. retailers, Al Levene, general manager of its American business, told Consumer Electronics Daily Thursday. The company for nearly a year has been supplying private-label, 32-to-65-inch TVs under the BEA brand to the Nationwide buying group, which accounts for about 35 percent of its U.S. revenue. It also supplies sets to BrandsMart under the Atak, Bolva, Etec and Vidao brands.
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Broad Electronics is selling the appeal of private-label TVs to smaller chains, offering a business model that in the past was available only to companies like Best Buy with its Insignia brand. It can offer regional chains “a turnkey solution, so they buy private label in minimum orders of a container,” said Levene. Containers range from 840 units for 32-inch TVs to 200 for 65-inch models, he said. “I think it’s the first time anyone has offered private label in quantity,” he said. “We can private label for anyone that can buy in the quantities we need them to buy.”
One of the company's selling points is a field-scrap program for product returns, Levene said. “Instead of taking the merchandise back, they tell us what’s wrong with it -- they’re not getting video or there's no sound or the panel is cracked -- and we will authorize them to scrap the goods completely.” That saves retailers from “having to pay a lot of money to ship product back and forth and have it refurbished,” he said. Damaged goods are sent to recycling centers in states that require it, he said. Its TV defect rate, he said, is under 2 percent -- “comparable to Tier 1.”
That’s also a selling point for consumers -- a way to assuage customers who might have qualms about the quality of a Tier 3 private-label brand they’ve never heard of, said the former Haier America and JVC executive. Dealers should support the primary message that “it’s a very good TV,” with the assurance of an over-the-counter exchange if there’s a problem, he said. Rather than requiring a consumer to bring in a TV for service, “we want to make it as easy for the consumer as possible.” It also gives retailers the opportunity to bundle a warranty with a TV sale and to tell customers: “We wouldn’t have a three-year warranty if it wasn’t a good TV.”
On the financing side, private-label lines typically require a line of credit from retailers, said Levene. Broad doesn't, offering retailers “normal” net 30-day terms along with free freight to their warehouse, Levene said.
Expansion hopes aren’t limited to regional chains, and they extend beyond electronics retailers, Levene said. He will attend furniture shows in High Point, North Carolina, and Las Vegas over the next year to pitch TVs to non-CE retailers that want to carry TVs but can’t compete on pricing with big-box retailers or Amazon. Private-labeling ensures retailers have control over pricing, while giving dealers without a CE focus competitively priced TVs to sell: “They don’t have to set to market price; market price will be whatever they decide,” he said. The company's target retailers carry competing brands such as RCA and Westinghouse, Levene said.
Broad Electronics, the U.S. arm of Changzhou Shincobroad Electronics, based in Changzhou City, Jiangsu province, China, has annual manufacturing capacity of 10 million units in China and Poland, said Levene. On tariff impact concerns, Levene said, “We’re not yet,” noting that finished TVs from China escaped the first round of Section 301 tariffs imposed in July but could face a 25 percent duty in a fourth tranche of goods listed in an Office of U.S. Trade Representative notice released last month (see 1905130066). A hearing on the proposed tariffs is set for June 17.
“We’re certainly anticipating to be in the next round,” Levene said, saying the state-owned Chinese company has been “concerned since the tariffs started.” In anticipation, the company brought in “a lot of goods to the U.S. pre-tariff.” Levene also cited its manufacturing operations in Poland, and said it’s looking at other markets, too.
On how retailers are responding to the threat of TV tariffs, Levene said, “They’re confused; they don’t think it’s going to happen.” He’s been encouraging dealers to bring in goods now, ahead of the anticipated next tranche, but dealers are largely “in denial,” saying they don’t need to because there are no tariffs on TVs. “I ask them, 'what are you going to do in August or something when they decide to put tariffs on TVs? Are you going to pay more money for them? Because you will; I guarantee it.'” He’s also certain big-box stores “are fully preparing for this" and also bringing in large TV volumes.
Broad Electronics’ TV list prices are very competitive, coming in under $100 for a 32-inch 720p TV, $299 for a 55-incher and $499 for a 65-inch 4K model with HDR10. Levene has seen the leader model sell for as low as $89 during promotions. Though Tier 3 is Broad’s playing field, Levene also sees the top three TV makers as competition “because Tier 1 is coming down in price.” Dropping prices on LG, Samsung and Sony TVs are taking a bite out of third-tier TV sales, Levene said, “but we offer more than price with our private-label distribution.”
Levene called the company’s expansion “a careful” one: “We’re not interested in going to big box at all.” The current model is successful and profitable, he said. “If you go into big box, there’s a lot more risk.”