Racks4cheap.com owned by Thule, but selling Yakima?

Thule selling Yakima product on the web, at a deep discount? Really? Believe it. Several weeks ago, a website suddenly appeared, www.racks4cheap.com, and began selling deeply discounted Yakima product. Retailers began to wonder who was behind this mysterious website, since there was no contact information listed on it at all, and absolutely no indication of who owned the site. SNEWS has the inside scoop.
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Thule selling Yakima product on the web, at a deep discount? Really? Believe it. Several weeks ago, a website suddenly appeared, www.racks4cheap.com, and began selling deeply discounted Yakima product. Retailers began to wonder who was behind this mysterious website, since there was no contact information listed on it at all, and absolutely no indication of who owned the site.

The homepage boasts that the website offers “absolutely THE BEST DEALS ON NEW YAKIMA racks and accessories for all of your biking, skiing, hiking, traveling, exploring and watersport needs!!! With our large selection of NEW Yakima products you will be able to create the ideal rack system that suits your active palate. Here you will find the lowest prices on new and replacement Yakima products.” While the website offers free ground shipping until March 31, it is also selling product with the stipulation that all sales are final and returns are not allowed.

The domain was registered through GoDaddy on Jan. 29, 2010, but the registration is private.

As the SNEWS® team began to ferret out the source – yes, we have our many ways -- it became increasingly clear Thule seemed to be the site owner. A customer service number -- 203-881-4837 -- was given to SNEWS when one of our editors asked how we might contact the site to find out more information about buying some products – and no, for the record, we did not identify ourselves at this time. A public records search revealed that number was owned by Thule Inc.

In a follow-up email to customer service, we were told, “Any claim and warranty issues would have to be taken to the manufacturer directly.” Ironically, Thule refers consumers to the Yakima Fit Guide on the Yakima site to help shoppers on its www.racks4cheap.com select the right product to buy.

Armed with this information, as well as a March 16 letter sent to dealers by Yakima CEO Jerry Heinlen alerting them to the fact it believed that Thule was behind the website, we contacted Fred Clark, CEO of Thule, who confirmed that the website was indeed operated by Thule.

According to Clark, the Thule website should only offer 10 percent off Yakima MAP prices unless it is older, discontinued product.

“Our intent is not to compete with the retailers, but to provide an outlet for us to get rid of inventory we had to pay for and that we don’t want to dump,” Clark said. A quick check of the website by the SNEWS team on March 18, after speaking with Clark, appeared to indicate a bit more than 10 percent was being shaved off MAP by www.racks4cheap.com. On 10 products, all current and inline, Racks4Cheap discounts ranged from 21 percent to 56 percent.

As for how Thule obtained the product, Clark told us, “We came into possession of the inventory because we had acquired some accounts who were sitting on some very old Yakima product and other Yakima products they couldn’t sell. For whatever reason, Yakima would not restock and clean up the product so we took it to support our dealers.”

Clark explained that the company tried diligently to offer the product to existing Yakima dealers; given the economy, none would take it, he said, leaving Thule with what it felt was its only remaining alternative – sell the product itself.

“We have in the past been successful in selling the product like this to existing dealers, but most would not take it this time,” Clark told SNEWS. “I think some guys in the industry would go to Sierra Trading Post or Overstock.com or other options, but it does not work in the rack category. Given the volume of that product we had to set up a website to sell it.”

Insiders with whom SNEWS spoke confirmed a great deal of the existing inventory came from Sport Chalet, which parted ways with Yakima in late 2009 and now provides Thule with a branded shop on its website. Though no one would confirm the actual value of the inventory that Thule acquired from Sport Chalet, sources indicated to us it was well over $1 million at retail. A closer look at some of the inventory appears to indicate that some of the product on the Racks4Cheap site also, at one time, belonged to Eastern Mountain Sports – also a recent Thule convert.

When we asked Clark how long Thule would continue to operate the Racks4Cheap website, he declined to give a firm timeline, but indicated that it was not going to be an ongoing project.

As for why Thule just did not set up a more transparent website and chose instead to try to pull a veil over its Yakima operations, Clark told us that Thule simply did not want to confuse consumers and there was nothing more to it than that.

Greg Bauer, co-owner of Rack N Road (www.racknroad.com), confirmed to SNEWS that Thule approached its business about buying the Yakima product, but that he turned it down.

“Thule and Yakima are great partners of ours. I understand how Thule came about owning the Yakima product, and that this was a business choice that they made and I’m not upset by it. However, the one mistake Thule did make in this I think is trying to go about selling the product themselves,” said Bauer. “They should have come back and offered retailers like us a deeper discount to keep it clean. But, again, that’s their business decision.”

In his letter to dealers, Heinlen took things one step further: “We are concerned about the confusion and inconvenience this situation is causing. We hope that those responsible for it decide to do the right thing and cease and desist from this unfortunate choice of business practice.”

One ironic note: According to insiders, it appears that thanks to the dealer letter Heinlen sent out, as well as the investigation by SNEWS, traffic on www.racks4cheap.com has jumped in the last few days. As a result, at least one retailer has contacted Thule indeed to buy a significant chunk of product at an even deeper discount to sell in its store.

--Michael Hodgson

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