HP New Zealand asks ComCom to approve new online sales model

HP New Zealand asks ComCom to approve new online sales model

HP prepares the ground for local online stores to be operated by a distributor

Credit: Rob O'Neill

The Commerce Commission has received an application from HP New Zealand seeking authorisation to set retail pricing for sales through its local online stores.

HP has asked for what is called "resale price maintenance" (RPM), where the vendor controls product and marketing strategies and, in particular, specifies the prices for which the third party will sell the HP products to consumers.

The application relates to sales through HP's online store, which was operated by a partner and ceased trading last year, and any future HP online marketplace stores.

HP does not currently sell directly to consumers in New Zealand. Rather, the technology giant imports, distributes and supplies HP products in New Zealand through its network of distributors, retail channel partners and resellers for resupply to consumers and business customers. 

"However, following the establishment of the proposed model for the HP online store in NZ, as part of HP NZ's direct to end-user strategy, if and when marketplace opportunities arise in the NZ market, HP will consider establishing HP (branded) online marketplace stores," the company's application said.

In both the PC and print categories, the HP products sold on the stores are primarily focused for two main target audiences: commercial -- small to medium sized businesses consisting of approximately 1-99 employees; and consumer -- at home users or students.

The proposed arrangements involve HP supplying products to a third-party distributor, which will on-sell direct to customers and receive payments from customers through HP’s new e-commerce platform, the commission said.

The third-party distributor will also be responsible for the physical supply of HP products to customers purchasing from the HP online store, or future HP online marketplace stores. Sales that were made through the HP online store made up a very small portion of HP's total sales in NZ, the company told the regulator.

Under the previous model between 2012 and 2020, HP's partner created, hosted and managed the store on its e-commerce platform and network; purchased a limited range of HP products from HP’s T1 distributors, only after an order was received on the HP store.

The partner decided on the product range to appear on the store; set the prices and accepted payment for all sales made through the store; undertook fulfilment and offered limited call centre support.

"The previous partner managed and operated the HP online store, including the e-commerce platform for the store," the company's applications said. "Accordingly, HP was not in a position to 'own' the customer experience both online and via the call centres, for the benefit of NZ customers."

The HP online store did not adopt the same look and user experience to that in other jurisdictions, in addition HP was not in a position to be directly responsive to customer feedback and needs

Under the new model, the selected tier 1 distributor will be changing its existing business model as part of supporting the HP online stores (and in the future, the HP online marketplace stores), whereby it will act as the merchant and seller of record in receiving sales from HP’s end consumers, in addition to warehousing order fulfilment and delivery function.

"However, the proposed conduct may be considered to amount to HP entering into an agreement for the supply of goods to the selected T1 distributor where one of the terms is that the selected T1 distributor will not sell the goods at a price less than a price specified by HP," the applications explained.

"HP therefore seeks legal protection by way of an authorisation for resale price maintenance to engage in the proposed conduct."

A further benefit for HP is that the proposed e-commerce platform will allow for orders from prospective online marketplace stores such as on, eBay, and in the future, Amazon, should it launch in NZ, to be more easily integrated into the selected distributor's order management system.

The commission said it can authorise RPM if it is satisfied that the conduct will in all the circumstances result, or be likely to result, in a benefit to the public.

HP said if it was not granted RPM authorisation, it would be be unlikely to have a direct-to-consumer online presence in NZ for the near-medium term and at best and may operate the HP Stores itself at some time in the future, however there are no such plans to do so.

"Therefore, customers of the HP Online Store will not be able to buy direct from HP and avail themselves (at least for a long period) of the enhanced customer and brand experience that are expected on an ongoing basis under the proposed conduct, nor have the opportunity to make purchases through any prospective HP online marketplace stores."

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