Enterprise dealers unhappy with DJI-imposed restrictions

As we reported earlier, DJI made the decision to make its Enterprise line of products available to purchase online directly from the company. It also recently issued another directive that further restricts options for authorized dealers trying to package products for their clients. Those two moves have thrown some of those dealers for a loop.

Traditionally, the only way to purchase an Enterprise drone – the kinds of products most suited to First Responders and industrial users – has been to go through an authorized dealer. This has worked out well because most clients would like to discuss their unique needs before settling on a package that works well for them. It has also worked out well because clients then have a point of contact for after-sale support.

That model changed, abruptly, last Friday.

DJI direct

With little notice, DJI changed the sales channel. Now, in addition to its global network of Enterprise dealers, it is selling those same products directly online. That means you can simply go to the DJI Store and buy whatever Enterprise product you want. It’s similar to the Apple model, where there are authorized dealers, but the company also sells directly.

DJI’s Phantom 4 RTK, an Enterprise product

But Enterprise drones, arguably, are a slightly different beast from the rest of the company’s product offerings.

Different products, different customers

DJI’s consumer offerings are pretty straightforward. In the case of drones, they’re simple to fly out of the box and consumers generally know what they’re after. Enterprise clients are different. Their needs are nearly always more complex. Often, that translates into pre-purchase consultation and post-purchase support. Orders from police departments, agencies, and industrial/corporate clients are frequently for multiple drones and sensors, monitors, etc., and are required to go out for a bidding process.

These are just a few of the things that Enterprise dealers are prepared to handle. In fact, due to increased profit margins baked into the Enterprise line over the past couple of years, some Enterprise dealers have even modified their business model – including hiring expert staff – to help handle the unique requirements of Enterprise clients.

DJI restrictions

DJI has some pretty rigid rules when it comes to Enterprise dealers. One of them is that dealers are not permitted to sell DJI products for less than retail price. In some ways, that has historically put the dealers on a level playing field, meaning when a quote is coming together two dealers would likely have an identical quote as far as DJI products. It also helped prevent the product from being devalued by stopping dealers from price-slashing just to get the deal.

In the case of bidding for a contract, that has generally meant that DJI dealers would offer some discount in overall package prices by discounting other products that are part of the same bundle. So, for example, they might shave some points off on custom cases, landing pads, or other products frequently sold at the same time.

But, says a prominent Enterprise dealer, DJI has placed restrictions even on those activities.

Must sell at MSRP

An Enterprise dealer spoke to DroneDJ on a not-for-attribution basis, meaning they wanted to remain anonymous. But they were stunned to receive communication stating that Enterprise dealers have been instructed they must not even discount products from other manufacturers contained in the same bundles as DJI products.

We’ve seen two different documents from two different Enterprise distributors, both of which outline the DJI policy in no uncertain terms.

Really? Cut off as a dealer for discounting products from another manufacturer, if included in a bundle with DJI Enterprise products?

Want to include these cases? Sure, but at retail price only…

“They are vigorously enforcing and closely monitoring every bid with DJI Enterprise products on them. Several dealers have been penalized in the last few weeks,” says the communication from early March.

The “I didn’t know / I was told it was okay” excuse isn’t working… To reiterate this is NOT an option. Once DJI prompts us to cut off an account, we have no choice. The account cut-off notice is also communicated to all other distributors.

Memo to Enterprise dealers from distributor

A separate document, from another Enterprise distributor, paints a similar picture.

Any bundle or package that include both DJI products and third party products must not list the value of a third party product as lower than its normal market price range.

Memo from second Enterprise distributor

Not many options for dealers

When news first broke about DJI adopting the direct sales route for Enterprise products, we asked the company a few questions. Those questions were not directly addressed, but we did receive a company statement. Here it is, with bold added.

As the Enterprise drone market continues its astonishing growth, DJI is committed to providing our ever-expanding customer base access to our products in a larger variety of ways. This will allow us and our partners to respond to the increasing demand for our products and further grow the entire Enterprise market in the most flexible manner. Our existing DJI Enterprise dealer network has built a strong global reputation as solution partners by offering services, advice and consulting with every drone they sell. Their expertise is invaluable for first-time customers just entering the drone era, as well as for experienced operators who have developed close and responsive relationships with their dealers. DJI is listing Enterprise products online without discounts, at the same price recommended for dealer sales – preserving their ability to negotiate prices directly with customers and respond to bidding opportunities. We will provide top quality pre- and after-sales support for Enterprise customers as we do for hobbyists and professional customers.

DJI Statement

It’s obviously going to be difficult for Enterprise dealers to “negotiate prices directly with customers” if they’ve been told they cannot discount the retail price of other products. And while the two directives we’ve seen are from distributors and not from DJI, they convey exactly the same policy. So it seems pretty clear this is a top-down company decision.

Hands tied

To Enterprise dealers, this all seems pretty unfair.

Essentially what DJI is doing is saying if you’re responding to a bid and there’s a DJI drone on there, you must follow our UPP (Unilateral Pricing Policy). What they’re also saying is…’You cannot list the GPC case as below their MSRP.’ That’s a big problem – not only for state and local agencies (hoping to get the best price possible), that’s also a huge issue for third party manufacturers. Because now they’re having another company dictate what their prices are. That’s insane, That flat out wrong, and it might be illegal… You can see how unfair this is for the end user.

DJI Enterprise dealer

The dealer said many police departments and agencies that purchase Enterprise bundles are working within tight budget constraints. The policy, he says, will not only harm dealerships trying to be competitive but ultimately those small police departments, etc., where a discount can really make a difference.

Red flag

In fact, the recent policy shift – specifically the directive that other retail products cannot be bundled at lower than MSRP – felt so unfair that one Enterprise dealer has taken its concerns to the US Department of Commerce. It’s unclear what actions, if any, the Department might have at its disposal in this case.

Products like the M300 are popular with Enterprise customers…

But dealers say none of this is good for them or, ultimately, for many of those purchasing Enterprise solutions:

“You can just see the writing on the wall when quotes start going out and bids start going out,” he says. “You can see how unfair this is for the end user.”

And, now that DJI is also selling directly, the same dealer envisions customers coming in seeking local, in-person support following those sales.

“They’re going to come to us looking for support from that product. And we’re going to be expected to provide support for that product? We have to say yes; they might be a future customer and it’s the right thing to do. (But) We were blindsided. It’s just greedy.”

To those dealers, now grappling with restrictive directives, the move is incomprehensible.

“They have a great product, a lot of people like to use it and the margins are great. But DJI corporate is out of its mind.”

We reached out to DJI North America for comment. Due to the time difference with Shenzhen, there was no additional response today beyond its initial statement.

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