Comments on: When manufacturers sell direct and “compete” with retailers http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/ Leveraging marketing & technology to solve business problems. Tue, 03 Jan 2012 04:25:01 +0000 hourly 1 http://wordpress.org/?v=3.3 By: Sherry http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5640 Sherry Tue, 03 Jan 2012 04:25:01 +0000 http://www.ebusinessblog.org/?p=261#comment-5640 We are in the baby product industry ourselves and have seen this very negative trend. We can't figure out why they would do this. It is disgusting. Phil and Teds (since Regal Lager dumped them), Mountain Buggy, Orbit... We just don't understand if they know the long term implications of this short sighted strategy. Oh, and selling to predatory Amazon.... I only hope they get stuck with some big receivables.... So unethical. We are in the baby product industry ourselves and have seen this very negative trend. We can't figure out why they would do this. It is disgusting. Phil and Teds (since Regal Lager dumped them), Mountain Buggy, Orbit… We just don't understand if they know the long term implications of this short sighted strategy. Oh, and selling to predatory Amazon…. I only hope they get stuck with some big receivables…. So unethical.

]]> By: Guest http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5520 Guest Mon, 07 Nov 2011 14:55:41 +0000 http://www.ebusinessblog.org/?p=261#comment-5520 Manufacturers who sell direct to the consumer undermine the retailers ability to turn a profit. Theoretically, manufacturers who do this would be selling at MSRP, but this is not the case. The manufacturers I deal with send out promotions for percentage off, free shipping deals and other things that compete with us. They also have pricing policies for us that keep us from lowering prices to compete as well as hide the where to buy links on their site so the consumer cannot easily find us. I have been in my niche industry for 20 years and online since the internet took wings. This practice has all but torpedoed my sales. When you have companies whose brand you depend on and who will only link to major franchises or themselves, those of us who have the knowledge to help the nursing mother personally will be eliminated. These companies include brands like Medela, Bravado, Avent and more. I feel helpless to stop them as you cannot boycott major brands in your industry and expect to have sales. If anyone has any answers to this or any way to pressure manufacturers to stop this small business killing practice, please comment. Manufacturers who sell direct to the consumer undermine the retailers ability to turn a profit. Theoretically, manufacturers who do this would be selling at MSRP, but this is not the case. The manufacturers I deal with send out promotions for percentage off, free shipping deals and other things that compete with us. They also have pricing policies for us that keep us from lowering prices to compete as well as hide the where to buy links on their site so the consumer cannot easily find us. I have been in my niche industry for 20 years and online since the internet took wings. This practice has all but torpedoed my sales. When you have companies whose brand you depend on and who will only link to major franchises or themselves, those of us who have the knowledge to help the nursing mother personally will be eliminated. These companies include brands like Medela, Bravado, Avent and more. I feel helpless to stop them as you cannot boycott major brands in your industry and expect to have sales. If anyone has any answers to this or any way to pressure manufacturers to stop this small business killing practice, please comment.

]]> By: Bill http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5479 Bill Thu, 22 Sep 2011 23:09:13 +0000 http://www.ebusinessblog.org/?p=261#comment-5479 Part of this issue that has not been mentioned is distribution. i.e. Amazon.com I'm sure they're more optimized to distribution than a manufacturer is. Part of this issue that has not been mentioned is distribution. i.e. Amazon.com I'm sure they're more optimized to distribution than a manufacturer is.

]]> By: 457 http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5424 457 Mon, 18 Apr 2011 20:42:07 +0000 http://www.ebusinessblog.org/?p=261#comment-5424 I think the manufacturers can and SHOULD sell directly. The only reason they do not do this in the real world is due to the expenses outweighing the benefits (got to buy land all over the place, hire employees left and right, even more massive fleets of transportation,etc..) where the consumer is unlikely to go into a store that only sells x brand vacuum cleaners or x brand beverage (though coin-op could easily make soda companies independent with minimum real world expenses - I mean a one time machine cost + an employee who covers many many machines even with 6/12/24packs it can work) Consumers in the physical market place want one trip to cover almost everything. Enter your Walmarts/etc.. Nothing is going to change the mindset of I can buy my condoms where I get my breakfast and dvd's and ooh look a tropical fish (most sales are not premeditated- they are visual impulses at your super store)- so manufacturers as a whole are never going to be profitable by going it alone. There is however a way they can be independent. Online sales. Nothing is to stop them (other than any real world deals with the walmarts/such) from altering their www to sell at a great price with minimum expense if their brand is strong/idea is unique. Won't hurt sales too much either as if they are based in one state that is sales tax for one state only! I say the big boys are stuck where they are and the niche/startups can and in some instances have sold directly online only successfully. Likely a side benefit of trying to cut the bs - corps like walmart make you bend to them in we want x color package, reduce sq. in to fit in x shelving, etc.. Your new guys may just have to much pride and sense to bend over for a chance of business. The walmart mentality of shoppers is what is saving a huge amount of jobs and leaves plenty of room for other crappy things like golfcourses. I think the manufacturers can and SHOULD sell directly. The only reason they do not do this in the real world is due to the expenses outweighing the benefits (got to buy land all over the place, hire employees left and right, even more massive fleets of transportation,etc..) where the consumer is unlikely to go into a store that only sells x brand vacuum cleaners or x brand beverage (though coin-op could easily make soda companies independent with minimum real world expenses – I mean a one time machine cost + an employee who covers many many machines even with 6/12/24packs it can work)

Consumers in the physical market place want one trip to cover almost everything. Enter your Walmarts/etc.. Nothing is going to change the mindset of I can buy my condoms where I get my breakfast and dvd's and ooh look a tropical fish (most sales are not premeditated- they are visual impulses at your super store)- so manufacturers as a whole are never going to be profitable by going it alone.

There is however a way they can be independent. Online sales. Nothing is to stop them (other than any real world deals with the walmarts/such) from altering their www to sell at a great price with minimum expense if their brand is strong/idea is unique. Won't hurt sales too much either as if they are based in one state that is sales tax for one state only!

I say the big boys are stuck where they are and the niche/startups can and in some instances have sold directly online only successfully. Likely a side benefit of trying to cut the bs – corps like walmart make you bend to them in we want x color package, reduce sq. in to fit in x shelving, etc.. Your new guys may just have to much pride and sense to bend over for a chance of business.

The walmart mentality of shoppers is what is saving a huge amount of jobs and leaves plenty of room for other crappy things like golfcourses.

]]> By: Eric Long http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5276 Eric Long Sat, 25 Sep 2010 21:31:48 +0000 http://www.ebusinessblog.org/?p=261#comment-5276 Mark, If this is happening, then the manufacturer doesn't understand the concept of proper channel management (which informs a pricing strategy). Typically, manufacturers selling direct will either implement a MAP (Minimum Advertised Price) policy which establishes advertised pricing parity in the market or they will choose to sell at a premium price on their site (and potentially offer other value-added services to account for the increased retail price the consumer pays). In your example, I do not understand why a manufacturer would do this unless they started their business this way and recently entered into selling through retailers. If the manufacturer is not a traditional retailer, then they probably don't excel at direct marketing or fully understanding the needs of the consumer in the shopping process -- in which case, you probably can excel at search marketing when someone does a Google search for the product. The only ammunition you really have is leveraging their competitors' pricing practices over theirs. At least, hopefully their competition (if any) has implemented a more intelligent pricing strategy. -Eric Mark,

If this is happening, then the manufacturer doesn't understand the concept of proper channel management (which informs a pricing strategy). Typically, manufacturers selling direct will either implement a MAP (Minimum Advertised Price) policy which establishes advertised pricing parity in the market or they will choose to sell at a premium price on their site (and potentially offer other value-added services to account for the increased retail price the consumer pays).

In your example, I do not understand why a manufacturer would do this unless they started their business this way and recently entered into selling through retailers. If the manufacturer is not a traditional retailer, then they probably don't excel at direct marketing or fully understanding the needs of the consumer in the shopping process — in which case, you probably can excel at search marketing when someone does a Google search for the product.

The only ammunition you really have is leveraging their competitors' pricing practices over theirs. At least, hopefully their competition (if any) has implemented a more intelligent pricing strategy.

-Eric

]]> By: Mark http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5275 Mark Sat, 25 Sep 2010 18:13:33 +0000 http://www.ebusinessblog.org/?p=261#comment-5275 How about when a manufacturer of a niche product not only sells on their own site, but also sells on eBay and Amazon, at a competitive price. As an online retailer, I have to compete with that, but my costs on the product are higher, and it leaves me with a much smaller margin. I also deal with a wholesaler that sells direct from their website. They quote me at 40% off of the "list price", but then they sell the product at about 20% less than the list price on their own site. The shipping from the wholesaler to me costs *me* about 9% of the total order. So in the end, I'm making about a 10% profit on the items I sell? No can do... I have to sell them at a cost higher than the manufacturer sells them for, and hope that when people Google for the product online that they manage to come to my site rather than the manufacturer's website. How about when a manufacturer of a niche product not only sells on their own site, but also sells on eBay and Amazon, at a competitive price. As an online retailer, I have to compete with that, but my costs on the product are higher, and it leaves me with a much smaller margin.

I also deal with a wholesaler that sells direct from their website.

They quote me at 40% off of the "list price", but then they sell the product at about 20% less than the list price on their own site. The shipping from the wholesaler to me costs *me* about 9% of the total order. So in the end, I'm making about a 10% profit on the items I sell? No can do… I have to sell them at a cost higher than the manufacturer sells them for, and hope that when people Google for the product online that they manage to come to my site rather than the manufacturer's website.

]]> By: Mobile internet access further blurring lines between channel-specific pricing | eBusinessBlog.org http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5169 Mobile internet access further blurring lines between channel-specific pricing | eBusinessBlog.org Sun, 20 Sep 2009 15:19:28 +0000 http://www.ebusinessblog.org/?p=261#comment-5169 [...] going to force retailers to differentiate in other ways. Sometimes this means the retailer will go private label with certain products. Or, retailers will demand a unique product selection from their supplier [...] [...] going to force retailers to differentiate in other ways. Sometimes this means the retailer will go private label with certain products. Or, retailers will demand a unique product selection from their supplier [...]

]]> By: eric_long36711 http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5178 eric_long36711 Wed, 12 Nov 2008 12:48:25 +0000 http://www.ebusinessblog.org/?p=261#comment-5178 Jim - Nothing was published to indicate that this was a "new" venture for P&G but it was recently highlighted on the Financial Times website -- probably more to do with the Wal-Mart executive hired to specifically investigate the potential impact of manufacturer-driven initiatives like this. Like I mentioned above, it'll probably lead to several unpleasant discussions between the retailer and manufacturer, but at the end of the day, the consumer ultimately benefits from the competition this will breed. Jim – Nothing was published to indicate that this was a "new" venture for P&G but it was recently highlighted on the Financial Times website — probably more to do with the Wal-Mart executive hired to specifically investigate the potential impact of manufacturer-driven initiatives like this.

Like I mentioned above, it'll probably lead to several unpleasant discussions between the retailer and manufacturer, but at the end of the day, the consumer ultimately benefits from the competition this will breed.

]]> By: Jim Deitzel http://www.ebusinessblog.org/261/when-manufacturers-sell-direct-and-compete-with-retailers/comment-page-1/#comment-5177 Jim Deitzel Thu, 06 Nov 2008 14:52:57 +0000 http://www.ebusinessblog.org/?p=261#comment-5177 Good post Eric. Question though. Was there something published that indicated TheEssentials.com was a new website? This site has been around for numerous years. I do like the fact that TheEssentials.com offers a range of brands and is not brand specific. This allows multiple brands to leverage technology, traffic and marketing efforts. I think it's a path other corporations such as Newell Rubbermaid should investigate. Good post Eric. Question though. Was there something published that indicated TheEssentials.com was a new website? This site has been around for numerous years.

I do like the fact that TheEssentials.com offers a range of brands and is not brand specific. This allows multiple brands to leverage technology, traffic and marketing efforts. I think it's a path other corporations such as Newell Rubbermaid should investigate.

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