Open Letter to Manufacturers

[SumpinSpecial]

Dear Manufacturer,
As much as you love building your products, I know you also love selling them. The more you sell the more money you make. Rock on! To help you move more product, you may be considering working with retail channels. A strong network of retailers can certainly move a lot of product for you. Speaking as a retailer, I'd like to offer a bit of advice:

After you have your retail network in place and have advised them all to use a common MSRP guideline to set the retail price at twice the wholesale price, please avoid one bit of naughtiness. Don't then sell your product on Amazon for two dollars over wholesale. You just undercut your retailers which means they can't sell your products. Plus it makes them hate you.

Sincerely, a retailer who tried to work with you in good faith

[vangogh]

Good point and funny too. I'm guessing there's a story that led you to write this.

I do think there are some reasons to sell through Amazon or other online stores. You'll likely reach more people and it's a lot easier to sell a product through an online store than it is to build a retail network. The obvious con is having to sell for less and so needing more sales to generate the same revenue.

That said, if you've already done the work to build a retail network, selling online for a lower price isn't going to make your network happy for the very reason you mentioned.

I think it's a decision sellers have to make and not necessarily an easy one. Before reading your post, my advice would have been to try selling in as many places as you realistically can and see which channels work and which don't. I'm rethinking that now. If you want to sell both online and offline and you should probably spend a little time thinking how online and offline affect each other. How does selling through one channel affect another? Is your product more suited to one or the other? Does one suit your personality more (assuming your business is you or a small team)?

I recently changed my business to a writer selling books. In my case, it's a lot easier and less expensive to start entirely with a digital product making online stores the obvious choice over physical stores. Should demand arise, I can let Amazon create the physical product on demand. On the other hand for some who's product has to be physical, selling through Amazon likely means maintaining stock and storing it someplace. Working with physical retail stores can alleviate some of the storage issues as a certain amount of your inventory is at the stores.

This is one of those things sellers need to decide what's best for them, but your point is well taken. You do have to be aware of how what you do affects the other business you work with and who are working to help you.

[SumpinSpecial]

The story behind it is just that I've caught a second manufacturer selling stuff at or below wholesale on Amazon, despite telling their retail channels like me to sell only at MSRP.

Perhaps another point is that these days some of their retailers are very likely to be online also. Customers absolutely price compare between me (and any retailer) and Amazon. But actually, it shouldn't matter if the retailer is brick and mortar or online. Customers have smart phones and price-check as they browse your B&M store.

When I found the first one last summer, I complained to the distributor (who I worked with). They gave me a lame story about how the goods are likely to be stolen or Chinese copies. They completely evaded the point I made that the goods were being sold by the manufacturer himself. So, what... he's stealing his own merch and then liquidating it?

[Bobjob]

Tough position. Time to visit China? Do you have contracts with these distributors? Any verbiage in the contract protect you?

[cbscreative]

The Amazon model is definitely problematic for B&M retailers and manufacturers being willing to cannibalize their own seller network isn't helping. We're seeing a surge in store closings like Macy's, Vanity, etc., and I think the trend will unfortunately continue.

I understand that times change but consumer behavior to save a few bucks is short sighted and sad. Here's a big problem as I see it. Physical retail stores provide the advantage of you being able to touch, feel, see it live, try it on, etcetera and make a real world purchase that would be trial and error online. Consumers who shop the retail store and then buy on Amazon just to save money cross a line I consider unethical. I know not everyone will agree on that view but it's really just selfishness manifesting itself and our culture has been trained to not even recognize that fact, nor think about the consequences.

Carry this trend out to its logical conclusion when enough consumers only buy on price alone and there won't be any B&M retailers. Then you'll have no choice but to order online and hope your shoes don't hurt your feet. I don't think retail stores will actually go extinct any time soon, but the devastation will be great and then people will wonder how this happened. For sure, consumers won't blame themselves, they'll only lament about how terrible it is.

I guess I should conclude my perspective by pointing out that I love people, but we sure are capable of behaving very badly/stupidly, especially when money is involved.

[Bobjob]

I understand that times change but consumer behavior to save a few bucks is short sighted and sad. Here's a big problem as I see it. Physical retail stores provide the advantage of you being able to touch, feel, see it live, try it on, etcetera and make a real world purchase that would be trial and error online. Consumers who shop the retail store and then buy on Amazon just to save money cross a line I consider unethical. I know not everyone will agree on that view but it's really just selfishness manifesting itself and our culture has been trained to not even recognize that fact, nor think about the consequences.

Carry this trend out to its logical conclusion when enough consumers only buy on price alone and there won't be any B&M retailers. Then you'll have no choice but to order online and hope your shoes don't hurt your feet. I don't think retail stores will actually go extinct any time soon, but the devastation will be great and then people will wonder how this happened. For sure, consumers won't blame themselves, they'll only lament about how terrible it is.


I thought an idea retail could try is allow people to shop online and make it where the store will save stuff for them to try on in person at the store. Maybe give them a week or two to come in. Send them emails and texts every other day to remind them.

I do wonder whether it is less expensive to try on in store or purchase and send back. And how returns will pan out in the future.

Another problem is purchasing quality. I am willing to pay more, but so many companies make everything so cheap I can't find quality.

[SumpinSpecial]

While it's an issue for sure, you guys are veering away from my complaint. :-)

I'm an online-only store and Amazon allowing their marketplace vendors to sell at wholesale is undercutting even me. Hmm... I don't suppose I could complain to Amazon about it...?