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Company A Supplying ONLY Company B

Discussion in 'General Business Forum' started by anonuk, May 10, 2020.

  1. anonuk

    anonuk UKBF Regular Free Member

    302 44
    I posted relating to this a week or so ago, but just thinking of other options.

    We have Company A and Company B. Company A does majority of sales whilst Company B doesn’t do a great deal, and so we were thinking of merging the two companies.

    We sell mostly online (Amazon, EBay, Etsy, etc). Company B’s sales so far all come from Etsy and it’s own website and I believe the main reason company B doesn’t do much in terms of sales is because Company B doesn’t sell on Amazon or eBay (there’s a rule that says we can only have a single Amazon account unless you get specific permission from Amazon).

    We have been waiting for said permission from Amazon, and have just received this, however, we would be starting from scratch on Amazon and EBay in terms of feedback, sales history, etc for Company B.

    So... I wonder whether we would be better if Company B simply sold its products to Company A and Company A would act as it’s sole distributor/retailer, then Company A would sell the products on amazon, eBay, etc. Company B could still sell on Etsy and it’s own website (or Company B could also transfer those to over Company A).

    Would there be anything wrong with the above (in particular if the Etsy account and website were transferred to Company A and therefore Company B only having a single customer)?
     
    Posted: May 10, 2020 By: anonuk Member since: Feb 27, 2014
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    25,382 3,094
    Company b sells to a at same price they would sell to others? Yes can be done.

    No idea if Etsy account can be transferred to another owner. Check that out, if cannot then leave it with b.
     
    Posted: May 10, 2020 By: Mr D Member since: Feb 12, 2017
    #2
  3. anonuk

    anonuk UKBF Regular Free Member

    302 44
    Company B would ideally sell to Company A at a lower ‘wholesale’ cost. If it were to ever sell wholesale to others (never going to happen), it would be at a higher cost than Company B would charge Company A. The idea is Company B would make a very small profit just to keep it ticking over and cover its costs.
     
    Posted: May 10, 2020 By: anonuk Member since: Feb 27, 2014
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    25,382 3,094
    Then the process will be to keep company B profits down artificially and keep company A profits higher than they would be otherwise.
     
    Posted: May 10, 2020 By: Mr D Member since: Feb 12, 2017
    #4
  5. anonuk

    anonuk UKBF Regular Free Member

    302 44
    Not that that is my intention but is that allowed?

    The other option would be to license the designs to Company A so Company A can make and sell the products. This would have the additional advantage of making stock purchases of raw materials simpler to control as it would just be one company buying and selling the stock.
     
    Posted: May 10, 2020 By: anonuk Member since: Feb 27, 2014
    #5
  6. Scalloway

    Scalloway UKBF Legend Free Member

    16,589 3,513
    Posted: May 10, 2020 By: Scalloway Member since: Jun 6, 2010
    #6
  7. anonuk

    anonuk UKBF Regular Free Member

    302 44
    Posted: May 11, 2020 By: anonuk Member since: Feb 27, 2014
    #7
  8. dotcomdude

    dotcomdude UKBF Enthusiast Free Member

    514 105
    Providing Companies A and B are owned by the same shareholders (and in the same proportions) and Company B never gets into any financial difficulty then I can't see any problem with this.

    Is it worth closing down Company B altogether, to save on admin/accountancy costs etc?
     
    Posted: May 11, 2020 By: dotcomdude Member since: Jul 27, 2018
    #8
  9. Alison Moore

    Alison Moore UKBF Enthusiast Full Member

    720 149
    It sounds rather complicated - if Company B will just be selling to Company A (and still not selling much in it's own right) then do you still need Company B? Surely Company A could just take over the website and Etsy sales and then you'd just have the one company which would make admin/overheads etc cheaper.
     
    Posted: May 11, 2020 By: Alison Moore Member since: Aug 4, 2016
    #9