Supplier refusing to supply

[Nortski]

Hi all,

I'm hoping someone can offer me some advice regarding an issue I'm having with my supplier.

Like all would-be retail start-ups these days my master plan was to buy some initial stock and trade online and build up to the point where I could afford to rent a small retail unit.

Having been accepted by the premier brand in my niche as an authorised dealer I was thrilled to begin trading on the usual online marketplaces. Then; out of the blue a small retail unit in a popular shopping arcade in Manchester City Centre became available and at amazing rates! Without hesitation I signed up straight away!

Now totally thrilled that I was 'on my way' I contacted my supplier to order some POS and marketing material. "That's great!", they said "Just give us the address of your new location so we can check there aren't any other retailers we supply within a mile." My heart totally sank as I knew for a fact that one of the retail units traded some of the same merchandise as I would be!

My dreams are now in ruin

So my question is: is this against any competition law or anything? Are they within their right to refuse to supply me their products for this reason?

Many thanks guys,
Mark.

 

[Geoff T]

I'm sorry but they are sure to be in the clear on this from what you've said... The fact that they gave such a distinct radius on distance makes it sound like they nailed this in their terms and conditions... But it might be worth going back to read that pesky small print to see if it offers an option or alternative...

 

[Nortski]

Hi Geoff, thanks for your reply. Well that's just it, I can't find any mention of this anywhere in the literature they sent me or anywhere on their website

 

[Geoff T]

Makes it simple then... Ask them the question...

 

[simon field]

If it's not written down, I would have thought a supplier can sell (or not) to who they like.

I may be wrong. Is there any contract between you?

 

[FirstClassVirtualOffice]

But none the less, they can pick and choose who to supply.

 

[Nortski]

Hi Simon. I'm under no contract. They said I can continue to trade on Ebay but they will not supply me products to trade in my retail unit as it is too close to another customer of theirs.

 

[simon field]

Which is fair enough really isn't it?

Oh dear. Are you reliant on this one supplier? What about your other lines?

 

[FirstClassVirtualOffice]

Likewise if you were the first in that area you'd be upset if a competitor started selling the same goods and were based near you and thus stealing your trade. It was an unfortunate oversight of not checking this first.

 

[Nortski]

This supplier are by far and away the best manufacturer of this type of product. Besides; I can't find another supplier that's worth trading with

 

[simon field]

So what exactly have you signed up to with the unit?

 

[Nortski]

The terms of the unit are flexible, I only need to give the shopping arcade a week's notice. It seems a little unreasonable that this one trader is allowed to monopolise the entire city centre of Manchester. I don't see Starbucks owners having the same problem lol

 

[simon field]

Phew!

Unreasonable? I would have thought that's dependent on many factors.

Why are you limited to one range of products, from one supplier?

What is it anyway?

 

[FirstClassVirtualOffice]

But exclusivity is what makes a product desirable. There will always be a limited selling radius with all good brands. It's quite common. Luckily you haven't taken on a proper full lease. It would be unusual to put all your eggs in one basket e.g selling only products from one supplier.

 

[Nortski]

Like I said First, they are the premier brand in this niche, I love their products and have no desire to trade anything else. Simon; it is gothic, punk, alternative lifestyle jewellery, and not the cheap and tacky Chinese crap.

Anyway; back to my question, I gather it's not against any anti-competition laws. GUTTED.

 

[deniser]

Like I said First, they are the premier brand in this niche, I love their products and have no desire to trade anything else. Simon; it is gothic, punk, alternative lifestyle jewellery, and not the cheap and tacky Chinese crap.

Anyway; back to my question, I gather it's not against any anti-competition laws. GUTTED.

Believe it or not it also isn't in your interests to sell products that someone else is already selling nearby - they are doing you a favour by pointing this out.

 

[14Steve14]

Look at it from the other side. If you were already selling these items from a shop and someone new came along and sold the same products, you would be gutted, or I hope you would. You would then be on this forum complaining that a near competitor is selling the same manufacturers stuff and its not fair on you.

The manufacturer can sell to who they want. If you want to keep selling online, don't annoy them too much.

 

[Root 66 Woodshop]

Sounds to me like they've actually done you a favour... you still get to purchase their product and sell online at least.

The last thing as a new business that you would want would be to have a price war with the other supplier on the exact same products... trust me it isn't worth the hassle in the end.

Your supplier is being extremely fair as it goes, they're considering yours and this other customers position and being savvy about it... Granted you lose out by not being able to sell their product in the new shop but at least they still get sales to both customers, i.e. you through internet sales and them through their shop.

Sounds rough I guess, but they're looking after both themselves, their product and their customers.

 

[businessfunding]

. I don't see Starbucks owners having the same problem lol

Retail franchising relies heavily on area exclusivity.

Whilst I see your pain, if the boot was on the other foot wouldn't you expect some sore of non-compete with the supplier?

 

[kelvin1950]

I'd be asking them where they aren't covered and trying to find premises in that area.

 

[tony84]

Give them a different address to post it to?

 

[japancool]

Give them a different address to post it to?

A bit late now that the cat is out of the bag.

And I wouldn't go ahead and do it anyway without their permission, because if the supplier finds out, e.g. by the other retailer complaining, they may refuse to supply him completely.

 

[beasty]

That is what happens when a mortage advisor gives retail advice..

Last post on previous page makes sense, ask them where they have gaps and see if one works for you, sounds like the company you are dealing with are entirely professional

 

[mhall]

We demand exclusivity with all our suppliers and if they don't agree to our terms we don't deal with them. In our opinion it doesn't do anyone any good having lots of people selling the product - the supplier will claim "brand awareness" which is just bullshit for "we want to shift our stuff". If you have exclusivity you will put more into the brand and spend more with the supplier.

To answer the question, unless you can prove that they are dominant in the market and taking advantage of that dominant position, which is nigh impossible to prove and certainly expensive, then they can supply whoever they want. Occasionally, if the current Retailer is not a good customer (some people will buy tiny bits of stock purely to try and stop anyone else selling the product) you can go to the Supplier and prove that you would be a much better proposition, in which case the supplier may terminate supply to the current Retailer and change to you, but you would need to invest considerably. You could visit the current Retailer and determine how much you think they buy each month to help you build your case. Suppliers will agree to exclusivity but they are not stupid- if a better deal comes along they will look at it.

 

[mhall]

Wouldn't hurt to post our New Supplier Agreement:

New Suppliers Agreement

1. We require “exclusivity” in the towns we are situated in. We do not believe that more than one shop in the area selling the same product is good for anyone. If you decide to sell to another Retailer in our location, that is your decision and we respect that, but we will require a pick up and full credit of all unsold stock. Actual radius varies from town to town - talk to us !
   
   
2. We are more than happy to “pro forma” as long as:
   
   1. We only pay for what is in stock and deliverable in the next seven days.
      
      
   2. Any damages or shorts are refunded immediately. We don’t expect you to be our bank and, likewise, we do not expect to be yours.
      
3. We require full credit of any customer returns, provided that they are returned within our agreed returns policy.
   
   
4. If a supplier operates it’s own website, either directly or through a third party, we must be able to offer the same price and retain our margin.
   

 

[BusinessDeli]

You seem too reliant on this one line. You can still sell it online can't you? So find something else to retail or some other lines to flog in the shop and put the other guy out of business, then move all online stuff in to the shop as well.
What would have happened if you had been trading this one manufacturers items and they went bust? Go find another supplier.

 

[CompuGlobal-Hyper-MegaNet]

Speaking as an outsider, I think it's a bit unfair that the supplier aligns themselves with the first and only the first vendor who comes knocking on their door.
I appreciate they may have invested a fair bit in marketing etc but I think this practice seems a little restrictive.
In an area like Manchester city centre, giving exclusive rights to someone is crazy. If another trader opened up, it may benefit both - it may become known in the neighbouring areas as the place to go to for niche brand X and related products/accessories. Look at how many music shops are on Tin Pan Alley (london) or electronic shops on tottenham court road. healthy competition benefits the customer and the reputation of the area benefits the trader.

 

[Chris Ashdown]

Regardless of what you feel you are buying what your customers want not what you like, you cannot afford to dictate what they want.

Get yourself trading with a much wider scope of goods from many suppliers, think what would happen if your present supplier goes bust or stops those lines, your in shit

You can still do your ebay from the shop which can keep you going

 

[Lloyd N8N]

This might be completely out of left field but could you come to some kind or arrangement with the current seller?

Are you selling exactly the same items? Could you agree not to stock their main items?

It could be the only way around the problem, if you want to open your retail outlet.

 

[paulears]

However - if the other retailer is more established, and perhaps has other profitable lines they could simply start a price war with you, ruin your margin, put you out of business and then go back to normal. Any way you look at it, you want to steam in to an area and make a living - don't expect a supplier to dump one outlet for a new, unknown one with no history. For them, it would be bad business.

 

[beasty]

Speaking as an outsider, I think it's a bit unfair that the supplier aligns themselves with the first and only the first vendor who comes knocking on their door.

SERIOUSLY?

A manufacturer finds a new retailer who wants a geographic region and you think this is unfair?

I appreciate they may have invested a fair bit in marketing etc but I think this practice seems a little restrictive.

Why? They probably dictate minimum orders and have a bunch of Ts and Cs attached to this deal

In an area like Manchester city centre, giving exclusive rights to someone is crazy. If another trader opened up, it may benefit both

Why does the manufacturer care, they care about attracting the next regional reseller and letting it become a free for all is a bad idea.

- it may become known in the neighbouring areas as the place to go to for niche brand X and related products/accessories. Look at how many music shops are on Tin Pan Alley (london) or electronic shops on tottenham court road

Yes but it is not really the same, you would have to say imagine having 3 macdonalds next to each other.. would that benefit anyone?

. healthy competition benefits the customer
So you are suggesting as a manufacturer I set up competition for the same customers in order for them to compete on price and devalue my brand?

and the reputation of the area benefits the trader.

Call the council who might care..
Why does the manufacturer care/

 

[geoWD]

Hello there,

The situation you encountered is saddening; but it is an important business lesson. One thing is for sure, the supplier operates with a clear, well constructed set of strategies; and what you encountered was one of its reinforcing tactics. Given the firm is a "the premier brand" in its sector, prospective clients would have to dedicate sufficient assiduity if they intent to maintain a position within the supplier's circle of highly-honoured clients. The fact that the supplier choose not to proceed with your interests because it presents potential conflict with the interests of its other (closely located) clients, indicates its broad commitment to its client--in line with its position within its sector of the industry.


GOING FORWARD


Legally, there is no ground for challenge. It is strictly business. What one could do in such situation is to seek deeper understanding of one's position in relation to the supplier's position within its sector of the industry. If you represented a trading entity which maintains notable market share and/or brand presence with the Manchester City Area, or you represented a trading entity which has notable sums of capital to be dedicated to each stock purchase cycle (thus indicating an attractive level of commitment), the supplier would most definitely not have resulted to the same response.

It may be reasonable to reconsider your overall strategy in trading within the sector.

 

[FantasticCleaners]

This might be completely out of left field but could you come to some kind or arrangement with the current seller?

Are you selling exactly the same items? Could you agree not to stock their main items?

It could be the only way around the problem, if you want to open your retail outlet.

This is probably your middle ground - for jewellery, trinkets ect, it might even work..
My guess is the supplier has "cheap" and "expensive" tier items - simply agree on who sells what and the supplier shouldn't mind.

 

[Deleted member 226268]

.

You now have premises..
Why can't you make your OWN brand / range of goods.

They are not large items, will not cost too much to install a few small machines and equipment.
Then you will not be dependent on any local supplier, the items will be your own designs, and if they are good, and sell, you may possible drive that other shop into closure !

dave

.

 

[Vectis]

There must be a limited market for what you want to sell (gothic, punk, alternative lifestyle jewellery) so perhaps they're doing you a favour by not selling to several retailers within the same area?

Potentially, your market share would be cut by 50%.

The analogy you made earlier with Starbucks doesn't stack up. There's a much bigger market for coffee shops than punk jewellery therefore an area can stand more retail outlets.

 

[zaen__]

I think they are well within their rights to refuse to supply anyone. Hope you sort things out though anyway mate