Sod that, I'm looking for minimal effort maximum profit ideas. So far I'm yet to find one. If only I'd seen a cat on a cliff first.
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What can I do about retailers selling below RRP
- Thread starter kangalou
- Start date
Sod that, I'm looking for minimal effort maximum profit ideas. So far I'm yet to find one. If only I'd seen a cat on a cliff first.
E
Esk247
Sod that, I'm looking for minimal effort maximum profit ideas. So far I'm yet to find one. If only I'd seen a cat on a cliff first.
See and that's the mass market view. Nothing wrong with it, it works. But there are many ways to skin a website (*substitute for using rabbit/cat)
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Drpepper
Of course you have to charge VAT - regardless of how you sell the item - when you get to £70k of sales, which I would imagine would be sooner rather than later if your only making £5 on a £180 sale.
I'm now presuming the prices you are buying at are plus vat i.e £180 plus vat, which leaves about 20% POR at RRP which is about right for electrical goods of this type.
Auction sites are also plentiful - in the bid up/down/reverse/dutch/secret/lowest unique/buy credits etc etc so that's nothing new or patentable. Unless of course you have something totally different in which case I wish you well and look forward to the details.
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Drpepper
How does that work then? They bid on their own items, can't see that taking off in a big way
I'm probably just being dim - nothing new there then
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Drpepper
Makes a little bit more sense
As a retailer myself I would steer well clear of any set up like this.
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Deleted member 74679
hi, going a bit off-topic here (but that already seems to have happened ) but what is the legal situation re. price fixing when dropshipping? I have a unique product which I dropship for other online shops, but I specify a minimum retail price (my website price) that they can not sell below - i.e they can not undercut my direct price. Is that allowed?
) but what is the legal situation re. price fixing when dropshipping? I have a unique product which I dropship for other online shops, but I specify a minimum retail price (my website price) that they can not sell below - i.e they can not undercut my direct price. Is that allowed?
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Only got the gist of the last few posts about auctions. Almost all autioneers have a few tricks yo their sleeve. I know one that used to work the car and boat auctions who after a function where we met invited me to help him on the rostrum of a car auction one day.
1st car came thru - and old banger and the hammer went down pretty quid at £25 quid scrap. Later I found out John had a deal with him. He threw in a few runners and the guy took the reall scap away.
Anyway after a few more cars I started trying to spot the bidders. John obviously knew the car dealers well and they would use a simple nod while the other punters would wave a car guide trying to catch his eye. Well it didnt take me too long to realise that these were in the main the only time that he scribbled a number on the entry form and then I sussed it.
A lot of traders were bidding on their own cars trying to hype the price up and John would help them by making it look like there was another bidder in another part of the hall thus making it look like the car was sort after by dealers and then bang. As soon as it got near reserve the hammer came down on some hapless punter.
A couple of traders did come to the side of the rostrum obviously thinking that John might have tried for more but when he told them he hadn't had a single genuine bid they went away as happy as a kid building sandcastles.
Never ever trust an auctioneer then. Set your own price and stick to it. If you don't get what you want stick around till the auction ends your find lots of cars or whatever you thought were sold wasn't. It had all been hype and with that over you can ask the auctioneer if your bid had been anywhere near the researve. You may well then get a deal.
Now back to the thread. How can any reputable wholesaler sell well known branded good in ones or twos to a private punter who is going to sell on Ebay and happy to work on a 2% margin.
That in miy opinion is retailing and believe you me if I were a stockist I would be complaining and forming a buyers consortium. It is also usually against the planning consent on warehouse premises to sell to the general public. A fact I would remind the company off.
Rob
1st car came thru - and old banger and the hammer went down pretty quid at £25 quid scrap. Later I found out John had a deal with him. He threw in a few runners and the guy took the reall scap away.
Anyway after a few more cars I started trying to spot the bidders. John obviously knew the car dealers well and they would use a simple nod while the other punters would wave a car guide trying to catch his eye. Well it didnt take me too long to realise that these were in the main the only time that he scribbled a number on the entry form and then I sussed it.
A lot of traders were bidding on their own cars trying to hype the price up and John would help them by making it look like there was another bidder in another part of the hall thus making it look like the car was sort after by dealers and then bang. As soon as it got near reserve the hammer came down on some hapless punter.
A couple of traders did come to the side of the rostrum obviously thinking that John might have tried for more but when he told them he hadn't had a single genuine bid they went away as happy as a kid building sandcastles.
Never ever trust an auctioneer then. Set your own price and stick to it. If you don't get what you want stick around till the auction ends your find lots of cars or whatever you thought were sold wasn't. It had all been hype and with that over you can ask the auctioneer if your bid had been anywhere near the researve. You may well then get a deal.
Now back to the thread. How can any reputable wholesaler sell well known branded good in ones or twos to a private punter who is going to sell on Ebay and happy to work on a 2% margin.
That in miy opinion is retailing and believe you me if I were a stockist I would be complaining and forming a buyers consortium. It is also usually against the planning consent on warehouse premises to sell to the general public. A fact I would remind the company off.
Rob
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It doesn't matter how you deliver your book or whatever you can not legally stop these other web sites from discounting. All you can do is make a commercial decission as to whether or not to supply then.
If Amazon for example are selling a 1,000 copies a month you may not want to cut them off. If someone selling 1 every 3 months then maybe.
I might add and perhaps should have said this before is that business like yours poster have a lot to answer for when you face problems like this. On the one hand you want retailers be they on-line or otherwise to invest in buying and marketing your products while on the other you set-up in competition with them and it may be you that offers the extra discount.
Customer loyalty B2B wise should work both ways don't you think.
Rob
If Amazon for example are selling a 1,000 copies a month you may not want to cut them off. If someone selling 1 every 3 months then maybe.
I might add and perhaps should have said this before is that business like yours poster have a lot to answer for when you face problems like this. On the one hand you want retailers be they on-line or otherwise to invest in buying and marketing your products while on the other you set-up in competition with them and it may be you that offers the extra discount.
Customer loyalty B2B wise should work both ways don't you think.
Rob
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OP's asking how to go about the illegal activity of price fixing?!
Price fixing is rife in our industry, aquatics, as the industry is very antiquated. Shop owners are used to VERY high margins compared to most other sectors. The advent of online shopping suddenly made it possible for online sellers to slash the margins and rocket their business skywards with ease. Thats basically how I got into it - It's hard to be sure, but I reckon we're number 3 online seller in the UK now. Took 3 years.
I understand the OP's issue, it's the age old (well approx 6 years old since internet shopping became big in my case) of a minority of retailer upsetting the majority that the OP relies upon.
It must be tempting to believe that you can afford to lose the minority of 'price slashers' if it secures the business of the majority of retailers that follow rrp. That's very short term thinking though. the OP must ask themselves what would happen if they shed the price slashers, and other suppliers find a diplomatic way to keep both parties happy(ish). The reality is, that the way retail works is changing, and effiecient, often distance selling is only going to get bigger. By fighting the trend you risk kicking yourself out of the market as a supplier.
within 5 years, especially given the economic situation, it's entirely possible many industries will start to see discount/online/distance sellers become the majority.
To be clear, I am not suggesting their is nothing the OP can do. Whilst it is true that it's illegal to close an account 'because retailers won't allow you to control their prices' it does happen everyday. The vast majority of our suppliers are actively price fixing, we all know it. No matter how it's dressed up. There is an amazing short-coming in the rule book however. Whilst you cannot close an account due to reselling price, you can in fact close an account for no given reason whatsoever. And no suitable level of policing exists to investigate your reasoning anyway. Not unless you're selling oil/gas on a multinational scale.
But like I say, it's easy to fix the short term problem the OP has by closing accounts, but the clever money is on coping with the transition in order to still be a relevant and competetive supplier in the long term. You can't be that supplier if your own competition take on the bulk of the new market share.
Also remember, it's not the bargain basement sellers that decide the price, it's the end customer. If the end customer wants to buy at low price, and it's possible to make a business work whilst selling at that price, the it's the entire industries job to reform it's ideas and make it so.
Price fixing, tut tut!
Price fixing is rife in our industry, aquatics, as the industry is very antiquated. Shop owners are used to VERY high margins compared to most other sectors. The advent of online shopping suddenly made it possible for online sellers to slash the margins and rocket their business skywards with ease. Thats basically how I got into it - It's hard to be sure, but I reckon we're number 3 online seller in the UK now. Took 3 years.
I understand the OP's issue, it's the age old (well approx 6 years old since internet shopping became big in my case) of a minority of retailer upsetting the majority that the OP relies upon.
It must be tempting to believe that you can afford to lose the minority of 'price slashers' if it secures the business of the majority of retailers that follow rrp. That's very short term thinking though. the OP must ask themselves what would happen if they shed the price slashers, and other suppliers find a diplomatic way to keep both parties happy(ish). The reality is, that the way retail works is changing, and effiecient, often distance selling is only going to get bigger. By fighting the trend you risk kicking yourself out of the market as a supplier.
within 5 years, especially given the economic situation, it's entirely possible many industries will start to see discount/online/distance sellers become the majority.
To be clear, I am not suggesting their is nothing the OP can do. Whilst it is true that it's illegal to close an account 'because retailers won't allow you to control their prices' it does happen everyday. The vast majority of our suppliers are actively price fixing, we all know it. No matter how it's dressed up. There is an amazing short-coming in the rule book however. Whilst you cannot close an account due to reselling price, you can in fact close an account for no given reason whatsoever. And no suitable level of policing exists to investigate your reasoning anyway. Not unless you're selling oil/gas on a multinational scale.
But like I say, it's easy to fix the short term problem the OP has by closing accounts, but the clever money is on coping with the transition in order to still be a relevant and competetive supplier in the long term. You can't be that supplier if your own competition take on the bulk of the new market share.
Also remember, it's not the bargain basement sellers that decide the price, it's the end customer. If the end customer wants to buy at low price, and it's possible to make a business work whilst selling at that price, the it's the entire industries job to reform it's ideas and make it so.
Price fixing, tut tut!
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I'm a realist. so long as just one competitor makes a workable business out of 20% markup, the rest need to offer the same value. Of course not all value comes from price. But the divide between new start ups distance selling and traditional bricks and mortar should be a few %, not 20-30% as is often the case.
For a long time retailers have set their margins in order to make the business function as they see fit. That worked fine when each shop had it's own geogrpahic area and prices were not instantly comparable online.
But now, it only takes one business to appear online and sell for less to threaten eveyone.
I would say that I'm a business that considers the customer to be my paymaster and ,ost useful critic. That doesn't mean they run my business, it means I need to meet their expectations. Which I do - as a result our once small webshop now has a large premesis and is also a physical shop (same cheap web prices though) and the local, more stubborn competition, are failing to keep up. I have no doubt that they thought me a fool either, a couple of years back one of them even delivered that sentiment in person!
The world changes very fast these days, keeping up and thinking realistically is improtant imo. I'm not saying I don't miss the old days...
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saxondale
hence all the threads "I`m a new internet business and not making any money ............"
yes - any fool can give away a product for free
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Drpepper
Agree, it's very easy to spend money, relatively easy to loose money and just sell cheaper, but a degree of skill is required to actually make a profit. NO business will ever survive by just being the cheapest - show me one where that is the case!
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Intelligent comment, unlike Saxondale who somehow jumped to giving a product away for free! Such simplistic thinking is probably a route cause for many businesses missing great, bot not obvious opportunities.
For sure being cheap is not the be all and end all. A cheap product, sold even though it's out of stock, on crappy website with appaling customer service is not a bargain. However a company that sells the same product with an excellent degree of customer service is not 'worth it' if they also charge over the odds for the product.
A PC World spokeswoman once commented that it's quite right that there should be a tangible price difference between online/offline prices. And that it should be around 10-15%, any more and the price gap is in excess of the percieved value of customer service and shopping experience you get from being 'in store'.
As a result Dixons group lowered their instore prices, so they could remain relative to the cheaper online prices - this meant much belt tightening and changes to the business model.
My approach was to increase scale and buying power to the point that we could find a margin at source, and make money that way. This allows us to sell to the customer at the cheapest price, with price match promise, also retain a good margin and ALSO offer great customer service.
You're right, you cannot simply sell cheap as an alternative to running the other parts of the business properly. But if you sell cheap and match more expensive competitors on the other level of service, then you are overall better value.
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What on earth? 20% margin is not free! - You should re-read the thread, no one suggested such a thing.
As it happens you're right regards start up net businesses. They don't fail because of low margins alone, they fail most often because they don't do the most basic maths to discover that actually, they make no money whatsoever.
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saxondale
its the online version of the busy fool
using your own example - what about if I told you I could increase profit by 30% and it wouldn`t cost you a thing?
you`d jump at it.
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What I was saying is that it's possible for myself to sell at a loss, then add the VAT to bring the full price up to the £185 ie: sell product X for £158+VAT even if I am buying in at £180.
I know it sounds completely mental but I'm not stupid (though to many it will appear that way lol)
And as for the up/down/back-to-front/lardy-dardy/Dutch auctions, you missed one, no fault of your own though, it's just not hit the market yet : )
I have filed my patent today and once my pending number drops on my floor through the letter box and the site development is under way, I shall inform you. It'll be nice to end some quarrels I e been having on here, hey SAX?? X x
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Even dictating how things are sold is illegal if it's done in order to effectively fix prices. I.e. no auction sites as it allows you to accept a lower offer than the advertised price.
But as for all types of price fixing, it can't be enforced as the supplier always have the option to give legitimate reasons for their actions, in spite of the fact they are simply anti ebay/web/low margin resellers.
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Well of course it is indirectly. However it is common for suppliers to put restrictions on how their products are viewed, thats called image, branding = higher price but not what price fixing is all about. They can say we paid for that image and you are exploiting it.
However the basic premise of business is freedom to contract and we can do that however we like with certain restrictions, UCTA for example
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Hold on! Gotta be careful about 'explaining the reasons' here. If they simply told the retailer it was because they were damaging the brand by selling too cheaply, that would be a clear breach of compete laws. I wouldn't put it into writing like that... No harm in alluding to the fact verbally of course, and having done that most suppliers would eventually close or restrict an account officially for other reasons. Been in this loop many times myself.
The important thing to remember is that anything legal to do with supply of goods in the UK is essentially founded on what is best for the consumer. And that includes people being able to compete on price alone in order to drive down prices to the customer, and also inflate size and scale of the industries involved. I'm not saying it's an ideal system, but it's the one we're all up against and at least need to be cautiously respectful of when dealing with the problems it can cause.
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ChrisS_uk
True true, movie tub! I guess be careful of the law! If its just a sale its ok right (that need to be control by your distributor), but when they're threatening to kill your product i think its best to stop supplying. I was always advised to individually mark the packaging from each distributor in the hope of catching the culprits as quick as you can.
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I would have thought that, in the intervening 6 years six the OP was posted, he's found some kind of resolution by now.
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