Need ADVICE on selling Widgets

Need help with this obstacle

[Brock]

I'm trying to get an ecommerce site going and I'm having some trouble. I've been talking with the manufacturing companies of the widgets I'm trying to sell and some of them push me to my local distributor... So I call up my local distributor and I'm told that they do not have a problem with my selling the widgets... But I have to sell them in my local area. They say they can't sell me the widgets at distributor price if I ship them outside of my local area..

Are there any other ways around this?

I have a few ideas but don't think it would work.

[RailMan]

won't go into unfair trading restrictions etc but if it's something you wanna sell, have 2 companies, one buying the stock and selling it to your other company, the other to sell worldwide ....

[Brock]

That was what I was thinking..

Purchasing it to one company, selling it to another.. who will then sell nation wide.

[King_Fisher]

Rather than drop shipping it, have it shipped to you and re-ship it.
Unless you don't have enough profit in the product to do so.

[ispy]

Well technically they are all sold in your local area. The sale is made wherever your business is located or licensed, not where it's shipped to. Where you ship them, and where they are sold are two different issues.

If that does not work then call the distributors in each area a sale is made, they cant have it both ways

[sniffer]

That was what I was thinking..

Purchasing it to one company, selling it to another.. who will then sell nation wide.

And when the didtributor finds out?

[dragsterboy]

he wouldn't mind I guess, as long as the stuff is sold out1

[Brock]

I do understand that they don't want every distributor in the world fighting each other for deals and it lowers the competition between them...

But I don't understand why they wouldn't want to sell more widgets by covering their eyes to this whole issue. I'm going to make them money..

[Beagle]

But I don't understand why they wouldn't want to sell more widgets by covering their eyes to this whole issue. I'm going to make them money..

Probably not as much money as their entire system of distributors, which could come down like a house of cards if they "cover their eyes" whenever someone wants to make an end run around the rules. When companies use a geographical distributor arrangement, someone selling outside their area would be almost as bad as a waitress taking a tip from someone else's table. (Well, I've been a waitress - I've only dated a regional distributor.)

If the system's running the way it should, there's a two-way commitment between the manufacturer and the distributors. If the manufacturer would make an agreement with you that went against the agreements it's already made with its distributors (and making the assumption that you're not the only person who'd like to do this, and they'd need to treat all comers alike), it would soon see its best distributors head off to sell someone else's widgets. OTOH, if a distributor allowed you to invade the territory of another distributor... Well, he wouldn't have the authority to do it in the first place, but if he tried he'd also be looking for a new job pretty soon, but not by choice.

Industries vary in their attachment to the system of regional distributorships. Since you've gotten this answer from more than one manufacturer, it sounds as if you're dealing with an industry that tends to operate this way. Once those two-way commitments have been made, it's difficult for the manufacturer to break out of the model without breaking some other things, and the model wasn't set up with the internet in mind.

If you can make a very strong case, using a very clear business plan, that you'll actually be generating new sales rather than taking those sales away from the geographically-based distributors, who knows - the manufacturer might give you their "internet distributorship." But the case would need to be strong enough that the manufacturer could turn around and present it to their current distributors as something good for everyone. ETA: From what you said, some of the manufacturers have no problem with your selling their widgets online. Your results for those companies might be the best evidence you can get to convince the other manufacturers that you will be adding to their sales, not just shifting them around. (Now, that's another whole issue. Are the distributors expected to sell the widgets for only one manufacturer? If so, your convincing job will be more difficult.)

[edited by: Beagle at 1:04 am (utc) on May 26, 2007]

[BananaFish]

If you can make a very strong case, using a very clear business plan, that you'll actually be generating new sales rather than taking those sales away from the geographically-based distributors

You really expect a B&M distributor to buy that line from a start-up. The reality is that you'll probably have to find another niche.

[BradleyT]

The sale is made wherever your business is located or licensed, not where it's shipped to

That must vary by state then. My state told me personally in an e-mail that a sale takes place at the time and place where tangible personal property or taxable services transfers from the seller or the seller's agent to the buyer or the buyer's agent. They then went on to explain that for e-commerce shipping the sale takes place wherever the customer recieves the package.

And if what you said was true, you'd owe local state taxes on every item you sold.

[edited by: BradleyT at 11:49 pm (utc) on May 26, 2007]

[Beagle]

You really expect a B&M distributor to buy that line from a start-up. The reality is that you'll probably have to find another niche.

Well, no, I wouldn't expect it. I was trying to think of any possible solution - but agree it's not at all likely.

[sniffer]

The sale is made wherever your business is located or licensed, not where it's shipped to

That must vary by state then. My state told me personally in an e-mail that a sale takes place at the time and place where tangible personal property or taxable services transfers from the seller or the seller's agent to the buyer or the buyer's agent. They then went on to explain that for e-commerce shipping the sale takes place wherever the customer recieves the package.

And if what you said was true, you'd owe local state taxes on every item you sold.

All this is irrelevant. An arrangement is in place, and they'd be treading on people's toes. Sure you can do business by p*$$ing people off, but at what price? How serious are you when your marketing plan is to create enemies who should be allies...