joined:Nov 12, 2003
There are some good reasons not to sell things online. Large Bulky items that have a high return rate, is one example.
However, if a manufacturer has created a product line, and has created an exclusive label, and are trying to control prices, and distribution channels; they are bound to fail unless they own at least 30% of the particular market segment (ie the De Beer's Diamond Cartel)
What happens is the manufactuer becomes dependent on high end speciality shops to sell their products. The manufacturer may also have a website that only sells at retail or slightly above. The manufacturer may also have factory outlets with a mix of end of lines and seconds mixed in with regular priced merchandise.
They have leverage the vertical supply chain, but they have created enhanced risks. They are selling goods at inflated costs, and they are built like a deck of cards.
If someone wants to sell the manufacturer products, there is nothing that can stop them from getting them fron a secondary source. Sure they will be paying more for the goods, but the large margin and low competition makes it worth while; and good money can be made until the market collapses; and then you move on.
Yes I know better how to market a business better than a 70 year old $100 company. I have seen plenty of 70+ year old large companies fail, because they tried to control the market, or are still using old marketing methods, and refuse to change.
Anti-Trust and Restraint of Trade laws were put in place for a good reason.
On a side note, I don't see how Avon and Amway fits into this. These are mass produced low quality products sold via a pyramid maketing scheme. Unless you are near the top of the pyramid, I don't see why anybody would want to sell this stuff on the web.
[edited by: lgn1 at 4:04 pm (utc) on Feb 12, 2011]