Forum Moderators: buckworks
Any advice is appreciated.
Thanks to all
You just have to keep contacting distributors, finding out what's allowed, filling out credit apps and start selling.
Good luck...
There are ways around it, but sometimes you just have to say "buzz off", if you can afford it.
But as bad as it might seem, in Europe it is FAR worse.
The product manufacturer should assure that those limited spots go to credit-worthy long time customers who have decades of experience and investment in warehousing and selling his line. Why should a hot manufacturer fill those ten spots with drop shippers who skim the easy sales and depart the minute something better comes along.
This is especially true since most johnnie-come-latelies aim to crack into a new field with the only technique they understand...Discounting.
The brick/mortar world has always worked like that. You don't open an account with a red hot line without laying out real investment. It's something like a marriage with commitment on both sides.
Most manufacturers are 'controlling' their product channels by having their distributors make you sign contracts to allow the selling of their products online. Unfortunately these contracts hold you to things like MAP pricing etc... All the things that will prevent you from making any sales. The whole MAP pricing thing is a big thorn because it doesn't matter what the product it is(except for niche ones), you can always finf it cheaper at the big swap meeet i.e., E-Bay.
So to my original focus....a distributor will sell to you if you have a physical location to warehouse the product and sell to the general public (this doesnt have to be a brick and mortar storefront, just a seperate physical location from your home address where you can accept deliveries) to put on the dealer application.
What methods are successfully being used to meet this need?
Thanks again
Here's another scenario:
Say you tell them you have a physical address and you acquire the rights to those HOT products you want to sell. You start selling them like hotcakes and you start to gain critical mass in the search engines and gain a lot of attention from everyone (including that HOT product's National Sales VP) who happens to see your link in Google and takes a look at your site.
Say you're selling that product for below MAP pricing for the whole world to see. The official mantra for most HOT product manufacturers is:
No price advertising is allowed on the internet - especially below MAP pricing. So the VP calls your 800# to find out three things: 1. Who you are? and 2. Do you have a contractual agreement to sell our products? and 3. Who is supplying you?
Lets say you answer the first two and decline and the third question. What happens next is that VP will initiate a purchase of product from your site. Get the product, trace the serial number and that product, and find out who is supplying you. The final scene in this act is where the manufactuer calls your distributor and tells them to STOP selling to you, the web guy, or else. Your probably wondering what the or else part is, right?
The or else part is that they will take the line away from your distributor. Guess what comes next? You receive a call from your distributor rep telling you to take down the product from your web site.
I know all this because I went through it on a regular basis. It actually became part of doing business with me. It is what ended up putting out of the business.
I am not telling you this to discourage you. I am telling you this to let you know what lies ahead. It takes a hell of a lot of work to position yourself on the web to be seen. When I was doing it 98-2003 it wasn't quite as difficult as it is today - thats partly why I put up with the bull#*$! - and of course the money was a factor too.
>>and gain a lot of attention from everyone (including that HOT product's National Sales VP) who happens to see your link in Google and takes a look at your site
**You can also easily replace (National Sales VP) in above's paragraph with (Your local HOT product's brick&mortar Reseller Store Manager)** The only difference being that he will call the HOT product's National Sales VP.
BTW, don't mention Ebay at all. No one's looking for pure Ebay sellers except for getting rid of seconds perhaps.
I don't quite understand your reference to E-Bay. Are you saying not to worry about selling HOT products on E-Bay? Or are you saying that nobody's 'watching' E-Bay.
I do know E-Bay monitors ALL listings on behalf of registered HOT product manufacturers because If you list a copyright or trademark they will take the listing down - it happened to me once. You can get around it by just taking a picture of the manufacturers box - which isn't copyrighted.
http://pages.ebay.in/help/confidence/vero-rights-owner.html
[edited by: lorax at 6:09 pm (utc) on Feb. 10, 2006]
[edit reason] removed copyrighted material [/edit]
Has anyone had any luck partnering with your local brick and mortar store for your intended product and making some sort of arrangement where you can use their storefront to obtain the product lines from manufaturers/distributors in exchange for advertising space on your high traffic site? Or perhaps offer local pickup of your items and then direct visitors to the brick and mortar store for local pickup (in store prices apply with some sort of discount if referral coupon is printed and brought into the store)?
Just trying to minimize headaches.
What you posted from Ebay is interesting. In our business most Ebay sellers are peddling used junk and are lucky to sell half of what they list, and usually for 20 cents on the dollar. That doesn't help the reputation of any brand.
Great if you are a buyer not intending to resell though.
eeehhhhhh
JBsaltydog,
You are a clever man. You think just like me. I tried to do just that with a local brick & mortar store. I sat in their office and made a proposal to them which they quickly declined. The reason they will always decline is because of two things:
1. They're not supposed to be SELLING on the internet
2. If they did let you sell(and believe me they would if they could), you wouldn't be selling at the allowable prices - you would be selling at below MAP because you have to add shipping to your price. And it all goes back to my ealier note relating to the 'Call from the Hot product's National Sales VP'
Although instead of just calling you, they will call the brick & mortar store owner and do the 'or else' function on them.
I actually did this through larger retailers early on when the internet policies were not solidified. I was supplied by J&R, Uncles Stereo et al.. all out of NY. But they all eventaully prohibited sales to us - once they got they're own estores up and running haha...Why share when you can dominate right!?
The good news is that I currently have a few large distributors that know I am web only and they dont mind.
I did speak to one manufacturer during my backlinks legwork who told me that they have a guy who does nothing all day but search the web for site's that sell their products for below MAP.
I guess the search for solutions continues regarding expanding my catalog but I at least I have a workable set of distributors that play ball with me so far.
Many are still basing their sales and distribution on what worked 50 or 20 years ago, and things have changed.
But some dinosaurs have yet to percieve the asteroid that is flying through the sky. It is just a matter of time I think before it all changes, but that could still be several years. When they start getting hammered by internet competition for their supposedly "safe" products, then it will happen or they will go under.
I see this attitude a lot in some of the "old line" industries, such as batteries (automotive type and similar). But the new kids on the block don't recognize the old "territories" concept - in fact some have gone directly to the net, bypassing the usual (old) multiple distribution chains.
who told me that they have a guy who does nothing all day but search the web for site's that sell their products for below MAP.
One manufacturer in our line tried setting MAP's about 3 years ago. What happened was that 95% of the retailers simply stopped selling it, or going around it by having things like "rebates" and coupons and such. After they lost over 50% of their sales to competition, they rethought their strategy.
It isn't necessarily the businesse's attitude toward the internet as it is to 'protect' the integrity, brand, and value of their products.
For example, when I started out in 98 I could get a hold of pretty much any elctronics product line I wanted - provided it was carried by the ditributor I got an account with.
I had access to nice lines like Harman Kardon Receivers, Infinity Speakers, Klipsch Speakers, Nakamichi Audio, Polk Audio and the list goes on.
These types of products were normally sold out of High-End Audio Video stores at healthy margins to the public - probably 40-60%.
Internet sales come along and started selling these products at 15-25% markup. And including shipping it still made the price more desirable than the B&M stores. Hence sales for these products went through the roof as people discovered the savings.
As time went on, the B&M store owners became enraged because they could no longer get the sales. So they complained to their manufacturers about the estore's unfair advantage. This lead to the strict internet policies you see in place today. I can understand why the manufacturers were concerned even though it cut into my business.
As more and more estores acquired these products, the prices came down more and more thus further devaluing the margins on otherwise Hot, pricey AV equipment. It was great for the estore/consumer - but bad for the B&M store.
I can understand the manufacturers loyalty to the B&M stores because of the history and relationships they had forged over the years. They really had an obligation to 'assist' the B&M stores by gaining control of their sales channels.
The manufacturers DID realize the importance of the internet paradigm. They began to 'hand select' estores to sell their product on line. Unfortunately, successful business owners like me were not part of that plan. WHY? Because they were looking for businesses who could MOVE volumes of their product over the web. Businesses that would adhere to their pricing policies and had infrastructure. Businesses who could meet the list of criteria they would always send to you. Lists that contained requirements they knew you could not meet like in-store presence, a knowledgeable support staff, $$sales/month, Huge marketing budgets. Businesses we see today like Amazon, Crutchfield, Vanns etc...
They weren't willing to accept the newer and smaller players who really started the whole thing rolling for them. That's what really makes me bitter. I spent a huge amount of time and sweat to get my site to where it was only to be turned down everytime I requested authorization from the managers at these manufacturers. Even agreeing to abide by their policies of MAP etc...They still turned me down.
I would have done anything to becaome 1 of maybe 5 exclusive online dealers of these products. It would have given me something to really rally around. Instead, they just yanked the products away and send you down the tubes.
So, at the end of the day....what are some possible solutions to the product sourcing issue for online retailers when faced with the B&M requirement by distributors or manufacturers that are still clinging to the pre-web sales model?
Internet sales come along and started selling these products at 15-25% markup. And including shipping it still made the price more desirable than the B&M stores. Hence sales for these products went through the roof as people discovered the savings.As time went on, the B&M store owners became enraged because they could no longer get the sales. So they complained to their manufacturers about the estore's unfair advantage.
I think this is the crux of it all - the fact that B&M could no longer get the huge margins they had enjoyed for years.
That has never been a problem for us, as we have always sold on the internet for the same as our store price. But we obviously sell a different type of product. To a large extent, we actually established internet selling for some of our brands.
We are a big fish in a tiny pond. Perhaps the next success stories will be to identify other tiny ponds, and leave the big boys to cutting each others throats.
what are some possible solutions to the product sourcing issue for online retailers when faced with the B&M requirement by distributors or manufacturers that are still clinging to the pre-web sales model?
I am far from being an expert on other types of products, but some things I have seen recently that succeeded very well were things like:
A specialty mexican spices store
A specialty sushi equipment and ingredient store
A specialty paper napkin store
A specialty rare insect specimen store (no kidding!)
