Forum Moderators: buckworks
Most maufacturers do NOT allow something called 'transshipping' with their distributors. This means that distributors are NOT allowed to dropship outside of their respective US territory into another distributor's territory. The reason for this is simple - by dropshipping outside of their assigned territory they are stepping on the toes of that territory's assigned distributor's sales. They are also taking away sales from those local B&M stores in that territory. Any distributor caught doing this will have the manufacturer's line summarily pulled from them.
Some manufacturers allow transshipping of their products and/or don't enforce a stated policy. Some manufacturers created 'strict' internet policies to please the pissed off B&M stores. A distributor may allow these products to be shipped while not allowing the ones with stricter policies to be dropshipped. Thus, most ecommerce stores are relagated to the products that are allowed. These products are usually the less desirable ones btw.
I know a major distributor in the US who has resorted to two categories of accounts B&M and ECOMM. Take a look at the two columns below and guess who has access to what?
Column 1 Column 2
JBL Speakers No-Name Cables
Advent Speakers Connectors
Samsung DLP TVs Jeep Radios
Monster Cable Korean Radios
Klipsch Speakers Feathered Backscratchers
Any Hot Good-Seller Not-So-Hot-New-Market-Entries
This has been the trend for the last few years. Its been an on-going battle. It is directly related to something called 'MAP pricing'. And its only known by the people who have experienced it like myself. Its also remotely related to things like 'Copyright Infringement' - thats a whole nother story.
You also have to consider that some distributors are NOT set up to dropship. they don't want to ship to residents - they would rather go loading dock to loading dock etc... Then there are others who are setup, have done ecomm biz, and are now fed up with handling the pitfalls of ecomm biz i.e., damaged freight, price haggling, onesy-twosy type shipments, non-payment etc... and do not do it anymore.
Believe me, I've been through it all and it was one BIG HEADACHE! I could go into more detail but it would take up a few more pages. Its funny to sit back and watch all these newbies pour their hard-earned cash into - what I see as the Ecomm Mirage. If your thinking about selling ANY products today, you should definately consider what I've stated above and DO YOUR RESEARCH FIRST BEFORE SETTING UP MERCHANT ACCOUNTS, WEB SITES, PPC ACCOUNTS, SEO CONTRACTS ET AL....
DUH!
When I opened my first B&M store long ago, I signed a 5 year lease that committed me to something like $200,000 in obligations, plus the cost of building and stocking the store.
That's what a supplier wants to see.
He can always find online retailers to hawk his products from a kitchen table.
I did a little research and then found out that manufacturers in the EU are no longer allowed to prohibit internet sales or sales to other EU countries in selective distribution systems.
So I pointed this out to the manufacturer. In the end he did cancel my contract. But not instantly like he had threatend but after the contractual three month cancellation period.
Yea, but I made over $760K in four years from my home office - and it was worth it! Although you B&Ms got what you wanted in the end - no internet sales from kitchen tables. However you're held to the same restrictions HA!HA!
Drop shippers, by definition, rarely stock product. They order in small quantities. Plus they are much more likely to return merchandise to the supplier since they don't have a BM method for disposing of odds and ends. Dealing with drop shipper shipments is much more complex than shipping to the same BM store all the time.
Drop shippers are much less profitable accounts from the standpoint of the supplier/manufacturer.
I understand perfectly what you're saying. The B&Ms would like for every independent ECOMM dropshipper to just GO AWAY so they can jack the margins back up on their products to the 50-80% levels they enjoyed before the advent of ECOMM. I would feel the same way if I owned a B&M store. Its still nice to know I can go to EBay to still find the 'deals' we offered the consumers for a while. BTW, I did have the expertise to adequately provide support my product lines. I had accounts with fortune 500 companies, the military and consumers. They didn't care how big my business was - they just wanted quality product at a reasonable price.
"Drop shippers, by definition, rarely stock product. They order in small quantities. Plus they are much more likely to return merchandise to the supplier since they don't have a BM method for disposing of odds and ends."
Absolutely correct - not stocking is the pure beauty of the business model - no overhead, no lights, few employees, consumers get great value - HURRAY for capitalism, ...and more profit for me!.
"Dealing with drop shipper shipments is much more complex than shipping to the same B&M store all the time."
Any distributor dealing with a dropshipper should be willing to accept these conditions if they're in that biz. If not, then they should just stick to B to B&M sales only.
"Drop shippers are much less profitable accounts from the standpoint of the supplier/manufacturer."
Partly correct. It may not be as profitable now for them because their own policies prevent dropshippers from being highly profitable. But back in '98, dropshippers were moving more product than a lot of distributors(or manufacturers for that matter) could handle. However, it is up to each distributor whether or not they wish to to do business with dropshippers.
We are in a niche industry, so don't see the crap much that goes on with some items, like stereo equipment, but it still happens. Probably half the products we sell now would never have gotten started without the internet, so most mfg have a different take on it.
But the fact is, more and more people are buying online, and fewer are going to B&M stores - especially for certain products. So companies trying to restrict internet sales may be cutting their own throats in the long run. If company "A" Widgets R Us decides that their products cannot be advertised or discounted on the internet, but their rival company "B" Gadgets R Us decides that they are going to a full internet push with thousands of outlets - how long is company "A" going to be in business?
That is essentially what drove Toys R Us to the brink...
Darwins law works. Adapt or die.
This just indicates that the supplier/manufacturer is not pricing correctly.
This is the phrase that anyone wanting to grow a small e-commerce business should remember. In a traditional store niche means tiny turnover. On the Internet niche can mean huge turnover.
E-Commerce for the little man is all about finding a niche and hitting it hard. By the little man i mean anyone doing less that $3 mill.
Sure, you can make a decent living on less than that, but find a niche and it pays.
They went for it, love the fuzzy gray areas.
This is the phrase that anyone wanting to grow a small e-commerce business should remember. In a traditional store niche means tiny turnover. On the Internet niche can mean huge turnover.
A lot of up and coming wanna-be ecommerce moguls seem to miss that part though.
With a B&M selling micro-niche products, you could not make it unless you were in a place like NYC where you have a ton of people in a small area.
But the internet essentially gives you the entire country, or world.
Yet time after time, I hear about someone wanting to open up "health supplement" store #238,458 instead of doing a little bit of research and actually finding a product(s) where they can be the small fish in a huge pond and still be successful.
One prospective customer in a thousand can be a lot when there are 200 million+ prospective customers.
And there is at least one really major advantage to taking that approach - and that is what the OP was complaining about. If you have the largest internet shopping site in the world for custom Buick Hubcaps, it is very unlikely that any of the manufacturers are going to care if you selling on the internet or not - just as long as you are sellng.
