Forum Moderators: buckworks
It stated that our listed prices were not acceptable to them. It gave us 24 hour to raise the prices above those of their online shop or else they will terminate our order.
It further accused us of playing games and if we did not comply, they will stop all our outstanding orers and credit the payment to our bank account without hesitation.
The point is that they never told us that there was any price control and accusing us of playing games was plainly unreasonable. Our problem is the their website offers free shipping on all their products whereas ours do not. When shipping costs are taken into consideration, the actual price is equal or more than theirs.
From the tone of the letter, I think they would really like to terminate their relationship with us. We have to work with them at the moment since they still owe us a few consignments. Luckily, we are dependent on any single supplier.
[edited by: lorax at 2:48 pm (utc) on Dec. 12, 2005]
[edit reason] removed email excerpt [/edit]
apologise now just to get the stock you've ordered, then tell them to stick it and that price fixing is illigal and that you'll report them to the authorities etc etc
What authorities? Derek is in China and his supplier may be elsewhere. Any threat would just make them madder.
Expect to see more price maintenance efforts in the future as powerful brick/mortar chains or catalogers complain louder about kitchen-table drop-ship discounters. I'm not saying Derek is in that category.
Just about every manufacturer now has some web sellers he wishes he'd never opened.
I agree that the 24 hour notice makes it look like they want to shut Derek down. Very unreasonable. We're getting some letters (form letters) from suppliers about minimum web pricing. They're very vague about the time table for compliance... SO FAR.
Also send this coupon (or coupon code) to every customer you've ever had.
Let them try to figure out why you raised your prices and their orders dropped even more.
Freq---
Oh, and hook up with their comeptition ASAP and then drop these jerks like a hot potato. Once you have everything switched over to their competing supplier(s) send them a nice letter thanking them for forcing you to find a better deal!
It sounds as though they were a little heavy handed about it, though - and if they themselves are selling the goods, as well as supplying you with them, then I would question their legitimacy as a "true" supplier (i.e. one who doesn't get involved in retail) - they are more likely operating as a middleman.
I would call your supplier, and remind them that price fixing is illegal, and if they continue to harrass or threaten you, report them to the authorities.
Does that still apply in this case though? The Supplier sells direct to the public, and want Derek's prices bought inline with their RETAIL prices.
In the UK, i'm pretty sure that is frowned upon, and I would not hesitate to point this out to them.
Isn't it called a Cartel when Retails get together to keep prices artifically high? (which is what you will be doing if you do what they say.)
We purposely sold direct at full retail price so our dealers would have a fighting chance. We built the necessary profit level into our dealer and distributor prices. Anything we sold direct to customer we made a killing on. We didn't care if the dealer discounted heavily and only made 5% or sold at full retail.
Your supplier is either bad at setting price points, unable to supply the product at a competitive price, or
just plain too greedy to think straight.
Freq---
Tell you the truth Id comply with their request and find someone else to deal with. Knowing what you sell Id say you could replace the line easily.
If the supplier is based in the UK thats I would imagine is a diffrent matter.
In this case, yes, it is attempted price fixing - as I mentioned, they are not a true "supplier" as such, merely another retail operation, and not someone I would want to be doing business with, in any case.
Price fixing is very common especially with luxury brands - there are many cases where prices are controlled rigidly depending on the attended market.
Just go into a certain Designer bag store anywhere in Europe and witness the groups of Japanese being asked for their passport numbers before being 'allowed' to buy.
I don't get this. Why would they be asked this?
Just go into a certain Designer bag store anywhere in Europe and witness the groups of Japanese being asked for their passport numbers before being 'allowed' to buy.
Isn't this so they can be sold the goods tax free?
They should be thankful for your sales, even though it's cutting into their online sales. Who really cares what URL the order was placed from, as long as they're getting the order.
If you are able to set your prices that much lower than theirs, it's possibly an indication that their wholesale prices are too low, or their markup is too high.
Don't take this as legal advice though.
Do a google search for vertical price fixing, and see the article from freeadvice.
Even if price fixing is illegal in Hong Kong, I don't think they would be too worried about that. After all, they do not have a physical address or phone number. We can only communicate with them through e-mail, ICQ or their individual mobile numbers. I somehow doubt that they are even an incorporated company. However, their operation is quite large and they are well known internationally.
This is the third time we have been asked by suppliers to raise prices. The previous two demands arose after their customers in US complained about our prices. They even insisted on controlling our list price in eBay.
I am actually quite neutral about this practice because in a way, it really does protect the small players: that is provided that they impose the price control fairly to all.
We told them that they have not taken our shipping charges into consideration and they said that they will consider. However, after this has been sorted out, we are going to reduce our business with them gradually.
If the memory chip manufacturers got together and agreed not to sell 128MB sticks less than $99. That's price fixing.
If gas stations got together and agreed not to sell premium gas for less than $4.99 per gallon, that would also be price fixing.
A supplier dictating a minimum price for retailers to sell their product is not price fixing, as long as they are not working with their competitors to raise prices across the board.
William.
You gave examples of horizontal price fixing.
What is happening here is vertical price fixing, which
is also illegal (in most free market countries).
I had a supplier try to tell me that they don't allow discounting on products on the web. I told them to contact their legal department for advice, since they are breaking the law and they quickly backed off.
My favorite line is "I don't tell you how to make your product; dont tell me how to sell your product"
William.
[ftc.gov...]
I had a supplier try to tell me that they don't allow discounting on products on the web. I told them to contact their legal department for advice, since they are breaking the law and they quickly backed off.
Had they actually contacting legal counsel you would be selling the product at their price or not at all. Telling you that you can't discount is illegal. However, telling you that if you discount, they will stop selling to you is completely legal.
Bottom line is they can tell youwhat you can advertise for, they cannot dictate the ultimate selling price, just the advertised price
Nope. The bottom line is that you can sell it for whatever you want once. The second time you may not have anything to sell. We've had very strict manufacturers actually place "test" orders over the phone and try to get a discounted price to see if we are in compliance with their MAP policy. Again, they are not dictating the price. They are simply saying that if you choose to discount, they choose not to sell you their goods.
Personally, I love manufacturers that have a MAP policy AND are VERY strict in enforcement. It helps create great margins and you compete on non-price issues (which are much easier). But, very few manufacturers that implement a MAP policy also have the proper enforcement. And, that becomes a problem.
Companies that try to control price in a free market economy are eventually doomed anyways, as they will eventually lose market share to a competitor that is less restrictive.
However, if you are advertising your website, but not targeting their product specifically, then you are not advertising their product, and the MAP does not apply.
Huh?
simply, i'd tell them to **** off and i'd find another supplier or two.
Perfect. Less competition on a higher margin product for me. Thank you.
