Should suppliers sell to consumers online

A growing number of manufacturers have operational B2C transactional websites. This raises a number of issues in the area of price and stock allocation.
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With regards to stock allocation, some suppliers’ sites are showing full availability and this is an issue when retailers cannot obtain these items. For a large number of retailers it’s not just direct competition but clearly these preferential stock allocations give the manufacturer a clear advantage in the area of stock availability.

With regard to prices, in some instances certain suppliers are selling online at prices that do not reflect recognised trade product mark-up. Normally the traditional model for non-discounted products is cost plus 50 per cent therefore delivering a 33 per cent margin. Where this recognised mark up is not respected, manufacturers are in effect setting artificially low retail prices that do not, in many instances, reflect retailers’ prices therefore resulting in retail price erosion.

Suppliers should support the retailers who support them. Their sites should be a fallback option for people who can’t obtain an item in-store or live in a remote area without a local toy store. It can’t be right that the person who sets my cost price is also setting my retail price as they are in effect making a double margin.

Retailers clearly need to make a blended margin and therefore the pricing of low profile non-contentious items may reflect a higher return than the standard mark-up to help subsidise the highly-discounted lead items. With the advent of internet shopping, we see the landscape changing and suppliers with their own websites are inadvertently suppressing retail prices or making their customers look expensive.

When recently viewing a supplier’s website I noticed a low profile item retailing at £27.99 with a published trade price of £18.39 therefore giving a retail margin net VAT of £5. So my question is why has this item not been marked up correctly? It should be retailing at around £32.99.

Surely a supplier with a retail consumer database should be supporting their retailers and stockists by directing their customers through mail-outs to retailers stocking their lines. Our experience is that when consumers go shopping they often shop the shop and therefore I feel that when suppliers sell directly we, as retailers, miss out on incremental added sales.

I value your views.



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