Since NSS, I’ve heard a handful of vendors (try to ) justify their direct-to-consumer sales and Tiny Prints or Shutterfly participation with the argument that retailers really don’t mind, as long as they sell at the same price point as stores.
This falls soundly in the “Huh???” column of my book since (a) I’ve yet to hear a retailer say they “don’t mind” that their suppliers are competing against them online, regardless of whether they’re a stationery, gift, or home accessory store, and (b) we all know the latter two companies sell at substantially discounted prices compared to what brick and mortars can access…or what even the vendors themselves can produce. But mine isn’t the only opinion out there.
Since I feel a line forming to grab the microphone, here goes….
Today’s question for the brick and mortar retailers in the crowd:
What do you think about vendors selling direct to consumers through below-market price sites?
RetailSpeaks IQ provides a podium from which brick and mortar retailers can speak to their industry. Not a member of RetailSpeaks? Feel free to chime in. If you like the idea of discussing and learning about things that impact your business as an independent retailer, check out RetailSpeaks.com. Your aren’t alone out there.
Click here to tell me what you think....
It seems to me that those vendors (oftentimes ones who “stipulate” what a bricks and mortar’s retail price for their goods must be) are in reality telling the consumer that they produce “discount” goods or that they are themselves discounting the quality of their own goods. They teach consumers the real value of their product – and in effect are telling us all not to believe anything that they say about the value or worth of their products but to judge them by their low price. It works at first until you figure out that you’ve taught your customers to “wait you out” for the discount. It also teaches your retailers to drop you like a hot potato (no disrespect to the potato industry intended!)
As a new vendor/manufacturer to the industry, I am really interested in hearing our retailers’ thoughts. Thanks, Cinda, for bringing this ‘hot topic’ up!
Hillary Jordan
Address to Impress, LLC
I don’t feel like there is any comparison between our B&M and a site like TinyPrints. From what I have seen, many of the TP designs are usually done specifically for their site. If it is a product/design that we don’t or can’t sell than it really doesn’t bother me. Plus I don’t think the quality of the product from those sites is really comparable. People buy products from us because they expect a certain level of quality and craftsmanship. This is not what TP or Shutterfly sells; quality and craftsmanship. If someone wants to buy a second-rate version of a designer’s work, than so be it. Those probably aren’t the people who would shop at my store anyway.
I need to jump in here, since I’m one retailer that made this statement in a conversation on Twitter. My point is this: A vendor selling online is not too different from another retailer selling that vendor’s products online or up the street AS LONG AS {and this is the key} the vendor’s products are being sold at the same price point and terms that the legitimate retailers are able to offer. Do I love it? No, it’s more competition for those precious dollars out there. However, competition is a fact of life in retail and something that forces the best of us to continually try to be better. In reality, some vendors need to access all appropriate sales channels they can to survive or they won’t be around long to provide products for us to sell.
In the best of situations, the sales to consumers on vendor websites are to customers that would not have shopped in our stores anyway, typically because they live too far from a decent store that carries the products. Or, the vendor’s websites may expose a customer to their products and have an effective retail locator that directs the customer to my shop to buy those products.
In the worst of situations {and this is where I do have a huge issue with how things are starting to go}, the vendor undercuts the prices or terms (like free shipping) that the vendor’s “valued” retailers are able to offer. This happens either directly by the vendor selling online at lower prices or with various online-only promotions, or indirectly by the vendor allowing the price slashing to happen on cheap discount web sites or by licensing designs that are not available to the retailers. This upsets the delicate balance that is struck between a vendor and a retailer by moving the relationship from one of a trusted and valued partner to one of an untrusted and unfair competitor.
So, my message to vendors out there . . . you can’t have your cake and eat it too. You need to carefully formulate your delivery strategy. You are either going to primarily sell direct to consumers by undercutting pricing and terms or licensing exclusive designs to online sites {in which case this will eventually be your sole strategy, since you will not have retailers around to sell your products through} OR you are going to primarily sell through retailers, in which case you need to respect the retailers and treat them fairly by refusing to undercut pricing and terms (either directly or indirectly).
Thanks for continuing the dialogue, Cinda. It helps to understand the thinking behind decisions being made by all parties.
I operate a business that sees this question from both sides: we distribute a wholesale line, and run a small boutique in our studio. From both sides I think it’s problematic for a manufacturer/designer to supply both independent business and discount chains/sites. If a designer builds their brand, reputation, portfolio and business by cultivating relationships with small/independent shops, those relationships are undermined when the designer sells comparable products to discounters who will undercut independent retailers at every turn.
As a wholesaler I have rebuffed propositions from large chains who promised big exposure in exchange for deep discounts, for fear that I would alienate the small boutiques who took a chance on our start-up. As a retail buyer I steer clear of lines that are sold through discount retailers – I want shoppers to enjoy a unique product assortment in our store, which we sell at MSRP.
Selling through discounters may provide short-term gains, but ultimately negatively impacts brands that position themselves as upscale or design-driven. By the time the big retailer moves on to something newer and cheaper, the small business who helped that line get off the ground are likely far less interested.
Cinda, thanks for posing this question. Truthfully, some of our invitation suppliers ARE doing us a rather large favor by selling directly to our customer;
1. I do not have to invest $400.00 in their upcoming Holiday Album. Or for that matter, any albums at any time in the future. This will also save me a TON of shelf space!
2. My employees will not have to spend 2-4 hours per customer deciding whether the groom’s parents names should or should not be included on their invitations.
3. Weekends are free! No more funding or staffing wedding trade shows. Yippee!
4. Now, I will have lots of prime retail floor space to sell product from manufacturers who still value brick and mortar.
Hi Cinda,
I am an independent vendor who is emailed/called often by consumers who want to buy my products, but are nowhere near a local retailer who carries them.
1.) Should I not sell to a consumer who contacts me to place an order? 2.) Should I refer a consumer who emails me from Missoula, MT to my nearest retailer in, say, Chicago?
3.) Should I spend months/years and countless thousands of dollars trying to find retailers in every corner of the country (who will never, ever carry my entire line of products) .
You market yourself quite well on the internet. Please tell us about your plans to begin offering your services ONLY through local agents and representatives with brick and mortar locations.
Thank you.
Anon
Editor’s note: Sorry about the delay in posting everyone’s comments. I’m in Chicago on a consulting trip this week…with a brick and mortar retailer.
to Anon:
I think you are missing the prime issue. No one has a problem with you selling to a customer who calls and is no where near a retailer. The issue would be your posting on your website and selling at discounted prices to customers the same lines that you sell to the retailers. It is the discounting that is the issue for me.
I am a retailer and have had lines that require a large min. order at market only to find them online at near wholesale pricing with free shipping. In fact I was able to get some last minute merchandise from their retail site cheaper than I could have bought from them plus got free shipping. I saved about 20 percent doing this. I guess it goes without saying they are not on my shopping list for this Christmas. My customers expect me to have unique items for one of a kind gifts, it is getting harder to do business without having to compete with wholesalers.
To Anon:
If you want me to post the lengthy essay you sent railing both on me and on retailers, you’re going to have to sign your name -and- your company name to it. Otherwise, sorry-—it stays off the site, per the Rules of the Road (click on the About tab at the top of the page).
Cinda
Dear Anon,
The issue is that, whether you’re discounting or not, manufacturers selling online take customers away from retailers, in most cases. If you’re in Montana with no retailers, by all means, everyone understands you need and should make that sale. But if you’re also going to sell to the guy living a block away from my shop, and I carry your product, throw me a bone for investing in your line and give me a commission. Otherwise, send me your products on consignment, because you’re simply undercutting me just by being there – taking your cake and eating it too, so to speak.
Discounting only adds insult to injury – actually making an effort to undercut your retailer.
Your question of Cinda doesn’t make sense – apples to oranges. Cinda doesn’t sell a product, she sells a service, and she doesn’t have a retail location. She’s not taking any of my business away – in fact, she’s helped an enormous amount of retailers get business through the 3/50 Project.
Bet you never hear back from Anon!!
Editor’s note: Anon did respond, unwilling to sign his/her name to the harsh criticism submitted yesterday. Both posts will remain unposted as a result.
As a manufacturer, designer and printer, I am totally fascinated with this debate and have frankly watched the debate evolve since the late 90′s. From the days when some manufacturers would not allow their designs to even be shown on a retail website to the lines blurring between commercial printing & photo processors to designers to retailers. Wow…
Noteworthy Collections has tried to make sure we stay focused on a couple of core principals. First, we seek to serve our clients which in our mind is the retailer of stationery and gift products. Second, we seek to design the type of items we like and that would be marketable to our clients. And our third big focus is to make sure we process our clients orders as efficiently and accurately as possible. We are neither the most expensive nor the cheapest, but 15+ years later we still stand here to see the industry continue to evolve and I hope like heck that the traditional brick and mortar store doesn’t just survive but thrive!
I do not distinguish between the retail website and the retail store…we can all debate if that makes sense or offends anyone. Many years ago we chose not to limit the number or locations of our dealers and shortly after that we decided doing business with web retailers was perfectly fine as long as the guidelines (rules) for pricing and order processing were consistent. My viewpoint on that has not changed, we are in business to support and delight the stationery and gift retailer …period.
We obviously worry that our client base could decreases in size and that many of our best clients have turned more and more to designing their own products but honestly we accept that competition can come from many angles. And in some circumstances our clients may also be our competitor. Technology or the progression of technology will continue to drive our industry which is the main reason we chose to purchase our own digital press. I still believe that if we stick to our core principals and keep moving forward to offer creative products beyond our core invitation, photo card and custom print album business to new items like collegiate licensed stationery, stamps and notepads….we will still be around another 15+ years!
As far manufacturers having retail sites, I believe that a manufacturer should not be punished for having a retail site as long as the pricing and policies are constant with the policies they enforce with their retailers. We have not ventured down that road as of yet and frankly I am well aware that we are good at servicing a retailer but we are not staffed or organized to to accept orders from an “end-user” or retail client. The ability to serve a retail business owner and a retail client in my mind are two very different skill sets. Heck, we struggle when one of my friends wants Noteworthy Collections to print 20 birthday party invites for them! We have no showroom or the time to stop and work with a friend on the proper wording for their invite! I often think we lose money in those situations…retailers we are not.
Okay lastly, to go back to an old debate on this blog…nor do I think manufacturers should be punished if they chose not showcase their wares at certain trade shows. We have run a booth at the NSS more than 12 times and this year we just did not feel it was the best use of our marketing dollars. If the numbers prove me wrong than I am sure we will come back to the show but I really need quantitative data it is a must that a manufacturer attend the show. An unpopular view maybe, but I have mostly certainly have enjoyed the conversation on this and other blogs about the NSS.
I enjoy the conversation and look forward to the this debate continuing to evolve and as well as the numerous other issues that impact all of our small businesses. Thanks for giving me a forum to speak my mind as well!
John Breed
Partner and Manager
Noteworthy Collections Inc.
I think some readers are missing the actual question: “What do you think about vendors selling direct to consumers through BELOW-MARKET PRICE sites?”
I’m realistic enough to know that it’s past the point of no return when it comes to vendors competing against me online. I just drop those lines and focus on the exciting young companies who offer fresh options and prefer not to sell against me online.
The companies who sell their designs to cheapster sites like Tiny Prints and Shutterfly are another issue. Those companies are selling their retail accounts down the river by providing designs under their brand name (the same brand name on my shelves!) at prices lower than what they offer us. How in the world is that justifiable?
I just read the well thought out comments by Mr. Breed and commend him for stepping up publicly to share his thoughts. Even if we disagree on a couple of points, I respect him for stating them openly.
Editor’s note: As do I, Anna…as do I.
Being a vendor who sells wholesale and through Shutterfly’s designer line, I thought I would comment.
It’s really apples and oranges. I don’t produce what Shutterfly sells, they do. And, actually, Shutterfly’s retail price for holiday card and stationery designs is more or equal to what most of my retail accounts charge for my line. As a side note, the paper weight and quality of printing is equal to what I sell wholesale- or I would not have done it.
My take is that the bigger my brand grows, the more people it touches in more places, the better it is for all concerned.
I’d love to hear if/why this is objectionable.
“As far manufacturers having retail sites, I believe that a manufacturer should not be punished for having a retail site as long as the pricing and policies are constant with the policies they enforce with their retailers. “
Although I was also impressed by his comments in general, I have to dissagree with the above statement by John Breed, in particular if the wholesale distributor or manufacturer has adequate and growing distribution across their region or the country.
I am amazed at the number of wholesalers that will set up websites to brand their products, but fail to provide a Where to Shop… page to assist consumers. When an inquiry comes into the supplier, forward it on to an active retailer with a request that you’d like to be BCC’d on communications to this customer. Positive, Proactive, Professional behaviour is just common sense = Take care of the customer. If you’re a wholesaler, be a good wholesaler, and support your retailers. If you are a retailer, support and take care of your customers.
We have one gift supplier with an affiliate website, but we know that too often when an inquiry is sent, they will simply sell the product directly (full retail price to their credit). But this action is executed because it is EASY and QUICK. In the long haul it does little in keeping their retailers happy, profitable and growing.
I have read all the above comments but fail to find an online retailer who is discounting product that is normally sold in B+M stores. Can you give me an example Cinda?
I find this very interesting as a producer/vendor because one of the things we are struggling with these days is that we have offered new product this year to B+M stores at very good price points to show the retailer we care about the failing economy – and what do they do? They mark it up to substantially more than our recommended retail price – and more than the online retailers are selling it for. So now we have product in the B+Ms that is listed at a higher price than online. All the online retailers we deal with are very respectful of the rec. retail price.
It’s not as easy to figure out as it seems – there are issues on the retailers side and the vendors side with this. Respect is all that is required – and competition is a good thing.
Editor’s note: Since giving online discounters a plug in my blog is the last thing I want to do, I’ll pass on the request that I list them by name. Instead, I suggest re-reading the retailer comments above, confirming the practice is widespread and problematic, then contacting your accounts to ask their opinions.
Anna S, I’m with you all the way.
In response to Haile about this issue being objectionable…
We retailers certainly do not begrudge you your sales and we know that you all have to grow your business as you see best- so I’m not saying that the practice is “objectionable”. I think my issue is that, as you said, the product quality on Shutterfly is the same as your product that is in my store. So what is my answer when a client asks why she shouldn’t order off Shutterfly when she can get the same card WITH the photo printed on it (which we can’t do b/c it is so costly to use all that ink!), for the same (or lower) price than I have without the photo? I don’t have a good reason why they shouldn’t… other than save the B&Ms!! Keep in mind, of course, that we use our vendors suggested retail price only.
For me, it is also a bit of an issue of hurt feelings. We retailers invest in you, personally,- we remember you at the end of the aisle at the back corner of the “Write On” section, we buy your albums, your updates, your samples, we actively promote you and your great product to our customers. Meanwhile one of the large online retailers gets you to submit designs and only pays you when and if something sells. (This is according to a friend of mine who creates lines for the big online stationery sellers- please correct me if I am misinformed). They are out nothing, really. If your stuff sells, they print it up and they cut a check, if not, no biggie. But our investment is only returned if we really support you and pull your books. We work hard for you and sometimes it feels like when our vendors get picked up by these big onliners, they forget that the big online businesses are hurting us, the “little people”, who took a chance on you way back when.
That’s just my two cents.