posted on January 15, 2002 11:03:50 AM
I had contacted a supplier about being a distributor for their products. I got the info, but this was one of their policies:
"Marketing via online auctions is not allowed. We have contracted with other firms to reach this market, and as part of the
agreement, we are not permitted to allow other parties to compete with these firms for this market."
Is this legal? Can they really tell me where not to sell the items? We are talking about not being able to sell on *ALL* online auctions. Now that's what I call monopoly.
[ edited by springmoon on Jan 15, 2002 11:04 AM ]
posted on January 15, 2002 11:31:00 AM
Yes, it is legal. Same thing happens if you have a B&M store. If you have a certain product for sale in your shop the supplier may not allow another shop in your town to sell it.
Also they don't want their product devalued by being marketed carelessly so they give the rights to a party that they can trust that will do a good job.
posted on January 15, 2002 12:00:10 PM
But there may be a way around it. It states YOU may not use net auctions to sell the product, however, you could sell the items to someone else and they can sell them on the net auction.
posted on January 15, 2002 12:24:57 PM
there are way to many wholesale option out there without backing yourself into a legal corner. I would move on but thats just IMHO
posted on January 15, 2002 12:25:25 PM
If you buy it as an end-user, wouldn't they charge you full retail price? Are these goods so hot that you can buy them at full retail then turn around and sell them for a higher price a'la the Beanie craze of a couple years ago? Keep in mind that the seller may limit the quantity you can buy at any given time.
You could also try Reamond's suggestion, but making yourself a middleman bites into your own profit margin. Also, depending on how you sell the goods to the frontline seller, you could still be on shaky legal ground if a court rules that the person you're selling to is acting as an agent for you and not independently.
[ edited by holdenrex on Jan 15, 2002 12:29 PM ]
posted on January 15, 2002 12:31:46 PM
Yup. This particular item sells pretty well (I wouldn't call it hot). If purchased as an end user (and in quantity), I will pay a bit more but it is not anywhere close to full retail.
The other problem might be a VeRO member looking out to cancel auctions of anyone selling the same thing.
posted on January 15, 2002 12:52:04 PM
Yes, the VERO angle could definitely be a problem, especially if whoever got the exclusive on-line auction contract is vigilant and it's an easy-to-spot widget.
And on the supply-side, you may be able to buy in quantity for awhile, but if they find out or even suspect you are reselling them, they're likely to put a limit on how much anybody can buy during any given time - it happened with Beanies, it happened with Playstations, it happens with hot event tickets.
As with any business decision, you have to weigh the potential risk against the potential profit then decide. Don't tread on thin ice for low to middling profit - it's not worth it.
posted on January 15, 2002 03:45:53 PM
The percent markup you can get on these widgets is less significant than the final net profit in dollars. If you're paying $10 per widget to sell at $16, it's probably not worth it. If you're spending $50 to sell for $80, then it's more worthwhile. $100 for $160 is better, and so on.
The problem is, the higher the investment, the more monetary risk you take. You'll definitely want to move the merchandise as quickly as possible to recoup that investment. Markets on ebay can be fickle, and bottoms have been known to drop out of all sorts of markets.
posted on January 15, 2002 04:35:57 PM
of course its legal lots of items are sold with territories attached
I have a customer who has his office in town here but lives 60 miles away
Why becouse some one else already had that territory.
spock here......
Live long and Prosper
posted on January 15, 2002 04:47:22 PM
I think some brick-and-mortar commerce rules shouldn't apply to e-commerce.
When you think about it, this policy is saying that I cannot sell their item on *any* auction site -- even future auction sites. How can someone have an exclusive on something that does not exist, or likely to exist?
The way "territory" is defined in the real world cannot be applied to cyberspace.
[ edited by springmoon on Jan 15, 2002 04:56 PM ]
posted on January 15, 2002 05:16:02 PM
I agree with holdenrex who said that somebody beat you to the exclusive on-line auction distribution contract.
The main supplier or company chooses someone trustworthy who purchases the most product and markets and sells it the best way. That way they have someone good to sell to who keeps buying from them and they don't have to fiddle around with a bunch of little and sometimes fickle or troublesome accounts.
posted on January 15, 2002 05:24:00 PM
VERO would not be a problem. There is no basis for the company to make a claim if a purchaser then re-sells the item on eBay. It would be like a record company saying you couldn't sell your CDs on eBay. Once sold, the contractual rights for right of re-sell do not apply unless the buyer signs a contract. If this could be done, every company would do it to get the used item market shut down and increase their new item sales.
Use your mother-in-law/mother, sister-in-law/sister or brother-in-law/brother to sell the items.
If the company tries to bully them with VERO, just file a counter-claim, and unless they are willing to file a court action within 10 days you get to re-list.
posted on January 15, 2002 06:50:39 PM
Contracts can be written to be very broad or very specific. If a company contracts to sell their product exclusively through Walmart and no other venues - including other retail stores, websites, or mail order - it's perfectly within their rights to do so, and it's done all the time.
If anything you have a bit of an out - as far as you've stated, they haven't prohibited selling through fixed price internet sites. Why not approach them from that angle?
posted on January 15, 2002 07:02:33 PM
I agree the online auction territory is a broad one but if the people who got the exclusive have all online auctions in their contract it may have been a very smart move for them.
You could approach them and ask if it is okay to resell the item on your web site. Most don't have a problem with that.
If you buy this item and then pass it on to a friend or relative to resell on auctions and they are listing in a quantity you should be prepared for the people who have the exclusive to start complaining. It may be a bit difficult for family members to claim that these are all unwanted gift items.
posted on January 15, 2002 07:14:05 PM
I am considering the fixed-price internet store route, but for the meantime my market research shows that it moves well on eBay.
A couple of months ago, I tried the fixed-price store for a couple of items on Microsoft's site (forgot the name) -- never had a sale.
posted on January 16, 2002 08:19:45 AM
I have a friend with a B&M who also has a website that does real well. The reason being many people vacationing in his area "find" him so when they go home, they continue to buy off his website.
He has one line that does very well. This particular manufacturer has protected territories for their dealers. He is not allowed to put any of their products on his website! They did offer him a concession. He can put their logo on his website and mention he carries their line and for more information to contact him. Then, he is suppose to only sell to those who live in his territory. He was informed that if they received complaints from other dealers he would have to remove the logo.
He said he really wouldn't want to mess with something that works so well for him. Since everyone expects to pay around $XXX for this item no matter where they find it, he is ensured a nice profit. Once discounters start hacking away at the price, the profit is gone for just about everyone. That is nothing new...
I had a B&M for 20+ years and made a nice living. I didn't drive a Mercedes, but I was satisfied. Then, Wal-Mart found our area...within a year, I was in trouble. I would have people come to me and say that they really would like to buy from me rather than drive the 60miles round trip to go to the neighboring town that had a WW, so could I let them have the item for the same price???? Yes, that was verrrrry common! I would smile, thank them for thinking of me first, but that I couldn't lower my price to match WW because I paid more for it than they did. For the really stubborn/dense ones, I would pull out an invoice and show them. I would go into "chit-chat" mode and explain the basics of business and all my woes until I bored them to death.
I have watched prices drop on the auction sites in just the two years I have been "playing" around with them. I would imagine that the same is true of the entire internet. With a few key strokes and search engines like "google" or "simon" you can find the absoulute cheapest place to buy just about anything you want.
I sometimes wonder where it will end. Will there come a time when all manufactures are selling directly to the public via the internet????? What will happen to all those little "middle" guys and "moms & pops"???
