Question

Topic: Strategy

Selling Direct & Wholesale-how To Do Both?

Posted by Anonymous on 5/27/2008 at 1:58 PM ET 250 Points
I recently launched a portion of my company's website that sells direct to consumers. Selling direct and wholesale is very common in most industries but we are the first to do it in our industry.
It has upset many of our wholesale customers even though we do not sell at a discount. We sell at a price that is $1-2 higher than our internet retailers and sell product that is at least a season older. I feel very strongly that this is the right thing to do for our brand but would like some suggestion on the best way to field all the angry phone calls.

Thank you

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RESPONSES

  • Posted by CarolBlaha on 5/27/2008 at 2:11 PM Member
    Are you selling at only $1-2 over wholesale direct? I don't know the price point of your biz-- but I can see why wholesalers would be upset. Having said that-- selling "closeouts" which are product that is several seasons old-- isn't a big deal. Frame it exactly that way. They don't want to buy past season merchandise do they? Explain its a business decision to liquidate it in this way. They'll squawk, but if your line is important to their business and profitability, they'll continue to buy. So stand firm and explain with empathy, but no apology.

    I'd look at a company like HP. They sell direct and wholesale-- but at a suggested retail (not at the same pricing as wholesalers). If you were to research something for direct sale-- they list on the website "buy it here" locations of retailers. A consumer has a choice to "buy it today" at their suggested retailers-- or buy from the website and have it arrive in a few days (and pay shipping). Its a partnering gesture that I think works.

  • Posted on 5/27/2008 at 3:01 PM Accepted
    I think problems arise mostly when the retailers do not fully understand what you are doing. They glance at your site, not paying attention to anything other than the fact that you are selling retail.

    If you have not done so, I would send a personal letter of to them outlining your efforts and how it does not affect them negatively, how important they are to you, and that you are also promoting them.
  • Posted by Frank Hurtte on 5/27/2008 at 3:57 PM Accepted
    Yours is a very common issue amonst wholesale distributors and their manufacturer partners.

    Communications and long term intent are always concerns in the markets I consult in. Over communicate. Why are you doing this? What is your long term plan? What will this do to benefit them?

    If you are able to sell product at a premium to your retail partners, this means they may have deficencies in their marketing approach. I would offer to share best practices with them which should drive their overall business.
  • Posted by joshuacrumbaugh on 5/27/2008 at 4:30 PM Member
    1-2$ is huge of your product costs $5, but almost nothing if your product costs $10,000 or even $1000.

    I need to know what your product is if I am to give you an accurate answer here.
  • Posted by CarolBlaha on 5/27/2008 at 6:11 PM Member
    To expand on Amandavega's response-- sometimes you can over communicate and open a pandora box. Its your business. Tell them what they need to know-- not much more. Spelling this out to the minute detail sounds like you are apologizing or at least feeling guilty about something. There is a fine line between empathy and sympathy-- empathy is good, sympathy will hold you back.

    For example, in my rep biz-- selling to the big boxes (like Depot) makes retailers seethe. And we are in negotiation to do just that. There will be no big announcement telling them their new competitor. Just as there would be no announcement telling them I took on another retailer in their town. Its the same thing. You are marketing thru another venue. And if you don't share account info as my example-- no big announcement is needed. Don't lie, don't hold back info-- but wait till they come to you. As I said in my 1st post, they may squawk, but they know this is really common in the industry and will be OK if you don't draw more attention to it and let the waters calm. In a perfect world we never make waves-- its not a perfect world and they'll understand.
  • Posted by CarolBlaha on 5/27/2008 at 8:34 PM Accepted
    The reality is-- who are they going to go with. If as you say, the industry standard is to have web and wholesale biz-- and you are making them money -- they will bark because its their nature. Sometimes you have to stand tough. I'm not in your chair and don't know your biz. But in my biz-- I know what is real and what is a bluff. This is a call you have to make. If you were selling the scrubs for $16/ then I think they'd have reason. they have competitors. Some selling lower than both of you. Listen, let them vent, assure them your intention is not to replace them, remind them of your referring on the website-- and anything else you can think of. Tell them upfront, yes we have a site, but this is what I am doing for you. But I really don't think its a deal breaker.

    Competitors slam each other all the time. Its a nasty game, but its part of the game. If it wasn't for your website it would be because they double seam something you don't. Your only differentiator isn't price. Focus on that.
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