Online prices and price fixing
Discussion
Hello all,
I was looking to buy an item, made in the UK, I looked at 3 different retailers and all three of them were selling the product at £495.
In my experience I find that I am constantly fielding phone calls from my customers complaining that their competition has undercut them on eBay or customer X is selling it cheaper than me, why are they devaluing your brand etc. Its only on eBay and not with my national customers.
Regarding the company that is selling the product with 3 retailers at the same price, how can they be achieving this without breaking competition law? I would say that our brands are comparable if not in different markets although my product is not made in the UK.
Very interested to know peoples thoughts/experience.
I was looking to buy an item, made in the UK, I looked at 3 different retailers and all three of them were selling the product at £495.
In my experience I find that I am constantly fielding phone calls from my customers complaining that their competition has undercut them on eBay or customer X is selling it cheaper than me, why are they devaluing your brand etc. Its only on eBay and not with my national customers.
Regarding the company that is selling the product with 3 retailers at the same price, how can they be achieving this without breaking competition law? I would say that our brands are comparable if not in different markets although my product is not made in the UK.
Very interested to know peoples thoughts/experience.
Could be that their margins are low - if the manufacturer is only giving them 5% or less discount from list then there's not much room to discount and still afford a new pair of shoes.
Could be that the things are selling so well that there's plenty of business for all the retailers, and thus no need to discount.
Or it could, of course, be that the manufacturer is doing something they shouldn't do, but think that they can get away with - fer example, restricting stock to anyone undercutting their competitors.
Or it could be that the retailers have formed a cartel of some sort. But there are legitimate reasons for the same price to everyone.
Could be that the things are selling so well that there's plenty of business for all the retailers, and thus no need to discount.
Or it could, of course, be that the manufacturer is doing something they shouldn't do, but think that they can get away with - fer example, restricting stock to anyone undercutting their competitors.
Or it could be that the retailers have formed a cartel of some sort. But there are legitimate reasons for the same price to everyone.
Sporky said:
Could be that their margins are low - if the manufacturer is only giving them 5% or less discount from list then there's not much room to discount and still afford a new pair of shoes.
Could be that the things are selling so well that there's plenty of business for all the retailers, and thus no need to discount.
Or it could, of course, be that the manufacturer is doing something they shouldn't do, but think that they can get away with - fer example, restricting stock to anyone undercutting their competitors.
Or it could be that the retailers have formed a cartel of some sort. But there are legitimate reasons for the same price to everyone.
I see what you are getting at but I would be surprised if a retailer worked on that margin on such an item. Could be that the things are selling so well that there's plenty of business for all the retailers, and thus no need to discount.
Or it could, of course, be that the manufacturer is doing something they shouldn't do, but think that they can get away with - fer example, restricting stock to anyone undercutting their competitors.
Or it could be that the retailers have formed a cartel of some sort. But there are legitimate reasons for the same price to everyone.
I think they will be restricting stock to people who are upsetting the market.
WokkaWokka said:
DoubleD said:
Is it price fixing or is it price matching?
Well it could be price matching but with these kinds of things I find someone wants the edge so takes an amount off and before you know it everyone is in a race to the bottom. WokkaWokka said:
I see what you are getting at but I would be surprised if a retailer worked on that margin on such an item.
I think they will be restricting stock to people who are upsetting the market.
I think you're right on both counts. 5% was a bit of a guess to be fair - we do commercial work only, and one manufacturer gives us 3%, plus rebates based on volume. Can't afford to sell at less than 3% margin (actually, we can't really afford to sell at that), and the rebates come months after installation so you can't discount with them. The upshot is that everyone sells the thing at list price and hopes for enough bulk to make a living off the rebates (which aren't very generous).I think they will be restricting stock to people who are upsetting the market.
Most of our suppliers give us more like 25-30% discount, and our two biggest give us 50% (and don't allow online sales).
It happens, even in our industry with pool and spa products.
There's a product we sell, retail price £89.95, we buy in pallet loads so get a decent price and have plenty of margin. I started selling below RRP on one of my websites, and was selling loads of it. Then all of a sudden, placed a stock order, and was told they were "out of stock".
They now go as far to say that to be able to stock it, you're not allowed to offer any rival product to it that might be similar, and not even sell it at a penny below their RRP.
Totally illegal, but hey ho.
There's a product we sell, retail price £89.95, we buy in pallet loads so get a decent price and have plenty of margin. I started selling below RRP on one of my websites, and was selling loads of it. Then all of a sudden, placed a stock order, and was told they were "out of stock".
They now go as far to say that to be able to stock it, you're not allowed to offer any rival product to it that might be similar, and not even sell it at a penny below their RRP.
Totally illegal, but hey ho.
Dr Interceptor said:
It happens, even in our industry with pool and spa products.
There's a product we sell, retail price £89.95, we buy in pallet loads so get a decent price and have plenty of margin. I started selling below RRP on one of my websites, and was selling loads of it. Then all of a sudden, placed a stock order, and was told they were "out of stock".
They now go as far to say that to be able to stock it, you're not allowed to offer any rival product to it that might be similar, and not even sell it at a penny below their RRP.
Totally illegal, but hey ho.
thanks for that info. Do you find that its is an overall negative or actually does it protect you and your margins? I can imagine that it might p*ss you off a bit being held over a barrel but ultimately are you not better off not being in a price war with other retailers? There's a product we sell, retail price £89.95, we buy in pallet loads so get a decent price and have plenty of margin. I started selling below RRP on one of my websites, and was selling loads of it. Then all of a sudden, placed a stock order, and was told they were "out of stock".
They now go as far to say that to be able to stock it, you're not allowed to offer any rival product to it that might be similar, and not even sell it at a penny below their RRP.
Totally illegal, but hey ho.
Of course being that it is illegal that is unfair on you as a customer!
Sporky said:
I think you're right on both counts. 5% was a bit of a guess to be fair - we do commercial work only, and one manufacturer gives us 3%, plus rebates based on volume. Can't afford to sell at less than 3% margin (actually, we can't really afford to sell at that), and the rebates come months after installation so you can't discount with them. The upshot is that everyone sells the thing at list price and hopes for enough bulk to make a living off the rebates (which aren't very generous).
Most of our suppliers give us more like 25-30% discount, and our two biggest give us 50% (and don't allow online sales).
thanks for the info, interesting reading! Most of our suppliers give us more like 25-30% discount, and our two biggest give us 50% (and don't allow online sales).
DoubleD said:
WokkaWokka said:
DoubleD said:
Is it price fixing or is it price matching?
Well it could be price matching but with these kinds of things I find someone wants the edge so takes an amount off and before you know it everyone is in a race to the bottom. Surely a beating the price would be a better way to win and retain a customer?
WokkaWokka said:
Dr Interceptor said:
It happens, even in our industry with pool and spa products.
There's a product we sell, retail price £89.95, we buy in pallet loads so get a decent price and have plenty of margin. I started selling below RRP on one of my websites, and was selling loads of it. Then all of a sudden, placed a stock order, and was told they were "out of stock".
They now go as far to say that to be able to stock it, you're not allowed to offer any rival product to it that might be similar, and not even sell it at a penny below their RRP.
Totally illegal, but hey ho.
thanks for that info. Do you find that its is an overall negative or actually does it protect you and your margins? I can imagine that it might p*ss you off a bit being held over a barrel but ultimately are you not better off not being in a price war with other retailers? There's a product we sell, retail price £89.95, we buy in pallet loads so get a decent price and have plenty of margin. I started selling below RRP on one of my websites, and was selling loads of it. Then all of a sudden, placed a stock order, and was told they were "out of stock".
They now go as far to say that to be able to stock it, you're not allowed to offer any rival product to it that might be similar, and not even sell it at a penny below their RRP.
Totally illegal, but hey ho.
Of course being that it is illegal that is unfair on you as a customer!
It is frustrating though when you can't include it on any promos or sale weekends - if the distributors see the advertised price change, we get a phone call.
The customer loses out, as if it were allowed to be price competitive, they'd be better off.
feef said:
DoubleD said:
WokkaWokka said:
DoubleD said:
Is it price fixing or is it price matching?
Well it could be price matching but with these kinds of things I find someone wants the edge so takes an amount off and before you know it everyone is in a race to the bottom. Surely a beating the price would be a better way to win and retain a customer?
Price matching keeps the retailer competitive without everyone having to keep reducing their prices to under cut each other.
Strategy - price equality = happy retailers
Policed by - supply restriction for naughty discounters
Solution - call up for a discount, it might even say that in the text.
My solution - I used to add in extras but maintain the rrp - eg phone includes extra batteries or a headset etc - add value.
Policed by - supply restriction for naughty discounters
Solution - call up for a discount, it might even say that in the text.
My solution - I used to add in extras but maintain the rrp - eg phone includes extra batteries or a headset etc - add value.
feef said:
Last time I was offered a price-match in a shop, I enquired as to why, if I found it cheaper somewhere else, should I come back to have the price matched and not just buy it there? Didn't really get an answer
Surely a beating the price would be a better way to win and retain a customer?
If you offer to beat the price then you’ll actually get consumers going away to find the goods cheaper and then coming back and screwing you down. In extreme cases you will get bombarded by the eBay/amazon shops who will lift all your stock after publishing a false low price themselves. Surely a beating the price would be a better way to win and retain a customer?
On the flip side the purpose of ‘offering to match’ is to play to the fact that the consumer is immensely lazy and really just needs some basic reassurance there and then that they are getting a good price which ‘matching’ does. They won’t ever be arsed to actually put any time into checking or doing anything.
So ‘matching’ is a mechanism to help give confidence to the consumer there and then that they need not put any more effort in to the extremely exhausting task of shopping, whereas ‘beating’ specifically attracts a different sort of behaviour that hits your bottom line and can in extreme cases blow it apart.
As for the OPs observation, most of the time level pricing occurs because the vendors legally agree to only publish the RRP. What you can be reasonably confident of is that one of those three vendors will go lower if you pick up the phone and talk to the right person.
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