Awkward predicament
Discussion
Right I will keep this short and possible and to the point as it could go on for a while!
I started my company about 7 years a go, it's grew in size a lot and making good consistent money. Along the way I have worked with a few suppliers/brands and basically found my little niche in the market with one particular brand (the one everyone wants!) however the UK disty wont supply me due to various T&C's so I basically went to an overseas distributor who would supply me the products and we have a great relationship, we have the whole process down to a tee. His sales increased dramatically and we expended together, happy days.
However as you can imagine the UK one isn't happy and although there is nothing they can do about it they try to make it awkward for me and block sales, give me a bad name etc. This has gone on for years but I am getting fed up of it and would like a solution (before you say it, no they wont allow me as a dealer now either!).
There main problem is me selling the products below RRP and as brand new when in fact there saying that they are not (they actually are).
Here is my plan:
I get the products at a very good price due to the amount I order, what I am thinking is carrying on as normal and listing the product as 'used' but in new condition. This will get them off my back as they are happy for me to sell used products, it will cut my profit margin a bit but I think selling them at a lower price will increase the sales slightly. It also means the product which has to be built can be fitted with ex-demo and similar parts as it's not then essentially brand new. Buying these ex-demo parts cheap should also help balance out the profit margin.
My main concern is the warranty, as this is key to the product. I am more than happy to honour the warranty as I know if there was a problem I can send it back to the distributor for repair. I wont be able to say 'manufacturers' warranty but can offer a warranty in my company name very similar to the manufacturer one.
What do people think based on the above. if you could have a brand new product which retailed at £5000 or a literally as new one but with a company warranty rather than manufacturer one at £3500 would you be tempted? There is also no other company doing this so it would again make it more niche, people might think dont go to a main dealer when you can save hundreds of ££ by going to X shop.
If the above doesn't work can anyone see another solution?
I started my company about 7 years a go, it's grew in size a lot and making good consistent money. Along the way I have worked with a few suppliers/brands and basically found my little niche in the market with one particular brand (the one everyone wants!) however the UK disty wont supply me due to various T&C's so I basically went to an overseas distributor who would supply me the products and we have a great relationship, we have the whole process down to a tee. His sales increased dramatically and we expended together, happy days.
However as you can imagine the UK one isn't happy and although there is nothing they can do about it they try to make it awkward for me and block sales, give me a bad name etc. This has gone on for years but I am getting fed up of it and would like a solution (before you say it, no they wont allow me as a dealer now either!).
There main problem is me selling the products below RRP and as brand new when in fact there saying that they are not (they actually are).
Here is my plan:
I get the products at a very good price due to the amount I order, what I am thinking is carrying on as normal and listing the product as 'used' but in new condition. This will get them off my back as they are happy for me to sell used products, it will cut my profit margin a bit but I think selling them at a lower price will increase the sales slightly. It also means the product which has to be built can be fitted with ex-demo and similar parts as it's not then essentially brand new. Buying these ex-demo parts cheap should also help balance out the profit margin.
My main concern is the warranty, as this is key to the product. I am more than happy to honour the warranty as I know if there was a problem I can send it back to the distributor for repair. I wont be able to say 'manufacturers' warranty but can offer a warranty in my company name very similar to the manufacturer one.
What do people think based on the above. if you could have a brand new product which retailed at £5000 or a literally as new one but with a company warranty rather than manufacturer one at £3500 would you be tempted? There is also no other company doing this so it would again make it more niche, people might think dont go to a main dealer when you can save hundreds of ££ by going to X shop.
If the above doesn't work can anyone see another solution?
- Also please dont turn this in to a bickering match on how I have gone behind the back of the distributor and I deserve the above, I really tried to work with them and they not only were rude but would barely give me the time of day. I wanted to promote and sell this brand so I done it the only way possible**
Yes, they are the sole distributor.
Virtually the same line, the products come from the far east and go to the distributors throughout europe. I get mine from within the EU.
Legally they cant stop me doing this as its free trade however I am sick of this play ground battle and want to put it to rest if possible.
Virtually the same line, the products come from the far east and go to the distributors throughout europe. I get mine from within the EU.
Legally they cant stop me doing this as its free trade however I am sick of this play ground battle and want to put it to rest if possible.
Various ways but for example one of my customers might take their product in to a dealer for a part or similar. Once in there the sh*t storm happens, their told the products have been brought in illegally, they come without warranty, no good etc etc. The customer who has spent thousands on this walks out pissed off and then gets in touch with us.
95% of the time we can resolve the matter but its an unnecessary stress, products also keep falling into the hands of customers like this then being returned, maybe its friends/colleagues of the disty just causing us problems but its relatively common.
I am sure I do have legal grounds to take this further but by me attacking them it could start a full on war.
My plan is the above, I can then have complete control over the warranty.
95% of the time we can resolve the matter but its an unnecessary stress, products also keep falling into the hands of customers like this then being returned, maybe its friends/colleagues of the disty just causing us problems but its relatively common.
I am sure I do have legal grounds to take this further but by me attacking them it could start a full on war.
My plan is the above, I can then have complete control over the warranty.
Edited by JCKST1 on Wednesday 14th June 22:38
As an aside, I think the UK distributor's Beef should be with the supply chain, not you. But equally I can see why they'd be pissed off, and either way you need to treat them as a.n.other hostile competitor.
Back to the question: I really don't understand what this "used" plan achieves that a super-clear explanation up-front on your website/literature / at time of sale wouldn't? "We sell only genuine parts and honour the manufacturers warranty. Our buying power allows us to pass savings on to you. In the event of a problem contact THIS NUMBER. Do not take it to your local store" blah blah blah and save 20% off U.K. RRP
?
Back to the question: I really don't understand what this "used" plan achieves that a super-clear explanation up-front on your website/literature / at time of sale wouldn't? "We sell only genuine parts and honour the manufacturers warranty. Our buying power allows us to pass savings on to you. In the event of a problem contact THIS NUMBER. Do not take it to your local store" blah blah blah and save 20% off U.K. RRP
?
Is the ONLY reason they wont supply you because you sell under RRP if so try and get something in writing from the UK disty (even no reply helps you) .
They are on very shaky legal ground here and if you get an idiot giving you some bullets in the form of a refusal reason then a quick corp lawyers letter to the DISTY would probably see them capitulate (depends on size). (they start with you need a b&m showroom / office)
Is its a recurring sale ? can you over label the helpline number ? will the pound / euro erode your margin ? can you source similar and market to the database using a keyword strategy ?
They are on very shaky legal ground here and if you get an idiot giving you some bullets in the form of a refusal reason then a quick corp lawyers letter to the DISTY would probably see them capitulate (depends on size). (they start with you need a b&m showroom / office)
Is its a recurring sale ? can you over label the helpline number ? will the pound / euro erode your margin ? can you source similar and market to the database using a keyword strategy ?
PBDirector said:
As an aside, I think the UK distributor's Beef should be with the supply chain, not you. But equally I can see why they'd be pissed off, and either way you need to treat them as a.n.other hostile competitor.
Back to the question: I really don't understand what this "used" plan achieves that a super-clear explanation up-front on your website/literature / at time of sale wouldn't? "We sell only genuine parts and honour the manufacturers warranty. Our buying power allows us to pass savings on to you. In the event of a problem contact THIS NUMBER. Do not take it to your local store" blah blah blah and save 20% off U.K. RRP
?
Exactly, the problem really should be with the EU distributors for selling out of their territory. The actual company it self based in the US and Far East have spoken up a couple of times but I am 95% sure they know where I get my stock but dont want to cut ties with my distributor as they spend around half a million per year in stock.Back to the question: I really don't understand what this "used" plan achieves that a super-clear explanation up-front on your website/literature / at time of sale wouldn't? "We sell only genuine parts and honour the manufacturers warranty. Our buying power allows us to pass savings on to you. In the event of a problem contact THIS NUMBER. Do not take it to your local store" blah blah blah and save 20% off U.K. RRP
?
The used scenario would stop them from trying to shut me down for selling new products. If the products was used or ex-demo I am certain there would be less pressure from them, normally when these products are used you do not get a warranty however thats why I was thinking of having an in house warranty. I am up front on my adverts saying that the product came from a EU distributor so in the event of a warranty claim contact us direct to start the process.
this is a genuine question, just trying to fully understand the situation: when you say " stop them from trying to shut me down for selling new products" what do you mean?
I can't tell if you mean stop them from convincing the parent company to exert pressure on the supplier to stop selling to you, legally challenge you, stop badmouthing you, or something else...
I can't tell if you mean stop them from convincing the parent company to exert pressure on the supplier to stop selling to you, legally challenge you, stop badmouthing you, or something else...
Edited by PBDirector on Thursday 15th June 09:01
DSLiverpool said:
Is the ONLY reason they wont supply you because you sell under RRP if so try and get something in writing from the UK disty (even no reply helps you) .
They are on very shaky legal ground here and if you get an idiot giving you some bullets in the form of a refusal reason then a quick corp lawyers letter to the DISTY would probably see them capitulate (depends on size). (they start with you need a b&m showroom / office)
Is its a recurring sale ? can you over label the helpline number ? will the pound / euro erode your margin ? can you source similar and market to the database using a keyword strategy ?
No its not, basically my business model didn't fit there plan and I was never given the chance to work with them.They are on very shaky legal ground here and if you get an idiot giving you some bullets in the form of a refusal reason then a quick corp lawyers letter to the DISTY would probably see them capitulate (depends on size). (they start with you need a b&m showroom / office)
Is its a recurring sale ? can you over label the helpline number ? will the pound / euro erode your margin ? can you source similar and market to the database using a keyword strategy ?
The problem I have is proving that the disty is causing these problems, I know from what customers have said its them scaremongering people and them firing back at me but its basically all word of mouth. I have had a few emails from 'customers' over the last year or so looking to buy a product and when I have searched there name, email etc it shows they work for the company so they are trying to get hold of some of my stock for a reason. Again I am certain they know my distributor however they sell to various other shops so I could be purchasing from anyone, it would be very hard to stop me.
There isn't a helpline to call, you basically take it back to your dealer to start the warranty process.
The weak exchange rate has effected me slightly however there is still enough margin (working at approx 40% mark up).
Not sure on the last point sorry, could you elaborate?
Hmm, let us look at another angle, from a PH view.
Let's say Porsche GB has the sole distribution rights for Porsche cars in the UK (for which it has paid a lot of money). AN Other comes along, imports Porsches from somewhere in the EU and starts selling them here in the UK.
Who has what legal rights?
Let's say Porsche GB has the sole distribution rights for Porsche cars in the UK (for which it has paid a lot of money). AN Other comes along, imports Porsches from somewhere in the EU and starts selling them here in the UK.
Who has what legal rights?
PBDirector said:
As an aside, I think the UK distributor's Beef should be with the supply chain, not you. But equally I can see why they'd be pissed off, and either way you need to treat them as a.n.other hostile competitor.
Back to the question: I really don't understand what this "used" plan achieves that a super-clear explanation up-front on your website/literature / at time of sale wouldn't? "We sell only genuine parts and honour the manufacturers warranty. Our buying power allows us to pass savings on to you. In the event of a problem contact THIS NUMBER. Do not take it to your local store" blah blah blah and save 20% off U.K. RRP
?
Surely this resolves your issue? At least if a customer does phone up having gone in to a shop you can point them at the above and diffuse the situation.Back to the question: I really don't understand what this "used" plan achieves that a super-clear explanation up-front on your website/literature / at time of sale wouldn't? "We sell only genuine parts and honour the manufacturers warranty. Our buying power allows us to pass savings on to you. In the event of a problem contact THIS NUMBER. Do not take it to your local store" blah blah blah and save 20% off U.K. RRP
?
Wearing my consumer hat and using an example:
About a year ago I upgraded my DSLR camera and was looking to spend about £350-400 body only. I found a few websites that seriously undercut the usual UK channels and after a lot of research into one company I was happy enough to pull the trigger. I was confident that my camera would be brand new, UK spec and warrantied. Some people said it might come in a plain box but mines was fine and I've been happy with my purchase and the saving I made.
However, I can assure you things would have played out very differently if the camera was listed as used or refurbished with a "retailer only" warranty. While you seem honest and willing to honour the warranty, the consumer won't know this and I'd treat it as a virtually empty promise.
From the sounds of it you are bringing the same product (same as conventional retailer) to market for a considerable discount. This is why I bought my camera. The instant you go down the 'used' or 'refurbished' line you are no longer comparing apples with apples and I think [based on no evidence] that an unknown percentage of consumers will pay full price for the brand new item through official channels.
Is there a way to preempt the hassle by raising customer awareness that the product they are buying is legit, warrantied, supported, etc but that UK dealers will try and make things a little difficult because they were not the supplying (full price) retailer. This way they get no surprises and go into the retailers ready to meet resistance.
EDITED TO ADD - PBDirector basically has the same suggestion as me. Explain your business model clearly and how the savings are arrived at and you'll put way less people off than advertising as used or refurbished.
About a year ago I upgraded my DSLR camera and was looking to spend about £350-400 body only. I found a few websites that seriously undercut the usual UK channels and after a lot of research into one company I was happy enough to pull the trigger. I was confident that my camera would be brand new, UK spec and warrantied. Some people said it might come in a plain box but mines was fine and I've been happy with my purchase and the saving I made.
However, I can assure you things would have played out very differently if the camera was listed as used or refurbished with a "retailer only" warranty. While you seem honest and willing to honour the warranty, the consumer won't know this and I'd treat it as a virtually empty promise.
From the sounds of it you are bringing the same product (same as conventional retailer) to market for a considerable discount. This is why I bought my camera. The instant you go down the 'used' or 'refurbished' line you are no longer comparing apples with apples and I think [based on no evidence] that an unknown percentage of consumers will pay full price for the brand new item through official channels.
Is there a way to preempt the hassle by raising customer awareness that the product they are buying is legit, warrantied, supported, etc but that UK dealers will try and make things a little difficult because they were not the supplying (full price) retailer. This way they get no surprises and go into the retailers ready to meet resistance.
EDITED TO ADD - PBDirector basically has the same suggestion as me. Explain your business model clearly and how the savings are arrived at and you'll put way less people off than advertising as used or refurbished.
Edited by Splats on Thursday 15th June 09:40
Edited by Splats on Thursday 15th June 09:40
I have had a similar experience to yours, and solved it in the way you are doing. I eventually ended up selling quite a bit more than the official distributor, and then approached the manufacturer with the view to becoming their official distributor. It wasn't easy and took some time, but eventually worked out. Maybe this could be a possibility for you?
You may need to reconsider your current strategy anyway in view of Brexit!
You may need to reconsider your current strategy anyway in view of Brexit!
If I was you OP I would be talking to the manufacturer / worldwide distributor.
if they are the ones giving someone exclusive rights to distribute a product in the UK, then that distributor is refusing to supply someone so therefore potentially losing them sales, I would be asking questions to the UK distributor and asking them to justify their stance.
also as you are shifting that amount of product I think someone at the top in the UK dist should be asking why are we not making money by supplying you?
the manufacturers must know that you are getting product from someone else as they surely track what serial numbers go to which location? they haven't tried to stop you, why should you use the used strategy and potentially damage your business?
if they are the ones giving someone exclusive rights to distribute a product in the UK, then that distributor is refusing to supply someone so therefore potentially losing them sales, I would be asking questions to the UK distributor and asking them to justify their stance.
also as you are shifting that amount of product I think someone at the top in the UK dist should be asking why are we not making money by supplying you?
the manufacturers must know that you are getting product from someone else as they surely track what serial numbers go to which location? they haven't tried to stop you, why should you use the used strategy and potentially damage your business?
JCKST1 said:
DSLiverpool said:
Is the ONLY reason they wont supply you because you sell under RRP if so try and get something in writing from the UK disty (even no reply helps you) .
They are on very shaky legal ground here and if you get an idiot giving you some bullets in the form of a refusal reason then a quick corp lawyers letter to the DISTY would probably see them capitulate (depends on size). (they start with you need a b&m showroom / office)
Is its a recurring sale ? can you over label the helpline number ? will the pound / euro erode your margin ? can you source similar and market to the database using a keyword strategy ?
No its not, basically my business model didn't fit there plan and I was never given the chance to work with them.They are on very shaky legal ground here and if you get an idiot giving you some bullets in the form of a refusal reason then a quick corp lawyers letter to the DISTY would probably see them capitulate (depends on size). (they start with you need a b&m showroom / office)
Is its a recurring sale ? can you over label the helpline number ? will the pound / euro erode your margin ? can you source similar and market to the database using a keyword strategy ?
The problem I have is proving that the disty is causing these problems, I know from what customers have said its them scaremongering people and them firing back at me but its basically all word of mouth. I have had a few emails from 'customers' over the last year or so looking to buy a product and when I have searched there name, email etc it shows they work for the company so they are trying to get hold of some of my stock for a reason. Again I am certain they know my distributor however they sell to various other shops so I could be purchasing from anyone, it would be very hard to stop me.
There isn't a helpline to call, you basically take it back to your dealer to start the warranty process.
The weak exchange rate has effected me slightly however there is still enough margin (working at approx 40% mark up).
Not sure on the last point sorry, could you elaborate?
Could you supply a similar item and attract the ACME clients to a site selling it using a keyword strategy and doing a "TAKE THE JCKST v ACME CHALLENGE" this will possibly scare them into wanting to collaborate with you or if nothing else it gives you a fall back position IF you can source and brand an equivalent item. I am about to do exactly this with headsets (once my lock out expires)
Thanks for the replies everyone.
I think contacting the international distributor wont help, they have also sent me emails in the past asking me to stop trading. They dont really care but they get it in the neck from the UK distributor from time to time.
They know where I get them from and have emailed that distributor asking him to stop trading to me however he also supplies to other shops in the EU (none in the UK) so for all they know I could be getting my stock from one of them and not the main disty.
Used is my only option for an easy life as they dont care about used sales at all however as mentioned this will affect my sales.
My adverts are usually very clear now but I have never done any advertising before, I get enough sales to see me over. I could increase sales a lot however I have never done this in fear of starting some sort of legal battle or more hassle. Majority of my sales are recommendations or word of mouth unlike the other 'uk dealers' I have never been to shows, had magazine features and so on.
One problem is that the UK distributor is now branding my products as second hand saying that the original purchaser is the only one who qualifies for warranty and as I am not a dealer then the warranty lies with me so anyone purchasing after that has none.
Its one big mess and has been for a while, the pressure I am getting from people now has spurred me on to get this resolved ASAP.
I think contacting the international distributor wont help, they have also sent me emails in the past asking me to stop trading. They dont really care but they get it in the neck from the UK distributor from time to time.
They know where I get them from and have emailed that distributor asking him to stop trading to me however he also supplies to other shops in the EU (none in the UK) so for all they know I could be getting my stock from one of them and not the main disty.
Used is my only option for an easy life as they dont care about used sales at all however as mentioned this will affect my sales.
My adverts are usually very clear now but I have never done any advertising before, I get enough sales to see me over. I could increase sales a lot however I have never done this in fear of starting some sort of legal battle or more hassle. Majority of my sales are recommendations or word of mouth unlike the other 'uk dealers' I have never been to shows, had magazine features and so on.
One problem is that the UK distributor is now branding my products as second hand saying that the original purchaser is the only one who qualifies for warranty and as I am not a dealer then the warranty lies with me so anyone purchasing after that has none.
Its one big mess and has been for a while, the pressure I am getting from people now has spurred me on to get this resolved ASAP.
If I was the UK Distributor, I would expect the manufacturer / brand to put a stop to this by enforcing the Distribution agreement of the grey market supplier to stop it selling outside its territory
It might not stop it entirely, but it would make it harder for you
Selling as 2nd hand will put a lot of punters off imO
Going to the manufacturer / brand with a plan to become the uk distributor is an option to consider. What value of sales in the UK now and how big a part of that are you already? Could you convince the manufacturer / brand to switch! Do you have the infrastructure to do it?
It might not stop it entirely, but it would make it harder for you
Selling as 2nd hand will put a lot of punters off imO
Going to the manufacturer / brand with a plan to become the uk distributor is an option to consider. What value of sales in the UK now and how big a part of that are you already? Could you convince the manufacturer / brand to switch! Do you have the infrastructure to do it?
Edited by anonymous-user on Thursday 15th June 19:16
JPJPJP said:
If I was the UK Distributor, I would expect the manufacturer / brand to put a stop to this by enforcing the Distribution agreement of the grey market supplier to stop it selling outside its territory
It might not stop it entirely, but it would make it harder for you
Selling as 2nd hand will put a lot of punters off imO
Going to the manufacturer / brand with a plan to become the uk distributor is an option to consider. What value of sales in the UK now and how big a part of that are you already? Could you convince the manufacturer / brand to switch! Do you have the infrastructure to do it?
To be honest, I dont have the infrastructure to do it. The buy out costs would be huge and the UK distributor is doing a good job and making big money from what I hear.It might not stop it entirely, but it would make it harder for you
Selling as 2nd hand will put a lot of punters off imO
Going to the manufacturer / brand with a plan to become the uk distributor is an option to consider. What value of sales in the UK now and how big a part of that are you already? Could you convince the manufacturer / brand to switch! Do you have the infrastructure to do it?
Edited by JPJPJP on Thursday 15th June 19:16
If my company was a dealer we would probably be one of the main ones I think, however are my continuous sales due to the lower RRP compared to the normal UK dealers? If I was a UK dealer then I would have to stick to RRP and be like the rest, importing gives me a bit of leeway.
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