In a former life, I used to sell on eBay. Yep, that’s how I got started in online sales, selling off-price clothing on eBay. It’s one of the reasons that Kathleen’s article resonates with me because I see things from both sides of the fence. While I don’t necessarily agree with the eBay retailer, I understand where they come from since I have friends who still sell on eBay and I actually advise a lot of eBay sellers.
When I first started my ecommerce website, it wasn’t easy to get accounts with established brands. Most were very leery of selling to online retailers and for good reason. Even online retail website owners can be pretty shady. Many want drop shipping and get upset about $200 minimums. And as most of you know, by the time you buy 1 style in 1 colorway and all sizes (or just the ones you want to sell) a $200 minimum becomes pretty easy to meet. When I went to my first market, I had a printed mock up of my website’s layout and I had already pre-arranged to get some larger brands to sell to me. As a result, it was easier to get Brand Y once they saw I would be selling Brand X. Competing and complementary brands always want to be sold with established brands.
But even then, there was one brand that was a huge hold out, didn’t want to sell to me as an unestablished online retailer, which was understandable. The rep wouldn’t even show me the line. A year and a half later, I was able to get that line after I went to the rep again, and the company viewed my website. By then, I had more brands, had been at it a while, and had gotten a little bit of press, I could show that it was a legitimate business, I wasn’t fly by night, and most importantly, I was upholding the retail price points on all current merchandise. Also, I could point out other (what we call) pure-play etailers who were selling the brand. Today, the only brands I can’t carry are those that require an online website to have a brick and mortar presence, or the ones that are locked into semi-exclusives with large online retailers. Everybody else is fair game.
As a result, I don’t take on a brand that doesn’t enforce a retail price point. Meaning if the brand doesn’t protect the retail price, I don’t want it. The reason is, eBay or website, many online retail businesses are established by people who think that the only way to compete is to compete on price and this is exactly what they do. A price war only keeps lowering prices and no one wins (except the consumer). It’s a race to the bottom.
Having said that, I’ll tell you a little story. Two Christmas seasons ago, I had placed a sizable (for me) order of items with a retailer who experienced an upsurge in business when a very long standing established manufacturer in the industry shut down their brand and licensed to Target. Don’t want to name names, so I’ll leave it at that. Well, sales were sluggish and I could not figure out why. I ended up just doing some normal stuff and discovered that all of their fall/holiday styles (with the exception of maybe 2 or 3) were selling on Bluefly at a deep discount. Needless to say this wasn’t a normal off-price deal. I was irate and contacted the company and my rep. My rep tried to give me a line that the company didn’t know about the Bluefly thing and no other retailers were complaining. I spent maybe 3 or 4 years selling off-price, I know jobbers, I know how the industry works, when you see something like that (current styles for the season for sale by a large retailer), the company was in on it (could have been a canceled order from a very large retailer, but whatever, deals like that don’t go unnoticed). Needless to say I returned most of the order and really pulled back in carrying that line. I still carry it, because it’s a small industry and it’s a brand that is well recognized, but I’m still salty about the situation.
I say all of this to say is that legitimate retailers want everyone to uphold the retail price, with discounting being used as a promotional tool or a way to get rid of excess stock. Legitimate retailers do not go into business to sell for the lowest possible price, we look to maximize our profit margin as inventory is our biggest expense. Even when you look at a discount retailer like Wal-Mart, they are lowering their price by squeezing the manufacturer, or using a combination of loss leaders and high profit margin items.
Having told that side of the story, I will shed some light on online and eBay sellers and this is the bottom line:
Some eBay sellers don’t care about profit margin, a dollar profit is a dollar profit. They aren’t looking at percentages, a dollar profit is a dollar profit.
I get this all the time, especially with off price merchandise. If someone sees an ebay seller selling (for example) a $300 coat for $30, they insist there has to be a jobber selling that coat for $15 or $20 so that the seller can make a decent profit selling it for $30 (remember all eBayers are not doubling their money, keystone is a foreign concept to many). What I always tell people is don’t make that assumption. Sometimes eBay sellers are recouping a loss, sometimes they have already made their money back on a bulk purchase of items, and sometimes they are gambling that bidding will go higher, and lastly, sometimes a dollar profit is a dollar profit.
Maybe the dollar is an exaggeration, but I have honestly had people get excited that they purchased something for $25 and sold it for $35, even with the eBay fees. Honestly.
The standard and traditional retail concepts by which traditional retailers evaluate a business are often not used by eBay sellers. If they were, most wouldn’t be there. Especially in the clothing and related categories.
With that, I do want to clear up some issues:
- You don’t usually need “credentials” to get into shows. For LA Market week, all you need is a seller’s permit, business card, or business license. No proof of storefront, no photos, no print out of websites. Trust me, I know.
- I will also go on to say that most shows have lax credential requirements. How do I know? Because I’ve been a registered buyer for everything from the Fancy Food Show to the Home & Garden Show. What can I say? I love trade shows.
- I will say, though, that MAGIC is one of the more difficult shows to get into (because of their credential requirements), however, usually a buyer badge to another show usually gets you through the doors at all of them.
- Buyers register friends. I have done it for friends that were starting up and didn’t yet have the credentials to get into a show. No problem, I’ll register you for the show, even if it’s one that I don’t attend. I’m sure I’m not the only one who does that. Also, buyers bring friends to shows as employees (as opposed to trade guests), I do it all the time because I don’t like to travel alone.
It’s common, there are many ways that non-buyers get into shows, don’t believe for a minute that it’s the show’s job to police the registrants.
Also, one thing that most of you don’t know is that eBay participates in, or sponsors displays or seminars at, most industry trade shows (eBay had a booth at MAGIC). They solicit manufacturers and retailers to sell on eBay. They run seminars every hour or two on getting started selling on eBay. They sponsor large ads in the show guides and inserts into the buyer’s bags.
Along with that, I want to respond to a few comments from the first entry:
Essentially in the USA is it illegal to “price fix”. MSRP is a “suggested” retail price..and retail pricing cannot be determined by the manufacturer…When a buyer buys your product, they are free to sell it whenever they please- at whatever price they please. If you find the buyer is price cutting your other buyers, and you are not happy with that..then you can stop selling to that buyer at any time.. but you cannot tell that buyer what to do. Once they buy the goods- they can do whatever they want to with them.
This is true. As a manufacturer, about all you can do is refuse to sell to someone after they have not adhered to your terms and conditions. However, eBay has an interesting loophole that manufacturers can use to their advantage: the DMCA and eBay’s VERO program. This has been used time and time again by established brands to pull their products off of eBay, I know, I know people to whom it has happened.
The basic concept is that if your brand is trademarked, someone selling on eBay is using your trademark to sell, without permission. Also, many eBay sellers tend to lift pictures from the manufacturer and other websites and this also includes copyright infringement (as they often use photos without permission), which is enough to get the auctions closed. Many brands have done this time and time again, they swoop through eBay and you see ALL the auctions for their product closed. Disappeared.
Also, asking for a sales tax ID will weed out some of the trunk show people as well as some etailers.
Not in most states. In California, people who have more than a few garage sales per year, who sell at the flea market, etc., are required to have a seller’s permit (which is what most people refer to as a Sales Tax ID). You can apply via mail or walk into a Board of Equalization office to get one, you don’t need a business license, my mother has one. I think most states are like that because one time I had to apply for one in Massachusetts and it was just as easy. Typically requiring a sales tax ID (or whatever it’s called in your state) doesn’t weed out anyone. A business license usually will weed out some, because most who aren’t serious won’t bother to go through the trouble of applying (and paying for) a business license and publishing a fictitious name statement. Business imprinted checks usually weed out more people, because even I don’t have those (I don’t write business checks, I do all the check writing online), but anyone can print up a business card.
One of the best ways to weed out sellers, honestly, is to find out what else they carry. A fly by night or eBay seller usually will not have a well rounded selection of brands typical for a legitimate business in that category, because they usually are trying to get their hands on a few hot sellers. I’ve been asked that all the time and honestly, it’s a question most buyers will answer. If a potential buyer is evasive about the product lines they’re carrying or they’re not carrying product lines similar to yours already, watch out.