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Enlightened Ecommerce

May 8, 2010

In my last blog, I wrote about Ecommerce and our industry. I specifically talked about four things:

  1. Predatory Ecommerce pricing
  2. Brick and mortar stores’ disadvantage of having to collect sales tax
  3. Manufacturers’ drop ship policies
  4. eStores run by manufacturers

There are ways to handle these points that can even the playing field between a brick and mortar store and then there are ways to handle them that give Etailers a strong advantage.

 

Coincidentally, a few days after I wrote that blog, I received a written Internet policy from O. W. Lee. During the same week, I spoke to one of my reps for another company who outlined their company’s vision for increasing business. Both take very enlightened approaches to improving the health of our industry and the use of the Internet.

 

O. W. Lee’s new Internet policy does two things. First, it clearly establishes a brick and mortar dealer’s market territory. Second, they have made rules for selling on the Internet that put all dealers (brick and mortar and Internet based) on a more equal footing.

 

The sales rep defines the marketing area. Mine is exactly what I expected. I sense that I could appeal to the rep or O. W. Lee if I feel the trade area is not correctly defined. However, I also sense that the area must be reasonable which means I can’t say my marketing area extends from New Orleans to Houston.

 

If I want to sell outside of my territory either through the Internet or another mechanism, I have to agree to sell for no less than a Minimum Resale Price. Unlike many MAPs or MRPs, O. W. Lee’s MRP is calculated using a discount that is reasonable and still profitable for me. Here’s the good part; if an Internet site offers free delivery, a rebate of any kind, a lower price because they don’t collect sales tax, the MRP must be raised to account for the value of those items.

 

O. W. Lee has some stringent requirements that web sites and etailers must abide by. All web sites that advertise or show O. W. Lee products or their logo must be registered with O. W. Lee. They don’t allow O. W. Lee product pricing on any web site. Web sites cannot guarantee “lowest prices”, direct customers to “call for pricing,” or offer “pricing through email.” All and all, this is something I can live with and hope other manufacturers will adopt.

 

Now let me talk about that discussion another rep and I had about the new direction his company is taking. This company is addressing the larger problem of how to increase sales without the knee jerk reaction of selling over the Internet. They have decided to explore overseas markets for their product. They have already gotten placement in one of the largest department stores in Europe. While placement is one thing, they are getting "sell through," too.

 

I see several advantages to this strategy. The most obvious is that the sales they make overseas are not taking sales away from me here in the United States. In addition, if they promote the fact that they are in world-renowned department stores and resorts, it will not only expand brand awareness, it will elevate it. Finally, think how synergistic it will be for this manufacturer to be exposed to European and Middle Eastern design aesthetics. Properly developed, this could lead to the “new next best thing” and they will be the first to bring it to our market.

 

After thinking about this, I began to realize there are so many ways for a manufacturer to increase business without going to the Internet. Creating product for the hospitality/contract industry is one. Designing product solely for the design trade market is another. None of these solutions potentially damage a manufacturer’s specialty retailer distribution; but, all can lead to increased sales.

 

As I said, both of these are enlightened approaches and I wonder why more vendors don’t get it.

 

Yours in confused retailing, Bruce