Imagine the shock of seeing a supplier offer products they wholesale to you being offered to consumers for not much more than your wholesale price.
The shock turns to anger when it continues months later, with the supplier competing with you for Google ad positioning. They can spend more since they have more margin with which to play.
Their words of no we are not trying to take business from you and we only want to grow the marketplace don’t land as you see customers you have nurtured for years switch to them.
As I told one supplier representative, what they have done in copying our business and chasing our customers disgusts me.
All of us in business have to put our needs ahead of everyone else and that is what this supplier is doing. The thing is though, they get childishly upset when we reduce our commitment to them having found a more valuable relationship elsewhere.
Maybe it is just meh but it feels like, in these early months of 2024, that we have more suppliers going direct to consumers.
Some suppliers are getting it right. One I spoke with this week who was pitching for our business said up front that they sold direct but at a price that was 10% higher than the suggested retail price they had on their items. What I liked even more was that their products, at their suggested retail price, gave us a gross profit of 62%.
This supplier is smart to structure their retailer relationships and their own online pitch such that it’s a genuine win win for supplier and retailer.
Not enough suppliers think through how to approach selling direct.
Some don’t announce it, they sneak around thinking retailers will not notice.
Some use spin from marketing to make it sound like retailers will benefit.
Some lazily copy what they see their retailers are doing and refuse to acknowledge they have done this.
Where the move has been made poorly, ignorantly and / or selfishly, it is understandable relationships break down. Trust is challenged and retailers who do not trust a supplier will not want to do business with them.
Each of us in business has to make decisions that serve our business and those who directly rely on it first. We need to be honest in our decision-making and respectful of long term relationships – if our decision means a change, we need to be upfront rather than secretive.
In my own case, I am more invested in seeking out direct supply relationships, from manufacturer direct to us rather than through a wholesaler who control a brand in the country. I am also happier working with suppliers who have no commitment to go direct to consumers.
Disruption is here to stay. Our role as business owners is to navigate this to our advantage.