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Old 28.03.2011, 21:57
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My naive business-mind

I started a little business, an online shop, and set my prices to basically cover my costs, plus a little bit. I am not a business-person, and my intention is not to create a thriving business, but to do it more for fun.
Although I know of stores that offer some of the same things I do, most of the stuff is not available or really very hard to find in Switzerland.

With all my suppliers, except 2, I do not have an obligation to sell their products at a given price. There are however, usually recommended retail prices, which I have not followed since they are only that, recommended.

The problem is, one of my suppliers contacted me to inform me that other stores selling their products have complained because I am offering them for less. And basically, if I don't sell them for more, they won't supply me (I can read between the lines!) anymore.

Now, I do understand if someone owns a shop and sees their products being offered for less over the internet, it would be frustrating. But, honestly, a shop has MUCH more traffic than my webshop. I do VERY little advertising and I only get a small handful of orders a month. The only other place I sell (or have the intention of selling) are at a couple markets twice a year.

So, basically now I am forced to raise my prices and will probably lose the few customers I have and that'll be the end of my business!! I know this sounds like a complaint thread, but what I really wanted to know is if any knowledgeable people would be willing to offer their opinion, guidance or advice!
For example, if I offer free shipping, will this win anyone over? Or, is it safe to offer gift certificates (ex: if someone buys something for 50, they'll get say 15 francs off their next order)? Will this sort of thing jeopardize my relationship with my supplier? Will it work with my customers?

So, if I get any good advice, I'll give you a discount off your first order!
......maybe.
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Old 28.03.2011, 22:01
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Re: My naive business-mind

A related article from years ago.

It has changed a little over the years, but not much..
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Old 28.03.2011, 22:02
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Re: My naive business-mind

Two things spring to mind. One is that the supplier is potentially colluding to fix prices. Second generally however this is accepted as long as the sellers (you and your competitor) are not colluding.

I would speak with the supplier and negotiate. Price might not be negotiable but you have come up with some clever ways to get around this. Ensure you wont be uspetting the supplier by implementing these deals.

The other thing that springs to mind would be 'how important is this supplier?' Are there other suppliers around that will not restrict like this? If there are, it might be time to strategically move to another supplier.
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Old 28.03.2011, 22:03
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Re: My naive business-mind

What kind of shop it is to give you more tips? What kind of products?
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Old 28.03.2011, 22:04
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Re: My naive business-mind

The free shipping sounds like a good idea. But, honestly, I would just find another supplier that will not dictate the way this one is. Contact your supplier's competitors and see if you can sell without those limiting conditions.
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Old 28.03.2011, 22:14
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Re: My naive business-mind

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The other thing that springs to mind would be 'how important is this supplier?' Are there other suppliers around that will not restrict like this? If there are, it might be time to strategically move to another supplier.
The supplier has already decided how important you are...
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Old 28.03.2011, 22:22
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Re: My naive business-mind

I just got the reaction from this supplier today in an email, so I haven't had the chance to "negociate", if you can call it that. But, they made it pretty clear that they'll stop supplying to me if I don't raise my prices. The thing is what they offer is pretty much one of the main things I am selling and there's really nothing I can replace it with. This is why I am looking for a way around "making" people pay the full price. (Special offers, free shipping maybe. But I don't know if this will cause me problems with the supplier).
I sell toys, craft sets and other things for kids.
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Old 28.03.2011, 22:26
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Re: My naive business-mind

As being one of your customer, I feel for you. I love what you have to offer and it is indeed at very good price. Beside that you are a lovely person and I am extremely happy to support a forum member.

All the brands you have on your website are not known by me. I looked at what you had and found things I liked.

I believe if you change your suppliers, I will not see it differently.

You are not just a website but a person who deal personally one on one with her customers, and that is priceless!
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Old 28.03.2011, 22:27
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Re: My naive business-mind

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I just got the reaction from this supplier today in an email, so I haven't had the chance to "negociate", if you can call it that. But, they made it pretty clear that they'll stop supplying to me if I don't raise my prices. The thing is what they offer is pretty much one of the main things I am selling and there's really nothing I can replace it with. This is why I am looking for a way around "making" people pay the full price. (Special offers, free shipping maybe. But I don't know if this will cause me problems with the supplier).
I sell toys, craft sets and other things for kids.
What is that thing?
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Old 28.03.2011, 22:28
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Re: My naive business-mind

Quote:
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I just got the reaction from this supplier today in an email, so I haven't had the chance to "negociate", if you can call it that. But, they made it pretty clear that they'll stop supplying to me if I don't raise my prices. The thing is what they offer is pretty much one of the main things I am selling and there's really nothing I can replace it with. This is why I am looking for a way around "making" people pay the full price. (Special offers, free shipping maybe. But I don't know if this will cause me problems with the supplier).
I sell toys, craft sets and other things for kids.
I know, a stupid question, but do you have to have your prices disclosed?

Can you make a deal for them letting you have your prices if you sign up for larger consignments from them?
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Old 28.03.2011, 22:32
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Re: My naive business-mind

Advertise your products at a price to keep the suppliers & competition happy. Stress on the website there is free shipping.

Ship all the parcels first class post and include a gift voucher, redeemable on the next purchase, maybe of value equal to 10% of current purchase.
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Old 28.03.2011, 22:35
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Re: My naive business-mind

In the UK what they are doing is illegal. I'm not sure if that's true here too, but I'd trawl the government websites to find out.
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Old 28.03.2011, 22:38
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Re: My naive business-mind

I don't think I can mention what brand it is (in case of spies), but it's imported from another European company and they set the (continental) Europe-wide prices. I do order what I feel to be a lot from them. I have never even found their products anywhere in Switzerland and I am very familiar with kids stores and toy stores (maybe not so much small boutiques and shops) But I can't imagine a small boutique or shop would order as much as I do. That's just a guess though.
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Old 28.03.2011, 22:42
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Re: My naive business-mind

This is a real shame and echo what Nil said regards you your service and your shop. Very friendly service. How much extra are they expecting you to charge per item? I am sure 10chf more for example wont put people off? Otherwise I think free postage should suffice.

Good luck and I'll still be ordering from you
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Old 28.03.2011, 22:46
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Re: My naive business-mind

If you really order so much more then the other stores do then thy will be just as interested in keeping you as a client as you want them.

Either order a big quantity of goods you need and sell it at your price and recon with them not supplying you anymore, but youl have your stock (only this seasons clothing)

Or make some sort of deal with them, tell them that since VAT is cheaper in Switzerland it makes the product a little cheaper to... or something like that.

And an online store always has to be cheaper then the highstreet price..

Good luck
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Old 28.03.2011, 22:49
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Re: My naive business-mind

I agree that it is a good idea not to talk names as it is not necessary and there are downsides.

You have a couple of good ideas on how you can offer value to your customer that is not directly linked to the price of their items. You might want to give those some thought.

You could also ask the supplier who they are selling too in CH since you have not been able to find anyone. I would also ask what sort of volume they are doing with the other person. You should be prepared to talk about how much you have already ordered from them and the projected growth for 2011 and 2012. I doubt that some single, small store would be able to keep up (unless you are missing someone big who carries the line).

You should also see if there is another supplier of similar products that you could go to if things do not work out. Can be useful in the discussions with the supplier.

Another basic question. Would it really hurt your business/sales if you increased your prices on that line? It is not normally a smart idea to run a business without any profit.

Good luck.
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Last edited by Verbier; 28.03.2011 at 22:50. Reason: typos
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Old 28.03.2011, 22:56
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Re: My naive business-mind

Chris,

By the way, you should put your website link as your signature so people can always click on the link to your website.... Good for promoting it!
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Old 28.03.2011, 23:00
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Re: My naive business-mind

I probably could sell the stuff for more (I've heard this from other people) and maybe I could use the extra money to advertise to then get more customers. But I didn't want it to be this way. I personally HATE feeling ripped off. It's like these products go through so many channels(?) and everyone is trying to make as much money as they can and the consumer pays so much for something that is basically so cheap to make. Yes, I know this is how the economy keeps going. I just wanted to be different in a very small way (I don't want a huge business- it's not my goal). And to be honest, I thankfully don't have to make a living from it and in my own superficial way, I like shopping and receiving packages and selling cool stuff (atleast in my opinion!!)

Thanks to everyone for your advice. I might even have the courage now to challenge the supplier of this brand!!
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Old 28.03.2011, 23:08
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Re: My naive business-mind

I was in a similar situation and the supplier suggested I could offer 1 or 2 products of the month - with say a 10-15% discount on the recommended retail price

This would not be seen as taking business away from their bricks and mortar shops

Just a suggestion
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Old 28.03.2011, 23:11
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Re: My naive business-mind

It certainly sounds like they are acting illegally but it depends on the details. Basically with the recent revision of the Swiss Cartel Act and the Notice on Vertical Agreements, the legal situation is much like in the EU.

Price-fixing is very frowned upon and is generally on the so-called "black list", that is things that are illegal even if there is not a huge impact on trade or on competition.

Here is the relevant article from the Cartel Act (this is clarified in the Notice I mentioned above but that is only available in German, French and Italian):
Art. 5 Unlawful agreements affecting competition

1 Agreements that significantly restrict competition in a market for specific goods or services and are not justified on grounds of economic efficiency, and all agreements that eliminate effective competition are unlawful.

4
The elimination of effective competition is also presumed in the case of agreements between undertakings at different levels of the production and distribution chain regarding fixed or minimum prices, and in the case of agreements contained in distribution contracts regarding the allocation of territories to the extent that sales by other distributors into these territories are not permitted.
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