Leathercraft on Amazon

[aaron]

Every manufacturer is entitled to seek their own level to make their business model work. Apparently Leathercraft was not fairing well in competition with Hancock and Moore, etc. in the traditional brick and mortar high end stores. Thats OK, not everyone can compete for the same customer base and achieve an equal outcome. There will be winners and losers. The losers are free to move on to try to fill new niches... nothing wrong with that. I wish then well.

I think Leathercraft should focus on selling directly through membership-based flash sale sites, even through Amazon's MyHabit, or develop a separate brand name for its direct sales. Even if the product lines created for Amazon aren't intended to be carried by dealers, the discounts advertised online (plus free shipping) can potentially create problems for dealers when customers wonder why they can't get the same product at the store at the same or lower price, or why the store can't match that level of discount on its inventory.

I'm reminded of the wallpaper industry, which was happy to have discounters sell by mail order in competition with brick & mortar stores that carried their products. People would shop at the store, then buy from the discounter. When the stores finally got tired of the arrangement, the industry collapsed. Yes, it's a tough environment for furniture manufacturers, but they have to be careful not to damage or lose their most important avenue for distribution when seeking alternatives.

We've discussed here before the principal means by which companies compete: quality, price and service. Best Buy gained customers by offering the same products at lower prices, and now online vendors are undecutting their prices. If you're selling the same product, and can't beat the competition on price, that leaves service - but I expect that for most consumers, except perhaps for appliances and very large items, there's little Best Buy can offer by way of service that would inspire a customer to pay more to obtain something from them. They have timing on their side, if they maintain a deep enough inventory, but Amazon Prime takes away much of that advantage as well. Things are tough all over.

[Judyg951]

The same thing is happening in my industry as well. Some professional album companies are now selling to the public. I and many of my photographer friends no longer show or sell those albums. However I can understand the need by these companies to sell to the public. They need the $$ coming in nad will do whatever it takes. Some companies have formed a seperate company to sell to the public though which is just what you suggested.

[airguitar]

Which is worse, a manufacturer selling a limited number of their products online for what appears a substantial savings, or a dealer selling the same manufacturers entire line at prices which undercut local dealers by offering program pricing, etc.. not intended for the online trade?

[drcollie]

No retailer can complete with a manufacturer that sells direct. Imagine Apple selling iPhone 5's for $ 50 under what Best Buy, Verizon or AT&T sell them for. Who would buy from the retail store? Its a model that doesn't work.

A maker can choose to sell through a dealer network and set that up accordingly (Leathercraft) or do what Jeff does with Simplicity Sofas and sell direct, with no dealer network. There are pros and cons to each method, but both can work. What cannot and never will work, is for the manufacturer to sell direct for less than the dealer network.

As to dealers competing among themselves for a retail sale, if they are all paying the maker the same wholesale price for the goods, then that's simply capitalism and competitive pricing at work be it brick and mortar or on-line, or a combination of the two.

[bubbaonline]

I think airguitar was talking about you.... lol..