Supplier issues. Help!
Hi in need of some advise. I have put up with a supplier moaning about me increasing my prices for years even though they are literally as high as i can go and still manage to sell. In line with competition law I have removed a few items from sale as the supplier said other retailers had complained my price was too low and as increasing my price would be a breach of the competition law. The rrp they are trying to enforce is stupidly high and def not a corner stone 50% with retailers charging a lot less than me in any case. I have now received an email from the supplier putting our account on hold for 2 weeks while they look into complaints from retailers re my pricing, whether it has damaged their brand and if I can sell through 3rd party sites as they have to support bricks and mortar shops! I have bought from them for 10 years including when I had a bricks and mortar shop and spend over £5000 a month with them. Can anyone confirm if they are convening competition law to 1. Try and enforce rrp 2. Refuse to supply favouring bricks and mortar retailers. 3. Discussing prices of other retailers with the alleged complainants?? No idea how to proceed on it, it is a very busy time for me and only 24 hours after his email I’m short in stock and need an order by monday!
Supplier issues. Help!
Hi in need of some advise. I have put up with a supplier moaning about me increasing my prices for years even though they are literally as high as i can go and still manage to sell. In line with competition law I have removed a few items from sale as the supplier said other retailers had complained my price was too low and as increasing my price would be a breach of the competition law. The rrp they are trying to enforce is stupidly high and def not a corner stone 50% with retailers charging a lot less than me in any case. I have now received an email from the supplier putting our account on hold for 2 weeks while they look into complaints from retailers re my pricing, whether it has damaged their brand and if I can sell through 3rd party sites as they have to support bricks and mortar shops! I have bought from them for 10 years including when I had a bricks and mortar shop and spend over £5000 a month with them. Can anyone confirm if they are convening competition law to 1. Try and enforce rrp 2. Refuse to supply favouring bricks and mortar retailers. 3. Discussing prices of other retailers with the alleged complainants?? No idea how to proceed on it, it is a very busy time for me and only 24 hours after his email I’m short in stock and need an order by monday!
54 replies
Seller_iBrSIJDZKlsXi
Hi.
First of all, im sorry to hear that you could not agree with your supplies, it is bad enough to live in these days, so all additional problems are really not needed right now…
To answer your questions:
1: Manufacturer can demand from their distributors to not go below certain price with their product (in order not to undervalue their products and this actually quite common)
2: Manufacturer has the rights to refuse to supply you at any point (if you have binding contract with them, you might want to look into it to see if there is any clause about termination)
3: Since your prices are publicly available online, there is no breach of confidentiality in discussing your prices with other distributors.
I am sure this is not what you wanted to hear, but unfortunately your position as a buyer is not too strong in here…
Seller_iBrSIJDZKlsXi
RRP and minimum sale price set by manufacturer are different things.
RRP is a recommended retail price for end customer, while minimum set price by manufacturer sets how much below RRP can you as a seller go before it is considered harmful to the product and brand value.
Seller_6sxtIS0RbZ5k7
Even if it proven not to be legal, at the end of the day, they can and may refuse to sell to you.
The other thing this brings to mind is the thing regarding ‘sold as part of a multipack, not for resale’. Provided the ingredients of, say, the crisps, are printed on the individual bag then there is nothing in law to stop them being sold individually BUT the suppliers may refuse to sell to you.
Seller_j4qOx3FnSoENm
As far as I’m aware in the UK.
- No they can’t force you to adhere to a RRP (as it’s only a recommended retail price) and MAP (minimum advertised price) is illegal in the UK as it infringes the competition act
- Yes they can supply who they like but as they have already admitted to you that the reason being is point 1 for no longer supplying you when you already have a business relationship with them, then I think you have an argument to make there
- Not sure on that one , I don’t think there is anything wrong with discussing but if any agreement is being made between those parties then it could be looked at along the lines of price fixing.
You may want to view this page on the .gov.uk website
https://www.gov.uk/government/publications/resale-price-maintenance-advice-for-retailers/resale-price-maintenance-advice-for-retailers
Seller_ohgoR0FjhqVfH
Thanks I think their issue is they named names. One being one if the largest if not the largest luxury childrenswear retailers as a complainant a few months ago. They charge a huge markup and can get away with it, hey they sell girls dresses at £2000, so contacted the supplier(allegedly) saying if they didnt get everyone to increase there selling prices they would stop buying. That would be price fixing surely.
Seller_FnJT8GoodqsLT
just found this, it sounds to me that they are doing exactly what deems a CARTEL see below
Cartels are a particularly damaging form of
anti-competitive activity. Their purpose is
to increase prices by removing or reducing
competition and as a result they directly
affect the purchasers of the goods or
services, whether they are public or private
businesses or individuals. Cartels also have
a damaging effect on the wider economy as
they remove the incentive for businesses
to operate efficiently and to innovate.
Detecting and taking enforcement action
against the businesses involved in cartels
is therefore one of our main enforcement
priorities.
Although responsibility for detecting and
stamping out cartels lies with the OFT,
cartels often operate secretly and we rely
heavily on information provided by others,
notably the purchasers of the goods or
services concerned. This means that
purchasers in the public and private sectors
have a particularly important role to play.
there is alot more information available here
Seller_bhSWqoVh7Pn98
So, in a nutshell: The maker cannot make you sell at any price (very high or very low), the only exception can be when you are selling at a loss, deliberately harming, etc, and that is a different issue.
BUT, they can stop supplying you, the larger retailers often say they want to sell at x price and have a margin of y% - if they think they have to reduce their retail price, then they demand from the maker that they reduce their buy price to maintain the y% - so by price matching to you, that means the maker has to reduce the cost to that large retailer, who usually deducts off the outstanding invoices.
I have had certain manufacturers just say we are not selling you product z any longer. We know why, then when we put the retail price up, then suddenly it is available to us again.
If the large store has at a retail price of 100.00 and yours is 90.00 - I guess the maker has to give the extra money to them and rightly they are unhappy with you, as that other Company probably could spend a lot of money with them compared to you. That is why some makers say they will not supply online Sellers at all, or you can tell they only deal with ones that also sell at the same RRP prices as the larger retailers.
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Amazon though have also sailed close to the wind. Example: We sell a product for around 60.00 normally, Amazon keep on wanting it sold around 50.00 to win the Buy Box (otherwise we are on the 2nd page) - but after Amazon 15% fees, and shipping, that would be sold at a loss. They also sell the item themselves around 50.00 (as they do not have to pay commission and they then can make a very low margin, as they also have their own shipping Company) - when they ran out of stock, we altered the price to just under 70.00 as the manufacturer price has also just increased. Then Amazon have sent us an email that is price gouging, with a warning. As they sell the item themselves, that could be considered as 'price fixing’. They have also done the same recently on many items that they are not selling, making Sellers charge just above cost price to be able to sell what they have classed as a vital item (but with trade prices and air shipping, some would have to be sold at a loss, after commission and shipping), whereas in the UK, anyone can legally charge as low or as high as they want (certainly within wide limits, of supply and demand). I am sure no one will take action against them though, and certain people thinking that is great for consumers to get a bargain.
Therefore, if you want to sell the brand still, if what they have done is legal or not, I would sell around the minimum suggested online price and still make some money (otherwise someone else will and take your place).
Seller_ohgoR0FjhqVfH
I hear you. They could have just refused to stop selling to us. Totally legal without explanation. However they did explain and have hounded us over prices (and other sellers) for years. If I thought there was even a cats chance of selling at that price maybe but there really isn’t. Example,our biggest seller at the moment is bunting. Nobody in sound mind is going to pay £28 for non designer bunting or £30 for some toddler pjs. A mute point either way if they decide to stop selling to online retailers it will jusy be a case of which course of action.
Seller_cedsnRIkO32W2
Sorry but I’m struggling to understand…
Your competitors are complaining your prices are too low but you can’t increase prices because this would be a breach of competition law? How so, please? In fact, the opposite would be true. If you’re severely undercutting competition this would be a breach.
If I were you, I’d find a new supplier. Sounds like they don’t know what they’re doing. Also, I’d review competition law because you should really be aiming for around RRP.
I’d carry on as normal, bang your prices up to RRP to suit them and wait for CMA to get in touch - I doubt they will, I think you’re mistaken on the competition law part. Also, they won’t go straight for prosecution anyway.
Happy to help with the CMA side of things either way. We’ve had dealings with them (and the ASA) in another one of my businesses. Send me a message on here.
Seller_ohgoR0FjhqVfH
The cornerstone markup of 50% was always fine and sales were moderate/good which works for me over a wide range. The prices have increased from the supplier by nearly 40% over a few year period on a lot of lines making the 50% markup impossible. That puts me at a 40% markup which is by no means ridiculous and obviously still generates a profit. There only seems to be 2 companies selling at a 50-60% markup 1 being the very expensive designer site who are complaining and the other the suppliers own retail site. I haven’t found another site or seller selling at 50% and that’s in over the 30 I know of. For a supplier to ask you to increase your prices breaches the competition law in the uk, to ask on behalf of another competitor is price fixing in my mind.
