Vickie Haushild owns The Garden Shop at Lakewold Gardens in Lakewood, Wash., and an online storefront. Today she talks about an emerging problem: wholesalers and distributors bypassing retailers and targeting consumers directly.
A disturbing trend is taking place that has small retailers worried. The line is being blurred between wholesale and retail sales. The small-business person who has invested in an online store either as a single endeavor or as an addition to a brick-and-mortar business is being undercut by the very distributors and wholesalers they have supported.
Case in point: an East Coast distributor with an online presence for its retail customers was contacted when a loyal customer was shocked to see an identical website with a different domain name. The prices were unbelievably low. Knowing the work that went into the wholesale site, the retailer naively called the distributor to let them know someone had copied their design and merely changed some colors.
Meekly, the owner of the distributorship explained that the Web site was indeed his own. He had also gone into the retail business. Since the wholesaler could buy the products at a substantially lower price, the Web prices were considerably lower than any retailer could possibly charge.
This trend is a short term gain for wholesalers. Distributorships sell in quantity to retailers who sell to the customer. The customer wants good value. But the customer buys one at a time, not 100 at a time. If the distributors sell at a low price to the consumer, the retail businesses will no longer be able to sustain their business and the distributors have lost their biggest customers. It’s a no-win situation and an unhealthy trend for all concerned.
-- Vickie Haushild
Your title is a question:
"Are wholesalers the new retailers?"
The answer is no.
eCommerce is a small portion of retail sales, and it is in this small eCommerce space that your 'wholesalers' are playing.
The future of eCommerce (except for the 800 pound gorilla's in the space) is in question.
The consumer prefers to get a product locally. Specifically after doing research on the web.
New inventory-based shopping initiatives are making their way online. The day will come when a garden center's inventory will be searchable on the web.
When that happens, the eCommerce-based garden center marketshare will shrink.
By the way, this same chain of events is the forecast for all eCommerce.
The reality is: a local search that leads to a local purchase - true today and even more so in the future.
Steve Cissel
Posted by: Steve Cissel | June 06, 2008 at 06:34 AM
It is interesting times,I own a musical instrument business and the same thing is appearing here in Australia.We have wholesalers who import well known brand name products and whilst still selling to their established retail dealers,are now opening up their own retail stores and online ecommerce as competitors obviously able to sell these brands at lower prices than independants.
Add the effects of the global shopping online,bricks and mortar stores will be having a tough time.It is interesting to note that some customers use bricks and mortar stores to try out products and then go online and surf for the best deal.It will be very interesting when either stores dont stock any of a paricular product anymore because its no longer profitale or there just isn't a retail store to check anything out anymore - what will online conssumers do then ???I guess buy online products in a blind act of faith ??
Posted by: Peter king | June 10, 2008 at 09:03 AM
So have you stopped doing business with that distributor?
That's the only way to encourage him not to compete unfairly. I don't have a problem with distributors/manufacturers who offer their products to consumers on websites at list prices, but if they want to discount them, they're telling you the retailer they don't want your business.
Posted by: Jim Connelley | June 10, 2008 at 12:07 PM
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Yes. Sadly, I have stopped doing business with him.
Posted by: vickie | June 10, 2008 at 12:57 PM
The Garden Shop at Lakewold Gardens
12317 Gravelly Lake Drive SW
My parents live minutes from the above address and I visit them often. Yet I have never noticed This Nursery, have not seen an ad in the local paper, or any other usual advertising. I do not see them as members of the Nursery Association or using its combined advertising power. http://www.wsnla.org/PierceCountyNurseriesGardenCenters.htm
They do not appear to be a usual representation of a Traditional Nursery of the Tacoma/Seattle area. It appears to be A Garden that charges admission that decided to sell retail goods.
Over the years I have kept up with the Trends of that area and what Retailers have done to be competitive and stay in business.
If you want to be a Retailer, then one needs to compete as one and if your competition is Wholesalers, than they are your competition as are other Retailers.
Why am I posting? To give a perspective of a customer that could shop there, yet did not know they existed until a blog post.
Posted by: Rick Edwards | June 10, 2008 at 07:27 PM
There is no charge to go into the garden shop, just the garden. Because the garden is public and non profit, the advertising rules for the garden shop are different. It is definitely a non-traditional nursery but stocks everything a traditional nursery stocks. Please re-read the original post. The original comment about retailers and wholesalers pertains to the website, not the garden shop which is a separate business. Any advertising for the shop is done through the public garden. There are tv spots, billboards and magazine ads. It is community based and community supported. Again, there is no admission fee to the garden shop, just the garden but the point was the website, not the garden shop.
Posted by: vickie | June 11, 2008 at 09:29 AM