Old dogs, dirty tricks

I would suggest that Graeme Samuel and his fellow watchdogs from the Australian Competition and Consumer Commission would want to take a closer look at research released this morning by eBay Australia, which suggests that small online retailers are being held back by a range of unfair and possibly illegal practices used by suppliers and manufacturers.

The survey of 357 “top” eBay sellers found that 78% experienced difficulties either occasionally or frequently from manufacturers and suppliers, with 35% saying manufacturers and suppliers had attempted to prevent them from selling goods on the internet or on particular websites.

If that is not bad enough, a quarter said they have faced issues with manufacturers or suppliers requiring them to sell their products at a particular price online.

That sounds very much like resale price maintenance and it is a clear breach of trade practices laws.

A further 28% of respondents said they had faced issues with manufacturers and suppliers telling them that they could only sell their products online if they met certain conditions. Again, that sounds like a breach of trade practices laws.

That suppliers and manufacturers should be using these tactics against small retailers in this day and age is bad enough and deserves the attention of regulators.

If you’re a small retailer and you’ve suffered from this sort of crap, document what’s happened to you and send what you know to the ACCC – they’ll be more than happy to hear from you.

But it also suggests to me that many manufacturers and suppliers are struggling to deal with a world where their cosy supply chains are being turned upside down.

It used to be so simple for these guys. Make something, stick a nice mark-up on it and sell it to the retailers, who could then put another fat mark-up on top.

In a smaller market like Australia, the system worked even better. You could control the number of retailers you sold through and therefore limit the need for anyone to drop their prices drastically to win sales. If there’s not much competition, you hardly need to worry too much about discounting, do you?

But that model is dying. The internet means consumers can get goods from every country in the world – including the ones where a supplier’s goods are much cheaper.

And the proliferation of online retailers large and small means there is always someone ready, willing and able to offer a discount to catch the attention of consumers.

I can understand why manufactures and suppliers wouldn’t like this new model, but that doesn’t excuse the use of bully-boy tactics to try and protect margins and profits.

These companies need to embrace the rise of the smaller online store as a chance to put their products in front of more consumers in more markets.

Internet retailing has opened consumers up to the world – surely manufactures want to go along for the ride?