How do companies make purchases?

[Auggie]

I Sell a product online to the end user. I have a web site, with a
shopping cart, and a credit card payment processor. Now I want to start
selling the product to resellers. In general, do companies purchase from
other companies using a shopping cart? And how do companies pay other
companies?

HOW DO COMPANIES SELL SOMETHING:

Sounds like you have something physical that you want to sell to retailers
to stock in their stores...?

Assuming thats the case, there are a few ways you can go about it:

1) Find a distributor.
You can contact distributors for similar products to yours either on a
city, state/province or national level.
A distributor will stock small quantities of your item(s) and as they
sell your goods they will send the orders to you.
IE: If you are selling a board game they might stock 2 gross (288 units) of
your game to handle quick turnaround and walk-in customers who want the item
*RIGHT NOW*. As they sell your product they will place orders with you that
you will fill by either shipping the item(s) to the retailer or to the
distributor who will then ship the item to the retailer (usually with other
goods the retailer bought from them). If the distributor ships the item out
for you they will charge you a fee for that service... but it can be cheaper
if you have say 12,000 units to go to 500 retailers in a city it would be
much cheaper to send it all as one crate to the distributor than the
individual shipping charges to send to 500 stores.

2) Be your own distributor.
You get your item made from a manufacturor and then stock it in your
house/warehouse/office. You hustle and work the phones, send out brochures,
attend trade shows, etc and as you make sales you ship the items out from
your house/warehouse/office to the retailers. You make more money this way
over the above (using a distributor) but then you have to make the sales,
build contacts and hustle to get your goods out there on the marketplace.
This might sound good, but the big thing here is that YOU have to do the
selling of your product. The advantage of using a distributor is that they
already have customers that they sell to and when next they talk to that
customer they will chime in with "So I have this new product here that looks
pretty good..."

3) Ship from manufacturor.
Similar to the above: you are still going out and hustling to make sales
but you keep no stock on hand. As you get orders you place your orders to
the manufacturor who will then build the items, pack them and then ship to
the end customer. This is usually the most expensive because you don't get
to take advantage of bulk purchasing (IE: buying 15,000 units and
warehousing them) and the manufacturor will charge you a fee for direct
shipping. But if you do a lot of sales this can save you money on having to
warehouse and store your goods pending sale/shipment.


USING A SHOPPING CART:

If somebody wants your product they will use whatever method you offer to
purchase your goods.

If you are going to use your website with a shopping cart you might either
want to put up a special B2B shopping cart and/or website that retailers can
use to purchase your product... or modify your cart to reduce pricing based
upon quantity ordered.

IE: if "Joe User" goes to your site and buys 1 unit they pay the full retail
price. If a merchant goes to your site and buys 500 units they get your
wholesale price.

But its a whole "how you want to do it" business. You can take orders by
phone or by fax if you want... or drive around and sell the item out of the
back of your car.


HOW DO COMPANIES PAY OTHER COMPANIES:

This depends and is one of those cases where you can specify whatever terms
you want.

Usually the wholesaler/manufacturor will ship the item to the retailer along
with an invoice that specifies the agreed terms of the sale.

In many cases this will be something like:
144 units at $20 = $2,880.00 Suggested retail price: $39.95 per unit.
Balance due in 90 days
8% discount if paid in 30 days
4% discount if paid in 60 days

So this tells them that they owe you $2880 for this shipment. If they pay
up within 30 days they save $230 (8% off)... if they pay within 60 days they
still save money buy only $115 (they only get a 4% discount). You do this
to encourage them to pay up sooner rather than later.

But this is again a case of how you want to do it: you can use terms like
the above or you could specify that they pay for the item up front in part
or in full. Usually if its a new customer you will usually ask for partial
payment... but if its somebody you have been dealing with for many years you
will probably ask for nothing up front and just send them the invoice.

 

[Mark Goodge]

No, it's not. Price fixing is when two or more competitors agree on
what they are going to charge (collusion). You can specify the minimum
price your resellers can sell your product. That's a matter of contract
law.

That depends where you are. It may still be legal in the US, but
setting a minimum retail price has been illegal in most of Europe for
quite some time.

Mark

 

[Jerry Stuckle]

That depends where you are. It may still be legal in the US, but
setting a minimum retail price has been illegal in most of Europe for
quite some time.

Mark

It is generally recognized in the U.S. that a company can set a minimum
price for its products. It allows a manufacturer to protect its other
sellers. Otherwise high end retailers may stop carrying a product
because discount stores sell the same thing at a much lower cost. And
manufacturers definitely want to see their products in the high end
retailers.

This is different from price fixing, where two or more competitors get
together and agree to widgets at a certain price.

--
==================
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Jerry Stuckle
JDS Computer Training Corp.
(e-mail address removed)
==================

 

[Mark Goodge]

It is generally recognized in the U.S. that a company can set a minimum
price for its products.

Sure. I'm not saying that you're misrepresenting US law, merely
pointing out that the same principle doesn't necessarily apply
eslewhere.

This is different from price fixing, where two or more competitors get
together and agree to widgets at a certain price.

Indeed.

Mark

 

[Scott Bryce]

That depends where you are. It may still be legal in the US, but
setting a minimum retail price has been illegal in most of Europe for
quite some time.

Interesting. So, if I am a small business owner, and my products are
only available through me, I can sell at any price I want to. How would
that be different than price fixing? After all, I would be determining
the price, and nobody could buy at a lower price.

 

[Tina Peters]

Interesting. So, if I am a small business owner, and my products are
only available through me, I can sell at any price I want to. How would
that be different than price fixing? After all, I would be determining
the price, and nobody could buy at a lower price.

PRICE FIXING: Actions, generally by a several large corporations that
dominate in a single market, to escape market discipline by setting prices
for goods or services at an agreed-on level.

In order for it to be price fixing, on your 'unique' product, there would
have to be no possible way of anyone competing for the market you sell your
product to. That is, I couldn't come along and sell a similar item that
does the same function and sell it for less. I would bet money that very
few products would fall under that category.

--Tina

 

[Mark Goodge]

Interesting. So, if I am a small business owner, and my products are
only available through me, I can sell at any price I want to. How would
that be different than price fixing? After all, I would be determining
the price, and nobody could buy at a lower price.

Someone could buy from you and resell them at any price they want to.
They could, if they wanted to, even resell them for less than they pay
you for them. That might not make obvious business sense, but it could
be worth doing if, for example, they bundled your product with another
one in such a way as to make a greater profit overall than the
individual loss they make on reselling your product.

However, that's not really relevent to the question being addressed
futher up the thread, and what is being addressed is being conflated
into two separate things. As Jerry has already pointed out, there's a
difference between a supplier setting a minimum price (aka Retail
Price Maintenance, or RPM), thus preventing their resellers from
competing on price, and a group of resellers agreeing among themselves
not to complete on price. The former is legal in the US, but not
necessarily so elsewhere in the world, while the latter is usually
illegal everywhere that has a concept of anti-competitive practice.
But neither of these have any relationship to the right of a
manufacturer of a product to sell it at whatever price they decide.

Mark

 

[tony cooper]

Interesting. So, if I am a small business owner, and my products are
only available through me, I can sell at any price I want to. How would
that be different than price fixing? After all, I would be determining
the price, and nobody could buy at a lower price.

As a sole seller, you fix the price at whatever you want to sell the
product for. That's fixing the price, but not price fixing. The
latter is two or more vendors conspiring to sell the same product at
the same price.

There's nothing wrong with selling a product at the same price that
another vendor sells it for. What's illegal is the agreement between
the vendors. Vendor A can sell the product for $10, and Vendor B can
set his price at $10 as long as A and B don't decide between
themselves to do so.

 

[tony cooper]

PRICE FIXING: Actions, generally by a several large corporations that
dominate in a single market, to escape market discipline by setting prices
for goods or services at an agreed-on level.

In order for it to be price fixing, on your 'unique' product, there would
have to be no possible way of anyone competing for the market you sell your
product to. That is, I couldn't come along and sell a similar item that
does the same function and sell it for less. I would bet money that very
few products would fall under that category.

Of course there are many products that fall under this category:
brand names. Target and K-Mart can't agree to sell Sunbeam toasters,
for example, at the same price. They can sell toasters at the same
price and sell Sunbeam toasters at the same price, but they can't
*agree* to sell Sunbeam toasters at the same price. There's nothing
illegal about Target seeing K-Mart's ad and setting their price at the
same amount. That's not conspiring.

 

[Jerry Stuckle]

Sure. I'm not saying that you're misrepresenting US law, merely
pointing out that the same principle doesn't necessarily apply
eslewhere.


Indeed.

Mark

Mark,

Thanks, but I did understand that. I was just trying to explain why
suppliers and high end retailers like it. Discount retailers don't, of
course.

--
==================
Remove the "x" from my email address
Jerry Stuckle
JDS Computer Training Corp.
(e-mail address removed)
==================

 

[Pogonip]

Interesting. So, if I am a small business owner, and my products are
only available through me, I can sell at any price I want to. How would
that be different than price fixing? After all, I would be determining
the price, and nobody could buy at a lower price.

You can set any price on your merchandise you want. That doesn't mean
that you'll have buyers willing to pay it.

 

[Andrew Heenan]

That depends where you are. It may still be legal in the US, but
setting a minimum retail price has been illegal in most of Europe for
quite some time.

Everyone in the UK thinks 'resale price maintenance' has benn banned. But
Tesco had to remove Levis from shelves when they undercut the affiliated
partners; Superdrug had to up the price of perfumes.

Like most UK consumer laws, you could drive a truck though it.

And many do.
--

Andrew
eBaY Weirdities
http://www.weirdity.com/ebay/

Norfolk & Way - Our Aim Is To Please
http://www.norfolk-and-way.com/

 

[Mark Goodge]

Everyone in the UK thinks 'resale price maintenance' has benn banned. But
Tesco had to remove Levis from shelves when they undercut the affiliated
partners; Superdrug had to up the price of perfumes.

That's because Tesco and Superdrug were breaking a contractual
restriction on geographic distribution territories by buying on the
"grey" market. Geographic selling restrictions are still legal[1], so
suppliers are entitled to enforce them even if that means resellers
can't get hold of their products at a cheaper price.

[1] Although they have as much rational basis now as RPM did before it
was abolished.

Mark

 

[shirley710310]

You started well.


And then it all went wrong.
Companies don't care if you're a good person or a bad person.
They just care about profit. They want to know who's going to provide them
with the best product at the lowest price.
They don't care if that person has a string of convictions for raping
underage orphan hamsters. They're not driven by ethics. They're driven by
£££ and $$$


You could operate the way you are doing and allow them to buy bulk lots of
your product with their cradit cards.
Or you could operate a system of allowing them to place orders with you, and
accept payment by cheque or electronic transfer.
Some companies prefer to deal with a sales team of real people rather than a
website. Some companies put out a catalogue. And some even offer a credit
facility.

To be honest, there's as many different ways of selling business-to-business
as there are ways of selling to the public.
You need to suss out who your customers are going to be, and look into what
methods they're most comfortable with.
Remember, the easier you make it for people to buy from you, the more
they'll buy.- -

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