Competing With Own Supplier

mgnng13

I am just starting out and doing the research phase on what product to potentially sell. I have found a few promising ideas from the wholesale directory, but they seem to be selling the product to the public already! How do I sell a product for them if they are already selling the product, making them both the supplier and the competitor?

fudjj

Hi Nicole and welcome to the forum,

It's certainly not ideal when suppliers make the decision to sell direct through open avenues, but it's becoming quite a common marketing technique for many suppliers to do so, at least the smaller dropshippers. To them a customer is a customer, they don't draw a line between trade and public, they just see it as a viable sales avenue to increase their sales.

Not ideal for someone wanting to develop a dropshipping business model, but not impossible. Of course many will prefer to deal with a supplier who isn't selling direct, but if they are then there are a couple of things you need to clarify.

1. are they selling on the same platform as you?

2. are they selling at the same price as they are offering you?

If the answer is yes to both of these questions, then your options are really limited if your intention is to compete against them. You can perhaps try bundling if you really want to deal with them, see details on that marketing technique on this link Link hidden: Login to view

karen_salehoo

Hi Nicole,

This trend of suppliers (manufacturers or wholesalers) doing direct selling had been on going for the past 5 years or so. As a budding online seller, it would pose as one of your biggest challenge however, do not be discouraged by it. There are turnarounds for this set-up.

As what Mark has pointed out on his 2 questions, determine if you are on the same e-Commerce platform. If so, then determine if your price can compete with theirs. Of course, if you are not on the same platform then, it should be fine. If both are on the same platform vying for the market share then, try to strike a deal with your supplier. Convince them to level the playing field by imposing on strict MSRP. Suppliers usually would listen to their retailers since you are still a big chunk of their sales as typically, their sales channel still depends more on retailers. They do not easily allow to loose sales from you especially if you would be ordering in bulk with them.

Another strategy you can discuss with your supplier is to give you (retailers) an "exclusive selling opportunity". For instance, if you are on the perfume or electronics category, both sales channel can sell directly but for refills or accessories they would pass the opportunity to you. Meaning all the repeat buys, installation, accessory - it would only be their approved retailers who can cater. That way, it is a win-win situation for both parties if suppliers really can't help but do direct selling.

These are just my 2 cents though. ;)

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