Capri Wheeler Posted May 21, 2009 Share cause lets say you sell a an item to a shot at R400 Rand. You actually want the shop to sell it with little mark-upo because the less that the consumer is paying, the more will ultimately be bough and then re-ordered from the agent. If it is sold at a ridiculous mark-up, lets say R1500, then less will be sold at the shop and will not be oredering more from the agent. Then the agent losesd out Link to comment Share on other sites More sharing options...
LazyTrailRider Posted May 21, 2009 Share You got to ask are his margins sustainable' date=' or is he just trying to attract attention to his shop and messing with the market.[/quote'] And? Ever heard of the term "loss leader"? Anyone who's ever analysed Wal-Mart's success knows that Mr Walton attributed getting to $1 bilion largely to this strategy. Everyone I've ever known who's been really successful in retail (I'm not talking bike shops here, think a little bigger) understands that selling things at cost (or even at a loss!) can work wonders for traffic. It's each individual's capitalistic right to offer and/or ask for any level of value trade they feel fit, and have the market decide whether it accepts. Oh wait, I forgot, some people think Marxism makes sense. Link to comment Share on other sites More sharing options...
rad006 Posted May 21, 2009 Share oh just buy my mates bike for R3500 no price fixing here hahaha Link to comment Share on other sites More sharing options...
porky Posted May 21, 2009 Share And? Ever heard of the term "loss leader"? Anyone who's ever analysed Wal-Mart's success knows that Mr Walton attributed getting to $1 bilion largely to this strategy. Everyone I've ever known who's been really successful in retail (I'm not talking bike shops here' date=' think a little bigger) understands that selling things at cost (or even at a loss!) can work wonders for traffic. It's each individual's capitalistic right to offer and/or ask for any level of value trade they feel fit, and have the market decide whether it accepts. Oh wait, I forgot, some people think Marxism makes sense.[/quote'] Quite correct. Although I must say I dont have a clue what the OP is on about as its all rather vague, I will assume a retailer (Henlo??) sold him an item for substantially less than RRP, and now the distributor is threatening to cut off the retailers stock flow?? Before I make further comments, I just need to know if this is the OPs point. Link to comment Share on other sites More sharing options...
Stretch Posted May 21, 2009 Share selling things at cost (or even at a loss!) can work wonders for traffic. True Story: In Empangeni (northern KZN) Spar were promoting bread at a certain price. The corner store across the road, counteracted Spar by offering it at 5c less. this carried on an on for a while till Spar were at a point that they were making a loss, and they were selling the bread at less that what it cost to make. eventually the MD and the corner store had a meeting to plot a way forward. Not sure what the outcome was, but it turns out that corner store was simply buying the bread from the spar and incurring the 5c loss each time!! Why? FOOT TRAFFIC. Crafty bastard though! Link to comment Share on other sites More sharing options...
splat Posted May 21, 2009 Share Quite correct. Although I must say I dont have a clue what the OP is on about as its all rather vague' date=' I will assume a retailer (Henlo??) sold him an item for substantially less than RRP, and now the distributor is threatening to cut off the retailers stock flow?? Before I make further comments, I just need to know if this is the OPs point. [/quote'] The OP is also a bike shop. Link to comment Share on other sites More sharing options...
Captain Fastbastard Mayhem Posted May 21, 2009 Share Bwahahahaha!!! Awesome... as far as max prices go, as long as it's above the equilibrium price (what people are prepared to pay for a certain supply of product) then it'll be fine because the max price won't have any effect on the market. If, however, the max price is set BELOW the equilibrium price, then we'll see problems... More quantity demanded, but less quantity supplied at that price. Hence upward pressure on the price, it rises, and then they get slammed by the distributors etc, and lose the dealership etc etc... The only way (i can think of) that the guy here is in danger of losing his dealership, is that the distributors have set a "price band" that he can work in, and he's gone below that price. The act of going below that price isn't anti-competitive in itself, whereas the setting of a minimum price for the dealer IS anti-competitive, so if anyone should go to the CC, it's the distributor. So what if the guy is selling his bikes at cost, or even below? The distributor STILL gets the full amount at the end of the day, it's just that the shop is getting more clients than shop B... who will then most probably run a counter-special etc etc. At the end of the day, the price WILL go back up, as the shops will not be able to sustain such activity over a long period of time. Link to comment Share on other sites More sharing options...
fr0sT!e Posted May 21, 2009 Share Bwahahahaha!!!Awesome...as far as max prices go' date=' as long as it's above the equilibrium price (what people are prepared to pay for a certain supply of product) then it'll be fine because the max price won't have any effect on the market. If, however, the max price is set BELOW the equilibrium price, then we'll see problems... More quantity demanded, but less quantity supplied at that price. Hence upward pressure on the price, it rises, and then they get slammed by the distributors etc, and lose the dealership etc etc...The only way (i can think of) that the guy here is in danger of losing his dealership, is that the distributors have set a "price band" that he can work in, and he's gone below that price. The act of going below that price isn't anti-competitive in itself, whereas the setting of a minimum price for the dealer IS anti-competitive, so if anyone should go to the CC, it's the distributor. So what if the guy is selling his bikes at cost, or even below? The distributor STILL gets the full amount at the end of the day, it's just that the shop is getting more clients than shop B... who will then most probably run a counter-special etc etc. At the end of the day, the price WILL go back up, as the shops will not be able to sustain such activity over a long period of time. [/quote'] thanks for the lesson in economics 1A Link to comment Share on other sites More sharing options...
porky Posted May 21, 2009 Share Quite correct. Although I must say I dont have a clue what the OP is on about as its all rather vague' date=' I will assume a retailer (Henlo??) sold him an item for substantially less than RRP, and now the distributor is threatening to cut off the retailers stock flow?? Before I make further comments, I just need to know if this is the OPs point. [/quote'] The OP is also a bike shop. Ah-Ha - all makes sense now - my comment is moot then cos its just dealers and not the public involved.? Link to comment Share on other sites More sharing options...
porky Posted May 22, 2009 Share ' date=' and lose the dealership etc etc...The only way (i can think of) that the guy here is in danger of losing his dealership, is that the distributors have set a "price band" that he can work in, and he's gone below that price. The act of going below that price isn't anti-competitive in itself, whereas the setting of a minimum price for the dealer IS anti-competitive, so if anyone should go to the CC, it's the distributor. So what if the guy is selling his bikes at cost, or even below? The distributor STILL gets the full amount at the end of the day, it's just that the shop is getting more clients than shop B... who will then most probably run a counter-special etc etc. At the end of the day, the price WILL go back up, as the shops will not be able to sustain such activity over a long period of time. [/quote'] Not really, setting minimum and maximum pricing is considered anti-competitive, however there are ways around it. In the USA where the watchdogs are far more voiceferous and vigilant than here (with much greater penalties incurred for errant dealers) distributors got around a loophole in the anti trust laws (which the government is busy closing now) basically by saying they NEVER controlled the price of stock in the retailers possession, they ONLY controlled the price of FUTURE stock the dealer may purchase - sneaky huh, - basically leaving them the discretion to say "you sell at this price or we will simply increase our price to you dramatically for supply of any future stock, putting you effectively out of the market, or forcing you to increase your prices in alingement. Hense the move now to change the laws to remove this loophole, I stand corrected, (I think its called the Lehmann act- I will check) but I think over 7 states have already ammended the law, and distributors cannot SET PRICES in any form, especially in advertising, (where the biggest issue comes about as this is what the customer sees) the retailer retains full right to sell at any price he / she deems fit. Economics 2A - there will always be way around something, it just depends how far you are prepared to go to get there.! Link to comment Share on other sites More sharing options...
Captain Fastbastard Mayhem Posted May 22, 2009 Share so true... so true... these lines are often smudged by those who "know better", or, in our case, the trade unions who just do NOT seem to realise that the companies cannot afford the pay rises (in this particular period) that they are demanding, and if they strike, it just exascerbates the problem... there's my big word for the day. Link to comment Share on other sites More sharing options...
Captain Fastbastard Mayhem Posted May 22, 2009 Share Bwahahahaha!!!Awesome...as far as max prices go' date=' as long as it's above the equilibrium price (what people are prepared to pay for a certain supply of product) then it'll be fine because the max price won't have any effect on the market. If, however, the max price is set BELOW the equilibrium price, then we'll see problems... More quantity demanded, but less quantity supplied at that price. Hence upward pressure on the price, it rises, and then they get slammed by the distributors etc, and lose the dealership etc etc...The only way (i can think of) that the guy here is in danger of losing his dealership, is that the distributors have set a "price band" that he can work in, and he's gone below that price. The act of going below that price isn't anti-competitive in itself, whereas the setting of a minimum price for the dealer IS anti-competitive, so if anyone should go to the CC, it's the distributor. So what if the guy is selling his bikes at cost, or even below? The distributor STILL gets the full amount at the end of the day, it's just that the shop is getting more clients than shop B... who will then most probably run a counter-special etc etc. At the end of the day, the price WILL go back up, as the shops will not be able to sustain such activity over a long period of time. [/quote'] thanks for the lesson in economics 1A haha. haha. Thanks! Link to comment Share on other sites More sharing options...
GoLefty!! Posted May 22, 2009 Share Don't know much about Merida's policy on recommended retail and discounts LBS's are allowed to give and whether or not they have threatened Henlo. What I would say is before giving the Merida importers grief' date=' consider that they have kept their prices lower than most brands. If you compare their bikes to Raleigh equivalents, you will see that the new reduced Raleigh prices in many cases are still slightly higher than Merida's long standing 2009 prices. Not trying to take a stab at Raleigh, but what I am saying is Merida have kept the prices reasonable in 2009. Raleigh's new pricing is good especially on the Carbon HT's.That is at their RRP's. At present the best value for money bikes I have come across. On the Henlo topic, I think he probably ruffled a number of retailers feathers by advertising his stock of DS Merida's at such a low price. You got to ask are his margins sustainable, or is he just trying to attract attention to his shop and messing with the market. [/quote'] So what if he is "messing with themarket"? It's a free market not a regulated one and any strong arm tactics to get the retailer in line is anti competitive and therefore illegal. selling a genuine product for below its market value is not a crime. Thats just poor business practice and not sustainable but it's a great mechanism to get people through the door. Link to comment Share on other sites More sharing options...
AuctionLamb Posted May 22, 2009 Share It is simple...just don't buy here! If you put a bit of pressure on the market by not buying then prices will come down....Raleigh bikes is an example of that, it means that they can drop prices if people decide not to buy overpriced items. P.S: Big thumbs up for Raleigh for showing other agents how it's done!! Link to comment Share on other sites More sharing options...
AndreZA Posted May 22, 2009 Share So if I'm a shop owner I can not give my buddy a present buy selling him a bike at cost. Or I'm a new shop trying to get new clients and sell everything on opening weekend for cost + 5%. No wonder it's ex pros that normally open bike shops. They did not finish school but need to make a living so they rely on the importers to tell them how to run a business*. *this statement is not aimed at you that actually did finished school. Link to comment Share on other sites More sharing options...
Wyatt Earp Posted May 22, 2009 Share So if I'm a shop owner I can not give my buddy a present buy selling him a bike at cost. Or I'm a new shop trying to get new clients and sell everything on opening weekend for cost + 5%. No wonder it's ex pros that normally open bike shops. They did not finish school but need to make a living so they rely on the importers to tell them how to run a business*. *this statement is not aimed at you that actually did finished school. Sorry boet, I am going to ruk a jagwil here, are you shure you finished school Alas I agree with your post, besides the importers telling me what to do, I use my own discretion to what we do in our shop. Link to comment Share on other sites More sharing options...
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