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Originally Posted by fingers "In the short term its good for retail customers and for competition, but in the longterm, its bad for the industry."
Sorry im new to all this, but why is it bad for the industry if sites want to sell cheaper? And why do such sites not last very long? |
Damn, I wished I'd checked back on this thread back in september.
For what its worth:
One reason sites like that dont last long is because the ones who operate legitimatally (buy stock through the correct UK channels) are working on ridiculously low profit margins (often £1-2 a tub).
The other kind of site we have now are ones who import illegitimately directly from the states without the permission of the brands or the UK importers.
More often than not they are getting away without paying VAT and customs charges and so are getting the products very cheap. They can then sell the products at a cheaper price than everyone else but still make as much or even more profit. This is only a short term success though as once either the UK importers or the brands spot them doing it (e.g. as their profile rises) they will put a quick stop to it.
Why is this all bad for the industry:
1. Creates price wars - puts smaller retailers out of business. Many of these are somebodys' only living and what they use to put food on their kids plates and pay the rent - not an expendable side business to a regular job (which is what many of the sites I've been talking about are).
2. When customers can buy at wholesale prices online, how can gyms possibly sell products and turn profit when they are buying at the same price. Puts pressure on the gym part of the industry which is struggling enough anyhow.
3. Likewise how can distributors justify their trade prices to gyms when the gym could buy the product online for the same price. It brings the whole retail/wholesale/distributor price system crashing down. Even if the distributor offers 10% off trade price its still a tight margin.
4. Devalues the products to the customer. One a customer buys Elite Whey at £18 a tub then have to go back to paying £27.99 the next they feel they are getting a poor deal. This simply isnt true. £18 a tub is less than gyms pay in this country. With all respect, gyms should not have to pay the same or more than retail customers. Fair enough you can buy it at that price in the states, but everythings cheaper there as they have a richer economy than us.
5. If and when they do let customers down or stop trading threads like the one on muscletalk appear and the buying public's opinions of ALL online retailers drop. Most online stores are legitimate businesses, but if someone is scammed once online they will always be reluctant to shop on the web again.
I've been researching the industry in the USA a lot lately and the same thing happened there. The business became saturated with small online companies who brought the prices down to wholesale price and the end effect was that they put themselves and all but the biggest, richest companies out of business. Sure a few other online companies still tick along, but they are doing far less well for themeselves now.
The same is unlikely to happen here because there is a general rule in place not to sell at a price per tub of less than 20% off retail. And believe me this is well enforced - we've been on the receiving end several times ourselves (smacked fingers and all..).