Why going to dropshippers with MAP/MSRP is bad advice. (And almost destroyed America)

Discussion in 'Ebay' started by WaffleCheese, Jan 19, 2013.

  1. WaffleCheese

    WaffleCheese Registered Member

    Dec 1, 2010
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    eBay Guru and Owner of AuctionDebtEliminator.com
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    One thing I'd like to add to the eBay dropshipping conversation, and why I disagree and approach MAP and suppliers differently, is history.

    In the early days of the Internet, especially in the early days of ecommerce, warehouses and suppliers (even dropshippers) were popping up everywhere wanting to cash-in on the new channel of capital.

    They were signing up EVERYONE that came up to them telling them 'I have a website and want to sell your products'.

    Suppliers LOVED this. They were making sales in this new channel and profits were great.

    Welcome to the '.com Boom'!

    But then something happened -- the growth curve didn't line up with their sign ups. It had actually plateaued -- at first. And their retailers weren't happy. They weren't happy with all of the COMPETITION that came to be.

    Turns out 'everyone was selling items -- but no one was selling items'.

    And the RETAILERS (before the markets) demanded that the prices of the products go lower, and lower and lower because the retailer competition was fierce...

    Eventually - the supplier needed to discontinue a product here, and a product there, because those weren't profitable.

    Eventually, the supplier went out of business because this happened with ALL of their products in their line.

    Welcome to the '.com BUBBLE BURST' of the early 2000's.

    So the remaining, surviving suppliers did something (that remains unpopular today) -- the started charging membership fees to 'weed out' those 'online retailers' that are looking to just get in the game and are brand new.

    They more than likely won't make any sales -- but at least they will cash in on some member ship fees!

    But the SMARTER suppliers do something else. (And these are the ones I like to look at)

    They INTENTIONALLY INFLATE THEIR PRICES Or, they instigate something bogus called a 'MAP' price.

    This has the same purpose of a 'membership fee' (to weed out the newbies)

    But, they also have a LOT of 'wiggle room' in their pricing since the 'wholesale prices ARE negotiable'

    Have you ever gone to supplier and all they had were products and NO pricing? This is because they don't want OTHER retailers to see what their OTHER retailers get for those products.

    Of course pricing is negotiable based on the MARKET WORTH of the item LESS DEDUCTIONS.

    Now, MAP pricing isn't used to 'protect a brand' or to 'keep the market from being saturated'. Because a supplier still has a say in whom they sign up-- Markets have ALWAYS had control over pricing. Either people buy the item at that price -- or they don't. MAP/MSRP prices be dam*ed.

    If you go to a supplier, demonstrating an UNDERSTANDING of the markets - and then pitch them pricing BASED on the markets -- then they are a LOT more apt to work with you than if you approached them with this:

    "Hey, I'm looking to learn how to build a website selling your products"

    They tried that. And it caused a huge nation-wide recession.