MAP and MSRP practices of online resellers - Page 3

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shadowfax

#21: Post by shadowfax »

Wilco,

I don't think there's any need to self-deprecate your English skills. I have no trouble understanding you, nor do I think anyone else does. Your skill at a second language is impressive. Probably commonplace in your country, but always a mark of distinction in the US ;).

I can understand that you had intended to just discuss your grinder, which is a discussion I was certainly enjoying, but this is also a community of people with many different perspectives, so I am sure you can appreciate how some of us got our feathers a little ruffled by your initial comments. I also don't think that Chris was trying to put words in your mouth--when he said "Excuse me but BOTH companies DO NOT practice what you are referring to," he was talking about 1st-Line and EPNW that you mentioned, and his comment that he didn't was simply a statement of fact, rather than implying that you said something bad about him in particular. At least, that's how I understood it. I think he was sticking up for Jim and Terry when he asked you to apologize for saying (publicly) they should be ashamed of themselves.

I don't imagine that there's a lot more to be gleaned from this discussion, so I would certainly second a motion to return to the original thread on the K10.
Nicholas Lundgaard

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NoMilkToday (original poster)

#22: Post by NoMilkToday (original poster) »

Nicholas,

Thank you for supporting my motion :).
I understand your point. It could very well be that your interpretation of the saying of Chris is correct. If that is the case, then I think it is admirable he stood up for his fellow-competitors. Further, now I think about it, you are certainly correct by stating that the HB community includes people with many different perspectives (and beliefs). Therefore I can understand that my expression "they should be ashamed of themselves" can have a different emotional charge from an American perspective than I intended it to be. Possibly because - and I interpret now - there are no present American laws broken. Which would make the whole matter rather subjective, depending on everyone's own - respected - beliefs. And as, at least, our common belief is the love of coffee, let us indeed go back to this mutual topic.

Best wishes. Wilco

Phaelon56

#23: Post by Phaelon56 »

I would certainly second a motion to return to the original thread on the K10.
Easy enough to do - the original thread is still active and this is a split from that due to the divergence of discussion. I do think it's been worthwhile to have this sidebar discussion because there are many people here in the US and far more overseas who aren't aware of the challenges retailers face in advertising the true prices of certain products.

I'm old enough to remember the "Fair Trade Laws" - which were anything but fair:


http://legal-dictionary.thefreedictiona ... Trade+Laws

They were ruled unconstitutional by the federal government in 1975 but some manufacturers are still finding ways to get around that. I have a friend who was selling Chanel No. 5 perfume in his discount cosmetics and beauty supply store for 10% less than the department stores charge. He wasn't advertising his price and the sales were not online (this was in the late 1980's). Chanel found out and suddenly the distributor he was buying from began to back-order 90% of everything he ordered... until he raised his price to the "suggested" selling price when his supply magically re-appeared and the back-orders stopped.

IMAWriter
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#24: Post by IMAWriter »

yes....I agree. Back to the original post!
It was a good one.
Rob
LMWDP #187
www.robertjason.com

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another_jim
Team HB

#25: Post by another_jim »

Ken Fox wrote:Jim Schulman and I DID get a "better" deal than the listed suggested price when we bought our two grinders together more than a year ago. ...

... A good dealer, like Chris, offers something in exchange for not selling his goods at his own cost (which would of course put him out of business rather rapidly, to say nothing about what it would do to his golf club membership :mrgreen: ). Chris offers service and he stands behind what he sells.
It's my understanding that there is an exclusive US importer who sets the prices Chris and other retailers will pay. Before this deal was made, Compak grinders were beginning to sell to cafes and enthusiasts; afterwards not so much.
Jim Schulman

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Stuggi

#26: Post by Stuggi »

shadowfax wrote:If I make a product, and you want to sell it, why shouldn't I be able to tell you, at a minimum, what to sell it for? If you don't like it, maybe you should buy something else, rather than complain to the government?
If you make something, and I want to sell it, in a fair market, I buy it from you at whatever price you put on it for me to buy it, and I sell it at whatever price I want to sell it for, profit or loss. Other markets do it this way, why can't the espresso market do this as well? People would laugh their butts off if they saw a MAP or MSRP on bolts and nuts.

But, I personally think the MSRP are just a lot of bullsh**, an imaginary number since nothing sells for that price anyway, and MAP is just another way for manufactures to make a little bit more money and keep their MSRP's seeming realistic.

And I also agree on you that the government should not baby consumers, and crap like the above should be weeded out by the markets themselves, but since this crap benefits the manufacturers this isn't likely to happen, so laws are probably the only way to do it.

That's all from me on this industrialized country problem, Good Night and Good Luck! :)
Sebastian "Stuggi" Storholm
LMWDP #136

zin1953

#27: Post by zin1953 »

Stuggi wrote:. . . I personally think the MSRP are just a lot of bull, an imaginary number since nothing sells for that price anyway, and MAP is just another way for manufactures to make a little bit more money and keep their MSRP's seeming realistic.
Stuggi,

I am not trying to Image -- honest. But you are still wrong about MSRP and MAP.
Phaelon56 wrote:I'm old enough to remember the "Fair Trade Laws" - which were anything but fair
Me, too. And Fair Trade ruled the the wine industry in California for about 1/3 of my career. I also remember when Fair Trade ended, and everyone predicted the death of the "mom-and-pop" liquor store/wine shop in the face of Liquor Barn . . . guess which one failed?

Stuggi, you think "nothing sells for [MSRP] anyway," but this is far from the truth. Unlike Europe, where the cheapest price on a bottle of wine can often be found at the winery, virtually every winery in North America sells at the MSRP -- or, as I mentioned above, the WSRP. So, too, do MOST "small" items . . . candy bars, toothpaste, paper plates, etc., etc. Remember than nothing prevents a retailer from selling below MSRP, and some do constantly, others do occasionally (think of a store having a sale), and some never do -- it all depends upon the specific retailer, and his/her internal policies. In other words, pricing is up to the retailer. Sometimes, the supplier will offer incentives to lower the retail price (e.g.: a discount for buying 10 cases; a "co-op" allowance that pays the retail $X for every unit sold, thus making up all or part of the difference between the MSRP and the retailer's actual sale price (Note: this is illegal in some states, and on some categories of merchandise -- alcohol, for instance); and so on . . .

When Fair Trade existed, it was illegal to sell below the MSRP. Now, not every item was subject to Fair Trade laws, and not every state. But, for example, alcoholic beverage sales in California were covered by Fair Trade laws for years! And it was illegal to sell below the Fair Trade price that was posted with the California Department of Alcoholic Beverage Control (ABC) by either the producer, the wholesaler, or the importer. Undersell the posted price, and the ABC could fine you, close you down for 30 days, or revoke your license to sell alcoholic beverages permanently (for repeated violations). Eventually, a challenge to the Fair Trade system was successful in court, and all this vanished.

The "replacement," if you will, was the manufacturer attempting to re-impose a sort of Fair Trade restriction, but without government backing or enforcement: the MAP. As you already know, you "cannot" advertise a lower price, but you certainly can sell at a lower price! Most major electronics manufacturers -- Sony, Canon, Panasonic, Phillips, Minolta, and Nokia, to name but a few -- employ MAPs, to a greater or lesser degree: part or all of their line will be covered . . .

The question is whether or not the price you see in an ad is a MAP, and how do you know? Some retailers (both online and at "brick-and-mortar" stores) will flat-out say, "Hey! Consumer! See this price? It's a MAP, and if you want a better price, just call me." Some websites get around MAPs by saying they cannot show you the actual price until you put the item in your "shopping cart" -- but you can always delete it if you don't like the price. (Lots of electronics stores do this.)

Keep in mind, too, that there is little-or-no culture of negotiating a better price with a vendor in the US the way there is in, say, parts of Africa or Asia. The only price regularly "ignored" by Americans is the MSRP of a new car. In that instance, MSRP is simply the point at which one begins negotiating a lower price.

Cheers,
Jason
A morning without coffee is sleep. -- Anon.

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zin1953

#28: Post by zin1953 »

In the "other" thread (Compak K10 WBC Grinder User Report), Jim Schulman wrote:
another_jim wrote:Sadly, their US importer is currently not making this model available at even a remotely reasonable price, the US MSRP is about 60% higher than in the rest of the world. So I suspect that other commercial conicals grinders will be the norm in the US market.

Quite frankly, I don't understand how espresso manufacturers regularly end up destroying themselves like this here in the US. Cimbali and Reneka are two more examples -- they own large chunks of the market everywhere on the planet except the US, where they are not a factor, since their importers add medieval level markups.
This is exactly how the grey market got started in the wine trade, and how that helped bring an end to Fair Trade.

The Champagne house of Moet & Chandon (M&C), the makers of Dom Perignon, had an exclusive US importer (Schefflein & Sommerset) that was, in fact, owned by Moet & Chandon's parent company, Moet-Hennessey. They took a huge markup (like Compak USA, Cimbali USA, etc.), and then resold the wines to wholesalers across the country. As a result, it was MUCH cheaper to buy Dom Perignon in, say, France, Italy and the UK than it was to buy it in the US.

A gentleman by the name of Bruce Shipman began buying Dom Perignon (at retail!) in Europe and importing into California, for sale to retailer and restaurants here. At a time when Dom was $60+, I could retail it for $33 and make a profit!

Schefflein & Sommerset (S&S) sued, claiming they had a contract with Moet & Chandon which gave them the exclusive right to import Dom.

The court, however, ruled that Shipman did not violate the exclusivity of the contract. The contract existed between M&C and S&S -- and that no one but S&S could purchase wines from M&C and import them into the US. But, the court said, Shipman did not do that; he acquired the wines via other sources and imported them. He had no direct dealings with M&C, and therefore did not violate the contract.

That legalized the grey market, and soon the price differential vanished!

Jim . . . one can only hope!
A morning without coffee is sleep. -- Anon.

Ken Fox

#29: Post by Ken Fox »

To my knowledge, Cimbali does not have an exclusive "US Importer;" they have a number of importers/distributors, of which one is TJ who has posted here on HB on occasion. TJ is the importer who provides Chris with his Cimbali products. There are other Cimbali importers/distributors who sell to other dealers located in other geographic areas.

There is a company called "Cimbali USA," but they are not the Cimbali importer for the country, rather they are a business located in Florida, which has the "national accounts" business. This means that they sell to large chains such as Darden Restaurants, Disney in their various resort locations, McDonalds, etc. etc. etc. To my knowledge, an importer/distributor such as TJ (and the other ones) deal directly with the Cimbali company in Italy, not through "Cimbali USA."

Al Critzer, who has occasionally posted here and used to post frequently on AC, was at one time an employee of Cimbali USA, working with their national accounts customers. He described their market niche both online at AC and to me personally by email, in the distant past. In addition, the pathetic "cimbaliusa.com" website, assuming it still exists, describes their business operation.

I don't know who sets the prices for Cimbali products at retail. If anyone actually does this, I sincerely doubt that it is "Cimbali USA," who to my knowledge has no presence in the USA retail business, at all. There might conceivably be another company who provides this function, but in this context "Cimbali USA" is a misnomer.

If I had to guess, I would say that the retailers take their cost(s) on an item, then apply the "trade standard" markup, and then quote that as the MSRP. The actual price you will pay will depend on whether or not you choose to negotiate with the retailer; if not, you will pay the asking price.

If any of the above is incorrect, I would be happy to be corrected.

ken
What, me worry?

Alfred E. Neuman, 1955

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another_jim
Team HB

#30: Post by another_jim »

I think Cimbali has changed in the last few years, and their prices are more in line now. But in the late 90s and early 20s, their prices were completely out of line, far higher than in the rest of the world. My understanding was that this was due to unfortunate import deals.
Jim Schulman