If you own a knife selling website, please read this

[Knife Outlet]

Skelton, I guess I need to elaborate. MAP programs aren't contracts. They are done unilaterally by the manufacturer. Noboby has any choice in the matter. It is completely legal since around 1989 or so when the Supreme Court ruled in favor of Proctor and Gamble's MAP policy. Prior to that it was considered price fixing but the Supreme Court fixed that.

Telling a dealer what selling price he can use is still considered price fixing. Telling him what price he can advertise is not. I'm not sure I understand the logic of that but, apparently, the justices do.

What the manufacturers do is simply announce it and take retribution against those who do not comply. Currenly, all kinds of knife companies have MAP programs but very few of them are enforceable. They are enforceable only by those companies who sell exclusively and directy to dealers. A good example of that is Benchmade. if a Benchmade dealer fails to comply with the policy, Benchmade will eliminate their dealership. They simply stop shipping products to that dealer. An example of one that is not enforceable is Leatherman. Dealers have many sources for Leatherman products other than Leatherman so there isn't much Leatherman can do unless and until they alter their distribution channel. Apparently showing the complainers good effort is good enough for them.

To me the most curious aspect of the whole thing is that it flies in the face of the economic law of supply and demand. When prices go up, volume goes down and vice versa. That's true of any product in any competitive environment. Since it is the dealer's prices and not the manfacturer's prices that are affected by MAP programs, those programs always reduce the manufacturer's sales and profits. It goes to show you how far some manufacturers will go in their quest for appeasement. It is truly amazing.

If a manufacturer loses some dealers because of a policy, that doesn't affect sales much. The remaining dealers pick up the slack. But if the manufacturer causes prices at the retail level to rise overall, that definitely affects sales by putting them at a competitive disadvantage. I'm not privy to their numbers but the laws of economics tell me Benchmade would sell more and make more money without their MAP policy. I'm sure they would disagree. However, they would be wrong.

While not good for consumers or manufacturers, MAP programs are good for dealers. What happens in the real world is that a dealer decides to take market share from other dealers by lowering prices. That results in the other dealers meeting or beating the prices. Then things reach some sort of equilibrium with everybody making less money. Another round ensues, prices go lower again. Dealers make even less money. The manufacturers think they can "save" the dealers by putting in MAP programs so the dealers have to compete with something other than price. It never seems to work out very well.

Competition is the lifeblood of the American capitalist system. Whenever the government or a well meaning manufacturer inhibits competition, the results are usually more bad than good.

The best thing consumers can do is to buy products from manufacturers that don't have MAP programs. That is the only thing consumers can do about it. They can vote with their wallets. This is one law that is contrary to the best interests of consumers and the private enterprise system. They can take it or leave it. The dealers don't have any choice. I'll get off my soap box now. Thanks for listening.

 

[Cougar Allen]

Well, if anybody is interested in understanding what motivates some manufacturers to use MAP programs ...

There are two kinds of dealers: brick & mortar stores, and mail-order dealers. (Whether mail-order dealers advertise on the net, in magazines, by direct mail, with or without making paper catalogs available, might be significant, but it probably isn't very.)

Manufacturers often find they do most of their sales through brick & mortar stores, and little through mail-order dealers.

The owners of brick & mortar stores often complain to manufacturers, "People are coming into my store with newspaper ads / direct mail flyers / printouts from that internets thingie and telling me somebody else is selling the same stuff for a lot less than I am! I can't match those prices or I'll go broke! You gotta make them stop advertising such low prices! If you don't make them stop I'm going to have to stop selling your stuff, because I can't sell it at a profit."

If a manufacturer makes, say, 90% of their sales through brick & mortar stores, and they are getting a lot of complaints, and some stores are dropping their product (whether they complained first or just dropped it without saying a word, who knows why they did it) ... a MAP program starts looking like it might be a good idea.

Since it is the dealer's prices and not the manfacturer's prices that are affected by MAP programs, those programs always reduce the manufacturer's sales and profits.

That's an assumption. The manufacturers could assume that, or they could assume if they lost a lot of their brick & mortar stores they would lose a lot of their sales and profits -- and it's hard to tell which assumption would turn out to be right before you try it.

If a manufacturer loses some dealers because of a policy, that doesn't affect sales much. The remaining dealers pick up the slack.

That's another assumption. Maybe so. Or maybe if they lost 30% of their brick & mortar stores the remaining dealers would only pick up half the slack and they would lose 15% of their sales. Or more, or less. Economics is not an exact science. So far economists have done a lot of guessing and modeling, not a lot of experimenting.

But if the manufacturer causes prices at the retail level to rise overall, that definitely affects sales by putting them at a competitive disadvantage. I'm not privy to their numbers but the laws of economics tell me Benchmade would sell more and make more money without their MAP policy. I'm sure they would disagree. However, they would be wrong.

Well, no. The laws of economics don't tell you that. In fact economics is pretty short of laws. Economics has a lot of surmises, conjectures, assumptions, not a lot of known laws.

Would a manufacturer sell more and make more money without a MAP policy? Maybe so, maybe not. Nobody knows until they try. If, say, half a manufacturer's sales are through mail-order dealers, it's pretty easy to tell brick & mortar dealers, "Sorry, can't help you. If you can't sell our stuff at a profit, well, there are others who can." If 90% of a manufacturer's sales are through brick & mortar dealers, it's not so easy to protect the 10%. Even then a MAP program may not be the best strategy for a manufacturer, but nobody knows for sure, all any of us can do is guess, and it's not easy to gamble with 90% of your business.

MAP is probably a temporary phenomenon. The economy is changing, more and more retail sales are going to mail-order and to discount stores like Walmart that follow the same kind of pricing/volume strategy. The time may come when no manufacturer does most of their business through traditional full service full price brick & mortar stores. In fact, that kind of store may die out completely.

For now, though, some manufacturers figure their best short-term strategy is to use a MAP program -- and it's hard to argue with them. You can tell them you think they're wrong but you can't prove they're wrong.

 

[jskelton]

Excellent and detailed responses. Many thanks for enlightening those of us not in the industry as to how things are done, it has been very educational.

 

[Knife Outlet]

Cougar, you make some good points. Let me try to put your comments into perspective. If you refer to B&M stores as cutlery specialy stores, it is fair to say they are on their way out pretty quickly. All of them will have to embrace the internet eventually.

If you mean chain stores like Walmart or Cabela's then it is important to note that the manufacturers handle these guys by giving them lower costs so that they can compete and be profitable. I know of manufacturers who sell to these guys at costs lower than they sell to wholesale distributors.

So I believe these arguments are specious. if the manufacturers are trying to protect specialty cutlery stores, they are fighting a losing battle and they know it. They are already protecting the big guys.

Sorry but there are some economic laws. If a manufacturer raises prices, volume will go down - every time - no exceptions in a stable competitive environment. He may still make more money because the added gross profit might make up for the profit lost in the volume decrease. However, if his prices remain the same but his dealers prices increase, his volume will go down - every time - no exceptions in a stable competitive environment. So will his profits. There isn't any way around it. Yes, he might lose dealers. Yes that might make matters even worse but read on.

I'll give you a couple of real life examples. I'm not suggesting they are indicative of every situation but they are the only ones I know about personally and they showed consistent results.

Compaq computer, when it was in the dealer business fired its largest dealer called Businessland because Businessland was giving them short shrift on marketing because they wouldn't bend to the company's demands for lower costs than their smaller competitors received. Everyone thought it would be a disaster for them to lose the largest dealer they had. Turned out to be exactly the opposite. The other dealers not only took up the slack but took up more because they had been rid of a giant competitor. I worked for Businessland at the time, by the way. Businessland is long gone. Compaq is now a unit of Hewlett Packard.

In the cutlery industry, Wusthof Trident installed a MAP program in 2006. They enforced it with teeth of steel and dropped two huge retailers for violations. One of them was Amazon.com. Everyone thought that would hurt them. It didn't. It worked the same way it did with Compaq in the 1990's. I remember the conversations with a worried sales rep. He doesn't worry any longer.

In other words there is good precedence for the fact that having more dealers doesn't always result in more sales and vice versa. In mail order and internet, having fewer dealers is probably preferable. With retail stores, having more is obviously preferable. That is the reason I said losing dealers isn't necessarily a bad thing.

So it gets down to the perspective from which you view the whole issue. As an internet merchant, I can deal with it either way. If I can earn more gross profit from a MAP program that is enforced, then that's dandy. After all, the purpose of MAP programs is to help dealers make more money. If people want to duke it out with low prices, that's OK too because I have lower overhead than most and I can deal with it. In other words, my operation is competitive. Those of the complainers are not as competitive. That's really the nuts and bolts reality of the whole thing.

I'm a believer in letting the marketplace make the decisions. I'm an old fashioned capitalist, I guess.

Is MAP a temporary phenomenon? I don't know. I remember back when it was call "fair trade" in the 1960's. It keeps coming back every time the law dampens it. It seems to be natural for people to want to control others. I'm not so sure that will change any time soon.

 

[Liveitloud]

I agree with your list but especially with the one about calling for price. It's ridiculous and I won't do it. I'm on the web for convenience and having to jump through hoops to get a good price is not something I am willing to do.

Kinda reminds me of those stupid plastic cards you have to give the checker at the grocery to get the discounted price. How about I go to Walmart for my groceries where I can get the discount without having to dig through my wallet.

The whole MAP policy thing is going to end up causing certain companies to lose money rather than pick up sales and I personally can't wait for it to hit them in their bottom line. This does not help the customer...you know, the one that buys your product.

I have seen some on line sources use discount codes to get around the issue and although it shouldn't be necessary it's an alternative. Personally the thought of setting minimum pricing has me so turned off that I choose to no longer purchase from those manufacturers.

 

[TKAZ]

Hey my friend, first I would like to say I hope your well and healing fast, hopefully you'll be on your feet in no time. and second, thank you for starting this thread. it's not easy to create a site and please everyone but with visitors like yourself and the other members that post here it can help to at least get an idea what it is that you like and dislike about knife sites and with that we can try to make changes to better serve you and the other visitors.

OUT OF STOCK ITEMS - my site has around 18,000 products with over 5,000 knives to choose from. I have my site set up so my supplier/s upload their new products to my site every day and/or remove out of stock items. I recently found out that that drastic change to the site everyday was causing issues with SEO (Search Engine Optimization) which is how google, yahoo, bing and the other search engines find my site when you type in a product or brand. so changes had to be made. that's just one of many many reasons that was changed.

One other reason is, I recieve about 20 emails a day minimum from visitors asking about certain items that I don't carry. some customers would write "I noticed you carry such and such item but so and so but I don't see the other item from so and so" and I did some checking and what I found out was my supplier/suppliers have items from brands that don't sell as much as other items from the same brand. these items are known as "C" class items. Items in the "A" class and the "B" class are always kept in stock and ready to be shipped. the "C" class items are only ordered or made when a order is placed, so these items are not uploaded to my site.

based on my emails to customers as well as questionaires that I send to customers I found out they wouldn't mind waiting just a little bit longer than the usual 3 to 6 days for their oder to arrive providing they know and are aware of the delay due to this special ordered item. one of the most important rules in business is comunication, you must at all times keep open and honest comunication with your customers. I have on my FAQ page on my site info for the customer regarding the ordering of "out-of-stock" items and always follow up with emails so that customer knows what to expect at all times and of course all products are shipped with tracking numbers.

AS FOR ENLARGING PICTURES - I agree 100% with you! this also drives me crazy at times. I know that a very large number of my products on my site will enlarge when you click on them but I also know there are some that will not. this issue is always being adressed and worked on. for multiple reason when I get the daily or weekly upload of products from my suppliers they don't include at times a picture at all let alone a good one. and also they sometimes won't include the product specs and descriptions. I have to visit the site that the product is from and copy pictures and specs to then place on my site. it's a very long and time consuming method but it's worth it. I can only use the pictures that my suppliers have or give me. many times there are things I can do but at times my hands are tied.

I myself shop on line all the time and never step a foot in stores anymore and when I'm on a site and I don't see a picture or a bad one at that or there is no info then there is a real good chance I won't buy and just move on. if I won't buy because of this then I don't expect my customers to buy from me for the same reason.

AS FOR PRICING, MAP AND MSRP - All products that are uploaded to my site by the brands and/or suppliers have the prices set already, they are often set at what they feel is a good selling price which is usually higher than what I think is good and fair. It's a business and I'm in this business for the love of what I sell and to make a living but I'm not out to rip anyone off. there's no reason I can't give you a good fair price and make a few bucks from the sale and you get that great knife or gear you have been looking at.

I can and do almost everyday lower prices on items but there are items, not many but there are some that have the MAP (Minimum Advertised Price) that can't be touched, If I were to lower that price and the brand/maker was to see or catch me I would lose my account and not be allowed to sell that brand any longer. I don't care what anyone tells you, they do look and watch every now and then to see what your selling the item for or how your displaying that item. they will shut me down and there is nothing that could be done about it.

AS FOR THE "CALL FOR PRICE" - I don't do this, I don't understand why others do! I will never understand this method of selling.

Thank you for starting this thread, input from you and all the other members really is priceless. since I have become a member here I have sold many items to memebers and have created a great relationship and I speak for all the dealers and makers here that your business is very much appreciated and we will continue to try to improve our way of doing business to better serve you our customer. Based what I have read in the threads I can say for all dealers and makers here that your satisfaction is the upmost importance to us and your time and insight is invaluble and we all hope that we can continue to serve you. Thank You.

 

[LorenzoL]

Cougar, you make some good points. Let me try to put your comments into perspective. If you refer to B&M stores as cutlery specialy stores, it is fair to say they are on their way out pretty quickly. All of them will have to embrace the internet eventually.

If you mean chain stores like Walmart or Cabela's then it is important to note that the manufacturers handle these guys by giving them lower costs so that they can compete and be profitable. I know of manufacturers who sell to these guys at costs lower than they sell to wholesale distributors.

So I believe these arguments are specious. if the manufacturers are trying to protect specialty cutlery stores, they are fighting a losing battle and they know it. They are already protecting the big guys.

Sorry but there are some economic laws. If a manufacturer raises prices, volume will go down - every time - no exceptions in a stable competitive environment. He may still make more money because the added gross profit might make up for the profit lost in the volume decrease. However, if his prices remain the same but his dealers prices increase, his volume will go down - every time - no exceptions in a stable competitive environment. So will his profits. There isn't any way around it. Yes, he might lose dealers. Yes that might make matters even worse but read on.

I'll give you a couple of real life examples. I'm not suggesting they are indicative of every situation but they are the only ones I know about personally and they showed consistent results.

Compaq computer, when it was in the dealer business fired its largest dealer called Businessland because Businessland was giving them short shrift on marketing because they wouldn't bend to the company's demands for lower costs than their smaller competitors received. Everyone thought it would be a disaster for them to lose the largest dealer they had. Turned out to be exactly the opposite. The other dealers not only took up the slack but took up more because they had been rid of a giant competitor. I worked for Businessland at the time, by the way. Businessland is long gone. Compaq is now a unit of Hewlett Packard.

In the cutlery industry, Wusthof Trident installed a MAP program in 2006. They enforced it with teeth of steel and dropped two huge retailers for violations. One of them was Amazon.com. Everyone thought that would hurt them. It didn't. It worked the same way it did with Compaq in the 1990's. I remember the conversations with a worried sales rep. He doesn't worry any longer.

In other words there is good precedence for the fact that having more dealers doesn't always result in more sales and vice versa. In mail order and internet, having fewer dealers is probably preferable. With retail stores, having more is obviously preferable. That is the reason I said losing dealers isn't necessarily a bad thing.

So it gets down to the perspective from which you view the whole issue. As an internet merchant, I can deal with it either way. If I can earn more gross profit from a MAP program that is enforced, then that's dandy. After all, the purpose of MAP programs is to help dealers make more money. If people want to duke it out with low prices, that's OK too because I have lower overhead than most and I can deal with it. In other words, my operation is competitive. Those of the complainers are not as competitive. That's really the nuts and bolts reality of the whole thing.

I'm a believer in letting the marketplace make the decisions. I'm an old fashioned capitalist, I guess.

Is MAP a temporary phenomenon? I don't know. I remember back when it was call "fair trade" in the 1960's. It keeps coming back every time the law dampens it. It seems to be natural for people to want to control others. I'm not so sure that will change any time soon.

I just realized I agree with 99% of what you say, and believe me, that rarely happens.

 

[the kid]

You make excellent comments.

I like to add shipping cost to your price section as well.
Best is a clear button which leads to a page with the shipping costs and options.
Having to email to get to know the shipping cost for each individual knife is crazy and I don't see why anyone would do it.

Also include WHERE you ship; international, US only, etc.

Seeing the shipping cost after putting an item in the basket but before having to register is acceptable to.

I also am annoyed most websites don't even list what country they are based, I just have to assume your .com website is US even though .com can be used by any country.

-Not being able to sort by price, manufacturer etc.

-No clear paying options like Paypal, Ideal, credit cards etc.