has any factory ever done this ? for me i make some customized stuff on alibaba for fraction of the price of the same stuff that amazon or any retailer does.
why dont factories sell directly to consumers instead of relying on retailers, especially with globalization nowdays ?
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That’s what Temu and Alibaba do. I wish more US companies did.
Stability.
Dealing with retailers, that’s tens to hundreds of thousands of units sold, no questions asked.
Dealing directly with consumers, the numbers can fluctuate for any number of reasons.
Because the factories don’t own the product, they own the tools to make the product.
I’m not going to shop on Alibaba
Lego catalogue from the 90s
Direct distribution is difficult
Because they do not have the market research to know what consumers want made.
Apple, Tesla and iRobot (Roomba) sell direct.
In my case, our products are very complex, requires training, installation, maintenance, spare parts… Our chinese competitors ship over the same machine, and thats it… no support. You can buy them on Alibaba for 1/4 our our price. These sales usually dont go very well.
On spare parts – We have 7000+ machines in the field, if we allowed every customer to order direct from us, our shipping dept would collapse. Our dealers place 6 or 7 bulk orders a year, and they they stock the parts… usually $1million +
We sell through a trusted trained up dealer network with dedicated Tech support. They do the heavy lifting for us.
They don’t make bank on teh machine sale with their discount, but they will get 20+years of spare parts and service revenue.
If we we were selling blankets, then direct could make sense.
Specialization and efficiently. A lot of people still want to physically see certain products before they buy. That means physical sales locations everywhere you want to sell your product and all the expenses that come with it lease, insurance, utilities… and paying sales people to staff those locations. It means a different sales store in that same city for every brand.
Say I want to buy a refrigerator and I want to compare brands, that means going to the GE store, the Maytag store, Frigidaire, Whirlpool, LG… Half a dozen different brand stores with their own locations and own staff. Or I can go to Lowes and see all of them in one location, which Lows is able to do more efficiently than those other stores because of scale.
Selling direct to consumers would in theory make more money over an infinite period, but selling to retailers ensures big bulk purchases so even if they get less per product, they dont have ti have as much merchandise just sitting in a warehouse waiting to be sold. Its about volume of material moved, vs price per unit at a certain scale. Im sure theres a break even point and even a amount sold vs produced where direct to consumer is more profitable, but that would be for like mom and pop shops. After scaling up to probably more than 3-4 times that, it just makes way more sense to immediately offload the product in bulk. Quicker money is usually better if your selling high volumes.
Because a distribution shop can sell bulk loads cheaper (way cheaper) than individually selling products door to door.
Well right now factories just have to deal with production and not other stuff like long term storage, distribution, customer care (at least not on the same scale as now) etc.
Retailers already buy they products cheaply because they bulk buy. If factories were to sell to end-users for the same price they are already selling to retailers then it’s literally assuming a huge load of extra work for essentially the same income.
Amongst the many other reasons the one I can think of is retailers act as sort of curators of goods, getting rid of some of the chaos. Compared to a factory they have better research, marketing ability, etc.
There are some companies that own all levels and coordinate it but that requires significantly higher resources and know how
You can buy directly through Alibaba. It’s a hassle. Much prefer retailers.
Also you’d have to deal with payment. And so many people are terrible at paying.
Dealing with a retail shifts liability of payment default usually onto the final seller
That being said, net trading terms exist and consignment stock make it complex depending on industry.