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What’s In A Name? Try A 20% Discount

As every experienced merchant knows, buying merchandise from suppliers for resale to the public is not as simple as it seems.

Too often the price that the reseller pays depends upon how he defines his business. The law may require that two retailers purchasing the same quantities of a product and receiving exactly the same services (co-op ad dollars and the like) be charged the same for the purchase — but you’d be surprised what a difference a title can make.

Take the terms “retailer” and “builder,” for example. Over the years I’ve discovered in both the consumer electronics and home appliances businesses that buyers who call themselves builders often pay as much as 20 percent less for the same merchandise and services as the traditional dealer does.

As someone dedicated to fairness in the marketplace, this raises the question of how to put an end to such discriminatory practices. The response to my complaint to the Federal Trade Commission several years ago was that because “builders” and “retailers” are a different class of customer, price differences are perfectly legal.

When it comes to dealing in kitchen or laundry appliances, or surround sound installations, differences in the way these two classes of trade do business remain unclear. Does this mean that to qualify for the lowest possible cost of goods a dealer should arrive at his supplier’s office dressed in overalls, accessorized with a hammer hanging from his hip? Perhaps it would also aid his negotiations if he shows up in a pickup truck rather than a car.

Surely this sort of discrimination does not apply to all suppliers. However, it is present often enough to make one wonder why there haven’t been more complaints from regular dealers. The answer, I’ve found, lies in the power of the brand franchises, for both products and stores, that most retailers view as a partnership between themselves and the manufacturers.

In addition, there are just enough suppliers who play by the rules so that dealers do have a choice with whom they do business.