Question

Topic: Strategy

Ethics Of Using Wholesale Pricing To Your Advantage

Posted by Anonymous on 50 Points
I am in a position to get a wholsale price for a popular product. Knowing that the product is sold to other wholesalers and also direct to the public with a higher markup, is it ethical that I could sell the same product for a lower amount than other wholesalers, in order to increase my sales?
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RESPONSES

  • Posted by adammjw on Accepted
    rogcart245,

    This not only the question of ethics, but also common sense.
    How long you think your increased sales would last? To me not too long.You would simply erode the market structure as it is now where everyone forming the sales channel has to fit in its place, make a living and do their best to grow.
    I do not think you could do it long enough to as your buying source would dry up pretty soon.
    If you really want to compete use your brains creatively to make yourself different in the way you sell people on the idea the product can meet people's expectations and needs or address an untapped market niche which has not been addressed properly.
    And as to your question- unethical- yes.

    Adam
  • Posted on Author
    Thanks Adam. I am trying to use my brain creatively, though at the moment I am only exploring ideas, which is why the question was very basic. Here is another:
    If it is unethical to go below a regular wholsale price, would that amount to being a price fix?
    How do supermarkets (as an eg.) say sell a brand of coffee cheaper than their competitor, if they have the same wholesale price to start with?
  • Posted by adammjw on Accepted
    What Paul says is a bit different story where wholesalers get different prices on the same product and then they play their game. If I understood you right you mean same wholesale price and reselling it under the market price.
    As to the example you gave pls bear in mind that supemarkets or hypermarkets- you name them, sell heaps of products and not this one only.Trying to attract and lure consumers they play the game where some of the stuff they sell are simple traffic builders like coffee in your story.

    Adam
  • Posted on Author
    Thanks to all. I would like to keep this open for now.
    The product that I have in mind is one that I am involved with as a producer. Over many years I have been stung by intermediates and that's why I am looking into ways to sell directly similar products at a lower rate than a general wholsaler, but making sure the producer gets the normal price or better.
  • Posted by michael on Accepted
    It seems that you are thinking about eliminating a "middleman". I say go for it, unless by doing so you'll destroy your distribution channel. Can you really handle all the business yourself?

    I'm a strong believer is offering the best cost solution...note I didn't say price. Be sure you're making money or you're wasting your time. You'll be out of business and price will creep back up and your intermediates won't carry your line anymore.

    Michael

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