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Aggregated retail is beneficial to both consumers, because they have a many competitive locations, at each of which then can buy many varieties of good. Similar

Aggregated retail is beneficial to both consumers, because they have a many competitive locations, at each of which then can buy many varieties of good. Similarly this benefits manufacturers, as they can specialise in manufacture rather than retail. Such aggregation increases the efficiency of the economy. Limiting retail would therefore decrease global efficiency, going against the principle that taxes should not incentivise inefficient behaviours.

lotsofpulp 6y ago
I wasn't specifically referring to the concept of exempting resellers from paying sales tax for items they are reselling. I was questioning the problem of manufacturers selling directly to customers. I prefer to cut out as many middlemen as possible nowadays, in order to ensure the highest probability of getting the highest quality product. I know Walmart gets lower quality products than other places and whatnot, and manufacturers make subtle adjustments to products to meet resellers' desired price points. So now, I just buy directly from the brands whenever possible (and definitely not from Amazon for anything high value). I trust Costco's items to have been better vetted and especially Kirkland Signature branded items to be decent, as well as Apple and maybe Nordstroms.
- bearbin 6y ago
  Indeed, there's nothing _wrong_ with direct-to-consumer sales and there are certainly some advantages as a purchaser - not least avoiding any chance of getting counterfeit goods. But there are certainly downsides too. Especially with the advent of internet shopping, improved delivery speeds, and reduction in cultural inertia, going direct has become more convenient. That said, while DTC shopping may be _more_ convenient than before, it's still noticeably _less_ convenient than retail shopping. This is displayed by the overwhelming preference of consumers for such resellers as Amazon (the likes of which take an extortionate fee, and provide very little for the consumer beyond a single storefront, fast postage and financial trustworthiness). > I know Walmart gets lower quality products than other places and whatnot, and manufacturers make subtle adjustments to products to meet resellers' desired price points. This, and more generally the market data held by retailers, is also a benefit of retailers. By aggregating information about purchases of many different consumers over many different brands, retailers are able to drive product development towards products they know will sell even if these preferences will not be expressed directly by consumers or manufacturers. To summarise, going back to your original point: > What's the problem with [manufacturers selling direct to consumers] Manufacturers know how to make things, they don't know _what_ things to make, or how to sell them to consumers. An market where only DTC sales were allowed would have products that consumers generally want less than they do now, with worse service.
  - bearbin 6y ago
    Actually, I realise there is another point here, namely the distinction between manufacturer, brand and retailer. Brands are somewhat confusing to analyse: a brand may manufacture its own products, or it may buy them in; a brand may sell its own products, or it may leave this to conventional retailers. In its purest form the brand does neither and simply exists to advertise itself and collect rent from other market participants. Generally, it seems that pure-play brands, and DTC sales by manufacturers, are fairly rare, while brands that also sell products to consumers, or that manufacture their prducts are the most common. So it seems that in reality, neither total specialisation as a pure-play brand nor as a triple-play fully vertically integrated brand is efficient, but instead some combination of branding with another function is optimal.

lotsofpulp 6y ago

I wasn't specifically referring to the concept of exempting resellers from paying sales tax for items they are reselling. I was questioning the problem of manufacturers selling directly to customers. I prefer to cut out as many middlemen as possible nowadays, in order to ensure the highest probability of getting the highest quality product. I know Walmart gets lower quality products than other places and whatnot, and manufacturers make subtle adjustments to products to meet resellers' desired price points. So now, I just buy directly from the brands whenever possible (and definitely not from Amazon for anything high value). I trust Costco's items to have been better vetted and especially Kirkland Signature branded items to be decent, as well as Apple and maybe Nordstroms.

bearbin 6y ago
Indeed, there's nothing _wrong_ with direct-to-consumer sales and there are certainly some advantages as a purchaser - not least avoiding any chance of getting counterfeit goods. But there are certainly downsides too. Especially with the advent of internet shopping, improved delivery speeds, and reduction in cultural inertia, going direct has become more convenient. That said, while DTC shopping may be _more_ convenient than before, it's still noticeably _less_ convenient than retail shopping. This is displayed by the overwhelming preference of consumers for such resellers as Amazon (the likes of which take an extortionate fee, and provide very little for the consumer beyond a single storefront, fast postage and financial trustworthiness). > I know Walmart gets lower quality products than other places and whatnot, and manufacturers make subtle adjustments to products to meet resellers' desired price points. This, and more generally the market data held by retailers, is also a benefit of retailers. By aggregating information about purchases of many different consumers over many different brands, retailers are able to drive product development towards products they know will sell even if these preferences will not be expressed directly by consumers or manufacturers. To summarise, going back to your original point: > What's the problem with [manufacturers selling direct to consumers] Manufacturers know how to make things, they don't know _what_ things to make, or how to sell them to consumers. An market where only DTC sales were allowed would have products that consumers generally want less than they do now, with worse service.
- bearbin 6y ago
  Actually, I realise there is another point here, namely the distinction between manufacturer, brand and retailer. Brands are somewhat confusing to analyse: a brand may manufacture its own products, or it may buy them in; a brand may sell its own products, or it may leave this to conventional retailers. In its purest form the brand does neither and simply exists to advertise itself and collect rent from other market participants. Generally, it seems that pure-play brands, and DTC sales by manufacturers, are fairly rare, while brands that also sell products to consumers, or that manufacture their prducts are the most common. So it seems that in reality, neither total specialisation as a pure-play brand nor as a triple-play fully vertically integrated brand is efficient, but instead some combination of branding with another function is optimal.