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Well, I guess you can consider a manufacturer to be either an actual manufacturing company that sells directly to wholesalers or retailers OR a company that own

Well, I guess you can consider a manufacturer to be either an actual manufacturing company that sells directly to wholesalers or retailers OR a company that owns a brand which purchases product in bulk to sell to wholesalers or retailers. Either way, a lot of companies want their products to be seen in a certain "class" of products, and it's harder to maintain that brand image from a pricing standpoint if everyone can just sell it at whatever they want. So, what happened at this large discount cigar place is that, like I said, they were doing something similar to Wal-Mart's strategy: sell a ton of product at a low profit margin and force manufacturers to come down in prices as a result. The manufacturers hated it because (a) their existence relied on the good will of this corporate behemoth, and (b) supplying so much product to the discounter meant less was available around the country for retail shops, which is essential to building brand loyalty. When Leegin happened, the discounter begrudgingly admitted that they would be forced to raise prices. But not before buying out a few accessory manufacturers. While not as popular as simply discounting cigars, it sorta worked for them. They would sell a box of cigars at the lowest price that they could and then include a free humidor to store them in. And what collector of stuff doesn't want another container for their stuff? I'll say too, that some manufacturers simply refused to do business with the volume discounter until after Leegin. They had built up a market for themselves with independent shops without needing to go to the volume discounter... but after they could be ensured that their prices would be stable, they opened the floodgates.

Joker_vD 5y ago
> it's harder to maintain that brand image from a pricing standpoint if everyone can just sell it at whatever they want Does this apply to discounters only? The PS5 (and earlier, PS4) resellers are re-selling them at premium, but AFAIK Sony doesn't go after them, at all. > (b) supplying so much product to the discounter meant less was available around the country for retail shops ...don't supply to the discounter so much then? Don't the manufacturers usually supply the retail chains first and only then dump whatever left to the discounters anyhow?
- MisterBastahrd 5y ago
  which resellers? I would have to imagine that anyone buying directly from Sony and marking up their products would catch the ire of the company, but maybe not. MAP and MRP are more about the downward pressure on prices, not upward, so that companies can't come back later and say "I can't sell your product and make a profit because I'm selling it for too cheap." The discounter largely doesn't care as much because of the sheer volume they were doing. They were selling at near half the price of what brick and mortar shops were selling AND this was during a time where most states were not charging taxes on internet purchases OR on tobacco sales. Say you have a box of cigars that has an MSRP for $100 a box. Break even price is $50. Discounter sells for $60 and offers free shipping. You go to the local store and buy for $100. Then you get hit with a 30% tobacco tax and a 9% sales tax. So now you're comparing $60 vs $139. Even if they didn't have what you want in stock, they probably would have something else you'd like for a fraction of the cost. Most mom and pop cigar stores carry about $50-200K worth of inventory at any one time. This discounter was doing mail order business and had about $80-100M worth of inventory.

Joker_vD 5y ago

> it's harder to maintain that brand image from a pricing standpoint if everyone can just sell it at whatever they want Does this apply to discounters only? The PS5 (and earlier, PS4) resellers are re-selling them at premium, but AFAIK Sony doesn't go after them, at all. > (b) supplying so much product to the discounter meant less was available around the country for retail shops ...don't supply to the discounter so much then? Don't the manufacturers usually supply the retail chains first and only then dump whatever left to the discounters anyhow?

MisterBastahrd 5y ago
which resellers? I would have to imagine that anyone buying directly from Sony and marking up their products would catch the ire of the company, but maybe not. MAP and MRP are more about the downward pressure on prices, not upward, so that companies can't come back later and say "I can't sell your product and make a profit because I'm selling it for too cheap." The discounter largely doesn't care as much because of the sheer volume they were doing. They were selling at near half the price of what brick and mortar shops were selling AND this was during a time where most states were not charging taxes on internet purchases OR on tobacco sales. Say you have a box of cigars that has an MSRP for $100 a box. Break even price is $50. Discounter sells for $60 and offers free shipping. You go to the local store and buy for $100. Then you get hit with a 30% tobacco tax and a 9% sales tax. So now you're comparing $60 vs $139. Even if they didn't have what you want in stock, they probably would have something else you'd like for a fraction of the cost. Most mom and pop cigar stores carry about $50-200K worth of inventory at any one time. This discounter was doing mail order business and had about $80-100M worth of inventory.