Manufacturers Can Mix It Up, Too

Dec. 21, 2004
Retailers warned not to sell on Web sites.

The giant retailers aren't the only ones wielding the big e-commerce stick. General Motors Corp. earlier this year warned its dealers against doing business with Internet-based auto brokers, such as Inc. and Inc. However, GM permits dealers to use certain e-commerce services such as Inc., which sends sales leads to car dealers that in turn get the sale. Again, the point is to restrict direct sales of cars to consumers, something GM and Ford Motor Co. would prefer to do on their own in collaboration with their dealers. Ford already had posted a similar decree to its dealer network. In the musical instruments industry, Yamaha Corp. of America is very specific in its rules governing how dealers can sell over the Web, in some instances prohibiting the posting of prices online. One requirement is that dealers first have an existing store-they can't be a Web site-only retailer. And for the larger instruments, such as pianos, Internet sales are not allowed. One large furniture manufacturer, Furniture Brands International Inc., has become something of an e-commerce bully itself, warning its network of independent retailers not to sell any of its popular brands over their own Web sites. "As a manufacturer, we do not sell direct to the consumer, and we will not sell to a retailer that sells over the Internet," says Lynn Chipperfield, senior vice president and chief administrative officer at the furniture manufacturer, which makes several well-known brands including Lane, Broyhill, and Thomasville. "The first reason we do not sell over the Internet is practical -- we are a manufacturer, not a retailer," explains Chipperfield. "A retailer has the infrastructure in place to handle issues such as customer service, delivery, returns, and repairs. A manufacturer does not. We leave the retailing to the retailers. "The other reason is channel conflict," Chipperfield continues. "We would upset our existing retail distributors if we sold over the Internet. There is a concern that they would become nothing more than a showroom, that consumers would look at the product in their stores and then go home and shop price over the Internet. The retailers would be providing nothing more than a support function for electronic retailers." Furniture Brands International tells its retailers they must not sell over the Web, or even so much as list sofa and chair prices online. "We encourage our retailers to set up a Web site, but we do not allow them to price our product or sell it over the Internet," Chipperfield adds. Office furniture manufacturer Herman Miller confesses to throwing an elbow or two to get better position under the e-commerce basket. "Our dealers can set up their own Web sites, but we have asked them not to sell," says Bruce Buursma, director of corporate communications. "Many of them had been selling over the Web, and we asked them not to." Dealers now are asked to send all their online orders to the manufacturer, with the dealer receiving a fee for the referral.

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