If the manufacturer tells their wholesale distributor not to sell to home business, they better not. You need a physical store front in order to buy from certain manufacturers or wholesale distributors. If you want to be a distributor of these big name brands, be ready to be turned down. You have to be an authorized distributor/dealer to buy wholesale for certain name brands. Some manufacturers put applying distributors through a vigorous and long process to get approved. Some manufacturers like Sony or Nike will only sell to certain retail stores. Your average mom and pop retail store in the city, would have a hard time acquiring such a contract. Otherwise you would see a Nintendo Wii being sold at every corner store.
If the wholesale distributor broke their agreement with the manufacturer they would be sure to be in court, as well as lose their big money account with a huge manufacturer. If the manufacturer was a huge contract like Sony or Nike, you can be sure that wholesale distributor wouldn’t be able stay in business for very long. That would be too big of a loss. Most companies wouldn’t be able to afford staying in business if they lost a contract like that.
The fact is; Don’t take it to offense, but companies like Sony and Nike don’t want to take the chance of a home business ruining their reputation with certain products. The risks are much higher dealing with small businesses compared to companies that are well established businesses. Not only that, but if these manufacturers decided to let the wholesale distributors ever sell to home businesses, this is what would happen:
The home businesses with little overhead would be able to charge lower prices than retail stores. Retail stores have huge contracts with companies like Sony and Nike. But retail stores have to pay overhead bills, insurance, and pay many employees among just a few things. The retail store would have to sell at MSRP to make profit. Even though the manufacturer wants everyone to sell at MSRP, doesn’t mean everyone will listen. Then lower prices than MSRP will pop out all over uncontrolled. Retail stores would take a huge loss. In the long run it would hurt the manufacturer.
But if the manufacturer sets a strict licensing agreement up with just the wholesale distributors, they can control who gets the product at wholesale prices. They could even track down the wholesale distributor breaking the rules, if they decided to break them. If small home businesses got to buy product at wholesale prices, the manufacturers wouldn’t be able to track down the bad ones selling at under MSRP. That’s what it is all about, a control game.
This also cuts down on counterfeiting rings. It will be easier to spot the people selling fake goods at lower prices if they know all their wholesale distributors. If Sony or Nike find someone selling way below MSRP, they will do an investigation. If that business is found not to be an authorized distributor, they would go after that company. Counterfeiting has become a huge problem around the world.
There are all kinds of other reasons big name manufacturers tell their wholesale distributors not to sell to anyone at wholesale prices. Most if it is just to cover their asses over licensing agreements.
I am not saying Sony won’t let any of their distributors sell wholesale. But certain products they make like Playstation, are under strict licensing agreements. Don’t expect to buy them at wholesale prices if you have a home business. You may be able to find shoes or clothing to buy wholesale as well.
But don’t expect to buy big name brand clothing or video games at wholesale prices. It’s impossible to buy these at wholesale prices if you are a home business. Anyone claiming to sell these items at wholesale, is either lying or selling counterfeit merchandise. Or they may be a crazy company that doesn’t care about their strict licensing agreement between the manufacturer and the distributor. If that is the case, they will soon be caught.
Times may change, but right now when a new shoe or product come out that is in high demand; there is usually not enough man power to create the product fast enough. Then the manufacturers try and control everything as much as they can to squeeze the most profit out of it.
When the product slows down in demand you will notice the products licensing agreements may change and it will be available to everyone at wholesale prices. But new products that are the big money makers for manufacturers will rarely be available to buy at wholesale unless you are an authorized distributor or dealer. And that day may never come with certain products.
There are lots of other products that are covered by strict licensing agreements like this. Everything from licensed professional sport clothing to DVD’s are under strict licensing agreements. Most of the time you will find the ones protected by strict licensing agreements are the ones that are most counterfeited.
Anyone claiming to have wholesale prices available for such goods are probably selling at discounted prices, not wholesale. There could be lots of reasons, but if they are an authorized dealer they will get in trouble. It could also be a scam.
If anyone has any questions about what items or products are under licensing agreements, just ask me. I can help.
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