Friday, July 15, 2011

The Free Enterprise System RANT

Definition: A free enterprise system is when individuals and businesses are free to make their own economic choices; this system can be also called a market economy.


If you can offer a product or service of excellent quality at a lower price, the competitors are free to lower their prices or increase the quality of their product or service.  No where is it stated in the free enterprise system that anyone cannot change their prices or service. (With the exceptions limited by law with regard to monopolies etc.)

Over and over again I hear shop owners complaining that they can't compete with online businesses that have no "bricks and mortar".  Physical shops need to pay hydro, insurance, staff etc. etc.  On the up side is that these shops sell more product because it is visible and accessible.  Quilt shops also have the advantage of having workshops, block of the month sessions, demos etc. etc.  They become a destination.  Online shops are only available when a customer chooses to visit their website.  Also, online customers often are paying shipping on top of their order costs and have to wait a week or more for delivery.  Some so-called bricks and mortar shops are built into some shop owner's homes in the basement or converted garage so overhead is reduced.

Can't compete?  Business not doing well?  CHANGE IT!! Customers have evolved over the last decade to a price savvy, internet researching, informed group of people.

I recently had the experience where a shop owner wrote to one of my suppliers because I was providing a limited number of batts at a reduced price at my batting lectures.  The supplier was refusing to sell to me unless I promised to sell batting at the same price as the shop owner who complained.  When I brought out the "free enterprise system" argument, the supplier knew that what he was doing was wrong but felt he couldn't jeopardize his relationship with this shop.  I might sell 70 quilt batts a year and not all of those locally.  I don't sell online, I just bring the batting to the batting lectures so that when I get people excited about trying a new batt they don't have to search all over to find it.  My feeling is that if the person trying the new batt likes it, they will go to their local shop and buy more.  It  was never my intention to take food out of the mouths of local shop owners but to promote the batting that they MAY carry in their shops, SHOULD THEY DECIDE TO DO SO.

THIS HAS BEEN YOUR FRIDAY RANT.
I WOULD LOVE TO SEE YOUR COMMENTS.

2 comments:

  1. Grr, that makes me mad. In Canada at least vertical price maintenance (where a supplier forces retailers to sell above a certain price) was illegal until 2009. Now its legality is determined on a case-by-case basis (read more here.)

    What drives me bananas is the ridiculous Canadian markup. I don't know what the cause is but as a result I have never purchased anything from my local LQSes. 95% of my quilting purchases are from online US retailers. I would undertand a 10-15% markup. But 50-100% is absurd. I saw Jelly Rolls for $60 recently! I buy all of my batts online because a king-sized batt at my local fabric store is $80. It's about $35 online. Even with shipping and duties I save a lot.

    Sorry, that wasn't really related to your rant but it made my own rant come to mind!

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  2. Good rant Heather.
    Looking forward to more in the future :)
    Janet

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