The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success

Why don't manufacturers sell directly to consumers?

Remove ads while supporting the Unscripted philosophy...become an INSIDER.

monfii

Gold Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Mar 3, 2020
1,050
2,266
545
Brussels
Why don't manufacturers sell directly to consumers at retail prices?

If you are a manufacturer that makes lightbulbs for example, wouldn't it be much better to sell to consumers directly instead of selling to Philips?

If you make clothes, why selling to Primark instead of selling to people?

Why does Foxconn manufacture phones for everyone, but don't sell to consumers?

Manufacturers fascinate me. You always read about brands, marketing and sales, but you rarely hear about the company that makes the product.

You always hear about Coca-Cola, but you never hear about the independent bottlers....

You hear about Louis Vuitton, not about the company that raised the crocodiles the bag is made of.

You hear about Dr. Oetker, not about the guy that has the pizza factory.

You hear about SpaceX....but who is making manufacturing the spaceships?
 

Don't like ads? Remove them while supporting the forum. Subscribe.

Stargazer

Silver Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Mar 8, 2018
488
881
320
England
In general manufacturers don't stock what they manufacture so they don't have to worry about building warehouses and all that goes with it (that would be the wholesalers problem) and then the retailer spends their money on the branding/customer service retail space end.

To do all three broad stages would be very costly and risky.

The internet is starting to shift things a bit though.

As you mentioned Primark, one of their major wholesalers was Boohoo. They are the ones who picked up and paid for the thousands of orders from little Asian sweatshops around the Midlands (UK) and kept it in their warehouses then sent it to Primark.

Boohoo now sell direct to consumer and they are not the only ones doing this in the UK.

If you go back a few decades though, think of Japanese manufacturers of circuit boards and micro-chips. They were used in US computers which were sold and marketed to the end user.

Eventually those Japanese companies started to market themselves directly - Toshiba for example.

Same as TVs. Sony, JVC in Japan and LG, Samsung in S. Korea shifted from manufacturer to US and European companies to directly selling to those same consumers.

Chinese companies will start doing this soon. As they become richer they will start to spend money on branding and getting us used to their names. They will enter low and work themselves up the value ladder once they start to get market share.

Dan
 

eTox

Expect success, but prepare to fail.
FASTLANE INSIDER
Read Millionaire Fastlane
Speedway Pass
May 21, 2016
458
600
282
Toronto
Aside from DTC CPG brands I think the reason would be optimization. What are you good at? Do that and scale it through the moon. It's more time efficient and will get you to focus on one thing. Making and selling are just two absolutely separate things. Yeah you can make, sure you can sell some. Good luck doing both incredibly well.
 

SEOguy

SEO Expert
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Dec 22, 2014
1,558
2,074
579
Los Angeles
Most companies don't own the factories that make their products for them. Copackers/manufacturers don't own the IP/trademarks/platform/marketing, so they would have a hard time selling direct to customers.

Tesla is the only one I can think of that does.
 

Kelvin Fernandez

Some Profound Quote Goes Here
Read Millionaire Fastlane
I've Read UNSCRIPTED
Jan 26, 2016
699
1,402
441
29
Rice, Texas
Most companies don't own the factories that make their products for them. Copackers/manufacturers don't own the IP/trademarks/platform/marketing, so they would have a hard time selling direct to customers.

Tesla is the only one I can think of that does.
Because they make more money selling to established markets than worrying about their marketing. Here's an example.

This company started producing white labels cigars. Instead of focusing on marketing, shipping, returns, etc from consumers they focused on the growing and rolling cigars. Their focus on the quality became so good that they sold the best cigars in the world. They were outperforming established brands and even overtook Cuba in cigar quality. Cigars companies began to buy from them their white label cigars. Now when you buy a cigar from a top cigar brand you're actually buying a cigar from Tabadom of the Dominican Republic.

View: https://www.youtube.com/watch?v=_mGFeOwjfbs
 

monfii

Gold Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Mar 3, 2020
1,050
2,266
545
Brussels


It seems brands have understood they'd make more money selling directly to consumers and avoiding third parties.

It was about time.

In a way, this is part of the massive decentralization movement arising in society.

- In finance, with blockchain
- In real-estate, with a relocation of workers enabled to telework
- In trade, where everyone is looking to produce and consume locally, instead of exchanging (the EU is particularly motivated to start making their own vaccines (lmao) and chipsets, where we are inherently dependent on US and China (Taiwan))

Further sectors: politics (the end of the objective truth and the lack meaning of the word "fact"); relationships (the rise of polyamorous relationship and the end of centralization in the "couple"); consumption (the end of ownership (Netflix with movies, Spotify with music, Online car-renting with cars) and the rise of everything AS - as a service), etc

And soon, we'll decentralize our brain, our organs, and probably our ability to think....
 

thechosen1

Gold Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Aug 25, 2020
1,043
1,700
470
25
In general manufacturers don't stock what they manufacture so they don't have to worry about building warehouses and all that goes with it (that would be the wholesalers problem) and then the retailer spends their money on the branding/customer service retail space end.

To do all three broad stages would be very costly and risky.

The internet is starting to shift things a bit though.

As you mentioned Primark, one of their major wholesalers was Boohoo. They are the ones who picked up and paid for the thousands of orders from little Asian sweatshops around the Midlands (UK) and kept it in their warehouses then sent it to Primark.

Boohoo now sell direct to consumer and they are not the only ones doing this in the UK.

If you go back a few decades though, think of Japanese manufacturers of circuit boards and micro-chips. They were used in US computers which were sold and marketed to the end user.

Eventually those Japanese companies started to market themselves directly - Toshiba for example.

Same as TVs. Sony, JVC in Japan and LG, Samsung in S. Korea shifted from manufacturer to US and European companies to directly selling to those same consumers.

Chinese companies will start doing this soon. As they become richer they will start to spend money on branding and getting us used to their names. They will enter low and work themselves up the value ladder once they start to get market share.

Dan
I doubt most people realize this, but Samsung makes EVERYTHING.

They don’t just make consumer products or electronics. They build giant industrial projects and equipment too. They’re in all sorts of industries that never show up to consumers. B2B moves mountains with nobody ever noticing.


Needless to say, retail is just one tiny sliver of the economy.

To a sidewalker, it’s the whole economy. Because they never see anything except what they can spend money on.

Samsung is so big that they are equal parts potential customer and competitor to my main biz. They have subsidiaries in every industry.
 

Speed112

Bronze Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Dec 5, 2013
80
211
149
26
Bucharest, Romania
In two words: opportunity cost.

It's better for a person or organization to focus their efforts on optimizing their particular process. Manufacturers focus on manufacturing. If they distracted themselves with also marketing their products, then they'd be worse manufacturers. In the end, they'd generate less revenue and profits.

Division of labor and commerce are great value generators. By specializing and trading the products of their specialized labor, economic agents can both be better off than if they tried to do everything on their own.

And this holds true even if one of the two actors is better AT EVERYTHING than the other. It's still more profitable to specialize at what they're best at and let the others handle the other tasks.

Economics is neat.
 

sparechange

Platinum Contributor
Speedway Pass
Nov 11, 2016
2,805
4,305
1,020
Canada (Vancouver)
Would you rather sell 1 at a time or 100,000 at a time?

pretty much this right here

I just bought 6 pack of lemonade from pellegreno for 6 bucks, at starbucks a single can is $3 and a convenience store sells them for $1.50, what do you guys think a can sells for wholesale? I'm guessing 50cents or under?
 

Don't like ads? Remove them while supporting the forum. Subscribe.

Last edited:

Ing

Silver Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Jun 8, 2019
850
834
267
55
Bavaria
I think, when manufacturers get bigger, they go further into into selling to customers, too.
They work themselves along the supply change until they control everything.
But!
A manufacturer is not a single person. The head of the manufacturing business may call his friend to make the next link in the supply chain. That calls the next friend and so on.
In the end the supply chain is occupied by peole, who know each other and earn money with each other. Play gulf with each other . And so on.

In deed, I think, most of the economy runs like a family of friends owning all of the supply chains.
That way, the manufacturers allready sells directly to the customer via his friends in very often times I think.
 

hellolin

Bronze Contributor
Speedway Pass
May 27, 2015
320
386
191
35
Because invention is the mother of necessity, not the otherwise which conventional wisdom has been telling you. We have absolutely no need of another electric car and living on Mars, and yet here we are today working on them.
 

LeszekM

Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
May 31, 2021
26
31
20
Why don't manufacturers sell directly to consumers at retail prices?

If you are a manufacturer that makes lightbulbs for example, wouldn't it be much better to sell to consumers directly instead of selling to Philips?

If you make clothes, why selling to Primark instead of selling to people?

Why does Foxconn manufacture phones for everyone, but don't sell to consumers?

Manufacturers fascinate me. You always read about brands, marketing and sales, but you rarely hear about the company that makes the product.

You always hear about Coca-Cola, but you never hear about the independent bottlers....

You hear about Louis Vuitton, not about the company that raised the crocodiles the bag is made of.

You hear about Dr. Oetker, not about the guy that has the pizza factory.

You hear about SpaceX....but who is making manufacturing the spaceships?

It is pretty good question. As we check our local market it depends of manufacturer.
When i am looking for materials to our product some of manufacturers are open to sell us directly, some of them directs us to their distributors.

I think applying B2C is another sales chanel for a manufacturers. For sure it is a lot of work/knowledge how to manage with direct sales but if this can increase your sales why shouldn't you do that?
 

jumac

PARKED
Feb 10, 2021
1
0
2
Kolkata
Being a Spinning can manufacturer from last 2 decade we can say that selling directly to customer depends upon the industry /products we are into. Also, many manufacturers hesitate to sell their own products directly to consumers. They don't want to jeopardize relationships with distributors and retailers, and thus, possibly, their own revenues, but they are constantly tempted by the larger margins of selling through direct-to-consumer sales channels.
 

robertwills

Contributor
Sep 9, 2020
53
26
45
Atlanta, GA
Why don't manufacturers sell directly to consumers at retail prices?

If you are a manufacturer that makes lightbulbs for example, wouldn't it be much better to sell to consumers directly instead of selling to Philips?

If you make clothes, why selling to Primark instead of selling to people?

Why does Foxconn manufacture phones for everyone, but don't sell to consumers?

Manufacturers fascinate me. You always read about brands, marketing and sales, but you rarely hear about the company that makes the product.

You always hear about Coca-Cola, but you never hear about the independent bottlers....

You hear about Louis Vuitton, not about the company that raised the crocodiles the bag is made of.

You hear about Dr. Oetker, not about the guy that has the pizza factory.

You hear about SpaceX....but who is making manufacturing the spaceships?
Many manufacturers do in fact sell direct.
 

hellolin

Bronze Contributor
Speedway Pass
May 27, 2015
320
386
191
35
You know that's how Taiwan sells cars, right? In the US, there are state laws says you have to sell cars through a dealership, means to create jobs...

But I'd say those used car salesman jobs are much better entry level jobs for high school grads than anything else society has to offer. The skills you learn there can carry you all the way to CEO suits, at the end, most of the corporate meetings are basically used car salesmanship.
 

Sponsored Offers

MARKETPLACE 7 Days To Freedom: From Wantrepreneur/Wage Slave To Freelancer
I attended the live session, really loved it! It gives some useful and practical tips on how to...
  • Sticky
MARKETPLACE Lex DeVille's - Advanced Freelance Udemy Courses!
Three things: 1. Discord Chat is open. Click here for free access. 2. New YouTube Channel...
  • Sticky
MARKETPLACE Fox Web School "Legend" Group Coaching Program 2021
Its for students who have joined. Did you sign up? Hey Rob, been watching your infoproduct and...
Introducing MJ's Personal Unscripted Network, Join Now for FREE!
Any chance to make it available outside of US? It has been available outside of the US on...
MARKETPLACE Not sure how to start? This free book will teach you how to build a successful web design business
If there’s one thread I see repeated over and over again on the forum, it goes like this: “I...
  • Sticky
MARKETPLACE You Are One Call Away From Living Your Dream Life - LightHouse’s Accountability Program ⚡
Thanks for clearing that up. What do you recommend for those who are still in the process of...



Forum Sponsor

Over 100 Fastlane Students
More Details...

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom