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Why don't manufacturers sell directly to consumers?

D

Deleted78083

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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?
 
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Stargazer

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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

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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.
 

SEBASTlAN

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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.
 

AFMKelvin

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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
 
D

Deleted78083

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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....
 
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G

Guest-5ty5s4

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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

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Over here, over there.
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.
 

Jon L

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Customers are a pain in the butt. the fewer you have of them, the better. if you have a ton of customers, you have to develop processes to handle them. Most companies focus either on dealing with end customers, or making product. not both.
 
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sparechange

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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?
 
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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

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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.
 
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LeszekM

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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?
 
D

Deleted85763

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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.
 
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hellolin

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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.
 

Odysseus M Jones

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What happened to monfii?

Did he request his account be deleted because he was spending too much time here?

Or were there other reasons?
 

Kevin88660

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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?
Big techs are doing it, and quite successfully.

If you look at E commerce basically this is happening right now, getting rid of middlemen distributors and retailors.

It isn't just the retail stores and distributors are hurting. People used to shop in malls and this create demand for restaurants and cinemas and arcades for children..Old money, traditional small business are angry and this is creating political backslash against the internet giants.
 
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