Tuesday, August 09, 2016

Why doesn't 1st-line sell all of their stuff on the Big A website?

We will let you guess who the Big A web site is.

Although customers may be benefiting from their lower prices and paid for 'free shipping' service, everyone needs to understand they are giving business to a company that works unethically behind the scenes to learn and then kill small and even large businesses.

As a business partner at 1st-line Equipment, LLC, let me share three real case scenarios:

a) My cousin 8 years ago opened a home business producing his own kitchen widget (called widget to protect his brand). He registered his business name under his home phone number, and his A-website different business name account under his cell number. Since it was easy with a large audience, he sold thousands through the Big A web site. However, after the first year and hundreds of thousands of sales dollars, the Big A started contacting manufacturers in Asia, Europe, and the USA to buy and sell this widget on their own. Finally, they called his home number (one under his business) and offered to buy the item, stock their warehouse, and undercut the current seller. In essence, they wanted to undercut his other business name. He told them he owned both businesses and said he was not selling them. They were already making a 15% cut with their fees.

b) Next door to our facility, an online children's clothing boutique who sells on the Big A and other portals advised us in 2012 that we can sell a lot on the Big A web site. I told him the story of my cousin whereby they follow metrics on high moving sales items of companies who put merchandise up there, and then get stuck selling slow moving items or who get undercut in pricing on their fast moving items. Thus getting driven out of business. In October 2014, the owner was crying in a panic fast-walking into our shop. I asked him what's wrong. He said that he has two weeks to go, and he still has 90% of his Halloween stuff in inventory. I asked him why? He said that all his fast movers were being undercut on the Big A by the Big A themselves. In essence, they learned from him over 2 Halloween seasons what were the fast movers, they brought in larger quantities at lower shipping rates, and they started killing his small business.

c) 1st-line's sister company imports Ascaso, and they have several dealers up there on the Big A web site. Repeatedly, the Big A contacts Ascaso to buy and import directly so they can get those sales. However, in our environment, they are unable to repair machines. 1st-line used to sell over 1000 of a single certain model of espresso machines every year. The total sold in the USA every year was ~4500 units. 1st-line had an almost 25% market share. Unfortunately, our competitors put this model on the Big A, and they data mined the metrics to carry this particular model. the Big A now sells over 3500 units per year, and we sell less than 100 units per year. Even speaking to our competitors, their  sales of this model has dried up.

At the end of the day, most consumers and most smaller retailers do not know that the Big A has a 'copy' department. Their systems monitor metrics to data mine off the smaller companies they invite to use their portal as a sales channel. When an item exceeds a certain amount of sales or units, it red flags the item for the copy department to pursuit the item and put it in their warehouses. They try to buy cheaper, get it shipped in and out at lower cost, and kill other businesses. How do I know they have a copy department. We have over 60,000 customers, and one of my local customers who buys coffee every week has a nephew who works for the copy department in Seattle.

Before the Big A wanted no collection of sales taxes in all 50 states, but now that they are large and they have to collect sales taxes in almost every state, they want all small merchants to collect sales taxes in all 50 states because it becomes a hindrance for small businesses to sell online and compete with them. 
In the end, people will have less choices with the Big A. USPS does not know this, but the Big A will drive them out of business in the next 10 years when drones start delivering small packages. Our local supermarket started with the Big A not knowing that they will use their sales metrics to stock their own warehouses to drive the local supermarkets out of business. This is why ToysRus started with the Big A for online order fulfillment and stopped after 2 years because they saw their sales metrics being captured and data mined.

Thus, when 1st-line is asked to sell on the Big A, we refuse to put any variety on the Big A web site. We are not going let them learn from us on the fast movers.They are big boys and girls, let them figure it out.

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