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[Holysteel]

Let me just give a very simple example here..Lets not talk about 7-eleven or Makro supermarket or whatever..

Let talk about an iphone. The norm supply chain will be = The company Apple Inc >  Authorized Telcos which will be the Distributors/"wholesalers' > Resellers/Retail Shops > End Users/ Customers. Although Apple does't have retail shop to do their selling. They do it themselves through apple store. But for the better understanding of our topic. Let just say they do.

I would you feel as a reseller store if these distributors sells directly to end users at a cheaper good price,foregoing bypassing your level. Given that they have a better 'wholesalers" price directly from the 'manufacturer" itself. Reaping the huge profit & sales price in between? Screwing you in between as a honest reseller shop trying to make a decent living?

Although this is nothing comparable to the printing industry..How would you feel for example, if you brought a 10 million baht printer from HP at a "end user" price here in Thailand. And you found out that, the authorized distributor are doing the printing directly to the crowd, charging at 50-60 baht per meter square, using their benefits as a distributor in getting cheap inks, media, materials directly from the manufacturer itself etc.? They jobs is to sell machines ! Not to compete with their buying customers trying to make a living. While the small pop & mom print shop who brought their machines from them at a higher price have to charge strugglingly with the market price of a measly average price of 120baht per meter square?

Ah...I think i should rest my case. I do not wish to clarify further on this. Let just say that i give it a try competing with these 'distributors' at cut throat price
and see how its goes......wish me luck..

[Jdietz]

"I can't make profit so let's sue the competition" is not a valid business model in Thailand. That one, as far as I know, only works in the States.

[Holysteel]

Thats enough..

Lets just put aside everything about 'distributors' & forget about it. Totally.

If there is any useful tips or advice..I say bring it on.

Thanks

[steveromagnino]

Ok let's take your apple example, funny you should mention a company i know so much about (my final comment on this, so you can apply it directly to your printing business):

"Let talk about an iphone. The norm supply chain will be = The company Apple Inc >  Authorized Telcos which will be the Distributors/"wholesalers' > Resellers/Retail Shops > End Users/ Customers. Although Apple does't have retail shop to do their selling. They do it themselves through apple store. But for the better understanding of our topic. Let just say they do.

I would you feel as a reseller store if these distributors sells directly to end users at a cheaper good price,foregoing bypassing your level. Given that they have a better 'wholesalers" price directly from the 'manufacturer" itself. Reaping the huge profit & sales price in between? Screwing you in between as a honest reseller shop trying to make a decent living?"

Apple DO retail directly through their apple stores (not yet in Thailand, but USA, Japan, China, etc) and their apple website, and while there are pricing tiers with their resellers and also tie ups with telco companies, when an apple store opens directly, they decimate the resellers in the direct 15km vicinity, and that is part of the reseller's strategy when they sign leases, to ensure they are not collateral damage.  As far as I know (having had this exact conversation with Apple Asia-Pacific and the 2 largest resellers in Thailand) this is accepted as inevitable, and it's a case of 'make hay while the sun shines'.  Or in Thai 'num kuen dtong reep tuk'

Incidentally, when an apple flagship opens, the effect is actually positive for the resellers outside the 15km radius, because it generates positive brand position and some people (like me) have no interest in going to 10,000sqm of retail space selling the same stuff I can find in 200sqm.  but immediate neighbours are wiped out.  That's the role of business and 'creative destruction'.  I would put the apple website and the fact apple retails directly on partner websites against themselves using amazon, ebay, etc etc and no one complains about any of this as a case of proof that the point you are attempting to raise is simply not an issue in macro economics; certainly it would be better as a mom and pop store if you didn't have a big competitor with competitive price point advantage competing against you directly, as you could rook your clients...but if HP isnt' doing it and Canon or some other brands are then HP would be the net loser.

In the case of HP, you may think their job is to sell printers to mom and pop stores.  I doubt very much if HP consider this as their job; I believe the distributor's goal would be to get an increasingly large share of an increasingly large printing and periferals including ink industry, and the management of the value chain downstream is to balance large direct sales vs. mom and pops.

The distributor would be gauged on how well they do this, I doubt (but I can check for you) if HP would care that they are setting up price competitive print houses as well to compete against the other ink/printer companies.  The industry has several tiers, from what I can see there is a tier of business to business which I already told you a mom and pop store is not going to get a look in (such as printing all the skins at the airport for JCD); then there is the tier of business to consumer where pricing is quite standardised, and this second area is where i understood you would do business (stickers on cars, stickers for company signs, smaller scale billboard printing, etc).

I just asked and now know that a large print firm we use with turnover of (my estimate) somewhere between 100 - 200m baht per year has no connection other than being a large customer of some of the suppliers that you name; if it was an issue, they would have raised it, as this end of the market, they are not paying what you are paying, they are buying directly at the lowest possible ink price.

There are numerous reasons why you would and should pay a higher price than a volume buyer, and numerous reasons and examples in almost every single industry I can think of where the manufacturer sells direct and also sells via middle men.  How do travel agents work?  How do hotel bookings work?  How can Amazon exist?  How can Apple, Macro, CP, HP, (insert virtually countless consumer brand in the world here) do business selling directly and also selling via other distribution networks?

If it was such an issue, you would have almost no mom and pop printing shops.  Which any search of any village throughout Thailand will assure you is not the case at all, they are all over the place.

What can you use from this?  Well first you can identify that brand of the materials matters, and I could tell you that; people will pay a different price for China no grade skins or 3M UV resistant skins etc and inks also the same applies.  You could create a point of difference by offering exclusivity in specific inks or print techniques, or offer a wider range than someone else (choose between brands).

I don't mean you would be unique in either of these, but I know print houses that specialise in both these USPs in their respective territories; I do still believe printing to be a territorial business (due to the tyranny of distance in delivery and meeting clients) but your experience in the industry may differ.

[Holysteel]

I dun know about you...I am still pissed off to know that i have to compete with authorised 'wholesalers' that i am getting my machines from..  


Peace

[steveromagnino]

look for 2nd hand machinery is some good advice; print companies often go bust, if you can buy equipment as a going concern, can save you cash and you have an immediate client base also, at a lower cost.

[Holysteel]

steveromagnino, on 2012-05-24 14:04:24, said:

look for 2nd hand machinery is some good advice; print companies often go bust, if you can buy equipment as a going concern, can save you cash and you have an immediate client base also, at a lower cost.

Good idea. Thanks

[Holysteel]

Any more tips for this industry? Keep it coming !