Will selling to customers online upset our dealers?

Monday, March 16th, 2009

Dear Norm,
We are a $40-million manufacturer, and we distribute our products through 250 independent dealers in North America and Europe. How can we use the Internet to sell products to the end user without upsetting our loyal dealers?
Chris

Dear Chris,
I doubt your dealers will be upset as long as you sell at the same price they charge and give them a commission on any sales in their area. In fact, they’ll probably encourage you. It’s trickier if you’re planning to sell your products for less. You’re going to need the dealers’ permission to do that, and you may have to agree to pay them their normal commission on the sales in their area. In any case, the key here is communication. I’d start by sending out a questionnaire to the dealers. Tell them you want to give them an opportunity to make a lot more money by earning commissions on sales over the Internet. Explain how the system would work, and ask them what they think. As long as you communicate properly, you should be all right. If you don’t, you’ll have a problem no matter what you do.
Yours truly, Norm

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