Letter to the Editor: Why Pulling Brands Off Chewy.com Isn't Enough



Published:

 

I have been following your articles concerning Chewy.com and the dog food industry. I own a dog training internet business.  We have been in business since 1982 and on the internet since 1994 and have seven-figure yearly sales. Our website (Leerburg.com) is the largest dog training website on the internet, with some days getting 18,000 unique visits. While we do sell dog treats, we don’t sell dog food.

With that said, the reason I am writing is I think a lot of retail stores are a little confused about the threat from companies like Chewy.com  or Amazon.com.

The problem is not that manufacturers are selling [through] Chewy or Amazon, the problem is that the manufactures have not established a minimum advertised price (MAP policy)  with companies like Chewy or Amazon before [those internet retailers] were setup as dealers. Had they done that, they could warn internet (or brick and motor businesses) about MAP violations and tell them to cease and desist advertising produces below MAP or they would be canceled as a dealer.

In addition, if manufacturers had also established a minimum sale price contract (MSP) before selling products to a dealer, that dealer (both internet and brick and mortar) could be legally held to a minimum selling price. If they were caught selling below that price, the manufacturer could refuse to sell them in the future. 

The purpose of MAP pricing and MSP policies is to ensure a healthy profitable dealer network for the manufacturer. It levels the playing field for internet dealers and brick-and-mortar dealers. In the end, a healthy dealer network is always better for consumers. 

Problem arises when manufacturer only pays lip service to MAP and MSP.  Manufacturers with no MAP or MSP enforcement end up with weak dealer networks simply because their dealers don't make enough profit to warrant supporting the manufacturers products. The bottom line is any manufacturer who doesn’t have MAP or MSP pricing has a short-term view of his market. 

We share the same concerns as brick-and-mortar stores. There are websites that don’t stock products like we do, who advertise for a few dollars over cost and then have manufacturers that drop-ship products to their customers. Those are problems no reputable dealer can compete with.

We no longer add products from manufacturers who don’t have a robust MAP program.  In fact, we are currently making preparations to stop doing business with a company (I won’t mention their name here) that we have close to $240,000.00 in annual sales with. We are doing this because this manufacturer pays lip service to MAP and they are a drop shipper. We feel our support and energy will be better spent promoting more reputable manufacturers products. 

If more dealers would walk away from companies like this, we would not have the problems like we have with Chewy or Amazon. 

And finally, the long term threat to our industry is not Amazon or Chewy but with China. China is "the black storm on the horizon" for our industry. Chinese products are cheap, their quality is getting better and better, and the Chinese could give a hoot about MAP or MSP pricing. 

Sincerely,
Ed Frawley
President Leerburg Ent. Inc.

 

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