Online resales worry retailers

  1. Online resales worry retailers
    By Elaine Hughes, USA TODAY
    Triss Budoff of Houston spent about $1,000 on 25 Rafe handbags that were available for a limited time at Target. But Budoff didn't use the purses. Instead, she posted 10 of them on eBay and earned about $750 in profit.

    "I viewed it as a low-risk investment," Budoff says. "Anything I didn't sell I could return to the store within 90 days and get my money back."

    More than a million people like Budoff make a portion of their income from selling products on eBay (eBay). And that has some retailers worried. To protect their businesses and their brands, they are taking steps to curtail customers who are buying products for resale.

    Retailers are especially concerned about reselling of clothing and accessories, a category that has grown 73% on auction website eBay in the past year.

    For retailers, "Jewelry and handbag sales are especially hurt by e-commerce," says Ken Nisch, chairman of retail consulting firm JGA. "More of these items sell online because people don't have to worry about clothing sizes."

    Luxury leather goods maker Coach (COH) sends letters telling people that they can't shop at its stores if they are found selling Coach products on eBay. "Unauthorized distributors lack the proper commitment to the Coach product," says Andrea Resnick, the company's spokeswoman.

    Companies often can spot potential resellers by their purchasing habits even before they get to the Web. EBay users are more likely to buy identical products in bulk because it makes selling them on the Internet easier. Selling 50 shirts of different colors would require making 50 posts on eBay, but 50 shirts of the same color can be sold on a single posting. "It increases productivity, and it's just easier," says Donna Klein of Birmingham, Mich., who sells plus-size and bridal lingerie on eBay.

    Because of this, many stores limit the amount of merchandise a person can purchase at one time. Gymboree (GYMB), a clothing store for kids, won't allow customers to buy more than five of the same item.

    "We need to protect our image," says Jamie Falkowski, Gymboree's director of public relations and advertising. "We can't ensure a product's quality on eBay, and we don't want people to think we're selling things on eBay."

    Target limits a small number of collectibles and special promotional products. The company cautions consumers about the quality of products on resale sites. "This is a largely unregulated marketplace where stolen and fraudulent goods have appeared," Target (TGT) spokeswoman Paula Thornton-Greear says.

    Besides purchasing limits, retailers can do little to prevent their products from being resold on Internet auctions, says John Devlin, an attorney who represents retailers such as Nordstrom (JWN), Home Depot (HD) and Nike (NKE).

    "EBay is like a modern-day yard sale," says Devlin, who works for the firm Lane Powell in Seattle. "The Internet just allows people to reach a larger audience."

    The top-searched clothing labels include Hollister, Abercrombie & Fitch (ANF) and Nike along with high-end designers such as Prada, Gucci and Marc Jacobs, eBay says. The most popular fashion items are dresses, shoes and handbags.

    Some eBay sellers make huge profits on sales, especially for items available in limited quantities. An Anya Hindmarch white canvas bag printed with "I am not a plastic bag" sold in stores such as Whole Foods (WFMI) for $15. But quantities were limited, and buzz about the bags drew long lines of customers, many of whom were left empty-handed. So when the bags showed up on eBay, they fetched as much as $450.

    A blue silk Proenza Schouler designer top that sold in limited quantities in the spring at Target for a bargain-basement $34.99 sold on eBay for $255.

    Budoff monitors eBay sales and plans to sell the other 15 Rafe bags she has when buyers are willing to pay top dollar.

    Why do people pay more for the products? Often, they have limited access to stores or limited time to shop, says Constance White, eBay's style director. "Plus, they're still getting designer items at a good price, even with the markup."
     
  2. I'll tell you what... retailers who limit people buying things..I don't get it. They are geting the price that they are asking for it so it really shouldn't matter to them. Shouldn't.

    There is a very long thread on the Ebay Purse Board about Coach banning certain people from their stores whom they suspect are reselling on The Bay.

    They are a private business so it's their right to ban customers if they want to but it just doesn't seem right to me...Hello? It's a Capitalist society and a lot of the people who buy the bags know full well they are from an outlet, but they don't have access to one and are happy to pay a little more just so they can have the bag they want.

    Now...returning the surplus is kinda shady IMO, because by that time the item could be past season and they have to mark it down. I don't agree w/ that part.JMHO.
     
  3. I agree, and would almost go as far as to say that even the returns dont matter, because ultimately, they are selling more. The real issue seems that they dont want to see other people profiting from their products.
     
  4. I agree with you both. I too have never understood why it should matter to the retailer exactly what I choose to do with the product after I've paid them their price for it. It's just like Munchkey says, they just don't want people profiting from their products which really, is none of their business.
     
  5. The thread on ebay got yanked but there was alot of good info in it.
     
  6. Oh no! Well that sucks.
     
  7. There are sellers from Louis Vuitton that get blacklisted every year, especially MPRS's, when they are identified as being resellers and also customers at their store. I heard that with fakes, LV doesn't have to worry as much because, it's not theirs (not authentic so no comparison), but with resellers, it's their greatest problem because authentic resellers are stealing retail customers. I have a friend who cannot buy anything from LV so she has to ask her friends or husband to buy for her.
     
  8. I've heard that too. I also heard that this is why you should black out ANY info pertitnent to your sale on the picture of the reciept. Like the store, and any transaction number codes, because if they figure out who you are you will be asked to not come back. A Chanel SA told me this when we were discussing ebay.
     
  9. Out of curiosity, why don't any of these sellers ever think to just pay cash instead of using a credit card when they buy at the boutiques?
     
  10. I thought I read an article awhile back where Target said that they didn't care if people resold their merchandise. Hmmm. They changed lol. I agree though if you stand in line and pay the same price as everyone else you should be able to do whatever you want with the item. It's not illegal to resell.
     
  11. The problem isn't reselling it is the returning of the items when they are unsold. This woman in the article proudly said: It was a low risk. She could always returnt the merchandise in 90 days.

    What? That attitude is what is making it harder on the rest of us. In 90 days a demand for a product can change and now Target(or any retailer is stuck).

    I bet this article was widely discussed in retail meetings throughout the country. If Target did not limit before--thanks to this woman they probably will now.
     
  12. ^^ "The returning" good point.
     
  13. Interesting article and discussion. Thanks!
     
  14. if they don't want ppl to buy for cheap and turn around and sell it then they shouldn't be marking down their prices. it doesn't make any sense
     
  15. It does make sense..it is not the reselling that is bothering them. It is all the returns that resellers do.

    Returns cost the retailer money in terms of admin. costs and lost sales time for the items on their sales floor.

    If the resellers were not returning I bet this would not even be an issue.