Thor | # 1 | 2009-11-18, 12:28 | Report

We've seen with so many people buying from newegg and amazon rather than directly from Nokia due to the price and/or guarantee. How can these companies sell the phone for less than Nokia themselves can? Surely Nokia should have the cheapest prices?

And it's not just Nokia, I've been looking at monitors and the Dell U2410 is £573 from the Dell site, yet a site like pcbuyit has it at £435 - almost £150 less, a significant difference!

On the flipside, HP seem to sell their monitors cheaper than anyone else. The 2448hc is £250 direct, while other companies like Dabs have them for £312.

v13 | # 2 | 2009-11-18, 12:37 | Report

Many companies don't even sell their products directly. Others sell them in higher prices than resellers. This is required for large companies to help resellers. If Nokia was selling N900 cheaper than a reseller then there would be competition between Nokia and the reseller.

Nokia depends a lot on e.g. stores and would never risk competing with them. That would result in reduced product advertisement, push and (finally) sells, because the stores would instead sell another product or a product of another company.

benny1967 | # 3 | 2009-11-18, 12:37 | Report

Now come on, that's an easy one. As a manufacturer, you're glad to have good re-sellers. You let them deal with the bedraggled consumers. You let them handle returns and complaints. You will not do anything that could harm their business.

Here in Austria, I couldn't even buy from Nokia if I wanted. Nokia Germany doesn't ship outside Germany, and there's no online store at nokia.at or something like a flagship store anywhere in Vienna.

ragnar | # 4 | 2009-11-18, 12:39 | Report

Well. I guess Dell thinks that they will attract a lot more retailers for their products if the retailers can have slightly cheaper prices for the products than what Dell themselves ask. I.e. if Dell would themselves have the cheapest prices, a lot of retailers would stop selling Dell because they couldn't compete anyway, and therefore less revenue and market share for Dell. That's the obvious answer, I guess.

fouro | # 5 | 2009-11-18, 12:41 | Report

Manufacturers are quite dependent on retailers for selling their stuff. Even if they would have large operations in internet, the're still would be lots of people who would prefer buying their goods from somewhere else.

Also companies usually prefer specializing to what they're good at and expanding to retailing in large scale could take resources away from something else (since they're always limited). And large retail chains can do this more effectively anyway thanks to economies of scale.

By directly competing with those large retailers these manufacturers could make the retailers quite angry. This could mean low visibility for products, no shelf-space or even retailers not selling these products (I think this happened with PSP Go in some country?).

So from this point-of-view it's best for manufacturers to stick to what they're good at and not taking risks. Having smaller scale web stores probably isn't that big deal. I would imagine that it's more a question of brand building for the companies anyway.

Edit. It seem's I was quite slow with my asnwer.

Thor | # 6 | 2009-11-18, 12:54 | Report

It's a huge difference though. I picked up the Dell monitor from eBay for £370 (Buy It Now from a business seller), which is a huge saving. I guess that may also be a part of it ? If you see it on the Dell site for £570 and then buy it from a retailer at £370, you feel like you've made a huge saving, and feel good about the product, while both retailer and manufacturer still make big profits? Good marketing like everyone says. I should have asked my sister the marketing genius I guess!

Thanks to all for explaining this to me. It had always bugged me and I'd never thought to ask anyone before.