Bulk Wholesaler Phenomenon

I thought I’d start a thread to discuss a recent development in the world of shaving that was being discussed over on Frank Dragonsbeard  Ethos site. With Frank’s consent I’m moving that discussion here so that his thread can stay focused on Ethos products and developments. 

I’ll let others with more knowledge provide detailed information on what’s going on but in a nutshell what’s happened is that middlemen/wholesalers have done deals with several well regarded artisans to buy all of their production with the intent to then turn around and offer it only to vendors who agree to their terms most specifically a higher price. The vendors are then forced to either raise their prices or eat a lower profit margin. If you don’t agree you don’t get to sell the brand. The wholesalers are inserting themselves into an existing market to extract profit while, in my opinion adding no value. 

As a wet shaver who’s been in this hobby or whatever you want to call it for over ten years I find this unfortunate. As a retired lawyer I also think that the scheme may run afoul of laws designed to prevent anti-competitive behaviour and price fixing. I’m not a US lawyer so I can’t comment directly on US law but most western common law jurisdictions have some form of legislation on the books to protect free market competition and consumers. If any US attorneys out there have any thoughts on this I’d be interested to hear them. I know we have very little information on which to draw inferences let alone conclusions but that’s what forums are for. To share information. 

I don’t know which artisans and vendors are involved in this scheme nor who’s behind the wholesalers but I have noticed some conspicuous absences of certain brand(s) from the brand list of the Canadian vendors I frequent. Personally, I don’t think this is a good development. For customers it will limit choice and increase prices and let’s be honest, who among us likes to be manipulated and gouged?  

If anyone feels they can make a convincing case for why this phenomenon might be a good thing, I’d like to hear it.

In the U.S., Sherman Act II violations require that the plaintiff 1) have standing to bring the action, and 2) demonstrate that the defendant has "market power", that is that the defendant has so much control over market share that it can control the price of the products in the market. It seems to me that if the "artisans" have agreed to use these distributors, and the distributors are not colluding, proving that any one distributor has "market power" is going to be difficult. Moreover, who is going to be a plaintiff that has standing? One of the other "artisans"? All in all its seems like a tempest in a teapot and maybe a good reason to just buy excellent mass market products available from multiple distributors all competing on price.

As always in Sherman Act II cases, defining the "market" makes or breaks the case. If the market is all wet shaving products, good luck proving that any middleman/wholesaler has "market power".

That’s just one angle of this thing. At the end of the day it’s going to make things generally worse for customers. The advantage to artisans is saving money on fulfillment. Instead of packing orders for a handful of vendors and a lot of individual customers, they pack one order to the wholesaler and they break it up among the participating vendors. So there is a value add to the participating artisans Assuming the arrangement precludes them from selling from their own storefront too. I’ve got no problem with artisans making their operation more efficient and more profitable but when it’s not really an efficiency but rather a pushing out of certain processes to a third party with those cost then being passed on to customers, I do have a problem. I’ll deal with that kind of problem in the time honoured way customers always have, I’ll buy someone else’s product who doesn’t do that.  I’ve probably got enough shaving soap that I could just stop buying any soap until after this all plays itself out!

I was at Italian Barber website today and there are no artisan soap brands listed, just the mass market TOBS, Trumper and the like. I know he carried artisan brands in the past. Maybe it’s just a new business strategy. Maybe he won’t participate because he doesn’t want customers asking why his prices on certain premium brands have gone up 40%. I can look on a certain vendor I frequent and see my purchase history going back to 2021. Certain brand cost me cdn$24.95 in 21 and cdn$35 in 24. That’s quite a bump. I don’t know if it’s all related to wholesalers but some of it probably is. So what you might say, it’s not like it’s going to cost me a significant amount of money on an annual basis and you’d be right, however, nobody likes to feel like they’re getting screwed. Like I said above, let it play out and see where it goes

That is very unfortunate to hear this is happening.

You just cannot keep these things secret.  When names start dropping, and they will, I predict some negative reactions from among the shaving consumers.  Perhaps a boycott.  We shall see.

You just cannot keep these things secret.  When names start dropping, and they will, I predict some negative reactions from among the shaving consumers.  Perhaps a boycott.  We shall see.

Interesting. There is one very well known artisan who started off with very shady promotional techniques which became well known, even notorious. There was a boycott, but that artisan's products are now a leader in sales and very popular on this forum. So we shall see.

BTW, not saying that those products are not good products, just saying that customers do not really seem to care.

I am different. To this day I will not buy any Gillette products.

You just cannot keep these things secret.  When names start dropping, and they will, I predict some negative reactions from among the shaving consumers.  Perhaps a boycott.  We shall see.

Interesting.  There is one very well known artisan who started off with very shady promotional techniques which became well known, even notorious.  There was a boycott, but that artisan's products are  now a leader in sales and very popular on this forum.  So we shall see.

BTW, not saying that those products are not good products, just saying that customers do not really seem to care. 

I am different.  To this day I will not buy any Gillette products.

I still don't buy any of that artisan's products

You just cannot keep these things secret.  When names start dropping, and they will, I predict some negative reactions from among the shaving consumers.  Perhaps a boycott.  We shall see.

Interesting.  There is one very well known artisan who started off with very shady promotional techniques which became well known, even notorious.  There was a boycott, but that artisan's products are  now a leader in sales and very popular on this forum.  So we shall see.

BTW, not saying that those products are not good products, just saying that customers do not really seem to care. 

I am different.  To this day I will not buy any Gillette products.

I still don't buy any of that artisan's products

I am on board with you Dave,. I will not either. There is also something I don't like about those products, but I won't mention it so as to not identify that artisan.

I’ve been thinking about this and asking myself “is this any different from the artisans that sell on Amazon?”  And my thinking says yes, it’s different. Amazon gives artisans a broader exposure and, if they want, fulfillment service. I don’t know the details of what Amazon offers sellers but I assume the more services they want the more they pay but their selling price on Amazon will not be higher than their selling price on their own website or at participating vendor’s websites otherwise it would be a problem. So the difference that I see is that an artisan’s choice to sell on Amazon doesn’t result in necessarily higher prices to customers or vendors being locked out of carrying their brand. It’s still just the free market operating without any coercive monopoly control.

I’ve been thinking about this and asking myself “is this any different from the artisans that sell on Amazon?”  And my thinking says yes, it’s different. Amazon gives artisans a broader exposure and, if they want, fulfillment service. I don’t know the details of what Amazon offers sellers but I assume the more services they want the more they pay but their selling price on Amazon will not be higher than their selling price on their own website or at participating vendor’s websites otherwise it would be a problem. So the difference that I see is that an artisan’s choice to sell on Amazon doesn’t result in necessarily higher prices to customers or vendors being locked out of carrying their brand. It’s still just the free market operating without any coercive monopoly control.

Maybe the added value of these wholesalers is they'll protect your business from unfortunate events... Like what may happen if you turn them down.