On 2007-12-23 09:47:38 +0000, "Brian Sharrock" said:

Hmm .. ! I recently purchased a 'boiler' - if it did _boil_ there'd be
something definitely dodgy!

I researched , and considered the cumulative advice / recommendations of
this group, then 'googled' for the lowest price. This eventually was a site
in some obscure part of the country.

An order was placed and reasonably quickly a man form 'Pl*mb Cent*r' turned
up in a wagon bearing my boiler!

I commented; 'I'm surprised _you_ are delivering this', he grinned back and
said ' We do the final part of the delivery for all/most web-sales in this
area! . If you'd bought it from us you'd pay hundreds of pounds more and it
costs us the same to deliver this as it would cost us to deliver one you'd
ordered in the shop. Doesn't make sense to me; but I'm just the driver.
Enjoy your savings!"

I'm not sure who, if anyone, got 'ripped off'.

The boiler is now heating the house I saved hundreds of pounds, Brown's
Darling is less tens of pounds of VAT .... !

Possibly Discounted Heating?


The equation is a simple one, based around the avarice of distribution
- a fascinating world in its own right.

Plumb Center is both a distributor and reseller of products. The
three key metrics for a distributor a

- Margin
- Stock turns - how many times a year does a line item or a product
group or a manufacturer's product move?
- Volume

These all factor in their commercial negotiations with their suppliers.
It may also be that there is an agreed stock rotation back to the
manufacturer. The distributor will want to maximise that while the
manufacturer will want to minimise it. OTOH, the manufacturer also
wants to maximise product out of the door. This can lead to
additional fun and games such as manufacturers, at their year end,
getting a distributor to agree to take more product, but with an
agreeement that it can be rotated back in the next financial year - a
procedure colloquially known as channel stuffing. Auditors have
become wiser to this one than they used to be, because of course it is
overvaluing the manufacturer.

The reseller aspect of PlumbCenter also wants to keep its trade
customers (e.g. Mr Local Corgi) happy as well and so does not want to
be seen to be offering very low prices to non trade end users.

So the arrangement that you describe ticks all the boxes:

- PlumbCenter increases their sales volume and improves their stock
turns and volume and hence negotiating position with the manufacturers

- PlumbCenter is selling to a "trade" customer (e.g. Discounted
Heating) at prices that are invisible to Mr Local Corgi at the trade
counter.

- PlumbCenter can afford to make a small margin on the sale because
they haven't had to use their trade counter to make the sale or handle
30 day credit accounts with small traders

- Mr Internet Trader handles the payments with the end user, although
that is all credit card - not 30 day accounts.

- Mr Internet Trader can be anywhere in the country and never have to
physically touch the goods. There is a cost saving from that.

- Mr. Internet Trader has low overheads and only a cash flow to manage
with Plumb Center. However, almost all of his money is cash up front.
The 3-5% with the credit card company is factored into his margin.

So the answer to your question is that nobody in your supply chain got
ripped off. All were perfectly happy with the arrangement.

You could look slightly bigger picture.

- If Mr Internet Trader wasn't there, you would have bought the product
from the trade counter.

- If the trade counter wasn't selling to the public, you would have
employed a fitter who would have sourced the product.

On that basis, you could argue that Mr. Local Corgi is being ripped off.

The notion that Mr Brown's junta is missing out on some VAT warms my
heart considerably. Don't feel guilty about that - he only wastes it.