DirtyWorks said:
The brick and mortar shop and the website are likely getting nearly the same price. The website works on less profit margin.
Both retailers sign an agreement that sets a price floor. It is not directly controlling price, (which is illegal) but effectively that is exactly what it is doing. It is standard practice in the U.S. with Apple, Sony, Nintendo, Adobe among many others.
If you as a bike dealer, sign with Specialized or Trek, it's an exclusive relationship for some categories of goods. If the retailer carried other shoes, then the local rep would let the home office know and that would probably bring a next-day letter from a Trek/Specialized lawyer to cease and desist and the legal pressure would mount from there.
Welcome to U.S. retailing. Consumers don't seem to care about this version of price fixing. And most consumers are too short-sighted to understand the value of their local shop. Meanwhile the local shop's profit margins are getting crushed by the manufacturers anyway.
Actually, in the US, no agreements are signed(not talking about trekspec-edstores, just an IBD).
IN the US, Once I receive some 'product', I can sell it for whatever I wish BUT if noticed by manufacturer or wholesaler, when it comes to buying more of that 'product', it is likely I will be cut off...they will not sell to me.
How it still works is some MO/Web based outfits buy in 'alternative' distribution channels that are not the 'norm'. AS in, they often go direct to bike makers or manufacturers with a suitcase of Euros, and buy direct. EPS off OEM Pinarellos comes to mind. Too many bike makers participate in unrestricted OEM resale. They get great prices, order 5000 'extra' groups, resell to MO/Web based places.
Also container filling. Big container is 3/4 full, price to ship is the same. Call MO place 'R', say,
this price to fill container, cash, MO place says OK...and so it goes.