A Forrester report points out challenges faced by some business-to-business firms working online.
House of Brides sues Alfred Angelo in a case that involves minimum pricing policies.
House of Brides Inc., which operates 11 retail bridal shops and an e-retail store at HouseofBrides.com, is suing one of its long-time dress suppliers for $30 million after the supplier stopped selling its products to the retailer. House of Brides says Alfred Angelo Inc. stopped selling to it because the retailer refused to price products according to Alfred Angelo’s marketing policy. According to House of Brides, the policy requires that it sell products at minimum prices set by the supplier and that also set prices higher for products sold online than for those same products sold in stores.
House of Brides says Alfred Angelo’s mandatory minimum pricing policies violate several antitrust laws and limit e-retailers’ ability to compete with retail stores, including Alfred Angelo’s own chain of bridal boutiques. The lawsuit says Alfred Angelo’s marketing policies set a manufacturer’s suggested retail price (MSRP) and a minimum pricing policy (MPP) that resellers had to agree to. The policies require online retailers to abide by MSRP prices, while retail stores can sell according to MPP. MSRP prices reflect a mark-up of up to 250% above wholesale cost, the suit says, whereas Alfred Angelo’s mark-up for MPP is up to 200% more than wholesale. “Alfred Angelo set its MSRP substantially higher than its MPP, resulting in [House of Brides] inability to compete against retail stores, including Alfred Angelo’s retail stores,” the suit says.
Alfred Angelo Inc. and one of its attorneys did not respond to requests for comment.
House of Brides says minimum price requirements in the bridal industry aren’t unusual, and that it’s come under attack from wholesalers, manufacturers and retailers before for not abiding by them.
“[House of Brides] has received verbal and written demands from manufacturers and wholesalers who act as dual-line distributors, demanding that it increase their prices,” the suit reads. “On each of these previous occasions, [House of Brides] has usually explained that they will not increase their prices and that the conduct threatened would be a violation of the antitrust laws and unfair to the consuming public.”
House of Brides, which has been in business since 1929 and began selling online in 2002, says it charges fair market prices for products and that those prices are always less than the minimum resale price. It says it has sold Alfred Angelo merchandise for 40 years and moved approximately $1.7 million of the brand’s merchandise last year. House of Brides’ is also seeking damages for dress orders Alfred Angelo failed to fill or shipped late, and for shipments of defective dresses that caused the retailer to lose sales and harmed its reputation.
Brian Kilcourse, managing director at Retail Systems Research, will discuss how e-retailers can find success by knowing what their competitors are doing and being more price competitive during a session titled “Expense ratios and margins—how you compare” at the Internet Retailer 2012 Conference & Exhibition in Chicago in June. The IRCE $200 early-bird discount expires March 31.