But losses mount for the home furnishings e-retailer that went public in October.
For cutlery brand manufacturer Wüsthof, maintaining its pricing and branding policy trumped millions of sales on Amazon.
As it celebrates its 200th year as a cutlery brand rooted in Germany, Wüsthof-Trident of America Inc. is slicing through its network of distributors and retailers to focus only on those that support its pricing and branding strategy.
This year alone, the manufacturer—which is often referred to as simply Wüsthof—has cut about 40 clients from its distribution list, and in the past year it has slashed to about 40 from 140 the number of unauthorized retailers selling its products online without regard to its brand and price policies. “The steps we have taken in the last 18 months are the most dramatic efforts we have taken in the U.S. to further tighten our distribution, protect the integrity of our brand, and create a fair and level playing field for our loyal retailers,” says Todd Myers, Wüsthof-Trident’s vice president of sales.
The retailers that Wüsthof has cut from its list of authorized sellers come in all sizes, and include Amazon.com Inc., No. 1 in the Internet Retailer Top 500, which ranks companies by their annual web sales and accounted for a significant portion of Wüsthof’s sales. The world’s largest retailer by web sales repeatedly undercut Wüsthof’s designated levels for both its minimum advertised price, or MAP, and its final selling price (which in Wüsthof’s case are typically identical) —apparently in order to win the “Buy box” on Amazon.com’s cutlery product pages, Myers says. It has now been three years since Wüsthof has wholesaled its products to Amazon, he adds. An Amazon spokesman said Amazon had no comment.
There are still plenty of third-party sellers retailing Wüsthof’s products on Amazon, and Wüsthof continues to search Amazon.com—as well as the rest of the web—to find and exert control over those that disregard its pricing and branding rules. The manufacturer works with Chicago law firm Freeborn & Peters LLP to set up retail pricing policies, and uses software from Channel IQ to monitor how its products are priced by online merchants. It then takes a series of steps to force compliance with its policies, including restricting cooperative advertising dollars and access to its products; if a distributor or retailer fails to comply, it cuts them off completely.
Although that can lead to at least a temporary drop in sales, Wüsthof makes up for it in sales through more cooperative sellers that support its products with effective online merchandising displays and high levels of customer service, Myers says.
When Wüsthof stopped selling in 2011 to Amazon, it forfeited close to $10 million in sales—“a nice percentage of our business,” Myers says—but it quickly made up for it with more sales through its authorized sellers. “We were up 20% that year,” he says.
In addition to taking steps to force compliance among its authorized sellers, Wüsthof also takes multiple steps to help customers distinguish between authorized and unauthorized sellers. It’s planning to post a list of unauthorized sellers on its web site, for example, and it’s using a certification badge service from Channel IQ that, much like the security seals common on e-commerce sites, let shoppers click an icon, in the form of an shield imprinted with “IQ,” to view a seller’s updated authorized status.
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