eBay for Small Business

Consumers pay the price for bully brands

eBay launches Europe-wide campaign to outlaw restrictions on online trade

Consumers are missing out on recession-beating online bargains because of underhand tactics used by manufacturers.

That’s the finding of a special investigation carried out by online marketplace eBay revealing the threatening behaviour of big brands. Half of online retailers have suffered bullying from suppliers over online sales, the investigation found.

eBay’s study comes at a time when hard-pressed consumers are increasingly turning to the internet to save money. To defend consumer choice, eBay is today launching a campaign to change EU law to prevent brands from blocking internet sales, and is calling on all eBay users across Europe to sign a mass petition calling on lawmakers to back them. European law governing internet sales is up for revision this year.

The investigation lifts the lid on the tactics used by some of Europe’s leading brands. Based on the experiences of 900 small online retailers, over half of them in Britain, the investigation reveals that:

  • 49% of British online retailers have been banned from selling certain products online or on particular websites.
  • 45% have been banned from offering unauthorised discounts on goods sold online.
  • 42% have been tied up in red tape to make it harder for them to sell goods online.
  • 33% have been forced to meet complicated conditions on how products are displayed if they want to sell online
  • 39% have experienced mysterious, unexplained supply problems as a result of selling goods online.

British consumers who buy online bargains from abroad find their choice is even more restricted, because suppliers in Germany, France and Italy put even more pressure on small businesses. Across all European markets, 55% of online retailers have been banned from selling certain goods online, 55% have been banned from offering discounts, 47% have been tied up in red tape when selling online, 40% have had complicated display conditions impose, and 45% have suffered mysterious supply problems.

Despite the significant scale of the problem, policy-makers are scarcely aware of it, research released by eBay reveals. A cross-party poll of politicians conducted by Total Politics magazine on behalf of eBay shows that 74% of Labour politicians, 67% of Conservatives and 76% of Liberal Democrats were completely unaware of the restrictions imposed by some manufacturers. But they required little convincing that such practices are unacceptable – 64% of Labour politicians, 70% of Conservatives and 66% of Liberal Democrats backed tougher action to tackle the problem.

eBay’s campaign urges lawmakers to put this commitment into practice, taking decisive action against such practices by:

  • Making it illegal for brands to impose blanket bans on internet sales.
  • Making it illegal for brands to block the resale of items that consumers have already bought.
  • Preventing manufacturers from insisting that small internet retailers must have a bricks-and-mortar store before they can sell online.
  • Introducing a legal presumption against other restrictions on online trade, except where the manufacturer can prove there is a clear consumer benefit.
  • Requiring manufacturers to base their distribution policies on objective criteria.
  • Requiring manufacturers to publish their distribution policies on request.

Mark Lewis, Managing Director of eBay UK, called on all eBay users to sign the petition. Mark said, “By blocking online sales, these manufacturers are denying consumers access to the widest possible selection of goods at the lowest possible prices. Consumers already value the convenience of the internet. And with the recession biting, consumers deserve a fair deal. That is why we are calling on lawmakers to break the grip that manufacturers have over internet sales. Brands must not be able to get away with this kind of threatening behaviour, and we are calling on shoppers and retailers right across Europe to speak out against it.”

One online retailer who is speaking out against the bully brands is John Pemberton, owner of GMDC Global Limited. John said: “Like many online retailers, I have been on the receiving end of threatening legal letters from big brands simply because I am offering consumers a good deal on genuine designer clothes. It can be very intimidating. Only recently I was threatened by a big high street name for selling goods which I bought from a legitimate wholesaler. Small businesses like mine are no match for the huge resources of big brands, so it is hard to put up a fight, even though you’re in the right. Online retailers can find themselves lumbered with thousands of pounds of unsellable stock because they can’t afford to take the big brands on in court. Consumers are missing out on savings as a result.”

Karl Strodl runs the Golf Retailer Online Shop on eBay. He said: “I run the internet side of the business, and we also have a bricks-and-mortar shop. We started selling online about two years ago as a way to grow the business. Some of our suppliers are brilliant – it is really easy to become an authorised online seller. But others make it as hard as possible to sell their products online. If you try to sell on eBay, some suppliers respond by sending you an intimidating letter, then they threaten to review your account and potentially end the supplies. Some suppliers tell us to bury price information so that it’s harder for customers to shop around. Suppliers are constantly moving the goalposts in order to stop us offering our online customers a genuine choice. It makes it really difficult for consumers to shop around for a good deal.”

Notes to Editors:

Methodology: eBay’s investigation is based on the experiences of 458 online retailers in the United Kingdom and 442 in Germany, France and Italy. Fieldwork took place in the United Kingdom between 1 May 2009 and 17 May 2009. Fieldwork in Germany, France and Italy took place between 17 June 2009 and 28 June 2009. Research was conducted by specialist research consultancy FreshMinds using an online survey. All businesses surveyed have a turnover on eBay of at least £100,000 a year (€117,000 a year). Total Politics poll: Total Politics magazine conducted an online survey of 602 politicians from all the main parties between 22 June and 29 June. Those surveyed included MPs, members of the House of Lords, MSPs, AMs, and local councillors. The full results of the survey will appear in the next edition of Total Politics, which will be available at the end of July.