Transshipped At A Cost
Such an endeavor can be costly. In addition to incurring the expenses to monitor and control transhipping, manufacturers can face significant loss of revenue—possibly millions of dollars—if they stop doing business with dealers that have transshipped their products. This makes it very easy to look the other way. And while new companies and new tracking technologies are emerging to help manufacturers monitor the unauthorized sale of their goods, these services also cost money. Even so, more manufacturers are investing in the defense of their brand.
On the retail side of the issue, transshipping is hurting authorized dealers, who find themselves investing time, money, resources and floor space to support a vendor's product, only to find themselves competing with a Web site that offers the product at two dollars above cost. Consumers, in turn, are unsympathetic to the problem. After shopping the market aggressively for the lowest price, a customer may know that the purchase was made outside of the standard retail arena, but he or she still expects the manufacturer's full service and attention should something go wrong with the product. Manufacturers often face the burden of returns and/or warranty claims for products sold cheaply by unauthorized dealers
"I had one vendor who found there were people selling camcorder batteries that were used on eBay," says David Lorsch, president and CEO of DBL Distributing. "The consumer didn't know they were used, and they sent it back for warranty service. The manufacturer said to me 'I'm not going to service them.' I said, 'What good is that going to do you? The poor consumer didn't know what he did.' They warrantied it."