Vass distributorships, globalization, protectionism, etc...

[demeis]

Sorry for the late fill in but what were his prices and did he have a website? Also has anyone contacted him to find out why they stopped? I've noticed another german retailer that i wanted to purchase through does not ship Vass to the US as well.

 

[Demeter]

Originally Posted by aportnoy

So, the German store made this agreement without any coercion on anyone else's part. Laughable.

I'd be willing to put money down that the powers that be at the US retailers went and had a chat with Vass, or perhaps both Vass and Budapesterschuhe (iirc, that was its name), to put an end to that outlet, or else they would put an end to their own distribution.

 

[zjpj83]

As my previous post indicates, Vass is shooting themselves in the foot. The way to get a new brand known in a new country is to market it like crazy. This means letting as many people as possible get their hands on them so that when the owners are standing around the water-cooler and everyone's admiring their shoes, they can say who made them and get the word out. This is the opposite of what Vass is doing. You get people interested; then you cut the supply and make them pay full price. See, e.g., Edward Green and upcoming price hikes; see also John Lobb. Even though many discounted Lobbs are out there for the taking from "international" sources, I am at the point where I know the brand and like it so much that I would go to an American retailer and pay full price for a pair I liked enough. That's because they enabled me to test the waters by getting my hands on some "trial" pairs in the first place. The only way monopolies work is if you have customers in the first place who simply can't live without your product. In the United States, Vass skipped the first step - actually developing a sizeable customer base who can't live without their shoes - and moved directly onto the second step. When really all they're doing is getting a lot of people pissed off, especially when they know that you can go to Europe and buy the same damn shoes at 1/3 the price. We weren't born yesterday. Like learning to crawl before you learn to walk - to get devotees, you first have to get initial customers. Their genius market idea over here is quite simple - sell the brand as exclusive and premium. The only problem is that everyone knows the shoes are astronomically and laughably marked up. Whereas their selling point should have been the shoes' quality, instead they are focusing on the one thing they can't deliver. At least with John Lobb and Edward Green, I know if I go to London I'm paying the same (deservedly) high prices as I would over here. Yet BG and Vass think they can put a 300% premium on their shoes knowing they're not pulling the wool over anyone's eyes, and still expect flocks of people to fork over four figures for a pair. Dream on. The market is very tight at the top, and there's a lot of companies fighting for a small number of feet, so to speak. As a potential customer, I have to say: Vass isn't fighting very well.

 

[kcgreg]

Originally Posted by zjpj83

As my previous post indicates, Vass is shooting themselves in the foot. The way to get a new brand known in a new country is to market it like crazy. This means letting as many people as possible get their hands on them so that when the owners are standing around the water-cooler and everyone's admiring their shoes, they can say who made them and get the word out. This is the opposite of what Vass is doing. You get people interested; then you cut the supply and make them pay full price. See, e.g., Edward Green and upcoming price hikes; see also John Lobb. Even though many discounted Lobbs are out there for the taking from "international" sources, I am at the point where I know the brand and like it so much that I would go to an American retailer and pay full price for a pair I liked enough. That's because they enabled me to test the waters by getting my hands on some "trial" pairs in the first place. The only way monopolies work is if you have customers in the first place who simply can't live without your product. In the United States, Vass skipped the first step - actually developing a sizeable customer base who can't live without their shoes - and moved directly onto the second step. When really all they're doing is getting a lot of people pissed off, especially when they know that you can go to Europe and buy the same damn shoes at 1/3 the price. We weren't born yesterday. Like learning to crawl before you learn to walk - to get devotees, you first have to get initial customers. Their genius market idea over here is quite simple - sell the brand as exclusive and premium. The only problem is that everyone knows the shoes are astronomically and laughably marked up. Whereas their selling point should have been the shoes' quality, instead they are focusing on the one thing they can't deliver. At least with John Lobb and Edward Green, I know if I go to London I'm paying the same (deservedly) high prices as I would over here. Yet BG and Vass think they can put a 300% premium on their shoes knowing they're not pulling the wool over anyone's eyes, and still expect flocks of people to fork over four figures for a pair. Dream on. The market is very tight at the top, and there's a lot of companies fighting for a small number of feet, so to speak. As a potential customer, I have to say: Vass isn't fighting very well.

A brilliant summary on human nature!!!

 

[shoefan]

Originally Posted by edmorel

You could also call that collusion or an illegal monopoly. Free market means Vass sells the shoes to whichever dealers want to buy them. The dealers in turn sell the shoes for whatever price and to whoever they can sell them. By not allowing the german dealer to ship to the US and compete freely, Vass is helping BG maintain their outlandish margin as there is no where else to go for the shoes. I know that the world works differently, but in theory we should be able to buy what we want, where we want.
I beg to differ. As an analogy, consider the manufacturer of high-end stereo equipment. In order to convince customers of the quality of his product, the goods must be displayed and available for the customer to hear. This requires a retail location. So, if the manufacturer sets a minimum retail price, or prevents dealers from shipping the product out of a local area, is this unfair or unreasonable? Such a policy ensures that a customer won't go listen to the equipment at a retail outlet, then turn around and order if from a discounter over the phone or the web. Such a policy protects the manufacturer's (necessary) retail outlets that invest in the provision of the opportunity to hear the equipment; failure to provide such a policy may lead to the failure of the manufacturer, and then who benefits from that? Another analogy: patent law gives the patent holder a monopoly on the use of that patent. Is that a bad thing? Without intellectual property rights, there would be a lot less innovation. Finally, consider the Vass situation specifically. Hasn't Gabor invested several years of his time and money developing a market for Vass in the USA? Won't Bergdorf take on risk and expense by stocking and promoting Vass in the USA? Would it be okay/ethical for you to go the Bergdorf to try on the Vass shoes, then to order them from Europe? While one may not like the situation, and one may find BG's markup extreme, that doesn't make in improper or unfair. If you think the markup is too much, why don't you open a shoe store and sell Vass shoes for less? Free market does not mean that Vass sells to whichever dealer wants to sell them without restriction. Free market means that two parties can agree to buy or sell goods incorporating an agreed upon set of terms, as long as those terms are not illegal. Free market means that you or I am free to start a shoemaking company to compete with Vass, E Green, etc, and to come to whatever terms we like with our retail partners. Finally, a monopoly is not illegal per se; what is illegal is taking certain actions that (improperly) create, sustain, or exploit a monopoly. Moreover, most (illegal) monopoly actions take place on the horizontal level (e.g. between two shoe manufacturers doing price fixing or something similar), not vertically between a manufacturer and a down-stream customer. If it is not improper or illegal for Hermes to control how its products are priced and distributed from its company-owned stores, why should it be improper for Vass to accomplish the same through an agreement with its retail partners. No one says the German retailer cannot sell to Americans -- if you want to fly to Germany to buy a pair, I'm sure they'd be happy to see you! I flew to Budapest to order a pair, but I don't begrudge Gabor or BG their markup.

 

[chorse123]

Well, my likelihood of buying a pair of Vass shoes just went from probable to extraordinarily unlikely.

 

[kcgreg]

Originally Posted by shoefan

I beg to differ. As an analogy, consider the manufacturer of high-end stereo equipment. In order to convince customers of the quality of his product, the goods must be displayed and available for the customer to hear. This requires a retail location. So, if the manufacturer sets a minimum retail price, or prevents dealers from shipping the product out of a local area, is this unfair or unreasonable? Such a policy ensures that a customer won't go listen to the equipment at a retail outlet, then turn around and order if from a discounter over the phone or the web. Such a policy protects the manufacturer's (necessary) retail outlets that invest in the provision of the opportunity to hear the equipment; failure to provide such a policy may lead to the failure of the manufacturer, and then who benefits from that?

Another analogy: patent law gives the patent holder a monopoly on the use of that patent. Is that a bad thing? Without intellectual property rights, there would be a lot less innovation.

Finally, consider the Vass situation specifically. Hasn't Gabor invested several years of his time and money developing a market for Vass in the USA? Won't Bergdorf take on risk and expense by stocking and promoting Vass in the USA? Would it be okay/ethical for you to go the Bergdorf to try on the Vass shoes, then to order them from Europe? While one may not like the situation, and one may find BG's markup extreme, that doesn't make in improper or unfair. If you think the markup is too much, why don't you open a shoe store and sell Vass shoes for less?

Free market does not mean that Vass sells to whichever dealer wants to sell them without restriction. Free market means that two parties can agree to buy or sell goods incorporating an agreed upon set of terms, as long as those terms are not illegal. Free market means that you or I am free to start a shoemaking company to compete with Vass, E Green, etc, and to come to whatever terms we like with our retail partners.

Finally, a monopoly is not illegal per se; what is illegal is taking certain actions that (improperly) create, sustain, or exploit a monopoly. Moreover, most (illegal) monopoly actions take place on the horizontal level (e.g. between two shoe manufacturers doing price fixing or something similar), not vertically between a manufacturer and a down-stream customer. If it is not improper or illegal for Hermes to control how its products are priced and distributed from its company-owned stores, why should it be improper for Vass to accomplish the same through an agreement with its retail partners. No one says the German retailer cannot sell to Americans -- if you want to fly to Germany to buy a pair, I'm sure they'd be happy to see you! I flew to Budapest to order a pair, but I don't begrudge Gabor or BG their markup.

Brilliant Economics lesson.

 

[kcc]

greed, greed, greed ...

 

[edmorel]

Originally Posted by shoefan

I beg to differ. As an analogy, consider the manufacturer of high-end stereo equipment. In order to convince customers of the quality of his product, the goods must be displayed and available for the customer to hear. This requires a retail location. So, if the manufacturer sets a minimum retail price, or prevents dealers from shipping the product out of a local area, is this unfair or unreasonable? Such a policy ensures that a customer won't go listen to the equipment at a retail outlet, then turn around and order if from a discounter over the phone or the web. Such a policy protects the manufacturer's (necessary) retail outlets that invest in the provision of the opportunity to hear the equipment; failure to provide such a policy may lead to the failure of the manufacturer, and then who benefits from that?

Another analogy: patent law gives the patent holder a monopoly on the use of that patent. Is that a bad thing? Without intellectual property rights, there would be a lot less innovation.

Finally, consider the Vass situation specifically. Hasn't Gabor invested several years of his time and money developing a market for Vass in the USA? Won't Bergdorf take on risk and expense by stocking and promoting Vass in the USA? Would it be okay/ethical for you to go the Bergdorf to try on the Vass shoes, then to order them from Europe? While one may not like the situation, and one may find BG's markup extreme, that doesn't make in improper or unfair. If you think the markup is too much, why don't you open a shoe store and sell Vass shoes for less?

Free market does not mean that Vass sells to whichever dealer wants to sell them without restriction. Free market means that two parties can agree to buy or sell goods incorporating an agreed upon set of terms, as long as those terms are not illegal. Free market means that you or I am free to start a shoemaking company to compete with Vass, E Green, etc, and to come to whatever terms we like with our retail partners.

Finally, a monopoly is not illegal per se; what is illegal is taking certain actions that (improperly) create, sustain, or exploit a monopoly. Moreover, most (illegal) monopoly actions take place on the horizontal level (e.g. between two shoe manufacturers doing price fixing or something similar), not vertically between a manufacturer and a down-stream customer. If it is not improper or illegal for Hermes to control how its products are priced and distributed from its company-owned stores, why should it be improper for Vass to accomplish the same through an agreement with its retail partners. No one says the German retailer cannot sell to Americans -- if you want to fly to Germany to buy a pair, I'm sure they'd be happy to see you! I flew to Budapest to order a pair, but I don't begrudge Gabor or BG their markup.

Look, I don't want to beat a dead horse. As I am sure you read my last sentence, I recognize the way the world works. Equating this situation with patent law is a huge leap. As for the stereo equipment, almost all but the highest, highest end (+$100,000) is available from multiple channels, usually within the same state if not city. I do not begrudge BG their markup as I realize what a Fifth Avenue address cost and I also realize that their is an investment being made by BG. I do begrudge Vass taking a step which only benefits BG, the german seller has lost customers and US customers are now forced to pay close to three times the price. Mr. Vass and Halmos can do as they please with their product. As a customer, I can do as I please with my money.

small edit: "Every detail of the fine shoes is precisely made by hand in Vass' workshop in Rákospalota in Budapest's District XV. "I have a crew of 25 craftsmen who can turn out the same quality as the finest shoes in London, for one-third of the price," he (Lazlo Vass) states proudly

 

[nerdykarim]

Originally Posted by chorse123

Well, my likelihood of buying a pair of Vass shoes just went from probable to extraordinarily unlikely.
That pretty much sums it up for me, too. edit: This is because the price went from one I could almost justify to myself to one that is too far out of my league.

 

[zjpj83]

Originally Posted by kcgreg

Brilliant Economics lesson.

Yes and no.

I, for one, certainly wasn't decrying the legality of Vass's distribution methods. Rather, I was questioning its common sense.

As shoefan points out, this is done all the time. Car manufacturers tell dealers they can't sell over MSRP. Or, worse yet, they can't sell to people who live outside of their geographic region. Imagine visiting BG from out of town and being told you can't buy Vass from them becasue you don't live in the tri-state area!

But such strategies only makes sense when your product is in high demand, when there's a huge buzz, and when people simply can't wait to get their hands on your products without 1) paying over retail; or 2) waiting on a waiting list in order to pay retail.

This only works when 1) global demand exceeds global supply (in the case of items easily shipped from one country to an end user in another); or 2) when the product is such that shipping from a lower demand to a higher demand country is impracticable or impossible (cars).

Vass fits into neither of these categories. As a result, they are artificially trying to create a restricted distribution model when the circumstances do not logically permit one. Global demand does not exceed global supply. Shoes are easily shipped across borders.

They can restrict all they please the extra-national dealers from shipping to the United States, and they can charge a 5000% surchage for Vass sold in the United States for all I care. But why they think this will stop private parties from arbitraging the two markets is beyond me. And, moreover, why they think there are enough consumers in the United States who are big enough suckers to buy into the model is, to me, an even greater mystery.

Perhaps they don't want to expand capacity and are happy being a small market niche producer. It's certainly possible. Indeed, it had better be, because if they're banking on selling these shoes at these prices in the United States to the small number of either a) unsophisticated consumers who don't know any better or b) those who do know better but who have such much money that they don't care, then Vass is never going to be an Edward Green or John Lobb, period.

Originally Posted by edmorel

Mr. Vass and Halmos can do as they please with their product. As a customer, I can do as I please with my money.
Quite.

 

[itsstillmatt]

Nobody has mentioned that Bergdorf (to Boot) bought Vass in an awful way. The U last shoes are nice and Bergdorf stocked up only on the chunky/clunky looking shoes (except one U last). They bought Kiton shoes in a similarly uninspired way.

 

[demeis]

Whats the price at stores like Sky Valet and Drink Water (which i thought carries them but might be wrong)? Are they less than BG or the same?

 

[AlanC]

Sky Valet stopped carrying Vass, if I'm not mistaken. They may have some residual pairs remaining.

 

[whoopee]

While they carried Vass, SV's prices were considerably lower.