Business ethics question. Am I in the wrong?
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  1. #1
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    Default Business ethics question. Am I in the wrong?

    I have a store that I sell honey to. They buy and resell goods that are produced locally. Milk, baked goods, gifts and of course honey. There is another store that I sell honey to. It is more of a gift shop that sells some food items. Chocolates and some locally produced food items, but mostly gifts.

    The first store is upset with me because they were under the impression that I was only going to sell to them and feel that I should not be selling to their competition. The 2 stores are in 2 different towns and 6 miles from each other.

    Am I breaking some sort of unwritten code here? Or am I right to tell them that I can not promise I won't be selling to other retailers.

    All opinions welcome please.

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  3. #2
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    Default Re: Business ethics question. Am I in the wrong?

    No, we live in a fair market country and you are allowed to sell to whoever you want to. Unless you had a contract listing them as the only seller of your honey within so many miles - you did entirely nothing wrong.

    You can always inform them that this is a way of income for you and have more than they can sell. If they would like some kind of "exclusive rights" to sell your honey you need to set minimum orders that are worth your time of doing so. (They can't just buy a few jars here and there, but need to bulk order by x amount of boxes).

    They obviously like what you have or they wouldn't be upset. People in business usually only get upset when expectations were "assumed" or just not discussed. I'd explain how much you appreciate them as a customer but don't be afraid to stand up for yourself or your product. Some people in business get a kick out of walking over "the little guy".

  4. #3
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    Default Re: Business ethics question. Am I in the wrong?

    As long as you are selling to both stores at the same price, I don't see a problem.
    Thankfully, the bees are smarter than I am. They are doing well, in spite of my efforts to help them.

  5. #4
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    Default

    I think it is ok to charge them 2 different prices. Sounds like one is more difficult to deal with, that costs extra.

  6. #5
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    Default Re: Business ethics question. Am I in the wrong?

    i liked myke's reply. if the complaining store owner is willing to purchase all you produce then by all means sell it all to them. if not then it's hard to see how they have a legitimate grievance. on the other hand if they are moving a lot of your honey and you want that to continue you'll have to figure out how to be 'diplomatic' about it.
    journaling the growth of a (mite) treatment free apiary started in 2010. 20+/- hives

  7. #6
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    Default Re: Business ethics question. Am I in the wrong?

    We tell all our stores that they can sell it for whatever they want AS long is not less than a bottom price we set with them. We also agree to not sell it ourselves for less than the bottom price. We, however, don't sell direct to customers unless it is a special event. Ain't nobody got time for that.
    Splitting a first year hive successfully https://youtu.be/ZfRTreQ-S9c

  8. #7
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    Default Re: Business ethics question. Am I in the wrong?

    if the complaining store owner is willing to purchase all you produce then by all means sell it all to them. if not then it's hard to see how they have a legitimate grievance. on the other hand if they are moving a lot of your honey and you want that to continue you'll have to figure out how to be 'diplomatic' about it.

    Amen
    “The single biggest problem with communication is the illusion that it has taken place.” -George Bernard Shaw

  9. #8
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    Default Re: Business ethics question. Am I in the wrong?

    I suspect the real beef is between the two shop owners.

  10. #9
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    Default Re: Business ethics question. Am I in the wrong?

    Quote Originally Posted by AR1 View Post
    I suspect the real beef is between the two shop owners.
    Agree with this. There's no ethical issue here unless you stated in some way or implied that they had an exclusive agreement with you. Doesn't sound like it. I suppose you could always swap out the label and / or the name of your brand if you really wanted to.
    "My wife always wanted girls. Just not thousands and thousands of them......"

  11. #10
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    Default Re: Business ethics question. Am I in the wrong?

    I sell in two places in our small Town including my own stand. The places have a totally different clientele. I don’t see a problem with it.
    Proverbs 16:24

  12. #11
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    Default Re: Business ethics question. Am I in the wrong?

    Thank You all. I really needed to hear that. I actually thought after the surprise phone call the other day that I had done something wrong. I caved and told them that I would be more mindful of location when selling to other stores. Then after I hung up, It was eating away at me for 2 days. I just felt like I was being strong armed. I was really upset and angry with them. I was planning on talking to them about it but I had to be certain that I was right. Nothing worse than going into a discussion with a false sense of confidence.

    I do value this stores business as they buy about 1/3 of my honey. I considered changing my label to sell to other stores, but I love my label and I love the name. Honestly, in my opinion they are both AWESOME and I will not change. I also offered them to by the honey from me in bulk for even less money and they could buy their own jars and their own labels and sell it as theirs. I thought that was a great resolution... they did not.

    The owner's husband suggested buying all of my honey up front since I have been selling out by Christmas every year. I don't think this will work because I really don't think they can move the other 2/3. especially at the price they are selling it for ( I should add, they are marking up 100%) That is another thing that has always annoyed me, but who am I to tell someone what to charge. If they ever found out what I sell direct to my customers for, they would probably be upset with me for that too. I'll tell you folks. I sell for 9.00 a lb. to my customers, the store sells it for 13.95 marked up from 7.00. There is no way I can ask my customers for that kind of money. especially online customers who now have to pay close to 7 bucks for shipping.

    As for buying all my stock in the beginning of the season, well I don't plan on only producing 300 lbs. I , like any other business person, no matter how little at the moment, am forward thinking. I have goals man! What happens WHEN I hit my goal of 800-1000 lbs? Then after that when the goal shifts to 1500 Lbs?

    Another reason I don't want to sell them all the honey is I simply don't want 1 exclusive store. No matter how much they sell. I don't want to put all my eggs in one basket. What if they decide to retire and close up shop? What if the place burns down? What if they dump me for some other thing I upset them over? Now I have to go out and find more retailers to help move my product. My goal is 3 or 4 stores. I have 2 now. the stores cut into my profit margin, but they do move a decent amount of my honey at 1 time and I know they will always call on a somewhat regular basis.

    I now have the confidence to go talk to them. My original thought was to tell them that I see things their way and wouldn't sell to anyone else and stop selling to the other store (which I already told them) and then just keep doing business as usual. I do want to be respectful though and I am not going to lie to them. I think I will tell them how much I really do value their business, but this arrangement needs to work for both of us. I can not promise that I won't sell to other stores and I won't stop selling to the other store. What I can promise is that I won't promote other stores businesses by Liking or sharing posts from the competitor (this is what really triggered the store owner in the first place) although I do like and share her posts about my honey. So moving forward, no liking and sharing ANYONE'S posts. I just don't have time for this drama!

    Thank you all very much for your opinions and support. I really do feel so much better now. I gotta tell you, I lost sleep over this and it has been on my mind for 2 full days now.

    Thanks again

    Todd

  13. #12
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    Default Re: Business ethics question. Am I in the wrong?

    Quote Originally Posted by trottet1 View Post
    That is another thing that has always annoyed me, but who am I to tell someone what to charge.


    Thanks again

    Todd
    And who are they to tell you to whom you can sell your product?

    Also, as you say, what if they close up shop for some reason. If you sell to them exclusively you will alienate the others and they will find another source leaving you with neither store.

    Alex
    Ten years of Beekeeping before varroa. Started again spring of 2014.

  14. #13
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    Default Re: Business ethics question. Am I in the wrong?

    https://youtu.be/xKGeHuln08A

    In all seriousness MTNMYKE got it right.

  15. #14

    Default Re: Business ethics question. Am I in the wrong?

    Had that challenge last year new veg market customer. Turns out has bad feeling with the farmer a few miles away. Farmer I pollinate is Punkin’s. and sell a couple cases of honey to. Where the veg market was selling a lot more honey. When he found out that I was selling honey I all most lost the account. Next year the farmer will get a different label to keep both happy.

  16. #15
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    Default Re: Business ethics question. Am I in the wrong?

    Nothing wrong with what you are doing. I wonder how they would feel if you told them who they could sell to? That is what they are attempting to do to you.

    Once they own it (by buying from you), it is theirs, and they can sell it to whoever they wish, for whatever price they wish.

  17. #16
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    Default Re: Business ethics question. Am I in the wrong?

    I am so very glad to see discussion of "Beekeeper Ethics" taking place.
    I worry that these principles are eroding as time passes.
    Beekeeping is an "agricultural community" and CAN funtion harmoniously if some amount of thought is given toward unity.
    Maybe a bit off topic but just wanted to throw my $0.02 in.
    I have exactly ONE more hive than you.
    That makes my opinion beyond dispute!

  18. #17
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    Default Re: Business ethics question. Am I in the wrong?

    A) You did nothing wrong. Don't sweat it.

    B) I wouldn't be so dismissive of an exclusivity agreement if I were you. Yes, it comes with some risks, but it also comes with some advantages.

    If you're open to it, I'd politely approach them and state that you weren't aware they were under the impression they had an exclusivity agreement with your honey but you are welcome to discuss it if they'd like. I'd then set out the terms:
    1) They MUST buy 100% of your honey from you, in cash, at the time it's extracted each year. They store it from there. If they fail, they breach exclusivity.
    2) The exclusivity comes with increased risk to you, so honey won't be sold at $7 /lb, but at $9 /lb (or whatever number you want).
    3) You have the right to dictate the retail price (or a range, no less than $X and no more than $Y without your prior written approval).
    4) Set a term (a year, or two, whatever you want). You could even include an option to renew at a new rate, or just renegotiate your rates then.
    5) Offer some promotional incentives. Say they can put a sign up that says its only available at their store. Give them a few days a year for your customers to come "meet the beekeeper."
    6) Then set damages. If they fail to buy all of it, the exclusivity is broken and they pay you $Z. If you sell any directly, you give all the profit over $9 /lb to them.

    There is significant value in having a secured revenue stream, getting paid up front, and not having to hold onto inventory. It isn't your concern how they sell the honey though. If they're selling 100 lbs a year, if they get 400 and have to move it, that's their issue as long as they paid you in cash. And realistically speaking, if you're producing 300 lbs a year and selling out by Christmas, you'll have to find additional revenue streams once you get to 2,000 lbs a year. Does it matter if you have to find them once you hit that volume, or once you hit that volume AND exclusivity is broken?

    If they hear the terms and don't like them, tell them that you need to sell the rest of the honey in order to maintain a living (just like they need to sell other products in order to make a living), and holding onto inventory is costly for you (just as it is for them), so they are welcome to continue to buy under the old terms you have, depending on availability, and you'll continue to sell to other customers.

    But honestly, as store owners, if they don't understand all of this they probably aren't good store owners. They should understand (probably more than you) the value in diversifying income sources, the cost of maintaining inventory, and the risk of putting all your eggs in one basket.

  19. #18
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    Default Re: Business ethics question. Am I in the wrong?

    Agreed with above.

    If you can guarantee they will buy all your inventory and they will pay up front, sell exclusive rights to them. If not, they need to understand you have a surplus you need to sell elsewhere.

    If they are stressing you out, find other shops that will carry your product - even out of your area and build a wider clientele. It's stressful depending on one (or two) shops to sell your honey to and when that one shop also stresses you out to where this is no longer enjoyable for you, makes it even worse. Having multiple shops to sell to gives you the power to say NO to the difficult shops, or at least put you in the mind set to stand up for your product since you don't NEED them to move product.

    When I was selling honey I had a list of shops who would buy anything I could produce. I sold to antique shops, gift shops, local "tourist" shops (tourists love buying it as a souvenir), etc. Diversify yourself and the stress will go away. Build up your brand and this "difficult" shop will suddenly become your best friend as they'll realize if they don't carry your honey, and people want it, they will just buy it from their competitor.

    It may also be a good idea at this point to start having shops sign a work order outlining payment terms (even if due at receipt) along with your terms outlined in the work order. They sign this upon receiving your product and if they ever have a problem you can direct them to the work order where it lists no exclusivity. Stand up for yourself and your product in a professional way and it will only help you grow as a respected business person as well as a quality producer of honey.

  20. #19
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    Default Re: Business ethics question. Am I in the wrong?

    If they want exclusivity, then explain that you intend to grow your business and you can go from having 300 lbs. of honey a year to 1200 lbs. a year. Are they ready, willing and able to handle that amount? Can they move it? I would offer to bottle it for them and then let them put their own label on it. If they don't want to, oh well.
    FL beehive and swarm removal service.
    www.123bees.com

  21. #20
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    Default Re: Business ethics question. Am I in the wrong?

    Thank you all for your support and ideas. Much appreciated.

    Todd

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