Is This Legal / Anti-Competitive Behaviour? Australian Electric Scooter Marketing Alliance (AESMA)

AssociatedLwalksmart @ WalkSmart on 05/05/2019 - 21:32
Last edited 05/05/2019 - 21:32

I have come up with an idea, and still in the phase where I "think its a great idea" and "cannot find any faults", but maybe tomorrow I will come to realise some issues with it.

I am thinking of creating a group, to allow members (businesses) in Australia to equally contribute financially to the marketing of products collectively. Applicable to companies that sell the same products as one another.

In my example, I would gather electric scooter distributors, retailers, wholesalers and importers into a forum where marketing campaigns can be contributed collectively by choice.

For example, for a specific electric scooter, all business involved with supply can choose to contribute to the cost of a significant influencer promoting that product.

Businesses that choose to be part, must contribute equal amounts, and they must benefit equally e.g. that influencer mentioning all businesses at the bottom of all posts etc….

I think it would be a good way to split up large marketing costs that small to medium businesses would otherwise not be able to do. While also helping to develop a particular product in Australia.

Some issues come to mind

  • Will the businesses that choose not to contribute to a campaign, still benefit? And will this influence their decision to be part of that marketing campaign?
  • Could this promote anti-competitive behaviour?
  • Will businesses even be interested in joining? Any ideas to get them interested if so?
  • Who will be in charge of the group? Who will run the marketing campaigns and organise? Must be no conflict of interest.
  • Cost vs benefit for different categories of businesses. e.g. supplier vs retailer and different profit margins?

I do not think there is a difficult solution to the issues above

What other risks or issues are there to consider?

General Discussion

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Comments

  • GordonR on 05/05/2019 - 23:42
    +1

    A couple of issues spring to mind:

    (1) If your "electric scooter alliance" promotes electric scooters in general, then that will enhance the market for all vendors, even those that don't pay to be in the alliance.

    (Usually known as the free-rider problem)

    (2) How would you decide on a fair "membership fee" for sellers of vastly different sizes.

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 10:14

      Hi,

      It would be product specific, and yes, ultimately "free riders" will benefit, however, the benefit would need to be significantly less than the businesses who contribute and have their information as part of the advertisement.

      I would say, the non-members who choose not to join would fall behind as the members gain ahead.

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 10:15

      There would not be a membership fee, rather, a list of campaign options that members can choose to participate in,

  • mskeggs on 06/05/2019 - 06:06
    +2

    Not illegal if you aren’t price setting.
    Many industries do this already, so you will have plenty of role models.
    Search “peak body” for the industry you are interested in and it will usually show who it is.

    • poboy on 06/05/2019 - 16:07
      +1

      VACC springs to mind (lobby group for Victorian motor repairers). Essentially, you need to both deliver value (so people pay your fees) and also safeguard value (against people not participating - e.g having a quality seal / group protection guarantee).

  • pao2x on 06/05/2019 - 06:39

    Who will join and for how much?
    Best of luck I hope you get escooters legalised throughout Oz, that’s your main issue

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 10:18

      There would be no subscription fee, just campaign option prices

  • whooah1979 on 06/05/2019 - 07:37
    +2

    This won't work.

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 10:15

      Ok

      • whooah1979 on 06/05/2019 - 10:41

        Some retailers would wait for AESMA to start their campaign and then ride on their coattails.

  • tomsco on 06/05/2019 - 07:54
    +1

    Influencers are a bane on society.

  • chumlee on 06/05/2019 - 08:20

    Other re-sellers not part of your alliance can just ride off your marketing work.

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 10:17

      Possible solutions:
      - advertising would only mention participating retailers
      - campaigns will only go ahead if all significant businesses of that product are contributing.

      • Ughhh on 06/05/2019 - 10:40

        advertising would only mention participating retailers

        Is there a point in non retailers ie. Wholesalers, distributors and importers to pay for this?

        • Associatedwalksmart @ WalkSmart on 06/05/2019 - 10:46

          Good point,

          One thought would be, retailers have options on where to source items from. If they are not willing to support a marketing campaign, then the retailer can choose to go with a distributor willing to contribute.

          Then you would argue, what if this particular wholesale has terms (or pricing) worse off?

          It depends on many circumstances, such as whether there is a sole distributor, how many sales channels etc…

  • one man clan on 06/05/2019 - 09:17

    Don't industry bodies like this already exist? Like the minerals council, Australian lamb, etc?

    I was recently looking up cloth nappies and there's some kind of association for that, and they give out awards but only give awards to member groups. There's only about 8 members and none of the brands I've heard of.

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 10:17

      Yeah maybe, I am not sure

  • bongom on 06/05/2019 - 10:23
    +1

    I'll let the Pedestrian Council of Australia know they have a new competitor?

  • Seraphin7 on 06/05/2019 - 10:43

    Nothing anti-competitive about it at all.

    Whether or not this is a sound business/marketing model is entirely different question …

  • [Deactivated] on 06/05/2019 - 10:56

    Will businesses even be interested in joining? Any ideas to get them interested if so?

    As a business owner, I can tell you immediately, NO.

    My thought process/questions:

    1. Why would I enter into a contract where I surrender executive decision?

    2. How is fair usage calculated?

    3. Which is a bigger factor for the success of my business? Product exposure (which you're offering) or competition (which you are potentially making worse)?

    4. Wouldn't the biggest beneficiary of this system be those who are not contributing and still selling the same/similar products?

    5. "Influencers" could include everyone. What's stopping you from taking everyone's money so you and your mate can split it, all for doing nothing but enjoying my product samples?

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 11:06

      You raise some good points,

      1. There needs to be value brought to your business. This value needs to outweigh the risks and potential flaws. We would hope to have an influencer contract on the table being worthwhile for members to participate in.
      2. Ultimately, all members can use marketing media as they wish.
      3. As I mentioned, risk vs value
      4. In some instances, maybe. However, the campaigns would need to be built around a model that favours the contributors significantly. I believe this can be done. It would then be in the best interest of members to participate if they are able to.
      5. Possible solution: Having an independent intermediary (maybe marketing company) organising this arrangement
      • [Deactivated] on 06/05/2019 - 11:13
        +1

        You mention risk vs value.

        When I deal with marketing companies, I discuss cost vs value.

        The difference between the two is that I know if my campaign fizzles via "traditional" campaigning (ie. not collective marketing), I am only out for cost.

        In your proposal, I may be funding someone else's take over of my business. This would be catastrophic.

        To mitigate this risk, you have to ensure the user pay calculations work out for those who cannot move the same volume as others. Ie, you have to be able to view the sales and allocate cost to the biggest seller. The only way to achieve this is to supply the product, allowing you to attach a percentage of the marketing fee to the product. The retailer that buys the most will end up paying the most for said marketing.

        This model is also known as distributorship.

        • Associatedwalksmart @ WalkSmart on 06/05/2019 - 12:13

          Yes, in this case, the value needs to be significantly higher. Arguably, due to EOS / efficiency with marketing, this may be achieved collectively rather than the options singularly.

          I think most business owners in this industry would assume they are flexible with sustaining large volumes, so this would only be an opportunity. This would vary industry to industry

          • [Deactivated] on 06/05/2019 - 12:33

            @walksmart: Your biggest retailers are overseas. AliExpress, banggood, etc.

            If their business is anything like mine, I wouldn't place any emphasis on Australia. Small market, overly regulated and highly litigious.

            Good luck getting these companies that operate on razor thin margins to take a risk here. Local operators would realise that collective marketing is primarily going to benefit the aforementioned giants.

            Your idea is essentially removing the patent holders', manufacturers' and the distributors' role of marketing and placing that risk and cost to retailers. Only the most foolish retailer would voluntarily enter such an arrangement.

            • Associatedwalksmart @ WalkSmart on 06/05/2019 - 12:39

              @[Deactivated]: The companies you have mentioned are nothing like the "small to medium" businesses I am referring to in this post.

              In the electric scooter industry, local operators have an advantage over overseas retailers. Like any other vehicle (and bikes), most would not buy online overseas. Servicing and support is usually non-existent.

      • peteru on 06/05/2019 - 12:32

        influencer contract

        What has the world come to!

        • [Deactivated] on 06/05/2019 - 12:36

          It's really no different to third rate celebrity endorsements.

  • [Deactivated] on 06/05/2019 - 13:08

    the cost of a significant influencer promoting that product.

    What would you consider as a significant influencer?

    • Associatedwalksmart @ WalkSmart on 06/05/2019 - 13:14

      https://www.instagram.com/danbilzerian/

      But, one with an audience in Au

      • Ughhh on 06/05/2019 - 13:20

        Might as well link the Kardashians or Taylor Swift.

        Have you found 1 influencer with AU audience, who's audience isn't mainly female who are into fashion and beauty?

        • [Deactivated] on 06/05/2019 - 13:36

          and is not already an influencer for another major brand.

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