[sfifs]

> but they are building a platform that would make it easy and more affordable for manufacturers to sell directly to customers

Manufacturers really don't want to be sellers in most categories. As a manufacturer, you want to be paid just as soon as you produce the product because you want to reduce your working capital. So you sell to retailers and distributors on say 15 days or 30 days terms and get paid with certainity. In fact for a manufacturer, the "customer" is a distributor or retailer - end users aee called "consumer".

Retailers and distributors take on the risk of locking in their money into inventory until the product gets sold to final customers.

[petra]

True. But some manufacturers in the Alibaba platform already solve these problems with alibaba's financing services , which remove all/most of their risk.

And if that all allows some manufacturers to offer cheaper prices, other manufacturers will have to do the same.

[sfifs]

Sure you can.... but working capital financing always comes with a cost and typically it's quite high. If you're funding inventory with your own money which is generally cheaper than a working capital finance, you're still taking a hit on opportunity costs.

If you're a small manufacturer with an unknown brand, you may still be forced to go this route to sell your products.

If you're a hundred million dollar brand with consumer demand, you typically don't need to bother being a seller yourself as well and can easily pass on the risk to a distributor or retailer and turn around your cash faster.

Branding often trumps pricing. Most products in the world are not purchased with detailed price/features comparison analyses (soap, cola, food) because our minds would get exhausted making so many choices.

[petra]

Maybe you're right about capital.

But branding - sure if you have $100M to advertise your product, you have branding power in the classic sense(cola/soap). But branding on the Amazon platform is of a much weaker form, more tied to reviews, and with a good product, it's not that hard to get those.

And the other case is of course of the $100M brand - he has the brand, not the reseller.