Monday, May 24, 2010

Exclusivity Be Damned - NFL loses anti-trust lawsuit - similarities with American Apparel ensue

I just heard on the radio about a Supreme Court lawsuit that was settled on behalf of an embroiderer who was denied the opportunity to sell NFL gear because of an exclusive arrangement the NFL had with Reebok. This sounds simliar to the restraints American Apparel is trying to accomplish with their anti-trust behavior in that by controlling the distributors then the company at hand can control the final prices for their products. Exclusivity be damned.

American Apparel has it's own problems now, but I feel that the underlying strength of this decision is basis enough to embolden my position that American Apparel is wrong by limited the type of resellers who can resell their blank t-shirts on esoteric conditions that are beyond their control like a requirement that somehow companies can only resell their products if they are printing on them. Yet, American Apparel sells these same products blank through their own retail stores which effectively makes them an exclusive distributor of the product. All of the actions American Apparel has taken to intimidate and force people out of that sort of business has only resulted in higher prices for the consumer at the cash register and is the type of behavior that anti-trust laws are supposed to prohibit. At this point I will resume selling American Apparel t-shirts at the prices that I feel are competitive and if they refuse to sell to me then I will have to forward my case to the relevant type of legal organizations that will hopefully prosecute and limit these unfair business practices that American Apparel has been implementing. I wonder if there are criminal liabilities or only civil liabilities in this type of case?

Tuesday, May 18, 2010

JUST SAY NO!!!!! to American Apparel orders

As the request come in for printing and shirts what should I do?

Typical request recently received:

"Please quote 300 T shirts being 250 lime green and 50 orange.
It has to be a sweat free product (made in USA works)"

Is the typical request. I could send them a link to American Apparel, which seems to be what American Apparel wants, all business for their shirts, or I could just say "NO" to the order. Or I could sell them an alternative.

The longer this issue continues for not being able to sell American Apparel t-shirts the more likely I will have to start selling alternative brands of wholesale t-shirts. American Apparel should leave the resellers alone so that we can continue to help them grow as they have in the past. I am trying not to go to the dark side, but maybe I'm on the dark side by supporting American Apparel to begin with.

Monday, May 17, 2010

What would Dov Do? American Apparel t-shirt conflict continued

What Would Dov Do?

Not to take this lightly, but I have to wonder what would Dov Charney, CEO of American Apparel, do if a company wouldn't sell him product that he needed to stay in business? Would he jump up and down and yell? Would he sue for violations of the anti-trust act for unfair business practices? Would he create a competitive line of clothing and/or offer alternatives to the items that he was being restricted from selling? Hmmmm, I wonder.

Most likely Dov would do all of these things in a random sequence, but yelling would be first. He's quite the successful business person and I am always impressed how he comes from behind and ends up on top.

The yelling is a given, but after that a serious discussion would ensue with a few confidants. As far as the anti-trust issues like monopolistic corporate behavior; Dov would sue asap. My response: I'm not in a position to pursue legal action since the cost are too high for lawsuits and to get good results you have to have the time to deal with the details. However, if this truly is an anti-trust violation of the law that harms the consumer by forcing them to pay higher prices by manipulating the distributors, then the government itself may be responsible for enforcing the law on this type of matter. But Dov, like myself, would avoid involving the government into his business as it usually just creates more problems in the long run. Nonetheless, if after a legal review that the government would enforce his rights to do business then I think he would immediately bring them in with the hopes of creating a 2nd front of attack against the company denying him products.

Team up with other manufacturers. Dov has been successful in the past at partnering with others to create new lines of clothing. I currently have some competitive lines of clothing that are available and I'll list those later. The problem here is that people do request American Apparel as a specific line for their jobs and I have offered it for over ten years and I don't bother trying to sell them an alternative in the short run. Case and point:

"I am looking for a quote on screen printed t-shirts for my XXX.

I would need approx. 100 American Apparel (no pocket) shirts in assorted colors in various men's and women's sizes. I would be looking to have a small one color logo put on the front left pocket area and one larger (but not large) on color logo printed on the back. All printing would be black."

Why should I have to say no to people or try to sell them something different? American Apparel has also improved it's quality and stock availability over this same period of time and I prefer selling that brand over some of the competitive brands. Dov would not give up selling these shirts easily, but would pursue other lines in the meantime. I feel the same.

Creating a new line of t-shirts isn't that difficult, but I don't have the financial resources to back this venture, as I have done before, except maybe in White and Black t-shirts. Private labeling a basic t-shirt that matches the style and color choices available with American Apparel is not as easy as it looks. Inventory and production schedules are the largest problem, but it is not impossible. Once again, the end result would most likely have a smaller color selection anyway, but underlying style factors like fit and texture with the basic American Apparel t-shirt in both Mens and Womens t-shirts are not unique enough to be exclusive. Dov would increase his debt and liabilities to create a new line, but I personally am not willing to invest my meager earnings into wholesale manufacturing since I don't the capacity for more debt.

The correct answer for what American Apparel and Dov Charney should do is:

Realize the shortcomings of the current prohibitive marketing strategy and separate his wholesale line from his retail line cleanly so that the wholesale market could continue to exist without interference or confusion with the American Apparel retail line of basic t-shirts? No brainer. The market forces for wholesale t-shirts are then returned to an equlibrium. As well, by offering a second line strictly for the retail market, as they have done with so many other specialty products that American Apparel has made, then they would solve this problem in the longrun instead of blaming it on smaller t-shirt distributors and screenprinters in the shortrun. The printable line of clothing should be separate anyway from what is sold retail. Thus by fixing this problem American Apparel would allow a competitive free-market system for blank t-shirts to exist again for the basic American Apparel 2001 and 2102 t-shirts and American Apparel would not be so Un-American in it's pursuit of complete control of the t-shirt industry.

Thursday, May 13, 2010

How the American Apparel customers are being ripped off by an American Apparel monopoly

Slowly American Apparel has restricted the flow of it's products to the wholesale market to create a monopoly in the retail market for their basic t-shirts. The end result is that the consumer is being ripped off by higher prices than are reasonable for their basic t-shirts. As a reseller of blank t-shirts for screenprinting to the public I find this alarming in many ways.

Number one, these restrictions eliminate a major product from my offerings which restricts who I can and cannot print for because of the availability of American Apparel t-shirts. Two, it has affected my ability to increase my market share by being forced out of the market for basic American Apparel t-shirts. Three, it has limited my companies ability to create a profit from buying and selling t-shirts.

Is this legal? Is this right? My personal opinion is that is not legal and there is definite harm being done to the consumer so that American Apparel can increase it's profits in an unfair way. I am not sure how far I can go to fight this, but it is alarming that they have gotten this far by implementing such a non-American strategy in the manipulation of the pricing of their products to the retail customer.

Here is a link to an American Apparel retail page for the basic 2001 t-shirts: American Apparel retail pricing for the basic 2001

Many companies were selling these shirts at competitive prices from $5-8, which is the normal price for a basic wholesale t-shirt. These companies have been threatened with litigation and forced to agree to ridiculous terms in order to keep selling these items. I was reselling the basic American Apparel t-shirt here on a sliding scale based on the number of shirts a customer buys: American Apparel t-shirts online at The basic shirt cost about $7/ea on white. How can American Apparel restrict the sale of it's products to the retail market so that it can enjoy a monopoly for the same product at an enormous retail markup. If it was a different product that it offers to the wholesale market at a lower price then I could understand, but to create a reason, "they only sell to companies that print on the shirts", then they violate this rationale by selling the product unprinted themselves. I can delve into the details later, but essentially by limiting the distribution and manipulating the distributors American Apparel is ripping off the retail customer for this basic t-shirt.