Not black; gray, said Ms. Edwards,
of Europe by Net. Black market is a term typically
reserved for sales that violate price-control
laws. "Gray market is what we're doing, and
we don't shy away from it," she said.
Ms. Edwards, whose site is six
years old, said the company took orders on its
Web site, found the furniture at retail stores
in Europe and shipped it to customers. This is
considered operating in a gray market because
customers don't buy the goods from sellers with
official agreements with manufacturers.
Her prices, Ms. Edwards said,
are between 20 percent and 40 percent less than
those charged by retailers in the United States,
even after shipping costs. "If you have the
time to buy in Milan and ship it to yourself,
it'll cost you a lot less. But for some reason,
the U.S. distributors have decided to sell it
for much more," Ms. Edwards said.
Europe by Net's customers seem
comfortable with the site's approach, considering
the company's sales figures. Ms. Edwards said
the privately held business sold between $5 million
and $10 million worth of goods in its last fiscal
year, which was double that of the previous 12-month
period.
Ms. Edwards attributed part of
the growth to a new catalog last year - a marketing
vehicle that is one of the focal points of her
complaint with the European Union. The complaint
alleges that the five Italian furniture makers
threatened to pull their ads from Britain's edition
of Elle Decoration, which is published by Hachette-Fillipachi,
if the magazine did not stop distributing Europe
by Net's catalog along with newsstand copies of
the magazine.
The magazine has stopped distributing Europe by
Net's catalog, according to Tony Long, a
spokesman, but only because the Web site has not
paid a bill of roughly $30,000. "We're
quite used to seeing some advertisers being upset
by what others do, but it's not our business to
ban advertisers based on the actions of other
companies," Mr. Long said.
Ms. Edwards said Elle had not
satisfied its obligations under the contract,
but that she would pay the entire bill if Elle
described, in writing, how the magazine had been
pressured by furniture manufacturers.
"This situation will ultimately
be resolved," she added.
More troubling for Ms. Edwards's
company is what she claimed was a concerted effort
among manufacturers and competing retailers to
spread falsities about the Web site. For instance,
Ms. Edwards said, prospective customers had been
told that the company sold counterfeit furniture,
a claim she denies.
Furniture makers are far from the only ones bedeviled
by gray-market sales, analysts said. Manufacturers
of electronics, luxury handbags, jewelry and other
goods often sell those items to distributors in
the United States for higher prices than in other
nations, only to find enterprising e-tailers selling
the foreign items in the United States for less.
The Internet has made it easier
for consumers to find those cheaper items, said
Robert K. Passikoff, president of Brand Keys,
a New York-based consultancy. Retailers who cannot
demonstrate the value of their customer service
- and physical proximity - may well have to drop
prices to compete, he said.
Manufacturers, Mr. Passikoff added,
run the risk that customers who receive shoddy
service from gray-market sellers will associate
that bad service with the manufacturer. But if
that retailer strives to give good service, manufacturers
need not fear that the lower prices alone will
tarnish their image. "People understand they're
getting a deal," he said. "They won't
think less of the product."
The controversy between Europe
by Net and the upscale manufacturers underscores
the growing importance of the Internet for the
furniture industry. According to comScore Networks,
an online consultancy, online sales of home furnishings
for the first five months of this year were 38
percent higher than the same period last year
- nearly twice the growth rate of nontravel-related
goods. Jupiter Research, another Internet consulting
firm, predicts Internet furniture sales of $1.1
billion this year, up from $900 million in 2005.
Ms. Manzone, the Signorello of
Westport owner, for one, is hoping that customers
recognize the value of the services offered by
offline merchants. "We spoil customers to
death because they're buying a piece of architecture,"
she said.