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"It also is not unheard of for Wal-Mart to demand to examine the private financial records of a supplier, and to insist that its margins are too high and must b
by joezydeco 9y ago
"It also is not unheard of for Wal-Mart to demand to examine the private financial records of a supplier, and to insist that its margins are too high and must be cut."
https://www.fastcompany.com/47593/wal-mart-you-dont-know https://www.fastcompany.com/47593/wal-mart-you-dont-know
- mschuster91 9y agoGood grace, these "business practices" are nasty. Thanks for the read.
- Analemma_ 9y agoAmazon does exactly the same thing though: http://www.newyorker.com/magazine/2014/02/17/cheap-words http://www.newyorker.com/magazine/2014/02/17/cheap-words (focusing specifically on books, but they do it across all sectors)
- mschuster91 9y agoWhen companies are able to do this, they should be broken up, period. Unfortunately we are in a system that's essentially the worst of capitalism with none of the good (and especially not with regulations), so there is no hope left and more jobs will migrate to China. That's what Trump should tackle if he wants to stop job migration, but it seems like he's focused on anything but regulating BigCos.
- Kocrachon 9y agoAmazon has been forcing cheaper books back when it was mainly a book store. What do you do about something like that? Back when Barnes and Noble was the big book store, same thing, they pressured better prices. What do you do, split up the book store into two companies, who still control the same market share and will both still put pressure on the book companies? Last I read, Amazon mainly fights for cheaper kindle prices, because it's considerably cheaper to sell a 12 meg file than a 200 page physical book. Which I agree with publishers, only benefits Amazon and not entirely fair, but for the most part, not much ahs changed, most kindle copies are MAYBE a dollar less.
- mschuster91 9y ago> Amazon has been forcing cheaper books back when it was mainly a book store. What do you do about something like that? In Germany, book prices are regulated: the printer sets the price, and the price the customer pays must be this price. Only exception are damaged (e.g. books with CD-ROM, but the CD is missing) or used books. The prices the retailers have to pay at the printer are of course different and may well be based on the # of books the retailer has purchased, but the system right now successfully prevents price wars. And yes, I am happy with that, because it ensures that authors get proper funding instead of having to fight for the scraps. > Last I read, Amazon mainly fights for cheaper kindle prices, because it's considerably cheaper to sell a 12 meg file than a 200 page physical book The printing and distribution costs of a book are not that high, once you have a significant enough mass of books. What Amazon wants to do here is squeeze the authors off their profit, and this must be prevented. Books are culture, and culture must not be bowing to the demands of predatory capitalism or else we'll sooner or later live in a Idiocracy world with a movie called "*ss" the sole Oscar winner... (okay, that was an exaggeration, but still, it's a danger to culture!)
- Kocrachon 9y agoWhile it seems ideal, I don't like the idea of consumer goods being regulated outside of groceries and other necessities. My Raptor romance novel should not be 'regulated'.
- KirinDave 9y agoI suspect the author of a successful novel hopes for some form of regulation to help guarantee revenue from the effort.
- Kocrachon 9y agoCan't that be said for every goods manufacturer? That would be like saying their needs to be regulation on the price of DVDs. Should we eliminate the 1 dollar DVD bin at WalMart now?
- randcraw 9y agoI've long wondered, with the rise of the internet, is prosecution really necessary to address unsavory business practices like these? Why not force the company into the light, posting this information in a useful form that informs the public and shames the malefactor? I'm a strong proponent of open <EVERYTHING>. If shady behavior arises in business, government, public services, and even public discourse, I'd love to see a moderated form of public disclosure become the standard way to reveal and address such 'discrepancies'. Now that the 'net is ubiquitous, I don't see why age-old small town arbitration principles can't be applied to redress virtually all forms of grievance, as long as the public exchange is conducted decorously, as a judge or strict moderator rules could ensure. IMO, the state of AI is getting pretty close to enabling this sort of moderator service, making it impossible for 'conduct unbecoming' to persist out of the public eye. What cellphone videos are doing to police/perp misbehavior ought to be possible for general business practices too.
- johncolanduoni 9y agoBecause ultimately most people won't care enough to stop going with the cheaper option, especially when all you can point to is negative effects for vendors. It's not like Amazon is going around creating spurious libel lawsuits against people for publishing criticism of their business practices, or paying for people to muddy the waters with counter-articles. It's just that the information largely fall on deaf ears. I'm not sure what a judge or moderator would do when there's no real back and forth. A lot of conduct unbecoming like this becomes public (Intel is a good example). How many people stopped buying their products even with literal judges finding them guilty of some particularly nasty anti-competitive practices?
- toomuchtodo 9y ago> Because ultimately most people won't care enough to stop going with the cheaper option, especially when all you can point to is negative effects for vendors. Indeed. If people could get cheaper clothing if slavery was made legal again, they'd do it in a heartbeat. Witness to a lesser extent the general sentiment on HN that Uber is "helping drivers", when they're indentured servants. I wouldn't call it consumer excess when you're exploiting someone with limited options.
- refurb 9y agoSuppliers are free to tell Walmart to stuff it.
- s73ver 9y ago"Free" in the sense that they have the 1st Amendment right to do so. Not in the sense that they actually can, especially once Walmart gets to be a significant customer to them.
- refurb 9y agoHow is that any different than any business that has one large customer? And if you're creating a valuable product at a good price, then you have leverage over Walmart. If you're selling a commodity, then be prepared to get squeezed. That's how it should work.
- mongol 9y agoHonest question. How do companies in the US go about assessing the solvency and financial status of suppliers. In Sweden annual reports are public records for all limited companies, not only public companuee. How would US company determine that a supplier is solvent and not at risk of bankruptcy, which would be a risk to build into supply chains etc?
- Bartweiss 9y agoA lot like this, as I understand it. Publicly traded companies have a fair bit of information generally available, but for a private supplier you might well demand some financials to establish enough confidence to pair with them. What's distinctive here, I guess, is that Walmart has the weight to get that info and then start making demands instead of just deciding whether to trust the partner.
- jjeaff 9y agoIt's not like you are required to sell to Walmart. You can always refuse. Plenty of successful companies don't sell anything to Walmart.
- Bartweiss 9y agoThe FastCompany article linked in the comments is interesting on that, though. (https://www.fastcompany.com/47593/wal-mart-you-dont-know https://www.fastcompany.com/47593/wal-mart-you-dont-know) In 2002, Walmart did more business than its next 6 grocery and general-good competitors combined. Something like that is presumably still true if you restrict to brick-and-mortar spending. If you sell something mass-market (e.g. pickles), a huge portion of all shopping happens at Walmart - you can get beaten by a competitor just for not playing ball with one retailer. Similarly, struggling companies can be saved by Walmart (e.g. Levis), but only if they concede to whatever Walmart demands. I'm not going to take the anti-capitalist tack, here. When Walmart tells Levis to fix their supply chain and introduce products at a lower price point, that's how markets should work. They demanded reform, and that's what saved Levis - they might not even have needed to sell at Walmart if those changes had come sooner. But the larger pattern is troubling. Walmart has so much power over smaller suppliers that it's like informal ownership - they're vertically integrating with none of the legal conditions or risk. And that helps them drive pretty serious ethical issues without ever taking direct action. Everything from monopoly creation to violation of labor laws to environmental devastation (mostly overseas) stems from Walmart's pricing demands. They may not ask for anything unethical, but asking for a 5% price cut every year means something has to give. With such enormous legislative influence, they can bend laws and trade agreements to favor their model. With the freedom to change suppliers and limited legal accountability for their suppliers' actions, they can work with whoever's willing to behave worst, and give them a market that cripples everyone better behaved. So you don't have to sell for Walmart, but in a lot of industries you can expect to suffer for those scruples.
- SilasX 9y agoSorry if this gets too tangential, but ... you ever notice how people are horrified by that, but at the same time actively advocate that the government use its "bargaining" (monopsony) power to force down drug prices, and believe the only downsides will be to drug company profits?
- haltingthoughts 9y agoThe receiver of the surplus (Walmart vs consumers) is kinda important...
- SilasX 9y agoFirst of all, consumers get lower prices at Walmart, it doesn't just have the effect of higher profits. Second, the real danger in both cases (though people only see it in one, hence my point) is that you're killing off the OEMs this way. No one wants to bring innovative new products to market if some monopsonist will just force them down to the mandated n% profits.
- haltingthoughts 9y agoFair enough on the passthrough to consumers.
- zaccus 9y agoNope. 1) Walmart doesn't pass savings to consumers, it passes them to shareholders, as they have a fiduciary obligation to do. The "lower prices" thing is just marketing; WM's prices aren't particularly low once they've driven away their competition. 2) If drug companies want to charge a R&D premium for bleeding-edge innovative products, that's fine. What's not fine is price gouging consumers for drugs they depend on to live, that are not innovative in 2017, and that are cheaply available in other countries, like the EpiPen.
- johncolanduoni 9y agoPost-patent drugs usually have insane prices due to reasons outside of what can be effectively combatted by the bargaining power of universal healthcare (e.g. regulatory capture in the case of EpiPen). That tactic is rarely necessary once generics enter the mix, as long as nothing is artificially preventing them from getting to market.