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A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their

A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf). On Amazon, companies are selling to consumers and Amazon facilitates that process. If Amazon makes it harder for sellers of particular products that Amazon also sells, they can effectively force those sellers out of business. That being said, I'd be kind of surprised if Amazon really needed to sell at a loss for products Amazon is selling directly since Amazon has a massive advantage in scale.

rlpb 8y ago
> A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf). Do supermarket supplier contracts really work like this? I was under the impression that nowadays suppliers have to pay supermarkets for shelf space, take the risk themselves for low sales volumes (with agreements to buy back inventory), etc.
- cavanasm 8y ago
  It's definitely an oversimplification on my part. Looks like it's a bit of both methods depending on scale and the particular product market. The suppliers compete with each other for shelf space via payments, and the supermarket sells the product at very close to cost (or at cost during sales), to the point where shelf space related payments are basically equal to profit for the market. https://www.bbc.com/news/business-29629742 https://www.bbc.com/news/business-29629742 Relating back to the initial part of the question, it seems like if suppliers are fighting over the "good spots" (the ends of the aisle or section), then the supermarket's branded products can safely fill in the gaps at lower prices (but much better margins), and still be profitable as long as they don't lose too much to waste.
- sct202 8y ago
  Some things are based on scan based trade (consignment), but most products aren't sold like that at this time. It's hard to get vendors to agree to the terms unless they're given control over in-store execution, and it's a lot of set up/hassle to integrate systems. The products that scan based trade tends to be most common with are DSD where someone from that company stops by on a fairly regular basis to deliver or merchandise the product.
bingoismynamo 8y ago
I’ve had experience as a larger seller. I think some of these tactics come down to corporate ladder climbing. Being in a category Amazon has tried to infiltrate, we’ve heard the “either join us or...” The head of the project does everything they can to attract leaders in the space to share their knowledge on how we’ve made it work for so long. Then if that seller doesn’t jump on board, it’s a well you’ll be sorry in the end. If their product doesn’t start to compete within the first few months, that is when you see desperation sink in from the lead of the project. That’s when you’ll start seeing Amazon brands taking over the front page, when they haven’t done the ground work to get there. Then you’ll see more Amazon brands showing up on the front page, with the help of product pages and ads that break their own terms of service. Then sellers may start seeing more frequent issues with their product in that category. And then if you’re really unlucky, Amazon vendor will say either bring your product to vendor or don’t sell on the platform at all. I get it’s their playground, and it’s their rules, but sometimes you just end up throwing up your hands and asking if it’s all really worth it
- k__ 8y ago
  "bring your product to vendor or don’t sell on the platform at all" what does this mean?
  - hayksaakian 8y ago
    Vendor Central which is structured differently than Seller Central
  - ssvss 8y ago
    I think it means, you have to bring your product to VendorCentral from the SellerCentral/MarketPlace, VendorCentral is where you become a Vendor/Distributor to Amazon, i.e, Amazon should be allowed to purchase at wholesale price from you, and sell it themselves. and MarketPlace/SellerCentral is where you can sell directly to customers.
    - k__ 8y ago
      Ah, didn't know Amazon would buy things too.
dazc 8y ago
I think you're right in principal although there are a lot of shady things going on in the relationship between brands and supermarkets that don't fit the standard model. Supermarkets demanding that offers they make are funded by the supplier, charging a premium for prime shelf space,and so on. This kind of thing has been going on for years and isn't that dissimilar to how amazon are behaving.
- setquk 8y ago
  Yes it's pretty nasty. For generic stuff, the supermarket manipulates the supplier by pushing huge supply demands on them so they shoot their smaller customers. This leads to a single customer scenario, then the supermarket abuses their position by threatening to pull contracts if the supplier doesn't reduce costs etc. Some of the suppliers teeter on the verge of bankruptcy most of the time. That's how you get your cheap stuff. On a positive note the supplier can protest by folding or reducing the quality or fucking up so much that the supermarket gets a bad name because it's their brand on it.

rlpb 8y ago

> A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf). Do supermarket supplier contracts really work like this? I was under the impression that nowadays suppliers have to pay supermarkets for shelf space, take the risk themselves for low sales volumes (with agreements to buy back inventory), etc.

cavanasm 8y ago
It's definitely an oversimplification on my part. Looks like it's a bit of both methods depending on scale and the particular product market. The suppliers compete with each other for shelf space via payments, and the supermarket sells the product at very close to cost (or at cost during sales), to the point where shelf space related payments are basically equal to profit for the market. https://www.bbc.com/news/business-29629742 https://www.bbc.com/news/business-29629742 Relating back to the initial part of the question, it seems like if suppliers are fighting over the "good spots" (the ends of the aisle or section), then the supermarket's branded products can safely fill in the gaps at lower prices (but much better margins), and still be profitable as long as they don't lose too much to waste.
sct202 8y ago
Some things are based on scan based trade (consignment), but most products aren't sold like that at this time. It's hard to get vendors to agree to the terms unless they're given control over in-store execution, and it's a lot of set up/hassle to integrate systems. The products that scan based trade tends to be most common with are DSD where someone from that company stops by on a fairly regular basis to deliver or merchandise the product.

bingoismynamo 8y ago

I’ve had experience as a larger seller. I think some of these tactics come down to corporate ladder climbing. Being in a category Amazon has tried to infiltrate, we’ve heard the “either join us or...” The head of the project does everything they can to attract leaders in the space to share their knowledge on how we’ve made it work for so long. Then if that seller doesn’t jump on board, it’s a well you’ll be sorry in the end. If their product doesn’t start to compete within the first few months, that is when you see desperation sink in from the lead of the project. That’s when you’ll start seeing Amazon brands taking over the front page, when they haven’t done the ground work to get there. Then you’ll see more Amazon brands showing up on the front page, with the help of product pages and ads that break their own terms of service. Then sellers may start seeing more frequent issues with their product in that category. And then if you’re really unlucky, Amazon vendor will say either bring your product to vendor or don’t sell on the platform at all. I get it’s their playground, and it’s their rules, but sometimes you just end up throwing up your hands and asking if it’s all really worth it

k__ 8y ago
"bring your product to vendor or don’t sell on the platform at all" what does this mean?
- hayksaakian 8y ago
  Vendor Central which is structured differently than Seller Central
- ssvss 8y ago
  I think it means, you have to bring your product to VendorCentral from the SellerCentral/MarketPlace, VendorCentral is where you become a Vendor/Distributor to Amazon, i.e, Amazon should be allowed to purchase at wholesale price from you, and sell it themselves. and MarketPlace/SellerCentral is where you can sell directly to customers.
  - k__ 8y ago
    Ah, didn't know Amazon would buy things too.

dazc 8y ago

I think you're right in principal although there are a lot of shady things going on in the relationship between brands and supermarkets that don't fit the standard model. Supermarkets demanding that offers they make are funded by the supplier, charging a premium for prime shelf space,and so on. This kind of thing has been going on for years and isn't that dissimilar to how amazon are behaving.

setquk 8y ago
Yes it's pretty nasty. For generic stuff, the supermarket manipulates the supplier by pushing huge supply demands on them so they shoot their smaller customers. This leads to a single customer scenario, then the supermarket abuses their position by threatening to pull contracts if the supplier doesn't reduce costs etc. Some of the suppliers teeter on the verge of bankruptcy most of the time. That's how you get your cheap stuff. On a positive note the supplier can protest by folding or reducing the quality or fucking up so much that the supermarket gets a bad name because it's their brand on it.