4 ms·

Abstractly, the question at hand is this: is a retailer that sells its own in house brand anticompetitive due to the information it has on potential competitor

Abstractly, the question at hand is this: is a retailer that sells its own in house brand anticompetitive due to the information it has on potential competitor sales? Other large retailers: Target, Walmart, etc. have a higher percentage of in house brands for sale than Amazon. So on this argument going after Amazon means you need to decouple retailers from in house brands across the board. Even the concern about search placement has concerns, as shelf space in the store can be viewed as a analogous to search pages.

admn2 7y ago
I think if you look at Warby Parker as a comparison, it's easy to see that Allbirds value is in buying into their brand. There were / are plenty of companies selling cheap glasses, but it took Warby Parker making them cool. I do think Allbirds should get a lot of credit for innovating in such a crowded space, but people buy Allbirds for way more than just the shoe. Walk into any one of their stores on a Saturday or check out their packaging and it seems obvious their customers are not choosing them based on price.
readams 7y ago
I think most people don't know that shelf space is actively sold by the stores. They imagine the stores go out and find the best products to display. That's not what happens.
- barbecue_sauce 7y ago
  This really depends on the retail methodology of a company. Space allocation in a category planogram (layout) is often ultimately decided by the category manager (corporate person who is responsible for P/L of that category), but can be affected by the heavy hitters in that category using their internal "retail services" department to help said category manager formulate their planograms. This usually results in somewhat biased product assortments and layouts that give preferential treatment to specific brands, but rarely is space outright purchased within the aisles of a store. End-caps are a different story, but often the "purchase" of an end-cap simply takes the form of wholesale pricing concessions, which allow the store to make more money by promoting those products for a short period of time. Historically, some DSD brands will lease end-caps at stores (speaking specifically about supermarkets in this context), but these are serviced and stocked by external companies. Depending on the marketing strategy of a chain, private label products are often placed on end-caps to drive volume for what are often their highest-margin products (due to heavy control over the whole supply chain) and are not subject to any purchasing. TL;DR: The extent to which retail stores "sell" shelf-space is often exaggerated, a kind of folk wisdom that may have been more truthful in the past but doesn't reflect modern business practices.
  - readams 7y ago
    The retailer is looking to maximize its own profit. It's not going to put a totally DOA product on the shelves, but they do charge slotting fees to allocate shelf space for products. There's always a large set of products they could put there, so those slotting fees end up being a major source of margin for the stores. https://www.vox.com/2016/11/22/13707022/grocery-store-slotting-fees-slotting-allowances https://www.vox.com/2016/11/22/13707022/grocery-store-slotti...
    - deleted 7y ago
      [deleted]
- criddell 7y ago
  That's not always true. I don't think it would matter how much Amazon money offered Apple, they aren't going to install an Echo end cap.
  - katmannthree 7y ago
    Sure they would. Apple has shown that they have no problem with human rights issues in their supply chain despite pushing a pro-human rights image in their marketing. They're a gigantic multinational company, their goal is to make money. Other concerns are secondary and prioritized in accordance with how they support that primary goal. The relevant thing to consider is that Apple likely wouldn't do it for an amount of money that was anything resembling a good deal for Amazon.
  - sct202 7y ago
    Yeah, the person above you makes it sound like stores just have giant Dutch auctions for space when it's more like negotiating terms to a contract after they've already passed other qualifying steps.
    - readams 7y ago
      https://en.wikipedia.org/wiki/Slotting_fee https://en.wikipedia.org/wiki/Slotting_fee
ShteiLoups 7y ago
It certainly does seem to be anticompetitive to (1) own the market, (2) collect the data about the market, and (3) actively use that data to replace or compete with third parties on the market. As per a comment below[1]. [1] https://news.ycombinator.com/item?id=21597614 https://news.ycombinator.com/item?id=21597614
- cmcd 7y ago
  If this is anticompetitive then many brick and mortar stores are in trouble. Go into any large grocery store and popular items will almost always have a store brand equivalent prominently displayed and discounted next to the name brands.
  - ghaff 7y ago
    CVS even explicitly has signs that point out some house brand product has the same ingredients as X well known branded product.

admn2 7y ago

I think if you look at Warby Parker as a comparison, it's easy to see that Allbirds value is in buying into their brand. There were / are plenty of companies selling cheap glasses, but it took Warby Parker making them cool. I do think Allbirds should get a lot of credit for innovating in such a crowded space, but people buy Allbirds for way more than just the shoe. Walk into any one of their stores on a Saturday or check out their packaging and it seems obvious their customers are not choosing them based on price.

readams 7y ago

I think most people don't know that shelf space is actively sold by the stores. They imagine the stores go out and find the best products to display. That's not what happens.

barbecue_sauce 7y ago
This really depends on the retail methodology of a company. Space allocation in a category planogram (layout) is often ultimately decided by the category manager (corporate person who is responsible for P/L of that category), but can be affected by the heavy hitters in that category using their internal "retail services" department to help said category manager formulate their planograms. This usually results in somewhat biased product assortments and layouts that give preferential treatment to specific brands, but rarely is space outright purchased within the aisles of a store. End-caps are a different story, but often the "purchase" of an end-cap simply takes the form of wholesale pricing concessions, which allow the store to make more money by promoting those products for a short period of time. Historically, some DSD brands will lease end-caps at stores (speaking specifically about supermarkets in this context), but these are serviced and stocked by external companies. Depending on the marketing strategy of a chain, private label products are often placed on end-caps to drive volume for what are often their highest-margin products (due to heavy control over the whole supply chain) and are not subject to any purchasing. TL;DR: The extent to which retail stores "sell" shelf-space is often exaggerated, a kind of folk wisdom that may have been more truthful in the past but doesn't reflect modern business practices.
- readams 7y ago
  The retailer is looking to maximize its own profit. It's not going to put a totally DOA product on the shelves, but they do charge slotting fees to allocate shelf space for products. There's always a large set of products they could put there, so those slotting fees end up being a major source of margin for the stores. https://www.vox.com/2016/11/22/13707022/grocery-store-slotting-fees-slotting-allowances https://www.vox.com/2016/11/22/13707022/grocery-store-slotti...
  - deleted 7y ago
    [deleted]
criddell 7y ago
That's not always true. I don't think it would matter how much Amazon money offered Apple, they aren't going to install an Echo end cap.
- katmannthree 7y ago
  Sure they would. Apple has shown that they have no problem with human rights issues in their supply chain despite pushing a pro-human rights image in their marketing. They're a gigantic multinational company, their goal is to make money. Other concerns are secondary and prioritized in accordance with how they support that primary goal. The relevant thing to consider is that Apple likely wouldn't do it for an amount of money that was anything resembling a good deal for Amazon.
- sct202 7y ago
  Yeah, the person above you makes it sound like stores just have giant Dutch auctions for space when it's more like negotiating terms to a contract after they've already passed other qualifying steps.
  - readams 7y ago
    https://en.wikipedia.org/wiki/Slotting_fee https://en.wikipedia.org/wiki/Slotting_fee

ShteiLoups 7y ago

It certainly does seem to be anticompetitive to (1) own the market, (2) collect the data about the market, and (3) actively use that data to replace or compete with third parties on the market. As per a comment below[1]. [1] https://news.ycombinator.com/item?id=21597614 https://news.ycombinator.com/item?id=21597614

cmcd 7y ago
If this is anticompetitive then many brick and mortar stores are in trouble. Go into any large grocery store and popular items will almost always have a store brand equivalent prominently displayed and discounted next to the name brands.
- ghaff 7y ago
  CVS even explicitly has signs that point out some house brand product has the same ingredients as X well known branded product.