4 ms·

That is certainly not true of everything. Ask a car dealer how much commission/margin they get.

Transfinity 7y ago
I would argue that reinforces the point. Car customers don't really have a relationship with a dealership until they're far into the process of selecting and buying a car. Even then the dealership doesn't own the relationship, there's lots of competition and the customer can play dealers against each other. OTOH, a customer certainly has a relationship with the car manufacturer, through advertising and mental image. When you shop for a car you choose the make and model first, then find a dealership that will sell it to you. If you get your media from Amazon, you go to Amazon to see what they have and choose from that. Amazon controls the relationship in a way the dealer does not. IIRC, this is basically why car dealerships exist and you can't just order a car out of a catalog.
ethbro 7y ago
It's probably more accurate to say 'Whoever owns the numerically limited chokepoint will take the lion’s share of profit.' There are many car dealerships. There are only a few car manufacturers. So the latter have forced the former into a bad deal.
- ghaff 7y ago
  I'm not sure it's a bad deal. New car dealership owners are often pretty successful and politically connected small local businessmen. It is generally true though that distribution isn't a business that the auto manufacturers wanted to be in at the time the current system developed. It's not a wildly profitable business to be in but, like other types of franchises, it's a decent enough living for many of the owners.
  - pkAbstract 7y ago
    It's not that they didn't want to be in the business, but that manufacturers couldn't scale their own dealerships across the country fast enough. So they opened up ownership to third parties. Tesla, however, was in the unique position of having enough capital to open their own dealerships, which has caused a lot of friction with more traditional, "family-owned" dealerships.
soapboxrocket 7y ago
There are a lot of laws surrounding the selling of cars and dealerships, ask Elon.

I would argue that reinforces the point. Car customers don't really have a relationship with a dealership until they're far into the process of selecting and buying a car. Even then the dealership doesn't own the relationship, there's lots of competition and the customer can play dealers against each other. OTOH, a customer certainly has a relationship with the car manufacturer, through advertising and mental image. When you shop for a car you choose the make and model first, then find a dealership that will sell it to you. If you get your media from Amazon, you go to Amazon to see what they have and choose from that. Amazon controls the relationship in a way the dealer does not. IIRC, this is basically why car dealerships exist and you can't just order a car out of a catalog.

ethbro 7y ago

It's probably more accurate to say 'Whoever owns the numerically limited chokepoint will take the lion’s share of profit.' There are many car dealerships. There are only a few car manufacturers. So the latter have forced the former into a bad deal.

ghaff 7y ago
I'm not sure it's a bad deal. New car dealership owners are often pretty successful and politically connected small local businessmen. It is generally true though that distribution isn't a business that the auto manufacturers wanted to be in at the time the current system developed. It's not a wildly profitable business to be in but, like other types of franchises, it's a decent enough living for many of the owners.
- pkAbstract 7y ago
  It's not that they didn't want to be in the business, but that manufacturers couldn't scale their own dealerships across the country fast enough. So they opened up ownership to third parties. Tesla, however, was in the unique position of having enough capital to open their own dealerships, which has caused a lot of friction with more traditional, "family-owned" dealerships.

soapboxrocket 7y ago

There are a lot of laws surrounding the selling of cars and dealerships, ask Elon.