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Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instan

Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer. Does anyone really think that any retailer launches a competing product in a category without looking at all their supplier data? If you want distribution you risk this. The only way to avoid it, it's to do direct to consumer or having a product that is extremely hard to copy.

hlmencken 7y ago
I really don't think Target is that upfront. How am I supposed to know Mossimo and Goodfellow are Target brands. I do however understand that Kroger groceries are made by the kroger store.
- Cactus2018 7y ago
  >Mossimo Interesting https://en.wikipedia.org/wiki/Mossimo#IPO_(1996)_and_relationship_with_Target_(2000%E2%80%932017) https://en.wikipedia.org/wiki/Mossimo#IPO_(1996)_and_relatio... >On March 28, 2000, Mossimo, Inc announced a major, multi-product licensing agreement with Target stores, for $27.8 million. >In 2017, Target underwent a makeover, introducing new smaller lines and eliminating bigger billion-dollar lines, including Mossimo. >Target distanced itself from Mossimo amid Mossimo Giannulli's alleged involvement in the 2019 college admissions bribery scandal, saying that Target had not been involved with Giannulli in over a decade
- whoisjuan 7y ago
  I mean. That's what I meant. Upfront in the sense that they compete with their suppliers by having a lot of brands that are hard to distinguish as white-label brands by Target.
  - xbmcuser 7y ago
    To me that is not a problem as long as they are not giving their own products better placement. If 50 brands of cornflakes and in them target has a 10 white-label brands that is not a problem but if all 10 white-label brands are put in front of other brands ie first few in search results then it is a problem.
    - closetohome 7y ago
      In all seriousness, not giving your own brands prominent placement would be ignoring the benefits of vertical integration, leaving money on the table, and violating your fiduciary duty to stockholders.
      - 1propionyl 7y ago
        > violating your fiduciary duty to stockholders The idea that corporate directors (of whichever kind) have an legal obligation to maximize profits/shareholder value is a myth. Taken directly from Alito's (non-dissenting) opinion in Hobby Lobby: "While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." Additionally, even if there were such a requirement, it would be toothless. The corporate directors of a company facing criticism from its shareholders that it is not maximizing profits (in the short-term) could simply retort that they are pursuing a strategy that maximizes profits in the long-run, and that investors should look elsewhere for short-term gains. As a practical example, consider any company that pursues more environmentally sound practices, or tries to source materials more ethically. By doing more than the bare minimum, they are surely cutting into short-term profits, however they may in the process be building a more resilient and popular brand that profits more in the long-run.
        closetohome 7y ago
        This would actually be an interesting test of that decision and the law of Business Judgement, which normally shields corporate directors from micromagement via lawsuit. I doubt it would pass the threshold of "grossly negligent" that you'd typically need to sue a CEO as a shareholder, but it's certainly different from an otherwise positive action that simply uses company resources - like raising salaries or making charitable donations.
- corpMaverick 7y ago
  Upfront with the suppliers. Not necessarily with the customers.
bcx 7y ago
This is the same situation that happens on most platform plays. You can see this in how Salesforce and Shopify are leveraging their platforms to learn what is popular and produce/buy their own products to sell to their customers to capture 100% of the value, rather than 30% of the value of the solution to the customer.
- mengibar10 7y ago
  This questionable business practice is neither new nor limited to online companies. Brick and mortar companies like Costco do have their own products competing from other vendors, and I am sure they analyze sales data before jumping on selling their own.
  - asdf21 7y ago
    Isn't that exactly what the grandparent comment said?
    - deleted 7y ago
      [deleted]
- libertine 7y ago
  I think the biggest issue isn't the "copy product by leveraging data", but more like, their products play by a different set of rules. They could copy products and launch them abiding by the same guidelines, policies and everything else. That's not the case, and that's where the unfairness comes to play: Amazon plays on their market place by a different set of rules. It's not only Amazon. Google, Apple, and so on. The question starts to arise, if they want such massive platforms and play on such marketplaces, they must obey their own guidelines, else they are either stripped from the playground or someone else should own the play ground.
  - stcredzero 7y ago
    if they want such massive platforms and play on such marketplaces, they must obey their own guidelines, else they are either stripped from the playground or someone else should own the play ground. So here's a question: Is a store really a marketplace? It seems to me that Amazon, Target, Macys, etc, do a lot of curation and editorial work with regards to standards of production and marketing for items in their stores. Isn't that more akin to publishing? I think the grey area and critical zone is this: Should a company be allowed to advertise their ecosystem/playground as akin to a "marketplace" when what's really happening, is that they are tightly controlling the product and harvesting the information for themselves? Seems like a bait and switch to me! ("Your margins are our opportunities," is the most fundamentally aggressive business statement I can possibly imagine, and Jeff Bezos said it!) Apple, Amazon, and YouTube all seem to fall into this general pattern: A "marketplace" or "ecosystem" which is less bazaar and more their tightly planned cathedral. "Partners" who are put upon, data-analyzed, and sometimes cannibalized. This pattern seems to be very widespread, and it only stands to reason, given the tremendous increase in the ability of companies to leverage technology to harvest such data in their own playgrounds.
tomohawk 7y ago
Amazon is a monopolist in several categories. Different rules apply to monopolists than other organizations. A basic constraint is that a monopolist may not use their position of monopoly in one area to give them an advantage in another. https://www.marketplacepulse.com/articles/amazon-is-a-monopoly-an-interview-with-sally-hubbard https://www.marketplacepulse.com/articles/amazon-is-a-monopo...
thoraway1010 7y ago
This is totally false - the number of retailers who have testified before congress that they don't use seller data to compete against sellers - and then who go ahead and do just that is basically zero. Additionally, most other retailers actually BUY the third parties products and take the risk of promoting and selling it. On Amazon third parties take the inventory and many other risks and may have to pay amazon to promote their product. The story here is that amazon has testified it does not do something, has supposedly the "highest ethical principals" - yet goes ahead and does exactly that which it said it doesn't do. Do that not matter to you from a trust / credibility perspective?
- fastball 7y ago
  Can you link to where AMZN has said this?
  - woodgrainz 7y ago
    "Nate Sutton, associate general counsel at Amazon, told lawmakers the company doesn’t tap data from individual third-party merchants to determine what new products to create." https://www.cnbc.com/2019/07/16/amazon-tells-house-it-doesnt-favor-own-brands-in-antitrust-hearing.html https://www.cnbc.com/2019/07/16/amazon-tells-house-it-doesnt...
    - grafporno 7y ago
      Ah, the hyper-specific dementi? Doesn't tap data from _individual_ third-party merchants.
      - bitxbitxbitcoin 7y ago
        No specific merchants... It's just from the aggregate data from third-party merchants. And I bet that data is "anonymized" too.
        TimSchumann 7y ago
stcredzero 7y ago
Does anyone really think that any retailer launches a competing product in a category without looking at all their supplier data? So, if cars are inevitably becoming computers with wheels, what's going to happen to insurance companies? The major weapon of underwriting is data, and a company like Tesla is going to have a huge advantage in data over external insurance companies. Is it really a societal good for big companies to control all of this data, or should the data belong to the consumer/owner/user? I suspect it's the latter which gives people the most choice and freedom by fostering the most competition.
- balls187 7y ago
  Insurance companies are already offering discounts for using their apps while in car.
  - stcredzero 7y ago
    Insurance companies are already offering discounts for using their apps while in car. I was debating on whether I should include mention of these apps. Here's the thing about that: The data available to these apps is nothing compared to the data available to Tesla. Tesla can figure out how often you get close to bumping into something, exactly how far, how fast you were going, and what the lighting/weather conditions were like at the time. That data is orders of magnitude better than the stuff coming out of the app. It's very analogous to iOS app makers competing with in-house Apple iOS apps. It's hard to compete, when your competitor controls the APIs.
    - StillBored 7y ago
      All the things you name are available to a phone app as well. Particularly, if it has enough penetration to be in the vehicles near you. Local weather + data aggregation from all the insurance companies apps and suddenly about the only thing they don't have is whether you were looking at the road, and the condition of your tires and other vehicle specific metrics. Sure the GPS/accel data might be off a few percent vs the car but does that matter? (BTW, Assuming a deal with your credit card company, they probably can approximate your tire age too).
malandrew 7y ago
Everyone is arguing as if Amazon is the only retailer here. Yes, they are a platform, but they are one of many. In fact, many people here contradict their own argument by saying that they are forced to go to other websites or direct to the supplier. Stating as much is tantamount to admitting that the market is functioning correctly. Amazon is great for some things and bad for other things. If it doesn’t meet your needs, go elsewhere instead of rewarding it with your business and then complaining that it’s too big and powerful because people like yourself keep rewarding it with your business.
- ProAm 7y ago
  Except Amazon disallows and punishes you for selling your product cheaper on a different platform.
  - toasterlovin 7y ago
    This is common practice in the retail industry. Large retailers want to ensure that they can offer their customers the lowest price on all of the products they sell.
    - deleted 7y ago
      [deleted]
gigatexal 7y ago
They own the platform which means they can see the data. This seems like a natural evolution. If you don’t own the platform the platform owns you.
interestica 7y ago
Similarly, Netflix's sometimes odd choices for their deals or for original content production is certainly driven by the performance or certain metrics of previously acquired content.
ardy42 7y ago
> Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer. IIRC, many traditional white label brands are actually manufactured by the name brands themselves, and they're part of a strategy to segment the market. The difference here seems to be that Amazon has been cloning relatively unique products made by smaller companies, while traditional white label brands are fungible commodities made by large players with little differentiation. From the OP: > Because of the limitations of shelf space, traditional retailers stock far fewer products than Amazon’s hundreds millions of items. Typically, they create private-label products to compete in generic categories such as paper towels, rather than copycat versions of items created by smaller entrepreneurs, private-label executives said.
- replicatorblog 7y ago
  That is largely not the case. I spent ten years making private label medical devices for CVS, Kroger, Target, and dozens of other stores. There tend to be specialist manufacturers who fill the store brand niches. E.g. in pharma, close to 90% of the pills, tabs, and liquids sold in front of the pharmacy counter are made by one company, Perrigo, whose entire model is predicated on being a store brand supplier. I don't think Kimberly Clark makes the store brand paper products, nor does P&G make the store brand beauty/cleaning supplies.
  - joezydeco 7y ago
    And I can give an opposite case. I used to work for a large 1st-tier manufacturer of consumer batteries (hearing aid, AA, 9V, etc etc). We were constantly competing with the other manufacturers for the Wal-Mart, Walgreens, CVS, etc white label brands. It was increased volume for our plants and they would usually suck up surplus supply. The catch was that your contract was continually up for renewal and you had to beat the others on price and other criteria. After all, nobody else would know that the rack at Wag's was half-bunny and half-coppertop, right? It was also a headache because defective parts and customer complaints counted against you hard. We actually tested our white label products more than the name brand SKUs.
stormdennis 7y ago
Maybe they do but that doesn't make it right. It's predatory.

hlmencken 7y ago

I really don't think Target is that upfront. How am I supposed to know Mossimo and Goodfellow are Target brands. I do however understand that Kroger groceries are made by the kroger store.

Cactus2018 7y ago
>Mossimo Interesting https://en.wikipedia.org/wiki/Mossimo#IPO_(1996)_and_relationship_with_Target_(2000%E2%80%932017) https://en.wikipedia.org/wiki/Mossimo#IPO_(1996)_and_relatio... >On March 28, 2000, Mossimo, Inc announced a major, multi-product licensing agreement with Target stores, for $27.8 million. >In 2017, Target underwent a makeover, introducing new smaller lines and eliminating bigger billion-dollar lines, including Mossimo. >Target distanced itself from Mossimo amid Mossimo Giannulli's alleged involvement in the 2019 college admissions bribery scandal, saying that Target had not been involved with Giannulli in over a decade
whoisjuan 7y ago
I mean. That's what I meant. Upfront in the sense that they compete with their suppliers by having a lot of brands that are hard to distinguish as white-label brands by Target.
- xbmcuser 7y ago
  To me that is not a problem as long as they are not giving their own products better placement. If 50 brands of cornflakes and in them target has a 10 white-label brands that is not a problem but if all 10 white-label brands are put in front of other brands ie first few in search results then it is a problem.
  - closetohome 7y ago
    In all seriousness, not giving your own brands prominent placement would be ignoring the benefits of vertical integration, leaving money on the table, and violating your fiduciary duty to stockholders.
    - 1propionyl 7y ago
      > violating your fiduciary duty to stockholders The idea that corporate directors (of whichever kind) have an legal obligation to maximize profits/shareholder value is a myth. Taken directly from Alito's (non-dissenting) opinion in Hobby Lobby: "While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." Additionally, even if there were such a requirement, it would be toothless. The corporate directors of a company facing criticism from its shareholders that it is not maximizing profits (in the short-term) could simply retort that they are pursuing a strategy that maximizes profits in the long-run, and that investors should look elsewhere for short-term gains. As a practical example, consider any company that pursues more environmentally sound practices, or tries to source materials more ethically. By doing more than the bare minimum, they are surely cutting into short-term profits, however they may in the process be building a more resilient and popular brand that profits more in the long-run.
      - closetohome 7y ago
        This would actually be an interesting test of that decision and the law of Business Judgement, which normally shields corporate directors from micromagement via lawsuit. I doubt it would pass the threshold of "grossly negligent" that you'd typically need to sue a CEO as a shareholder, but it's certainly different from an otherwise positive action that simply uses company resources - like raising salaries or making charitable donations.
corpMaverick 7y ago
Upfront with the suppliers. Not necessarily with the customers.

bcx 7y ago

This is the same situation that happens on most platform plays. You can see this in how Salesforce and Shopify are leveraging their platforms to learn what is popular and produce/buy their own products to sell to their customers to capture 100% of the value, rather than 30% of the value of the solution to the customer.

mengibar10 7y ago
This questionable business practice is neither new nor limited to online companies. Brick and mortar companies like Costco do have their own products competing from other vendors, and I am sure they analyze sales data before jumping on selling their own.
- asdf21 7y ago
  Isn't that exactly what the grandparent comment said?
  - deleted 7y ago
    [deleted]
libertine 7y ago
I think the biggest issue isn't the "copy product by leveraging data", but more like, their products play by a different set of rules. They could copy products and launch them abiding by the same guidelines, policies and everything else. That's not the case, and that's where the unfairness comes to play: Amazon plays on their market place by a different set of rules. It's not only Amazon. Google, Apple, and so on. The question starts to arise, if they want such massive platforms and play on such marketplaces, they must obey their own guidelines, else they are either stripped from the playground or someone else should own the play ground.
- stcredzero 7y ago
  if they want such massive platforms and play on such marketplaces, they must obey their own guidelines, else they are either stripped from the playground or someone else should own the play ground. So here's a question: Is a store really a marketplace? It seems to me that Amazon, Target, Macys, etc, do a lot of curation and editorial work with regards to standards of production and marketing for items in their stores. Isn't that more akin to publishing? I think the grey area and critical zone is this: Should a company be allowed to advertise their ecosystem/playground as akin to a "marketplace" when what's really happening, is that they are tightly controlling the product and harvesting the information for themselves? Seems like a bait and switch to me! ("Your margins are our opportunities," is the most fundamentally aggressive business statement I can possibly imagine, and Jeff Bezos said it!) Apple, Amazon, and YouTube all seem to fall into this general pattern: A "marketplace" or "ecosystem" which is less bazaar and more their tightly planned cathedral. "Partners" who are put upon, data-analyzed, and sometimes cannibalized. This pattern seems to be very widespread, and it only stands to reason, given the tremendous increase in the ability of companies to leverage technology to harvest such data in their own playgrounds.

tomohawk 7y ago

Amazon is a monopolist in several categories. Different rules apply to monopolists than other organizations. A basic constraint is that a monopolist may not use their position of monopoly in one area to give them an advantage in another. https://www.marketplacepulse.com/articles/amazon-is-a-monopoly-an-interview-with-sally-hubbard https://www.marketplacepulse.com/articles/amazon-is-a-monopo...

thoraway1010 7y ago

This is totally false - the number of retailers who have testified before congress that they don't use seller data to compete against sellers - and then who go ahead and do just that is basically zero. Additionally, most other retailers actually BUY the third parties products and take the risk of promoting and selling it. On Amazon third parties take the inventory and many other risks and may have to pay amazon to promote their product. The story here is that amazon has testified it does not do something, has supposedly the "highest ethical principals" - yet goes ahead and does exactly that which it said it doesn't do. Do that not matter to you from a trust / credibility perspective?

fastball 7y ago
Can you link to where AMZN has said this?
- woodgrainz 7y ago
  "Nate Sutton, associate general counsel at Amazon, told lawmakers the company doesn’t tap data from individual third-party merchants to determine what new products to create." https://www.cnbc.com/2019/07/16/amazon-tells-house-it-doesnt-favor-own-brands-in-antitrust-hearing.html https://www.cnbc.com/2019/07/16/amazon-tells-house-it-doesnt...
  - grafporno 7y ago
    Ah, the hyper-specific dementi? Doesn't tap data from _individual_ third-party merchants.
    - bitxbitxbitcoin 7y ago
      No specific merchants... It's just from the aggregate data from third-party merchants. And I bet that data is "anonymized" too.
      - TimSchumann 7y ago

stcredzero 7y ago

Does anyone really think that any retailer launches a competing product in a category without looking at all their supplier data? So, if cars are inevitably becoming computers with wheels, what's going to happen to insurance companies? The major weapon of underwriting is data, and a company like Tesla is going to have a huge advantage in data over external insurance companies. Is it really a societal good for big companies to control all of this data, or should the data belong to the consumer/owner/user? I suspect it's the latter which gives people the most choice and freedom by fostering the most competition.

balls187 7y ago
Insurance companies are already offering discounts for using their apps while in car.
- stcredzero 7y ago
  Insurance companies are already offering discounts for using their apps while in car. I was debating on whether I should include mention of these apps. Here's the thing about that: The data available to these apps is nothing compared to the data available to Tesla. Tesla can figure out how often you get close to bumping into something, exactly how far, how fast you were going, and what the lighting/weather conditions were like at the time. That data is orders of magnitude better than the stuff coming out of the app. It's very analogous to iOS app makers competing with in-house Apple iOS apps. It's hard to compete, when your competitor controls the APIs.
  - StillBored 7y ago
    All the things you name are available to a phone app as well. Particularly, if it has enough penetration to be in the vehicles near you. Local weather + data aggregation from all the insurance companies apps and suddenly about the only thing they don't have is whether you were looking at the road, and the condition of your tires and other vehicle specific metrics. Sure the GPS/accel data might be off a few percent vs the car but does that matter? (BTW, Assuming a deal with your credit card company, they probably can approximate your tire age too).

malandrew 7y ago

Everyone is arguing as if Amazon is the only retailer here. Yes, they are a platform, but they are one of many. In fact, many people here contradict their own argument by saying that they are forced to go to other websites or direct to the supplier. Stating as much is tantamount to admitting that the market is functioning correctly. Amazon is great for some things and bad for other things. If it doesn’t meet your needs, go elsewhere instead of rewarding it with your business and then complaining that it’s too big and powerful because people like yourself keep rewarding it with your business.

ProAm 7y ago
Except Amazon disallows and punishes you for selling your product cheaper on a different platform.
- toasterlovin 7y ago
  This is common practice in the retail industry. Large retailers want to ensure that they can offer their customers the lowest price on all of the products they sell.
  - deleted 7y ago
    [deleted]

gigatexal 7y ago

They own the platform which means they can see the data. This seems like a natural evolution. If you don’t own the platform the platform owns you.

interestica 7y ago

Similarly, Netflix's sometimes odd choices for their deals or for original content production is certainly driven by the performance or certain metrics of previously acquired content.

ardy42 7y ago

> Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer. IIRC, many traditional white label brands are actually manufactured by the name brands themselves, and they're part of a strategy to segment the market. The difference here seems to be that Amazon has been cloning relatively unique products made by smaller companies, while traditional white label brands are fungible commodities made by large players with little differentiation. From the OP: > Because of the limitations of shelf space, traditional retailers stock far fewer products than Amazon’s hundreds millions of items. Typically, they create private-label products to compete in generic categories such as paper towels, rather than copycat versions of items created by smaller entrepreneurs, private-label executives said.

replicatorblog 7y ago
That is largely not the case. I spent ten years making private label medical devices for CVS, Kroger, Target, and dozens of other stores. There tend to be specialist manufacturers who fill the store brand niches. E.g. in pharma, close to 90% of the pills, tabs, and liquids sold in front of the pharmacy counter are made by one company, Perrigo, whose entire model is predicated on being a store brand supplier. I don't think Kimberly Clark makes the store brand paper products, nor does P&G make the store brand beauty/cleaning supplies.
- joezydeco 7y ago
  And I can give an opposite case. I used to work for a large 1st-tier manufacturer of consumer batteries (hearing aid, AA, 9V, etc etc). We were constantly competing with the other manufacturers for the Wal-Mart, Walgreens, CVS, etc white label brands. It was increased volume for our plants and they would usually suck up surplus supply. The catch was that your contract was continually up for renewal and you had to beat the others on price and other criteria. After all, nobody else would know that the rack at Wag's was half-bunny and half-coppertop, right? It was also a headache because defective parts and customer complaints counted against you hard. We actually tested our white label products more than the name brand SKUs.

stormdennis 7y ago

Maybe they do but that doesn't make it right. It's predatory.