4 ms·

Not the same thing. Retailers are the customers of the product manufacturers. They pay for all of the products that show up on their shelves, even the store bra

Not the same thing. Retailers are the customers of the product manufacturers. They pay for all of the products that show up on their shelves, even the store brands. (Note: only trial products operate on a consignment arrangement where the manufacturer only gets paid for units actually sold on.)

treis 6y ago
>Not the same thing. Retailers are the customers of the product manufacturers. They pay for all of the products that show up on their shelves, even the store brands That's not really true. They force manufacturers to accept returns of unsold product and have met 30-90 day payment terms. The effect is that these large retailers don't buy the product until after it's sold. They also just rent shelf space to companies and have little if anything to do with what is stocked there and how it's priced.
- gamblor956 6y ago
  They force manufacturers to accept returns of unsold product and have met 30-90 day payment terms. The effect is that these large retailers don't buy the product until after it's sold. This is false. Net payment terms don't change who holds title to the product, just when the money changes hands. Additionally, retailers only force manufacturers to accept returns of unsold product for products that overwhelming failed to sell. They don't return small batches of unsold product. They also just rent shelf space to companies and have little if anything to do with what is stocked there and how it's priced. True, but this is such a small portion of the retail market that it would be a rounding error of a rounding error. Generally, most retail companies don't do this.
  - treis 6y ago
    Holding title and nitpicking return policy doesn't change the core of my point. Retailers haven't paid for the products on their shelves. Holding title doesn't change that nor does having a minimum return size.
    - gamblor956 6y ago
      Holding title changes everything in legal terms, and since antitrust is a legal issue, that is what matters. Retailers haven't paid for the products on their shelves. Net payment terms aren't net of sale to customer. They're net of delivery to retailer. Some products sell before payment is due (i.e., perishable foodstuffs); many do not (i.e., electronics, toys, most non-food items). Title transfers before payment is due, since transfer of title is a huge consideration for a myriad of other legal issues, like product liability. Usually, title transfers when received by the retailer, but sometimes it transfers when handed off to the shipper. Actual timing depends on the contract between retailer and manufacturer, and there is an entire body of law dedicated solely to this. Returns to manufacturers (for working/undamaged goods) are literally beside the point here, since they only happen for products that simply fail to sell through to end customers, even after substantial discounts by the retailer. Generally, outside of book sales, this happens rarely, and when it does happen the manufacturer almost always just provides discounts on other goods. (For books, returning unsold copies to the publisher is SOP, and the publisher usually takes them back and refunds the store because they want the store to purchase future books. Unlike other retail, book sales are heavily hit-driven and transient, so financial considerations differ.) In the case of new products: for small manufacturers without a record, stock is usually provided on consignment with the manufacturer getting paid after units sell; for big/established manufacturers, the stock is purchased by the retailer at a substantial discount from wholesale price or for exchange of services such as marketing efforts by the store to move the product.
arrosenberg 6y ago
No, the comment you are applying to is 100% correct. Store brands are a form of price discrimination, which is anti-competitive and illegal. Courts and regulators significantly weakened enforcement in the 80s, but the laws haven't changed.
- gamblor956 6y ago
  No, the comment I am replying to is 100% wrong. Store brands are a form of price discrimination, which is anti-competitive and illegal. Courts and regulators significantly weakened enforcement in the 80s, but the laws haven't changed. Price discrimination (known as price segmentation in the business world) is perfectly legal, as long as it is between products and not between customers (and even there it might still be as long as the discrimination isn't based on a protected class). Price segmentation of products has always been legal in the US. Store brands have been a thing for centuries. Most stores used to just sell the house brand. Indeed, the concept of selling a "third party" brand in a store is a relatively recent development that can largely be traced to farm supply stores and the rise of department stores...which, notably sold their own store brands alongside those of other companies for decades without antitrust issues. (In fact, Sears' antitrust issues related to their use of market power to obtain discounts or to fix prices in certain geographic markets. They never had issues with selling store brands).
  - arrosenberg 6y ago
    If we were in 1930 and discussing a bunch of independent locals, I would agree with you. In this case, we are talking about vertically aligned retail giants producing store brands as a form of further vertical alignment. Amazon/Walmart/Target know how much of a given product sells off their shelves. They use that data in order to develop store brands in order to further monopolize profits from their position as a distributor. This behavior is clearly anti-competitive, as numerous complaints from merchants on Amazon marketplace or from vendors who have to deal with Walmart's predatory purchasing teams can attest to. It is effectively a monopsony or oligopsony.
    - 6y ago

treis 6y ago

>Not the same thing. Retailers are the customers of the product manufacturers. They pay for all of the products that show up on their shelves, even the store brands That's not really true. They force manufacturers to accept returns of unsold product and have met 30-90 day payment terms. The effect is that these large retailers don't buy the product until after it's sold. They also just rent shelf space to companies and have little if anything to do with what is stocked there and how it's priced.

gamblor956 6y ago
They force manufacturers to accept returns of unsold product and have met 30-90 day payment terms. The effect is that these large retailers don't buy the product until after it's sold. This is false. Net payment terms don't change who holds title to the product, just when the money changes hands. Additionally, retailers only force manufacturers to accept returns of unsold product for products that overwhelming failed to sell. They don't return small batches of unsold product. They also just rent shelf space to companies and have little if anything to do with what is stocked there and how it's priced. True, but this is such a small portion of the retail market that it would be a rounding error of a rounding error. Generally, most retail companies don't do this.
- treis 6y ago
  Holding title and nitpicking return policy doesn't change the core of my point. Retailers haven't paid for the products on their shelves. Holding title doesn't change that nor does having a minimum return size.
  - gamblor956 6y ago
    Holding title changes everything in legal terms, and since antitrust is a legal issue, that is what matters. Retailers haven't paid for the products on their shelves. Net payment terms aren't net of sale to customer. They're net of delivery to retailer. Some products sell before payment is due (i.e., perishable foodstuffs); many do not (i.e., electronics, toys, most non-food items). Title transfers before payment is due, since transfer of title is a huge consideration for a myriad of other legal issues, like product liability. Usually, title transfers when received by the retailer, but sometimes it transfers when handed off to the shipper. Actual timing depends on the contract between retailer and manufacturer, and there is an entire body of law dedicated solely to this. Returns to manufacturers (for working/undamaged goods) are literally beside the point here, since they only happen for products that simply fail to sell through to end customers, even after substantial discounts by the retailer. Generally, outside of book sales, this happens rarely, and when it does happen the manufacturer almost always just provides discounts on other goods. (For books, returning unsold copies to the publisher is SOP, and the publisher usually takes them back and refunds the store because they want the store to purchase future books. Unlike other retail, book sales are heavily hit-driven and transient, so financial considerations differ.) In the case of new products: for small manufacturers without a record, stock is usually provided on consignment with the manufacturer getting paid after units sell; for big/established manufacturers, the stock is purchased by the retailer at a substantial discount from wholesale price or for exchange of services such as marketing efforts by the store to move the product.

arrosenberg 6y ago

No, the comment you are applying to is 100% correct. Store brands are a form of price discrimination, which is anti-competitive and illegal. Courts and regulators significantly weakened enforcement in the 80s, but the laws haven't changed.

gamblor956 6y ago
No, the comment I am replying to is 100% wrong. Store brands are a form of price discrimination, which is anti-competitive and illegal. Courts and regulators significantly weakened enforcement in the 80s, but the laws haven't changed. Price discrimination (known as price segmentation in the business world) is perfectly legal, as long as it is between products and not between customers (and even there it might still be as long as the discrimination isn't based on a protected class). Price segmentation of products has always been legal in the US. Store brands have been a thing for centuries. Most stores used to just sell the house brand. Indeed, the concept of selling a "third party" brand in a store is a relatively recent development that can largely be traced to farm supply stores and the rise of department stores...which, notably sold their own store brands alongside those of other companies for decades without antitrust issues. (In fact, Sears' antitrust issues related to their use of market power to obtain discounts or to fix prices in certain geographic markets. They never had issues with selling store brands).
- arrosenberg 6y ago
  If we were in 1930 and discussing a bunch of independent locals, I would agree with you. In this case, we are talking about vertically aligned retail giants producing store brands as a form of further vertical alignment. Amazon/Walmart/Target know how much of a given product sells off their shelves. They use that data in order to develop store brands in order to further monopolize profits from their position as a distributor. This behavior is clearly anti-competitive, as numerous complaints from merchants on Amazon marketplace or from vendors who have to deal with Walmart's predatory purchasing teams can attest to. It is effectively a monopsony or oligopsony.
  - 6y ago