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>By this logic though shouldn’t “store brands” at the grocery store or “CVS brand” medicine at the drug store also be “illegal.” No they don't. Stores buy thei

by Renaud 6y ago

>By this logic though shouldn’t “store brands” at the grocery store or “CVS brand” medicine at the drug store also be “illegal.” No they don't. Stores buy their stock. They can choose to stock other brands or to make their own products, but they invariably have to purchase what they sell. The Amazon market place makes you think it's the same but it's not. Sellers are using the platform to sell their own products and they pay Amazon for that service. Amazon is accused of using sales data from the sellers, like their sales volumes, margins and customers profiles, and then undercut them by producing their own version. Amazon basically benefit from the traffic, interest and sales data of sellers to then displace them and promote their own product. It's like if you had a small business but your landlord had access to all your data and saw that they should also sell their own copies of your most profitable items by opening a bigger shop right next to you and selling for cheaper because being the landlord, they don't need to pay rent. Maybe illegal, maybe not, but in any case it's cause for at least some amount of concern and deserves some overseeing. It's way too tempting to abuse that absolute power in some way, whether as a matter or policy or just because some overzealous Amazon manager found that pushing the envelope was in their own interest. You can't just ignore that and brush it off. We've created a potential bully and we should at least keep watch.

dredmorbius 6y ago
The B&M retail story is ... considerably more complicated. For grocery stores, "slotting fees": “Slotting fees” (or “slotting allowances”) are fees that manufacturers pay retailers to appear on their scarce shelves. It can cost millions of dollars to launch a product in the nation’s groceries, and through that cost, these fees shape our supermarkets and diets long before we’re able to make a purchase decision ourselves. It’s easy to think that these fees show supermarkets are “rigged” — against both consumers and smaller manufacturers that can’t afford the fees. But as the above video shows, the debate is an intense one, with strong partisans, and decent arguments, on both sides. 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... Not excusing or arguing for Amazon (I'm not a fan), just noting real-world complexity.
- gamblor956 6y ago
  Importantly, those fees are only paid to launch a new product. They pay them because retailers won't buy inventory of a new product until they know it sells. So again, not even remotely the same thing as what Amazon does.
  - galkk 6y ago
    This is not correct. There are also placement fees that are paid to put the products on better locations on the shelves etc
baskire 6y ago
Not all stores “buy” their own stock. Take Walmart what doesn’t sell they just give back to manufacturer and don’t pay for it.
- JAlexoid 6y ago
  Walmart outright buys most of its stock.
curryst 6y ago
> No they don't. Stores buy their stock. They can choose to stock other brands or to make their own products, but they invariably have to purchase what they sell. This is technically true, but I don't think it accomplishes what you think it does. In large retail agreements, it is fairly common to include buyback clauses. I.e. if the goods don't sell within a specified time frame, the supplier is contractually obligated to buy them back from the retailer. In some cases, they are not even required to return the inventory they have left, but the supplier must still "buy them back". In other agreements, payment isn't made until the goods are sold (which is what Amazon does). So having to buy the goods doesn't give a brick and mortar store much extra incentive to make sure the stuff they "bought" sells. They can still undercut a product with an in-house version and suffer no losses from not selling whatever they replaced. It's a shitty business model, but Amazon isn't alone here. If it makes sense to stop Amazon from doing it, we should stop everyone from doing it.
- gamblor956 6y ago
  Buyback clauses are very rare. Generally, most suppliers refuse buyback provisions except for new product lines. And most retailers build spoilage into their profit models. It's why margins are so low even though they sell everything marked up by double digits.
- JAlexoid 6y ago
  The stores would have to have a dominant position or abuse that position. EU competition comission only cares about maintaining a competitive market. Until the overwhelming majority of the stores in my area are Amazon - there's no ground to target B&M stores.
txcwpalpha 6y ago
>No they don't. Stores buy their stock. They can choose to stock other brands or to make their own products, but they invariably have to purchase what they sell. This is incorrect. I wish people would stop repeating this in this thread. Some stores purchase their stock. But the really big players do not operate like that. When you go into Target and go to the cracker aisle, Target has not actually purchased all of the cookies and crackers that you see on the shelf. Target effectively rents out shelf space to Nabisco, who then comes in and puts their items on the shelf (or will pay Target to take the product and put it on the shelf for them). The pricing agreement can get quite complicated and depends on the amount of shelf space, location in the store, and can also depend on number of items eventually sold... but the takeaway is that Target does not just outright buy boxes of Oreos and then try to resell them. If the Oreos don't sell (say perhaps because the customers opted to buy the Target brand sandwich cookies instead), Target isn't out any money, because they still got their shelf rental fees from Nabisco. Going even further, Target also engages in the same type of activity Amazon does with their analytics (including sales volume, margins, customer profiles etc) and use that information to decide who gets to rent how much shelf space and where. Target et al spend incredible amounts of money optimizing this stuff, which isn't far off from what Amazon does. People have this old rusty view of brick & mortar stores, but the reality is that they've been masters of this stuff far longer than Amazon has even been around. Amazon championed bringing these practices to the online space and became the most obvious juggernaut, but that doesn't mean these other companies are angels.
- eridan2 6y ago
  in Europe a supermarket buys the products; usually it will pay in 90/120/180 days and it has the option to return unsold items and will have advertising agreements for better/larger shelves, but everything is in the store is own by the store
  - txcwpalpha 6y ago
    This is not universally true. Slotting fees and shelf rental agreements are a thing in Europe, just like they are in the US.

by Renaud 6y ago

dredmorbius 6y ago

The B&M retail story is ... considerably more complicated. For grocery stores, "slotting fees": “Slotting fees” (or “slotting allowances”) are fees that manufacturers pay retailers to appear on their scarce shelves. It can cost millions of dollars to launch a product in the nation’s groceries, and through that cost, these fees shape our supermarkets and diets long before we’re able to make a purchase decision ourselves. It’s easy to think that these fees show supermarkets are “rigged” — against both consumers and smaller manufacturers that can’t afford the fees. But as the above video shows, the debate is an intense one, with strong partisans, and decent arguments, on both sides. 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... Not excusing or arguing for Amazon (I'm not a fan), just noting real-world complexity.

gamblor956 6y ago
Importantly, those fees are only paid to launch a new product. They pay them because retailers won't buy inventory of a new product until they know it sells. So again, not even remotely the same thing as what Amazon does.
- galkk 6y ago
  This is not correct. There are also placement fees that are paid to put the products on better locations on the shelves etc

baskire 6y ago

Not all stores “buy” their own stock. Take Walmart what doesn’t sell they just give back to manufacturer and don’t pay for it.

JAlexoid 6y ago
Walmart outright buys most of its stock.

curryst 6y ago

> No they don't. Stores buy their stock. They can choose to stock other brands or to make their own products, but they invariably have to purchase what they sell. This is technically true, but I don't think it accomplishes what you think it does. In large retail agreements, it is fairly common to include buyback clauses. I.e. if the goods don't sell within a specified time frame, the supplier is contractually obligated to buy them back from the retailer. In some cases, they are not even required to return the inventory they have left, but the supplier must still "buy them back". In other agreements, payment isn't made until the goods are sold (which is what Amazon does). So having to buy the goods doesn't give a brick and mortar store much extra incentive to make sure the stuff they "bought" sells. They can still undercut a product with an in-house version and suffer no losses from not selling whatever they replaced. It's a shitty business model, but Amazon isn't alone here. If it makes sense to stop Amazon from doing it, we should stop everyone from doing it.

gamblor956 6y ago
Buyback clauses are very rare. Generally, most suppliers refuse buyback provisions except for new product lines. And most retailers build spoilage into their profit models. It's why margins are so low even though they sell everything marked up by double digits.
JAlexoid 6y ago
The stores would have to have a dominant position or abuse that position. EU competition comission only cares about maintaining a competitive market. Until the overwhelming majority of the stores in my area are Amazon - there's no ground to target B&M stores.

txcwpalpha 6y ago

>No they don't. Stores buy their stock. They can choose to stock other brands or to make their own products, but they invariably have to purchase what they sell. This is incorrect. I wish people would stop repeating this in this thread. Some stores purchase their stock. But the really big players do not operate like that. When you go into Target and go to the cracker aisle, Target has not actually purchased all of the cookies and crackers that you see on the shelf. Target effectively rents out shelf space to Nabisco, who then comes in and puts their items on the shelf (or will pay Target to take the product and put it on the shelf for them). The pricing agreement can get quite complicated and depends on the amount of shelf space, location in the store, and can also depend on number of items eventually sold... but the takeaway is that Target does not just outright buy boxes of Oreos and then try to resell them. If the Oreos don't sell (say perhaps because the customers opted to buy the Target brand sandwich cookies instead), Target isn't out any money, because they still got their shelf rental fees from Nabisco. Going even further, Target also engages in the same type of activity Amazon does with their analytics (including sales volume, margins, customer profiles etc) and use that information to decide who gets to rent how much shelf space and where. Target et al spend incredible amounts of money optimizing this stuff, which isn't far off from what Amazon does. People have this old rusty view of brick & mortar stores, but the reality is that they've been masters of this stuff far longer than Amazon has even been around. Amazon championed bringing these practices to the online space and became the most obvious juggernaut, but that doesn't mean these other companies are angels.

eridan2 6y ago
in Europe a supermarket buys the products; usually it will pay in 90/120/180 days and it has the option to return unsold items and will have advertising agreements for better/larger shelves, but everything is in the store is own by the store
- txcwpalpha 6y ago
  This is not universally true. Slotting fees and shelf rental agreements are a thing in Europe, just like they are in the US.