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Supermarkets do not pay for product as you describe. Manufacturers and/or distributors pay the supermarkets slotting fees to get their products on the shelves.

Supermarkets do not pay for product as you describe. Manufacturers and/or distributors pay the supermarkets slotting fees to get their products on the shelves. Additionally, slotting fees are higher for ideal shelf location, and in some cases proximity to competitor products. For example, the bottom shelves are undesirable. And then you have end caps which are highly desirable.

tomtheelder 6y ago
Slotting fees are real, but of course supermarkets pay for the product. How else would the manufacturer be paid? The fee is basically paying for the right to shelf space, but the supermarket still buys the product to fill the shelves. Also, not all supermarkets, including not all large chains, have such fees.
- andromeduck 6y ago
  They're paid when the product clears. Many big chains like Walmart and Best Buy don't own a significant portion of inventory on shelves or in warehouses. The manufacturers own the inventory up until the products are paid for by the customer.
  - gamblor956 6y ago
    This is simply false. Chains like Walmart and Best Buy own their inventory (i.e., they hold legal title). They simply might not have forked over the cash yet, which is very different--for a variety of reasons, the actual transfer of cash can take place weeks or even months later. (This is how invoicing works with most companies. If you are an independent contract, you know exactly how this works.) Very few products in retail are sold on a consignment basis (meaning, when the product sells). Generally, only new products or slow-selling big-ticket items (like refrigerators) get sold on consignment (or similar) arrangements.
    - noizejoy 6y ago
      Legal title isn’t the end-all depending on how the entire contract is structured. e.g. A home owner may hold legal title to a home, but the mortgage is a side contract that may show that the bank may hold more than half of the entire home value. Legal title is just one of many arbitrary constructs that get applied, typically in a way that’s most advantageous to the more powerful party in the relationship. Forking or not forking over cash can be a key component of who really holds the business risk (rather than just legal title).
- OpieCunningham 6y ago
  Sure. I didn't say anything differently. The parent though was mistaken to believe supermarkets do not have similar structures to Amazon in terms of product placement/promotion. In other words, Apple pays Amazon in some form in order to have Amazon prioritize Apple products based upon user search. Supermarkets are paid by Starkist to get Starkist tuna on the eye-level shelf as opposed to the first shelf from the floor. Starkist and Apple still get paid for products sold, otherwise neither company could exist.

tomtheelder 6y ago

Slotting fees are real, but of course supermarkets pay for the product. How else would the manufacturer be paid? The fee is basically paying for the right to shelf space, but the supermarket still buys the product to fill the shelves. Also, not all supermarkets, including not all large chains, have such fees.

andromeduck 6y ago
They're paid when the product clears. Many big chains like Walmart and Best Buy don't own a significant portion of inventory on shelves or in warehouses. The manufacturers own the inventory up until the products are paid for by the customer.
- gamblor956 6y ago
  This is simply false. Chains like Walmart and Best Buy own their inventory (i.e., they hold legal title). They simply might not have forked over the cash yet, which is very different--for a variety of reasons, the actual transfer of cash can take place weeks or even months later. (This is how invoicing works with most companies. If you are an independent contract, you know exactly how this works.) Very few products in retail are sold on a consignment basis (meaning, when the product sells). Generally, only new products or slow-selling big-ticket items (like refrigerators) get sold on consignment (or similar) arrangements.
  - noizejoy 6y ago
    Legal title isn’t the end-all depending on how the entire contract is structured. e.g. A home owner may hold legal title to a home, but the mortgage is a side contract that may show that the bank may hold more than half of the entire home value. Legal title is just one of many arbitrary constructs that get applied, typically in a way that’s most advantageous to the more powerful party in the relationship. Forking or not forking over cash can be a key component of who really holds the business risk (rather than just legal title).
OpieCunningham 6y ago
Sure. I didn't say anything differently. The parent though was mistaken to believe supermarkets do not have similar structures to Amazon in terms of product placement/promotion. In other words, Apple pays Amazon in some form in order to have Amazon prioritize Apple products based upon user search. Supermarkets are paid by Starkist to get Starkist tuna on the eye-level shelf as opposed to the first shelf from the floor. Starkist and Apple still get paid for products sold, otherwise neither company could exist.