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Thus, it is irrelevant to the manufacturer whether the supermarket promotes their store-brand product or the name brand product; they've already been paid by th

Thus, it is irrelevant to the manufacturer whether the supermarket promotes their store-brand product or the name brand product; they've already been paid by their primary customer. That might be true if Safeway is going to buy the same number of cereal boxes from you every quarter, but that's not what happens. Stores adjust their purchases based on what sells, so if Safeway starts promoting their own cereal then they will start buying less of yours. Notably, and very importantly: Amazon does not pay for the third-party sellers products available on its website, the third-party sellers have to pay that. Supermarkets frequently charge slotting fees to appear on their shelves. The manufacturers get paid either way (by the retailer, third-party seller, or Amazon if Amazon.com is the seller). But in the case of Amazon, the third-party sellers on Amazon's website get screwed, and that is where the antitrust concern lies. Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock.

mthoms 6y ago
None of what you wrote is really relevant to the point the parent was making. They were highlighting the upfront risk of paying for the inventory itself. Amazon does not assume any of this risk. Ever. The vast, vast majority of other retailers do. Consignment arrangements are the exception, not the rule. Slotting fees, like buying ads on Amazon, have absolutely nothing to do with inventory costs. >Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock. There's exceptions to everything and the parent explicitly mentioned that.
- colechristensen 6y ago
  > Amazon does not assume any of this risk. Ever. This is a bit extreme. “Shipped and sold by Amazon” is indeed a large part of their online retail and many people try to buy only directly from Amazon.
  - mthoms 6y ago
    We seem to have come full circle back to the original point. Amazon chooses which products to stock and sell direct based on the risk/reward ratio of each individual product. They determine that ratio by analyzing their 3rd party merchants data. See the problem? Amazon can eliminate/minimize their own risk based on data from their supposed "partners".
gamblor956 6y ago
That might be true if Safeway is going to buy the same number of cereal boxes from you every quarter, but that's not what happens. Stores adjust their purchases based on what sells, so if Safeway starts promoting their own cereal then they will start buying less of yours. You do know that the companies that make the name brand cereals...also make the store brand cereals... It's about market fit. Price sensitive customers would generally not buy name brand because it's too expensive, and the brands don't won't lower-priced products to "sully" the image of the brand. Hence, they sell white label (aka store brand) products to retail stores that are generally lower quality and thus cheaper. Supermarkets frequently charge slotting fees to appear on their shelves. Yes, some do. For new products that they wouldn't otherwise stock on the shelves, because it's in lieu of the anticipated lost revenue from saleable products that would otherwise have gone on the shelves. Note that slotting fees are used alongside consignment arrangements. Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock. Yes, but they've still paid for those products in the first place (in the legal/accounting sense). Refunds come in the form of discounts or credits on future invoices.
- donor20 6y ago
  And you frankly have no clue. Let me clue you in on a few facts. Retail stores are not paying upfront. Name a single major retailer that does this. I've yet to hear of a single one doing this. Amazon is a bookstore. Go to any other bookstore or even distributor, and ask how quickly folks get paid who sell into their market. These folks drag the absolute HELL out of payment. And yes, the local bookstore can return the books. They are generally not taking inventory risk. Same thing with a grocery store. Want to get on shelf? Pay a fee? Want to sell in store? Until you prove sales volume so risk is gone, you will need to be willing to accept product returns and pay fee to cover whatever you replaced. Want data on how your product sold at store level / by day / time etc? Be prepared to PAY for that. BTW - amazon merchants get most of this for free. The time to pay for a product that sells in a retail store and amazon is different, and much WORSE for the retail store. You can get next day payout availability for FBA from amazon. If you sell a product through a distributor into retail - if you think you are going to get next day payment - dream on.

mthoms 6y ago

None of what you wrote is really relevant to the point the parent was making. They were highlighting the upfront risk of paying for the inventory itself. Amazon does not assume any of this risk. Ever. The vast, vast majority of other retailers do. Consignment arrangements are the exception, not the rule. Slotting fees, like buying ads on Amazon, have absolutely nothing to do with inventory costs. >Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock. There's exceptions to everything and the parent explicitly mentioned that.

colechristensen 6y ago
> Amazon does not assume any of this risk. Ever. This is a bit extreme. “Shipped and sold by Amazon” is indeed a large part of their online retail and many people try to buy only directly from Amazon.
- mthoms 6y ago
  We seem to have come full circle back to the original point. Amazon chooses which products to stock and sell direct based on the risk/reward ratio of each individual product. They determine that ratio by analyzing their 3rd party merchants data. See the problem? Amazon can eliminate/minimize their own risk based on data from their supposed "partners".

gamblor956 6y ago

That might be true if Safeway is going to buy the same number of cereal boxes from you every quarter, but that's not what happens. Stores adjust their purchases based on what sells, so if Safeway starts promoting their own cereal then they will start buying less of yours. You do know that the companies that make the name brand cereals...also make the store brand cereals... It's about market fit. Price sensitive customers would generally not buy name brand because it's too expensive, and the brands don't won't lower-priced products to "sully" the image of the brand. Hence, they sell white label (aka store brand) products to retail stores that are generally lower quality and thus cheaper. Supermarkets frequently charge slotting fees to appear on their shelves. Yes, some do. For new products that they wouldn't otherwise stock on the shelves, because it's in lieu of the anticipated lost revenue from saleable products that would otherwise have gone on the shelves. Note that slotting fees are used alongside consignment arrangements. Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock. Yes, but they've still paid for those products in the first place (in the legal/accounting sense). Refunds come in the form of discounts or credits on future invoices.

donor20 6y ago
And you frankly have no clue. Let me clue you in on a few facts. Retail stores are not paying upfront. Name a single major retailer that does this. I've yet to hear of a single one doing this. Amazon is a bookstore. Go to any other bookstore or even distributor, and ask how quickly folks get paid who sell into their market. These folks drag the absolute HELL out of payment. And yes, the local bookstore can return the books. They are generally not taking inventory risk. Same thing with a grocery store. Want to get on shelf? Pay a fee? Want to sell in store? Until you prove sales volume so risk is gone, you will need to be willing to accept product returns and pay fee to cover whatever you replaced. Want data on how your product sold at store level / by day / time etc? Be prepared to PAY for that. BTW - amazon merchants get most of this for free. The time to pay for a product that sells in a retail store and amazon is different, and much WORSE for the retail store. You can get next day payout availability for FBA from amazon. If you sell a product through a distributor into retail - if you think you are going to get next day payment - dream on.