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> What makes Amazon different in this regard? Safeway/Kroger/Costco do not have direct third-party merchants, do they? They are just resellers. This is funda

> What makes Amazon different in this regard? Safeway/Kroger/Costco do not have direct third-party merchants, do they? They are just resellers. This is fundamentally different from what Amazon is doing.

xyzzyz 5y ago
They all have their own store brands.
- rootusrootus 5y ago
  Sure, but if they are the actual customers of their suppliers, it doesn't seem like what Amazon does. I don't walk into Kroger and buy Doritos from Frito-Lay with Kroger just doing the fulfillment and payment processing, do I? I'm actually buying product that Kroger owns. At least this is how I understand it. I am 100% open to being schooled in how it actually plays out. I'm just a software guy, but I like to learn.
  - jsolson 5y ago
    If you're curious, The Secret Life of Groceries is a good (and interesting) read. One tl; dr thing is that the supermarkets are a _supplier_ to both end customers and those with products to sell. They supply shelf space and customer reach, in the very literal sense that companies bid for things like endcap placement (the end of the aisle being better than being in the aisle, since everyone making an orbit through, say, the deli section will pass your goods).
    - rootusrootus 5y ago
      Thanks! That is an interesting aspect. I had not considered that it could be a two-way relationship, rather than the store just buying what they want to sell and putting it on the shelf. I guess it seems a little obvious in retrospect that there must be a bit of that going on, I've long noticed that some suppliers have a lot of responsibility in the store beyond delivering product. Like the beer guy pretty much runs the entire beer aisle. And it's one of the big names supplying all the beer, not just their own. I've seen similar action in some stores by the soft drink vendors and even the bread vendor. Non-store employees on the floor putting stock directly on the shelf.
newsclues 5y ago
Grocery retail is much more complicated. They may charge shelf space rent.
- akiselev 5y ago
  They take on the vast majority of the inventory risk, which is the fundamental detail everyone seems to miss. They own what they sell. The complications come from trying to manage that risk - manufacturers who have better products or marketing can afford to pay for prime shelf space which also means it'll move faster.
  - dave5104 5y ago
    I don't believe this is true in all cases. Maybe for some products, but at least other commenters here are confirming that some manufacturers refund the grocer for any unsold product. (So, Safeway only pays for the inventory that gets sold.) Seems risk-free for grocers on the products they have those sorts of deals with.
    - akiselev 5y ago
      Yep they do that too but it's not risk free for physical stores because they take up shelf space. Anything that isn't moving off storefront shelves isn't making them any revenue - unlike Amazon they can't present every product through a paginated digital catalog while charging for warehouse storage.
      - dantheman 5y ago
        You don't think page space matters? How many people go page 30 of results?
        akiselev 5y ago
        Page space doesn't matter, at all. Anyone can produce more Amazon searches in 5 minutes than there are shelves in a retail store. Amazon makes money no matter which page you buy it from AND they charge all the merchants on page 30 for storing their goods in the Amazon warehouses on top of any commission. That's the exact opposite of inventory risk, that's an inventory gold mine. Retail stores can only sell stuff that is physical within arms reach of a customer. We're talking about retail vs Amazon, not retail vs Alibaba reseller #39146527.
klodolph 5y ago
If you think that a supermarket buys products wholesale and then puts them on shelves for customers to buy, you don't understand how supermarkets work.
- rootusrootus 5y ago
  > you don't understand how supermarkets work. Agreed ;-). That's why I hang out on HN, hoping to gain some insight and knowledge. The customer->FBA->merchant relationship is much clearer than in any supermarket I've been in. Maybe I'm really buying from a third party and the supermarket is just acting as the fulfillment center and payment processor, but it is well hidden. I'd love to know more about how the business end works.
  - elliekelly 5y ago
    Grocery stores are retailers in the traditional sense rather than a consignment shop or marketplace like Amazon. I think the person you’re replying to is alluding to “slotting fees” for new products and perhaps the more controversial “pay to stay” fees which are far more secretive and, from my understanding, are more of a grey area. Technically I believe the “fee” is considered a type of advertising expense: https://home.kpmg/content/dam/kpmg/pdf/2015/04/revenue-leaflet-food-drink.pdf https://home.kpmg/content/dam/kpmg/pdf/2015/04/revenue-leafl...
    - wyldfire 5y ago
      Those fees might be an interesting factor but who bears the inventory carrying cost is what I suspect GP means. For FBA, it's not Amazon. It wouldn't surprise me if big vendors like coke/Pepsi who stock the shelves also own the inventory.
- shkkmo 5y ago
  I'd love to read a good article talking about how inventory acquisition and management works at divergent super market chains... I suspect a lot of the interesting details are considered trade secrets though.
legitster 5y ago
I worked for Frito Lay as a salesperson and yes perhaps only 20% - 40% of grocery store inventory is maintained by the store staff. The rest was space that we were allocated to sell our stuff. Stores would pay for the inventory, but we would rebate them for what would not sell as an incentive to make sure we put out products that actually sold. But I would literally come in every day to the larger stores and put product on the shelf and argue with the manager about inventory and clean up our area. None of the stores I worked at explicitly sold shelf space (I think), but our corporate worked with their corporate to determine how much space in each store would maximize their revenue. I am sure newcomers would have to do extra to guarantee they would make enough money for the stores to take risks on them. Needless to say, they had all of our sales data when it came to developing store brands.
- legitster 5y ago
  Also, continuing on, grocery stores are a very apt comparison. Foot traffic and purchase behaviors are very heavily tracked. Firstly in an analogue ways - managers are always watching were customers are going/ what they are looking at/etc. The security team at a one co-op bragged that their cameras could read the time on your watch. Secondly, there are all sorts of new tools stores are trying out to automate this. Software that analyzes footage to generate heatmaps. Or using the in-store wifi access points to generate heatmaps (even if you don't connect, your phone will give away your position when looking for networks). This is especially important in mall settings where they need to calculate foot traffic estimates as a way of pricing storefronts.
  - threatofrain 5y ago
    One thing I've always wondered is whether there's any interest in using in-store cameras for tracking the information people show on their phones, such as location, health, financial data, or even passwords. Esp. since COVID I imagine a lot of people inputting their passwords in front of a camera at the register.
  - legitster 5y ago
    If you want to learn more about some of the platforms out there: https://www.getblix.com/retail-foot-traffic https://www.getblix.com/retail-foot-traffic https://www.aislelabs.com/products/flow/ https://www.aislelabs.com/products/flow/ https://documentation.meraki.com/MR/Monitoring_and_Reporting/Location_Analytics https://documentation.meraki.com/MR/Monitoring_and_Reporting...
nitwit005 5y ago
Some of the stock is essentially fully managed by third parties. If you see a bunch of Coke products in a store, there is likely to be a "Merchandiser" that visits and restocks it. It's a strategy by brands to get their product into more stores.

xyzzyz 5y ago

They all have their own store brands.

rootusrootus 5y ago
Sure, but if they are the actual customers of their suppliers, it doesn't seem like what Amazon does. I don't walk into Kroger and buy Doritos from Frito-Lay with Kroger just doing the fulfillment and payment processing, do I? I'm actually buying product that Kroger owns. At least this is how I understand it. I am 100% open to being schooled in how it actually plays out. I'm just a software guy, but I like to learn.
- jsolson 5y ago
  If you're curious, The Secret Life of Groceries is a good (and interesting) read. One tl; dr thing is that the supermarkets are a _supplier_ to both end customers and those with products to sell. They supply shelf space and customer reach, in the very literal sense that companies bid for things like endcap placement (the end of the aisle being better than being in the aisle, since everyone making an orbit through, say, the deli section will pass your goods).
  - rootusrootus 5y ago
    Thanks! That is an interesting aspect. I had not considered that it could be a two-way relationship, rather than the store just buying what they want to sell and putting it on the shelf. I guess it seems a little obvious in retrospect that there must be a bit of that going on, I've long noticed that some suppliers have a lot of responsibility in the store beyond delivering product. Like the beer guy pretty much runs the entire beer aisle. And it's one of the big names supplying all the beer, not just their own. I've seen similar action in some stores by the soft drink vendors and even the bread vendor. Non-store employees on the floor putting stock directly on the shelf.

newsclues 5y ago

Grocery retail is much more complicated. They may charge shelf space rent.

akiselev 5y ago
They take on the vast majority of the inventory risk, which is the fundamental detail everyone seems to miss. They own what they sell. The complications come from trying to manage that risk - manufacturers who have better products or marketing can afford to pay for prime shelf space which also means it'll move faster.
- dave5104 5y ago
  I don't believe this is true in all cases. Maybe for some products, but at least other commenters here are confirming that some manufacturers refund the grocer for any unsold product. (So, Safeway only pays for the inventory that gets sold.) Seems risk-free for grocers on the products they have those sorts of deals with.
  - akiselev 5y ago
    Yep they do that too but it's not risk free for physical stores because they take up shelf space. Anything that isn't moving off storefront shelves isn't making them any revenue - unlike Amazon they can't present every product through a paginated digital catalog while charging for warehouse storage.
    - dantheman 5y ago
      You don't think page space matters? How many people go page 30 of results?
      - akiselev 5y ago
        Page space doesn't matter, at all. Anyone can produce more Amazon searches in 5 minutes than there are shelves in a retail store. Amazon makes money no matter which page you buy it from AND they charge all the merchants on page 30 for storing their goods in the Amazon warehouses on top of any commission. That's the exact opposite of inventory risk, that's an inventory gold mine. Retail stores can only sell stuff that is physical within arms reach of a customer. We're talking about retail vs Amazon, not retail vs Alibaba reseller #39146527.

klodolph 5y ago

If you think that a supermarket buys products wholesale and then puts them on shelves for customers to buy, you don't understand how supermarkets work.

rootusrootus 5y ago
> you don't understand how supermarkets work. Agreed ;-). That's why I hang out on HN, hoping to gain some insight and knowledge. The customer->FBA->merchant relationship is much clearer than in any supermarket I've been in. Maybe I'm really buying from a third party and the supermarket is just acting as the fulfillment center and payment processor, but it is well hidden. I'd love to know more about how the business end works.
- elliekelly 5y ago
  Grocery stores are retailers in the traditional sense rather than a consignment shop or marketplace like Amazon. I think the person you’re replying to is alluding to “slotting fees” for new products and perhaps the more controversial “pay to stay” fees which are far more secretive and, from my understanding, are more of a grey area. Technically I believe the “fee” is considered a type of advertising expense: https://home.kpmg/content/dam/kpmg/pdf/2015/04/revenue-leaflet-food-drink.pdf https://home.kpmg/content/dam/kpmg/pdf/2015/04/revenue-leafl...
  - wyldfire 5y ago
    Those fees might be an interesting factor but who bears the inventory carrying cost is what I suspect GP means. For FBA, it's not Amazon. It wouldn't surprise me if big vendors like coke/Pepsi who stock the shelves also own the inventory.
shkkmo 5y ago
I'd love to read a good article talking about how inventory acquisition and management works at divergent super market chains... I suspect a lot of the interesting details are considered trade secrets though.

legitster 5y ago

I worked for Frito Lay as a salesperson and yes perhaps only 20% - 40% of grocery store inventory is maintained by the store staff. The rest was space that we were allocated to sell our stuff. Stores would pay for the inventory, but we would rebate them for what would not sell as an incentive to make sure we put out products that actually sold. But I would literally come in every day to the larger stores and put product on the shelf and argue with the manager about inventory and clean up our area. None of the stores I worked at explicitly sold shelf space (I think), but our corporate worked with their corporate to determine how much space in each store would maximize their revenue. I am sure newcomers would have to do extra to guarantee they would make enough money for the stores to take risks on them. Needless to say, they had all of our sales data when it came to developing store brands.

legitster 5y ago
Also, continuing on, grocery stores are a very apt comparison. Foot traffic and purchase behaviors are very heavily tracked. Firstly in an analogue ways - managers are always watching were customers are going/ what they are looking at/etc. The security team at a one co-op bragged that their cameras could read the time on your watch. Secondly, there are all sorts of new tools stores are trying out to automate this. Software that analyzes footage to generate heatmaps. Or using the in-store wifi access points to generate heatmaps (even if you don't connect, your phone will give away your position when looking for networks). This is especially important in mall settings where they need to calculate foot traffic estimates as a way of pricing storefronts.
- threatofrain 5y ago
  One thing I've always wondered is whether there's any interest in using in-store cameras for tracking the information people show on their phones, such as location, health, financial data, or even passwords. Esp. since COVID I imagine a lot of people inputting their passwords in front of a camera at the register.
- legitster 5y ago
  If you want to learn more about some of the platforms out there: https://www.getblix.com/retail-foot-traffic https://www.getblix.com/retail-foot-traffic https://www.aislelabs.com/products/flow/ https://www.aislelabs.com/products/flow/ https://documentation.meraki.com/MR/Monitoring_and_Reporting/Location_Analytics https://documentation.meraki.com/MR/Monitoring_and_Reporting...

nitwit005 5y ago

Some of the stock is essentially fully managed by third parties. If you see a bunch of Coke products in a store, there is likely to be a "Merchandiser" that visits and restocks it. It's a strategy by brands to get their product into more stores.