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"This is nothing new, as brick and mortar retailers have store brands for popular products as well". The analogy seems spurious to me. Do brick and mortar reta

"This is nothing new, as brick and mortar retailers have store brands for popular products as well". The analogy seems spurious to me. Do brick and mortar retailers charge other brands for being a market-place ? Don't they actually buy products of other brands ?

kreeben 5y ago
Some super markets carry your favorite brand of frozen chicken nuggets, others do not. Makes me think there are agreements between producers and retailers and that those agreements are all about money. I bet there are clauses in those agreements that state that the retailer should "make my brand of ketchup the first brand that customers see" and that they cater to that clause "for a small fee".
xioxox 5y ago
In the UK, the big supermarket Tesco were criticised heavily for how they charged their suppliers for various things: https://www.theguardian.com/business/2015/mar/30/tesco-reduces-charges-imposed-suppliers-after-accounting-scandal https://www.theguardian.com/business/2015/mar/30/tesco-reduc...
joshuamorton 5y ago
Surprisingly no (or at least not always). Think for example of the displays of idk, stacks of holiday branded coke near the entrance of Walmart. Coca cola pays Walmart for that space and a coke employee likely puts the product there. Joe's corner store and Walmart work differently, only one negotiates brand deals.
thow-01187 5y ago
Yes, this is the crucial difference Brick and mortar stores are dealers, Amazon is a broker. Dealers have inventories - they purchase items from the suppliers and resell them - if they misjudge demand, they're left off with useless goods. Brokers simply facilitate a transaction between two parties - there's no risk involved. The fact that brokers get to charge a higher mark-up than dealers is just bizarre
- PeterisP 5y ago
  The major brick and mortar stores are not solely dealers, they often have various deals where they sell items on consignment and do not pay for inventory until after they're sold, require payment for "shelf space", etc. That's transparent from a customer perspective, but from a supplier viewpoint they're often quite close to brokers in practice.
  - mthoms 5y ago
    The consignment model and paying for shelf space are the exception in retail though, not the rule. They tend to exist only where there is a huge asymmetry in power between retailer (usually large chains) and suppliers.
    - PeterisP 5y ago
      Isn't most of retail done by large chains with a huge asymmetry in power?
      - mthoms 5y ago
        Depends on (1) what country/region you live in and (2) what brand you're talking about. For example: Yes, Safeway may be huge, but so is Procter and Gamble. Is there an asymmetry there? I'm not sure. Anyways, large chains don't deal exclusively in consignment either.
- lotsofpulp 5y ago
  > Dealers have inventories - they purchase items from the suppliers and resell them - if they misjudge demand, they're left off with useless goods. Everything is negotiable. If a retailer has more power than a supplier, then the retailer can demand a guaranteed sale clause in the contract, requiring the supplier to take back unsold goods and refund them. https://www.comcapfactoring.com/blog/walmart-vendor-financing/ https://www.comcapfactoring.com/blog/walmart-vendor-financin... https://factor-this.com/walmart-supplier-financing/ https://factor-this.com/walmart-supplier-financing/

kreeben 5y ago

Some super markets carry your favorite brand of frozen chicken nuggets, others do not. Makes me think there are agreements between producers and retailers and that those agreements are all about money. I bet there are clauses in those agreements that state that the retailer should "make my brand of ketchup the first brand that customers see" and that they cater to that clause "for a small fee".

xioxox 5y ago

In the UK, the big supermarket Tesco were criticised heavily for how they charged their suppliers for various things: https://www.theguardian.com/business/2015/mar/30/tesco-reduces-charges-imposed-suppliers-after-accounting-scandal https://www.theguardian.com/business/2015/mar/30/tesco-reduc...

joshuamorton 5y ago

Surprisingly no (or at least not always). Think for example of the displays of idk, stacks of holiday branded coke near the entrance of Walmart. Coca cola pays Walmart for that space and a coke employee likely puts the product there. Joe's corner store and Walmart work differently, only one negotiates brand deals.

thow-01187 5y ago

Yes, this is the crucial difference Brick and mortar stores are dealers, Amazon is a broker. Dealers have inventories - they purchase items from the suppliers and resell them - if they misjudge demand, they're left off with useless goods. Brokers simply facilitate a transaction between two parties - there's no risk involved. The fact that brokers get to charge a higher mark-up than dealers is just bizarre

PeterisP 5y ago
The major brick and mortar stores are not solely dealers, they often have various deals where they sell items on consignment and do not pay for inventory until after they're sold, require payment for "shelf space", etc. That's transparent from a customer perspective, but from a supplier viewpoint they're often quite close to brokers in practice.
- mthoms 5y ago
  The consignment model and paying for shelf space are the exception in retail though, not the rule. They tend to exist only where there is a huge asymmetry in power between retailer (usually large chains) and suppliers.
  - PeterisP 5y ago
    Isn't most of retail done by large chains with a huge asymmetry in power?
    - mthoms 5y ago
      Depends on (1) what country/region you live in and (2) what brand you're talking about. For example: Yes, Safeway may be huge, but so is Procter and Gamble. Is there an asymmetry there? I'm not sure. Anyways, large chains don't deal exclusively in consignment either.
lotsofpulp 5y ago
> Dealers have inventories - they purchase items from the suppliers and resell them - if they misjudge demand, they're left off with useless goods. Everything is negotiable. If a retailer has more power than a supplier, then the retailer can demand a guaranteed sale clause in the contract, requiring the supplier to take back unsold goods and refund them. https://www.comcapfactoring.com/blog/walmart-vendor-financing/ https://www.comcapfactoring.com/blog/walmart-vendor-financin... https://factor-this.com/walmart-supplier-financing/ https://factor-this.com/walmart-supplier-financing/