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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

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/

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/