3 ms·

I wonder if the supplier can similarly have the detailed data on the customer and how that helps in negotiating both ways.

by avmich 3y ago

steveBK123 3y ago
It's asymmetrical for the most part on a lot of stuff Was listening to Bloomberg the other day and they were talking about how Walmart is the biggest grocer in US. They have pricing power because for example they constitute something over 5% of all Heinz sales. Similar for paper products from one of the big companies like Procter & Gamble. The inverse is not true, as you are unlikely to find any vendor who Walmart makes 5%+ of all their sales dollars off of. So Walmart can generally turn to any of these vendors and say - we will evaporate 5% of your sales overnight if you don't give into demand, and send all our orders to some competitor.
- carlosjobim 3y ago
  I've never understood this. If you're not making enough profit - or even loosing money - selling to a large client, you are better off without them. Profit should come before everything else, including growth.
  - collaborative 3y ago
    Then you wouldn't exist. Even the smallest business goes through years of losses before it (hopefully) reaches profitability. Pay to sell is the only way nearly 100% of incumbents have to simply exist. If they don't do it, someone else will Traditionally, businesses build a reputation and customers learn where to find them (a physical location). They then become and stay profitable. Anyone depending on a monopolist for its pay-to-sell strategy won't usually reach profitability. The monopolist might be as small as a greedy feudal lord in the middle ages. Today we have Apple/Google etc
    - A4ET8a8uTh0 3y ago
      There is a real difference between starting a business and running it at a loss before reaching profitability and consciously entering a contract, where you know you are producing at a loss ( and your contract partner benefits ) that only furthers your profitability gap. If this is the opening bid, it is highly unlikely it will get better. If anything, it will only get worse. You don't make it up in volume when you sell at a loss already. << If they don't do it, someone else will That is the interesting part. The pressure is so high that people are willing to forego their own self-interest and basic critical thinking skills, because someone will do it at or below cost anyway. It is great for Walmart, but it would explain why so many businesses fail so hard. They are way too nice to the other party.
  - frozenport 3y ago
    Not enough profit is different from loosing money. Here the vendors are simply making less money because their product is part of a highly competitive marketplace.
    - carlosjobim 3y ago
      Not enough profit is the main reason to shut down a business, unless you have a good and realistic plan on how to reverse that. All that effort and all that risk can be put into more lucrative ventures.
  - frozenport 3y ago
    Not enough profit is different from loosing money. Here the vendors are simply making less money because their product is part of a highly competitive marketplace. Furthermore, their position is weakened because they are poorly differentiated from their competition.

I wonder if the supplier can similarly have the detailed data on the customer and how that helps in negotiating both ways.

by avmich 3y ago

I wonder if the supplier can similarly have the detailed data on the customer and how that helps in negotiating both ways.

steveBK123 3y ago

It's asymmetrical for the most part on a lot of stuff Was listening to Bloomberg the other day and they were talking about how Walmart is the biggest grocer in US. They have pricing power because for example they constitute something over 5% of all Heinz sales. Similar for paper products from one of the big companies like Procter & Gamble. The inverse is not true, as you are unlikely to find any vendor who Walmart makes 5%+ of all their sales dollars off of. So Walmart can generally turn to any of these vendors and say - we will evaporate 5% of your sales overnight if you don't give into demand, and send all our orders to some competitor.

carlosjobim 3y ago
I've never understood this. If you're not making enough profit - or even loosing money - selling to a large client, you are better off without them. Profit should come before everything else, including growth.
- collaborative 3y ago
  Then you wouldn't exist. Even the smallest business goes through years of losses before it (hopefully) reaches profitability. Pay to sell is the only way nearly 100% of incumbents have to simply exist. If they don't do it, someone else will Traditionally, businesses build a reputation and customers learn where to find them (a physical location). They then become and stay profitable. Anyone depending on a monopolist for its pay-to-sell strategy won't usually reach profitability. The monopolist might be as small as a greedy feudal lord in the middle ages. Today we have Apple/Google etc
  - A4ET8a8uTh0 3y ago
    There is a real difference between starting a business and running it at a loss before reaching profitability and consciously entering a contract, where you know you are producing at a loss ( and your contract partner benefits ) that only furthers your profitability gap. If this is the opening bid, it is highly unlikely it will get better. If anything, it will only get worse. You don't make it up in volume when you sell at a loss already. << If they don't do it, someone else will That is the interesting part. The pressure is so high that people are willing to forego their own self-interest and basic critical thinking skills, because someone will do it at or below cost anyway. It is great for Walmart, but it would explain why so many businesses fail so hard. They are way too nice to the other party.
- frozenport 3y ago
  Not enough profit is different from loosing money. Here the vendors are simply making less money because their product is part of a highly competitive marketplace.
  - carlosjobim 3y ago
    Not enough profit is the main reason to shut down a business, unless you have a good and realistic plan on how to reverse that. All that effort and all that risk can be put into more lucrative ventures.
- frozenport 3y ago
  Not enough profit is different from loosing money. Here the vendors are simply making less money because their product is part of a highly competitive marketplace. Furthermore, their position is weakened because they are poorly differentiated from their competition.