7 ms·

Predatory pricing is classic anti competitive behavior. The soap will no longer be $1 when competitors are driven out of business.

granzymes 3y ago
How exactly are you planning to drive out all competitors in the market for soap?
- drekipus 3y ago
  If it makes you happy we can add in ".. except for soaps" in the ruling... /s For a real life example, the major grocery chain in Australia (Woolworths) did this with milk, selling their brand for $1 a litre, where everyone else had to do $2+ just to break even. Effectively selling it at a loss so that they get market dominance. They make up the loss on other products in their big chain. I think there needs to be a break-up between "the retailer" and their home brand being sold there, because it means the profits made on selling the competition works to the home brand advantage.
  - granzymes 3y ago
    And in Australia today is Woolworths a monopoly, or are there still other companies in the market selling milk? I think I can guess.
    - drekipus 3y ago
      The consumer protection body got involved as well as a lot of negative media attention. They had to raise their prices so they don't become a monopoly. Did you guess "there needs to be market regulation and monitoring?" Because: Bingo! You got it!
      - granzymes 3y ago
        Really? Because the reporting I found says that the competition authority cleared the market participants of any wrongdoing in the "milk wars". >[Chairman of the Australian Competition and Consumer Commission] Samuel said the major impact of discounted milk prices appears to have been a reduction in the supermarkets’ profit margins on house brand milk, rather than a gain. https://www.smartcompany.com.au/startupsmart/advice/startupsmart-legal/accc-clears-coles-of-predatory-pricing-of-house-brand-milk/ https://www.smartcompany.com.au/startupsmart/advice/startups...
        drekipus 3y ago
        How is that different to what I said? > "Effectively selling it at a loss" Sure, maybe it wasn't a total loss, just less profit.
        granzymes 3y ago
        >The consumer protection body got involved as well as a lot of negative media attention. >They had to raise their prices so they don't become a monopoly. You seemed to be suggesting that what was happening with milk was anticompetitive and the consumer protection body got involved to stop it. I pointed out that what actually happened is that the body determined that there wasn't anything anticompetitive going on and that the companies ceased the "milk wars" on their own because they were losing money (which is exactly what I was alluding would happen with soap if one company tried to drive competitors out of the market). Seems like a big difference to me.
  - scarface_74 3y ago
    Every retailer has loss leaders.
    - kalleboo 3y ago
      Loss leaders are illegal in several countries
      - scarface_74 3y ago
        Well since this a US lawsuit…
    - barrkel 3y ago
      Illegal in California...
      - deleted 3y ago
        [deleted]
      - scarface_74 3y ago
        Three conditions must be met. https://www.upcounsel.com/lectl-california-antitrust-law https://www.upcounsel.com/lectl-california-antitrust-law > Loss Leader Sales > The Act also bars "loss leader" sales, defined as sales (1) below cost, (2) to induce, promote or encourage the purchase of other merchandise, and (3) with the intent to injure competitors or destroy competition. Business and Professions Code 17044. If that were not the case, cell carriers couldn’t sell phones below cost to sell service plans and the entire “razor vs razor blades” model would be illegal. That also means that game console sales would be illegal.
        jjeaff 3y ago
        how would you prove intent to injure a competitor? wouldn't all attempts to outcompete a competitor be considered an attempt to injure them? there is no way Costco isn't losing money on their $4.99 chickens or $1.50 hot dog and drink. and I assume the point is to get you in the door so you will buy other stuff from them and not Amazon or Walmart.
  - mullingitover 3y ago
    When your competitors are dumping, can’t you just buy their goods and resell them at cost until they go broke?
    - DecoPerson 3y ago
      Not without potentially creating a scandal. “IGA coordinates anti-consumer buyout of Woolworths milk” “Why is IGA skimming your milk?” “Woolworths vs IGA — Calf scalps bull’s milk”
    - nickpp 3y ago
      That is exactly what Dow Chemical did at the beginning of the 20th century to break the German bromine cartel. https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_monopoly https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_m... No government intervention necessary!
  - thejazzman 3y ago
    Huh, kinda like the App Store sparing Apple/Google of fees while all their competitors eat 30% cut to their revenue
- uhura 3y ago
  I believe the general strategy for this kind of product is to drive CX conversion. Amazon usually offers auto repurchase too, so if you are going to buy once and Amazon is cheaper, the second time too..., by the third you might actually decide to setup a auto purchase from time to time. if they discount 5 cents from the best competitor initially and in the long run they start to price 10 above, they use this to finance similar strategy to convert more CX and then they keep a more strong market position. In the end you don't push your competitors out of the market, but consolidate a very strong consumer base.
  - BlueTemplar 3y ago
    "CX" ?
    - vitus 3y ago
      In this context, "customer". https://devblogs.microsoft.com/oldnewthing/20120119-00/?p=8503 https://devblogs.microsoft.com/oldnewthing/20120119-00/?p=85... https://www.abbreviations.com/term/1424467/customer https://www.abbreviations.com/term/1424467/customer (Confusingly, most of the search results I found point at "customer experience" which doesn't fit as well here. I've definitely seen support write about "the CX has an issue with ..." so I'm pretty sure this is a standard term.)
- adt2bt 3y ago
  By selling soap for a loss for longer than the competitors can stomach. If you have 10 businesses making $100M/yr, you can lose $1B/yr on soap (by selling a $2 bar for $1) and get a ton of customers who buy your cheaper soap. Eventually, other basic soap sellers will either need to match your prices and take their own losses to match, or hold steady hoping you'll fold. Eventually, they are either sold to Amazon or fold, and Amazon can increase the price to $2.20/bar and mint another $100M/year for the next industry to attack with $1.1B. Rinse & repeat and eventually the customer is charged some percentage more for the same product once the competition is kowtowed.
  - deleted 3y ago
    [deleted]
  - WalterBright 3y ago
    When they raise prices again to cover for the losses, another soap company appears. "Predatory" pricing is not sustainable.
    - altcognito 3y ago
      It is possible that large scale soap companies will be deterred due to previous anticompetitive behavior
    - afavour 3y ago
      That is surely a vast simplification. By sheer operating scale Amazon can ship items at a cost far lower than any brand new “soap company” could. There’s no way you could be competitive on such a low priced item.
      - nickpp 3y ago
        And still countless competitors do exist. They must find some other ways to compete, because your point is valid. It's almost like the human ingenuity knows no bounds...
      - WalterBright 3y ago
- tuatoru 3y ago
  Yeah, it might be easier to crash the price of Unilever and then buy it. 1. https://en.wikipedia.org/wiki/Unilever https://en.wikipedia.org/wiki/Unilever > It is the largest producer of soap in the world,[3] and its products are available in over 190 countries.[4]
scarface_74 3y ago
Yes, because Amazon is going to drive out every single competitor including those who physically sell commodity goods in stores out of business - including the much larger Walmart. Is everyone forgetting just how small Amazon is when you consider all of retail?
- henriquez 3y ago
  [flagged]
- eganist 3y ago
  > Is everyone forgetting just how small Amazon is when you consider all of retail? https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/ https://www.statista.com/statistics/274255/market-share-of-t... June 2022, 37.8% of all ecommerce market share. Not sure why you're comparing to physical retail considering the antitrust practices alleged are in the ecommerce space. And even if we were to compare all retail in the US, Amazon is likely to overtake Walmart across all retail come next year. https://www.ascentialedge.com/press/ecommerce-shakes-top-5-retailers-us https://www.ascentialedge.com/press/ecommerce-shakes-top-5-r...
  - granzymes 3y ago
    The FTC doesn't get to determine the relevant antitrust market. Part of Amazon's defense will be pointing out that consumers buy soap on Amazon and in physical stores alike. It will be up to a judge to decide.
    - scarface_74 3y ago
      And the government has lost every single case it brought against BigTech in the last 4-5 years
  - scarface_74 3y ago
    Since when was 37.8 percent a monopoly? And it was also predicted by analysts that Windows Phone would overtake the iPhone by 2017 https://www.computerworld.com/article/2473666/windows-phone-to-overtake-the-iphone--it-will-happen-.amp.html https://www.computerworld.com/article/2473666/windows-phone-...

granzymes 3y ago

How exactly are you planning to drive out all competitors in the market for soap?

drekipus 3y ago
If it makes you happy we can add in ".. except for soaps" in the ruling... /s For a real life example, the major grocery chain in Australia (Woolworths) did this with milk, selling their brand for $1 a litre, where everyone else had to do $2+ just to break even. Effectively selling it at a loss so that they get market dominance. They make up the loss on other products in their big chain. I think there needs to be a break-up between "the retailer" and their home brand being sold there, because it means the profits made on selling the competition works to the home brand advantage.
- granzymes 3y ago
  And in Australia today is Woolworths a monopoly, or are there still other companies in the market selling milk? I think I can guess.
  - drekipus 3y ago
    The consumer protection body got involved as well as a lot of negative media attention. They had to raise their prices so they don't become a monopoly. Did you guess "there needs to be market regulation and monitoring?" Because: Bingo! You got it!
    - granzymes 3y ago
      Really? Because the reporting I found says that the competition authority cleared the market participants of any wrongdoing in the "milk wars". >[Chairman of the Australian Competition and Consumer Commission] Samuel said the major impact of discounted milk prices appears to have been a reduction in the supermarkets’ profit margins on house brand milk, rather than a gain. https://www.smartcompany.com.au/startupsmart/advice/startupsmart-legal/accc-clears-coles-of-predatory-pricing-of-house-brand-milk/ https://www.smartcompany.com.au/startupsmart/advice/startups...
      - drekipus 3y ago
        How is that different to what I said? > "Effectively selling it at a loss" Sure, maybe it wasn't a total loss, just less profit.
        granzymes 3y ago
        >The consumer protection body got involved as well as a lot of negative media attention. >They had to raise their prices so they don't become a monopoly. You seemed to be suggesting that what was happening with milk was anticompetitive and the consumer protection body got involved to stop it. I pointed out that what actually happened is that the body determined that there wasn't anything anticompetitive going on and that the companies ceased the "milk wars" on their own because they were losing money (which is exactly what I was alluding would happen with soap if one company tried to drive competitors out of the market). Seems like a big difference to me.
- scarface_74 3y ago
  Every retailer has loss leaders.
  - kalleboo 3y ago
    Loss leaders are illegal in several countries
    - scarface_74 3y ago
      Well since this a US lawsuit…
  - barrkel 3y ago
    Illegal in California...
    - deleted 3y ago
      [deleted]
    - scarface_74 3y ago
      Three conditions must be met. https://www.upcounsel.com/lectl-california-antitrust-law https://www.upcounsel.com/lectl-california-antitrust-law > Loss Leader Sales > The Act also bars "loss leader" sales, defined as sales (1) below cost, (2) to induce, promote or encourage the purchase of other merchandise, and (3) with the intent to injure competitors or destroy competition. Business and Professions Code 17044. If that were not the case, cell carriers couldn’t sell phones below cost to sell service plans and the entire “razor vs razor blades” model would be illegal. That also means that game console sales would be illegal.
      - jjeaff 3y ago
        how would you prove intent to injure a competitor? wouldn't all attempts to outcompete a competitor be considered an attempt to injure them? there is no way Costco isn't losing money on their $4.99 chickens or $1.50 hot dog and drink. and I assume the point is to get you in the door so you will buy other stuff from them and not Amazon or Walmart.
- mullingitover 3y ago
  When your competitors are dumping, can’t you just buy their goods and resell them at cost until they go broke?
  - DecoPerson 3y ago
    Not without potentially creating a scandal. “IGA coordinates anti-consumer buyout of Woolworths milk” “Why is IGA skimming your milk?” “Woolworths vs IGA — Calf scalps bull’s milk”
  - nickpp 3y ago
    That is exactly what Dow Chemical did at the beginning of the 20th century to break the German bromine cartel. https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_monopoly https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_m... No government intervention necessary!
- thejazzman 3y ago
  Huh, kinda like the App Store sparing Apple/Google of fees while all their competitors eat 30% cut to their revenue
uhura 3y ago
I believe the general strategy for this kind of product is to drive CX conversion. Amazon usually offers auto repurchase too, so if you are going to buy once and Amazon is cheaper, the second time too..., by the third you might actually decide to setup a auto purchase from time to time. if they discount 5 cents from the best competitor initially and in the long run they start to price 10 above, they use this to finance similar strategy to convert more CX and then they keep a more strong market position. In the end you don't push your competitors out of the market, but consolidate a very strong consumer base.
- BlueTemplar 3y ago
  "CX" ?
  - vitus 3y ago
    In this context, "customer". https://devblogs.microsoft.com/oldnewthing/20120119-00/?p=8503 https://devblogs.microsoft.com/oldnewthing/20120119-00/?p=85... https://www.abbreviations.com/term/1424467/customer https://www.abbreviations.com/term/1424467/customer (Confusingly, most of the search results I found point at "customer experience" which doesn't fit as well here. I've definitely seen support write about "the CX has an issue with ..." so I'm pretty sure this is a standard term.)
adt2bt 3y ago
By selling soap for a loss for longer than the competitors can stomach. If you have 10 businesses making $100M/yr, you can lose $1B/yr on soap (by selling a $2 bar for $1) and get a ton of customers who buy your cheaper soap. Eventually, other basic soap sellers will either need to match your prices and take their own losses to match, or hold steady hoping you'll fold. Eventually, they are either sold to Amazon or fold, and Amazon can increase the price to $2.20/bar and mint another $100M/year for the next industry to attack with $1.1B. Rinse & repeat and eventually the customer is charged some percentage more for the same product once the competition is kowtowed.
- deleted 3y ago
  [deleted]
- WalterBright 3y ago
  When they raise prices again to cover for the losses, another soap company appears. "Predatory" pricing is not sustainable.
  - altcognito 3y ago
    It is possible that large scale soap companies will be deterred due to previous anticompetitive behavior
  - afavour 3y ago
    That is surely a vast simplification. By sheer operating scale Amazon can ship items at a cost far lower than any brand new “soap company” could. There’s no way you could be competitive on such a low priced item.
    - nickpp 3y ago
      And still countless competitors do exist. They must find some other ways to compete, because your point is valid. It's almost like the human ingenuity knows no bounds...
    - WalterBright 3y ago
tuatoru 3y ago
Yeah, it might be easier to crash the price of Unilever and then buy it. 1. https://en.wikipedia.org/wiki/Unilever https://en.wikipedia.org/wiki/Unilever > It is the largest producer of soap in the world,[3] and its products are available in over 190 countries.[4]

scarface_74 3y ago

Yes, because Amazon is going to drive out every single competitor including those who physically sell commodity goods in stores out of business - including the much larger Walmart. Is everyone forgetting just how small Amazon is when you consider all of retail?

henriquez 3y ago
[flagged]
eganist 3y ago
> Is everyone forgetting just how small Amazon is when you consider all of retail? https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/ https://www.statista.com/statistics/274255/market-share-of-t... June 2022, 37.8% of all ecommerce market share. Not sure why you're comparing to physical retail considering the antitrust practices alleged are in the ecommerce space. And even if we were to compare all retail in the US, Amazon is likely to overtake Walmart across all retail come next year. https://www.ascentialedge.com/press/ecommerce-shakes-top-5-retailers-us https://www.ascentialedge.com/press/ecommerce-shakes-top-5-r...
- granzymes 3y ago
  The FTC doesn't get to determine the relevant antitrust market. Part of Amazon's defense will be pointing out that consumers buy soap on Amazon and in physical stores alike. It will be up to a judge to decide.
  - scarface_74 3y ago
    And the government has lost every single case it brought against BigTech in the last 4-5 years
- scarface_74 3y ago
  Since when was 37.8 percent a monopoly? And it was also predicted by analysts that Windows Phone would overtake the iPhone by 2017 https://www.computerworld.com/article/2473666/windows-phone-to-overtake-the-iphone--it-will-happen-.amp.html https://www.computerworld.com/article/2473666/windows-phone-...