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We let supermarkets competitively position themselves all the time. Why is Amazon different?

by wbl 3y ago

andyferris 3y ago
Well, actually, I think this is increasingly being highlighted as a problem. For example a few years ago in Australia it was a big issue that the supermarket duopoly was intentially making their brands of milk too cheap. There was a kind of spiral where expensive brands weren't selling well, so farmers had to sign restrictive contracts with the big supermarkets, but the rates were too low to be profitable or even viable. The conflict of interest sort of "broke" the free market for milk. I'm not sure if retailers should be forced to be "brokers or producers but not both" but I am sure that if they were purely "brokers" then we wouldn't have experienced this particular problem. (The fact that the supermaket business is so centralised is another related issue).
- dantheman 3y ago
  Did the price of milk get higher or did it just stay lower?
- avar 3y ago
  I wasn't familiar with the Australian "Milk Wars", and went down a bit of a rabbit hole. This $1/liter pricing appears to have started on Australia Day in 2011, and continued until 2019. But in this summary [1] of the report that Australia's competition regulator released in 2018 we can see that the price/liter that farmers were getting during this period doesn't seem to have been affected by the $1/liter pricing. The ACCC found (quoting [1]): "no direct relationship between retail private label milk prices and farmgate prices", and that neither the rate at which farms closed down, or their profitability was affected by the $1/liter milk. 1. https://www.farminstitute.org.au/briefing-dairy-regulation-and-floor-pricing/ https://www.farminstitute.org.au/briefing-dairy-regulation-a... 2. https://www.accc.gov.au/about-us/publications/dairy-inquiry-final-report https://www.accc.gov.au/about-us/publications/dairy-inquiry-...
mcpackieh 3y ago
There's a lot more healthy competition between grocery store brands than in e-commerce. If Amazon weren't so dominant then they wouldn't be the target of this kind of regulation.
- dantheman 3y ago
  I'd say the cost of switching in real life is a lot more expensive than going to a different URL. Amazon is dominant because it fights to provide a good value to its customers. It's easy for them to type in a different URL.
ffgjgf1 3y ago
Most supermarkets do not rent out a significant proportion of their floorspace to third party retails which they directly compete with? (and therefore have an arguably unfair advantage because they have full access to their sales data but not the other way around)

We let supermarkets competitively position themselves all the time. Why is Amazon different?

by wbl 3y ago

We let supermarkets competitively position themselves all the time. Why is Amazon different?

Well, actually, I think this is increasingly being highlighted as a problem. For example a few years ago in Australia it was a big issue that the supermarket duopoly was intentially making their brands of milk too cheap. There was a kind of spiral where expensive brands weren't selling well, so farmers had to sign restrictive contracts with the big supermarkets, but the rates were too low to be profitable or even viable. The conflict of interest sort of "broke" the free market for milk. I'm not sure if retailers should be forced to be "brokers or producers but not both" but I am sure that if they were purely "brokers" then we wouldn't have experienced this particular problem. (The fact that the supermaket business is so centralised is another related issue).

dantheman 3y ago
Did the price of milk get higher or did it just stay lower?
avar 3y ago
I wasn't familiar with the Australian "Milk Wars", and went down a bit of a rabbit hole. This $1/liter pricing appears to have started on Australia Day in 2011, and continued until 2019. But in this summary [1] of the report that Australia's competition regulator released in 2018 we can see that the price/liter that farmers were getting during this period doesn't seem to have been affected by the $1/liter pricing. The ACCC found (quoting [1]): "no direct relationship between retail private label milk prices and farmgate prices", and that neither the rate at which farms closed down, or their profitability was affected by the $1/liter milk. 1. https://www.farminstitute.org.au/briefing-dairy-regulation-and-floor-pricing/ https://www.farminstitute.org.au/briefing-dairy-regulation-a... 2. https://www.accc.gov.au/about-us/publications/dairy-inquiry-final-report https://www.accc.gov.au/about-us/publications/dairy-inquiry-...

mcpackieh 3y ago

There's a lot more healthy competition between grocery store brands than in e-commerce. If Amazon weren't so dominant then they wouldn't be the target of this kind of regulation.

dantheman 3y ago
I'd say the cost of switching in real life is a lot more expensive than going to a different URL. Amazon is dominant because it fights to provide a good value to its customers. It's easy for them to type in a different URL.

ffgjgf1 3y ago

Most supermarkets do not rent out a significant proportion of their floorspace to third party retails which they directly compete with? (and therefore have an arguably unfair advantage because they have full access to their sales data but not the other way around)