6 ms·

When Amazon decides to discount a product, who swallows the loss? Does the supplier still get a fixed cut per sale regardless of sale price, or do they get a fr

by growse 12y ago

When Amazon decides to discount a product, who swallows the loss? Does the supplier still get a fixed cut per sale regardless of sale price, or do they get a fraction of whatever the sale price was? I ask because I believe in things like grocery retail, the retailers have immense power over the suppliers. If you see pasta sauce at 2-4-1, it's the supplier picking up the cost of that. Favourable placement in store? The supplier pays. The big retailers can hit the supplier over the head with the threat of simply stopping selling the suppliers entire catalog, which would cause massive revenue loss for the supplier. With this stick, the retailer can ensure that they're getting a fixed income for every unit sold, regardless of the actual unit sale price. They pretty much have the suppliers completely over a barrel. Seems like the balance of power between retailer and supplier is drastically different between sectors.

ghshephard 12y ago
Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.99. As much as I love my Kindle, and Amazon, and as much as I realize that the publishers probably extract more value from the entire chain than is reasonable given their contribution (as compared to the author, who I believe should be rewarded a great deal more) - I realize that we will face dark times in the future if Amazon is able to corner the eBook market.
- pbhjpbhj 12y ago
  >Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.99. // What were the books selling for in paperback? I'm guessing less than $15 - I know it's priced to the market and the utility improves the value, and thus a higher price can be attained. But, I didn't think that Amazon would let publishers rip them off in this way - paying more for something that costs less to produce. Amazon if ebooks are even marginally above paperback costs should just buy the paperback, format shift to ebook, sell the paperbacks as pulp. I don't think anyone wants to hand over the ebook market entirely to Amazon; all the publishing houses needed to do was not be evil and not try to squeeze the system dry ... oh well. Death and taxes and human greed can always be relied upon.
  - ghshephard 12y ago
    I remember when "Under the Dome" was selling wholesale (Hardcover) for $13 and I ended up buying it from Walmart for $6.99 - because (A) it was $3.00 less than the eBook, and (B), well, I then could, in theory, resell the book. It's odd watching two book sellers compete with each other to sell a book at loss. But, your comment, "Amazon would let publishers rip them off in this way - paying more for something that costs less to produce." brings to mind Scalzi's comment, http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ "(This is where many people decide to opine that the cost of eBooks should reflect the cost of production in some way that allows them to say that whatever price point they prefer is the naturally correct one. This is where I say: You know what, if you’ve ever paid more than twenty cents for a soda at a fast food restaurant, or have ever bought bottled water at a store, then I feel perfectly justified in considering your cost of production position vis a vis publishing as entirely hypocritical. Please stop making the cost of production argument for books and apparently nothing else in your daily consumer life. I think less of you when you do.)" Think about the software that I purchase online that costs $0.001 to deliver and I pay $595 - it costs 1/10,000th what the old version with paper books, and CDs, and nice glossy boxes. I agree with Scalzi - the argument about "it costs less to produce" is bogus. Something should be worth whatever value it has to the person buying it intersecting with whatever price the person willing to sell it wants, plain and simple. The cost of creation is not particularly interesting.
    - ganeumann 12y ago
      Scalzi is arguing that the packaging is the important thing, not the contents, which is a funny thing for an author to argue. Because if the content is the important thing, then there is now a system that delivers the exact same thing more efficiently. We, as consumers, should definitely push to benefit from that efficiency with lower prices. To do otherwise would be irrational. Aside from being a straw-man, Scalzi's just wrong. We pay less for a soda at the fountain than we do in a bottle. That's the comparison that should be made. When you buy Coca-Cola, you are buying more than just the raw ingredients processed. Otherwise you'd be buying Store Brand Cola.

by growse 12y ago

ghshephard 12y ago

Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.99. As much as I love my Kindle, and Amazon, and as much as I realize that the publishers probably extract more value from the entire chain than is reasonable given their contribution (as compared to the author, who I believe should be rewarded a great deal more) - I realize that we will face dark times in the future if Amazon is able to corner the eBook market.

pbhjpbhj 12y ago
>Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.99. // What were the books selling for in paperback? I'm guessing less than $15 - I know it's priced to the market and the utility improves the value, and thus a higher price can be attained. But, I didn't think that Amazon would let publishers rip them off in this way - paying more for something that costs less to produce. Amazon if ebooks are even marginally above paperback costs should just buy the paperback, format shift to ebook, sell the paperbacks as pulp. I don't think anyone wants to hand over the ebook market entirely to Amazon; all the publishing houses needed to do was not be evil and not try to squeeze the system dry ... oh well. Death and taxes and human greed can always be relied upon.
- ghshephard 12y ago
  I remember when "Under the Dome" was selling wholesale (Hardcover) for $13 and I ended up buying it from Walmart for $6.99 - because (A) it was $3.00 less than the eBook, and (B), well, I then could, in theory, resell the book. It's odd watching two book sellers compete with each other to sell a book at loss. But, your comment, "Amazon would let publishers rip them off in this way - paying more for something that costs less to produce." brings to mind Scalzi's comment, http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ "(This is where many people decide to opine that the cost of eBooks should reflect the cost of production in some way that allows them to say that whatever price point they prefer is the naturally correct one. This is where I say: You know what, if you’ve ever paid more than twenty cents for a soda at a fast food restaurant, or have ever bought bottled water at a store, then I feel perfectly justified in considering your cost of production position vis a vis publishing as entirely hypocritical. Please stop making the cost of production argument for books and apparently nothing else in your daily consumer life. I think less of you when you do.)" Think about the software that I purchase online that costs $0.001 to deliver and I pay $595 - it costs 1/10,000th what the old version with paper books, and CDs, and nice glossy boxes. I agree with Scalzi - the argument about "it costs less to produce" is bogus. Something should be worth whatever value it has to the person buying it intersecting with whatever price the person willing to sell it wants, plain and simple. The cost of creation is not particularly interesting.
  - ganeumann 12y ago
    Scalzi is arguing that the packaging is the important thing, not the contents, which is a funny thing for an author to argue. Because if the content is the important thing, then there is now a system that delivers the exact same thing more efficiently. We, as consumers, should definitely push to benefit from that efficiency with lower prices. To do otherwise would be irrational. Aside from being a straw-man, Scalzi's just wrong. We pay less for a soda at the fountain than we do in a bottle. That's the comparison that should be made. When you buy Coca-Cola, you are buying more than just the raw ingredients processed. Otherwise you'd be buying Store Brand Cola.