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what if we replace Amazon with Walmart and publisher with manufacturers? "Walmart is squeezing manufacturers to push prices down, which is bad becuase... why?"

skwirl 12y ago
Lower prices are good for consumers. If you manufacture commodities then ideally you will have no profit margin in a free market. If you did, someone could come in and undercut you and take your market share, without losing money doing so. Walmart is just being a rational consumer - if they can get something for cheaper somewhere else, they will. The only thing I have a problem with is when costs are cut by reducing wages to the point where employees have to take public assistance. This is government subsidization of your business. This should be solved with a mandatory minimum wage set to a value that is a living wage.
logfromblammo 12y ago
Some people would prefer to shop based on value or total quality rather than price. When minimizing price becomes the dominant merchant behavior, quality suffers. Yes, you can get a computer mouse shipped to your door in 2 days or less for $7. But you will also be replacing it in a few months when its cheap microswitch starts randomly double-clicking from a single button press. This, in itself is no big deal. You got what you paid for, basically. The danger is when other manufacturers, that formerly had more trustworthy brands, replace their microswitches with the cheaper part, without informing the customer that their build quality has been reduced. So you can also buy a $60 name-brand mouse that experiences exactly the same failure mode as the $7 item. Then value-based shoppers and cost-based shoppers end up buying exactly the same item, even though the former would dearly love to buy just one mouse that lasts for 10 years rather than 20 that last anywhere from 1 to 24 months each. Meanwhile, the quality-based shoppers have to pay higher prices for parts that are no longer available at scale. Or, as is more frequent, they take to the secondary market to buy goods manufactured before the cost-driven breakdown in overall quality. Aggressive cost controls are great for people who always buy the goods with the lowest up-front cost. But they absolutely suck for people who do not want to ensure things work by purchasing an ongoing subscription for replacement parts. I want my goods to be durable and reliable, not cheap enough to replace when it inevitably breaks.

skwirl 12y ago

Lower prices are good for consumers. If you manufacture commodities then ideally you will have no profit margin in a free market. If you did, someone could come in and undercut you and take your market share, without losing money doing so. Walmart is just being a rational consumer - if they can get something for cheaper somewhere else, they will. The only thing I have a problem with is when costs are cut by reducing wages to the point where employees have to take public assistance. This is government subsidization of your business. This should be solved with a mandatory minimum wage set to a value that is a living wage.

logfromblammo 12y ago

Some people would prefer to shop based on value or total quality rather than price. When minimizing price becomes the dominant merchant behavior, quality suffers. Yes, you can get a computer mouse shipped to your door in 2 days or less for $7. But you will also be replacing it in a few months when its cheap microswitch starts randomly double-clicking from a single button press. This, in itself is no big deal. You got what you paid for, basically. The danger is when other manufacturers, that formerly had more trustworthy brands, replace their microswitches with the cheaper part, without informing the customer that their build quality has been reduced. So you can also buy a $60 name-brand mouse that experiences exactly the same failure mode as the $7 item. Then value-based shoppers and cost-based shoppers end up buying exactly the same item, even though the former would dearly love to buy just one mouse that lasts for 10 years rather than 20 that last anywhere from 1 to 24 months each. Meanwhile, the quality-based shoppers have to pay higher prices for parts that are no longer available at scale. Or, as is more frequent, they take to the secondary market to buy goods manufactured before the cost-driven breakdown in overall quality. Aggressive cost controls are great for people who always buy the goods with the lowest up-front cost. But they absolutely suck for people who do not want to ensure things work by purchasing an ongoing subscription for replacement parts. I want my goods to be durable and reliable, not cheap enough to replace when it inevitably breaks.