[jstepka]

Right, so Target, grocery stores, hardware stores, and everyone else, can't sell their own value products too then right? Seems like those shelves are platforms to me.

I'm fine with 'big tech' not being able to sell products/services on their platform, but i want the same standard for other businesses as well.

[gamblor956]

Not the same thing. Retailers are the customers of the product manufacturers. They pay for all of the products that show up on their shelves, even the store brands.

(Note: only trial products operate on a consignment arrangement where the manufacturer only gets paid for units actually sold on.)

[treis]

>Not the same thing. Retailers are the customers of the product manufacturers. They pay for all of the products that show up on their shelves, even the store brands

That's not really true. They force manufacturers to accept returns of unsold product and have met 30-90 day payment terms. The effect is that these large retailers don't buy the product until after it's sold.

They also just rent shelf space to companies and have little if anything to do with what is stocked there and how it's priced.

[gamblor956]

They force manufacturers to accept returns of unsold product and have met 30-90 day payment terms. The effect is that these large retailers don't buy the product until after it's sold.

This is false. Net payment terms don't change who holds title to the product, just when the money changes hands.

Additionally, retailers only force manufacturers to accept returns of unsold product for products that overwhelming failed to sell. They don't return small batches of unsold product.

They also just rent shelf space to companies and have little if anything to do with what is stocked there and how it's priced.

True, but this is such a small portion of the retail market that it would be a rounding error of a rounding error. Generally, most retail companies don't do this.

[treis]

Holding title and nitpicking return policy doesn't change the core of my point. Retailers haven't paid for the products on their shelves. Holding title doesn't change that nor does having a minimum return size.

[gamblor956]

Holding title changes everything in legal terms, and since antitrust is a legal issue, that is what matters.

Retailers haven't paid for the products on their shelves.

Net payment terms aren't net of sale to customer. They're net of delivery to retailer. Some products sell before payment is due (i.e., perishable foodstuffs); many do not (i.e., electronics, toys, most non-food items). Title transfers before payment is due, since transfer of title is a huge consideration for a myriad of other legal issues, like product liability. Usually, title transfers when received by the retailer, but sometimes it transfers when handed off to the shipper. Actual timing depends on the contract between retailer and manufacturer, and there is an entire body of law dedicated solely to this.

Returns to manufacturers (for working/undamaged goods) are literally beside the point here, since they only happen for products that simply fail to sell through to end customers, even after substantial discounts by the retailer. Generally, outside of book sales, this happens rarely, and when it does happen the manufacturer almost always just provides discounts on other goods. (For books, returning unsold copies to the publisher is SOP, and the publisher usually takes them back and refunds the store because they want the store to purchase future books. Unlike other retail, book sales are heavily hit-driven and transient, so financial considerations differ.)

In the case of new products: for small manufacturers without a record, stock is usually provided on consignment with the manufacturer getting paid after units sell; for big/established manufacturers, the stock is purchased by the retailer at a substantial discount from wholesale price or for exchange of services such as marketing efforts by the store to move the product.

[arrosenberg]

No, the comment you are applying to is 100% correct. Store brands are a form of price discrimination, which is anti-competitive and illegal. Courts and regulators significantly weakened enforcement in the 80s, but the laws haven't changed.

[gamblor956]

No, the comment I am replying to is 100% wrong.

Store brands are a form of price discrimination, which is anti-competitive and illegal. Courts and regulators significantly weakened enforcement in the 80s, but the laws haven't changed.

Price discrimination (known as price segmentation in the business world) is perfectly legal, as long as it is between products and not between customers (and even there it might still be as long as the discrimination isn't based on a protected class). Price segmentation of products has always been legal in the US.

Store brands have been a thing for centuries. Most stores used to just sell the house brand.

Indeed, the concept of selling a "third party" brand in a store is a relatively recent development that can largely be traced to farm supply stores and the rise of department stores...which, notably sold their own store brands alongside those of other companies for decades without antitrust issues. (In fact, Sears' antitrust issues related to their use of market power to obtain discounts or to fix prices in certain geographic markets. They never had issues with selling store brands).

[arrosenberg]

If we were in 1930 and discussing a bunch of independent locals, I would agree with you. In this case, we are talking about vertically aligned retail giants producing store brands as a form of further vertical alignment.

Amazon/Walmart/Target know how much of a given product sells off their shelves. They use that data in order to develop store brands in order to further monopolize profits from their position as a distributor. This behavior is clearly anti-competitive, as numerous complaints from merchants on Amazon marketplace or from vendors who have to deal with Walmart's predatory purchasing teams can attest to. It is effectively a monopsony or oligopsony.

[gamblor956]

If we were in 1930 and discussing a bunch of independent locals, I would agree with you. In this case, we are talking about vertically aligned retail giants producing store brands as a form of further vertical alignment.

If you want to talk about vertically aligned retail giants producing store brands, it would be very helpful for you to understand that retailers like Walmart and Target are not vertically aligned and do not produce their own store brands. They buy them as white label products from other companies, most of whom make the name-brand products that appear in their stores alongside the store brands.

Tesla would be an example of a vertically aligned company, as would Apple to a lesser extent.

Amazon does not operate like Walmart or Target, so none of what I am saying applies to Amazon. I agree with you that Amazon is violating antitrust with its policies. There are fundamental differences in how Amazon's marketplace works compared to how retail sales work that drive that analysis.

They use that data in order to develop store brands in order to further monopolize profits from their position as a distributor.

The second half of that statement is false ("in order to..."), and demonstrates a fundamental misunderstanding of how the retail market works. Product manufacturers derive their profits from selling to retailers not to end customers. They sell their goods at "wholesale prices" that are far below what the end customers pay. The wholesale prices for store brand products are generally the same or close to the same as the price of name-brand products.

Once on the shelves, the products compete on the basis of marketing. Manufacturers do this by advertising, like on TV. Stores do this by discounting their products or placing them in a better position on the shelf.

And you know what? Advertising simply works better. People prefer the name brand even though the store brand of comparable quality (and often the same underlying product) is right there next to it. There are hundreds of studies on this, and literally trillions of dollars of consumer spending supporting this.

Also, in many cases the stores work with the product makers and provide them data about in-store sales statistics to help them determine marketing spend (including advertising, product design, package design, etc.), because they care more about getting people into the store to buy any product than they do about making a tiny bit more from selling a store brand item instead of Name Brand Product X.

[arrosenberg]

> If you want to talk about vertically aligned retail giants producing store brands, it would be very helpful for you to understand that retailers like Walmart and Target are not vertically aligned and do not produce their own store brands. They buy them as white label products from other companies, most of whom make the name-brand products that appear in their stores alongside the store brands.

This is a distinction without a difference. The mere fact that they don't own the factory producing the goods doesn't change the fact that they are acting as both producer and distributor in the same marketplace. If Costco buys bottled water from Nestle they are only a distributor, and there is no conflict of interest. When they put Kirkland Signature water on the shelf next to it, there is a pretty clear conflict of interest that allows Costco to leverage it's power as a distributor into pricing power against producers. Additionally, there is only a single buyer for the product line, regardless of whether the producer is legally independent. This is a vertically aligned operation - if Costco stopped selling Kirkland Signature tomorrow, it would cease to exist. The fact that they are buying the store brand products from the same producers who make the name brand product makes the entire operation look more aligned and concentrated, not less.

> The second half of that statement is false ("in order to..."), and demonstrates a fundamental misunderstanding of how the retail market works. Product manufacturers derive their profits from selling to retailers not to end customers. They sell their goods at "wholesale prices" that are far below what the end customers pay. The wholesale prices for store brand products are generally the same or close to the same as the price of name-brand products.

Don't be patronizing. The entire dynamic as it exists gives chain stores negotiating leverage against those name-brand products, allowing them to get better prices on goods than a smaller, independent operator would be able to get. That is price discrimination, and it's why small businesses in the US are getting killed and big, consolidated corporations keep getting larger.

[ben_w]

Potentially — loss-leaders, company towns with company stores, and state-run businesses all come to mind — but at the moment I don’t know of any examples of physical stores having this problem even across a single capitalist nation.

First-party apps made a lot of sense in the early days, and still do for brand-new features, but I think it would have been better if Apple had promoted existing AR tape measures rather than preinstalling their own; ditto time monitoring.

[qppo]

> at the moment I don’t know of any examples of physical stores having this problem even across a single capitalist nation.

Retailers bully wholesalers and manufacturers all the time when they represent a significant amount of total sales.

You always hear stories of "this was great until the bean counters told us we needed to shave 25c off the production costs and that killed its longevity." What you don't hear is that the bean counters were told by the sales managers that the retailer wouldn't list the product at $X because they didn't think their customers would pay more than $Y, and $Y would make the project unprofitable. And the retailer does 50% of our sales in the US, so we can't tell them to screw off!

One solution to all these problems is to enshrine direct-to-consumer sales in law, for digital and physical goods.

[Talanes]

I've never heard anyone talk about that issue without actually saying "Walmart" before.

[qppo]

I didn't mean Walmart when I wrote that.

[ben_w]

That sounds like a different problem, though still a real problem.

[dantheman]

Yeah, I mean why have nice built in stuff - far better to go and buy everything separately. For instance cars should have seats, stereos, gps, etc... it'd be better for you to go to 3rd party sellers and buy them.

[ben_w]

I think the analogy in this case would be a car company which gives you a choice of three different types of seat, five different types of stereo, and the option of built-in GPS from whoever when you configure your new car in the first place.

I’m not even against first-party apps, I just want them to be competing fairly instead of being mandatory pre-installs (with the exception of security-critical parts like the OS, the phone and SMS apps, the wallet apps, the App Stores themselves; but even then, there is room for them to be opened securely, it is just harder to do right, and should probably be replaceable later rather than during setup).

[naringas]

a store (even a multi-location physical retailer) is not the same thing as a digital platform

the crucial difference is due to the digial aspect. digital "material" does not have physical contraints. this simple fact changes everything.

[andreilys]

Sure they aren't the same thing, but doesn't mean you can't manipulate the physical layout among other variables in order to push your own products at the expense of your competitors.

You also have access to sales trends for competitors, giving you a leg-up in market research (i.e. Target decides to enter Chips market because they see Lays data). I mean it's not that dissimilar to what Amazon does, it's just done in the physical world.

[gamblor956]

It's not the same as what Amazon does, not even close.

Target owns the products on its shelves so it can do with them what it wants, even give them away for free. Importantly, the product manufacturers are not its competitors because they aren't in the retail business; they are in the wholesale business of making and selling to retailers.

Amazon does not own the products in its marketplace. The sellers in the marketplace do not sell their products to Amazon. They are all sellers, like Amazon, and that is why Amazon's practices are an antitrust issue.