[code4tee]

Is a traditional store also not a marketplace for product manufacturers and distributors to sell their wares? It operates the same way. Drop off a truckload of your stuff at mega-mart’s distribution hub and they take care of the rest via their marketplace for your canned beans or whatever you’re trying to sell. If your product is popular, mega-mart will probably make mega-mart beans and put them right next to yours on the shelf at a lower price. The fact that it happens on a website vs a physical store doesn’t change anything.

[jdmichal]

It depends. By marketplace, what people mean here is that Amazon is taking zero risk on the inventory. They are merely providing a place to list it. (Along with maybe some other paid services such as fulfillment and inventory management.) Retailers sometimes operate under this model.

But retails also sometimes operate under the model where the inventory on their shelves was purchased by them from the manufacturer or distributor. They are taking the risk on the inventory, and not selling means they are losing money. The manufacturers and distributors were already paid.

So, I reflect a question back to you: If it's all your owned inventory, what does it matter what name is on the box? No matter what, you the retailer are getting your sale and making the profit. This is not true of the marketplace model. There, whitelabels are directly competing for every sale, and no sales means no money to the manufacturers of those other products.

All this is also heavily discounting the fact that Amazon also owns the search. Some people equate this to product placement on shelves, but it's really more like there's two stores. The first store is all Amazon stuff, and you have to walk through that store to get to the second store, where other sellers are.

[code4tee]

I again suggest looking at other retail models. Grocery stores, department stores and such operate a sizable part of their business by simply providing distribution and shelf space for goods. They don’t own all the inventory on their shelf. For things like beverages and certain other goods they literally just rent shelf space in the store (3rd parties come in and stock the shelf) and then put their own store brand stuff right next to it selling for less. It’s literally the same model. One really struggles to make the argument that it’s bad to do this online but not in person. That’s the issue with this line of reasoning.

[gamblor956]

That's not at all how retailers actually operate on the US. They pay for the overwhelming majority of what they sell. Full stop.

You've taken a relatively rare thing like slotting fees and built up an entire mental model around it. That would be like saying that all programming languages are typeless because you heard that JavaScript isn't typed.

[zaarn]

1) It's hard to hide things in a physical store. There are some tricks but if you want Brand A cereals and the store has them, you can find them in the cereal section. Amazon has in my experience, sometimes hidden product brands entirely or beyond page 4-5, favoring their own or prime products.

2) When a supermarket takes on Brand A cereal, the Brand A owner makes little risk, they get paid whether they sell or not. The supermarket is taking all the risk. If they bring their own store brand, they still run the entire risk, now for both stocks. If cereals stop selling well (because there is a milk shortage) then the supermarket is loosing a lot of money. Amazon faces no risk, they can have the vendor for Brand A continue to sell non-prime cereal from their own stock so amazon faces 0 costs if it flops. If the vendor does well they can be onboarded for inventory management and prime shipping, amazon takes more risks and more profit. Lastly, they can use methods like "We suspect the product is counterfeit, send bills for when you bought it" to gain direct access to the manufacturer of Brand A. Now they can sell Brand Amazon directly from the manufacturer, leaving the Brand owner of Brand A in the dust by selling the same product, that did well, cheaper and hiding them in the search results below their own.

The supermarket equivalent would be that the supermarket subsidizes the Brand A seller from their value-add in-store things like customer payback cards after a while, then blackmails them into giving them the manufacturer by threatening to not sell their popular product, then selling the manufacturer's product under an in-store brand and the Brand A cereal is only available under-the-counter. Brand A seller is also entirely co-dependent on the supermarket as that supermarket is 90% of the market.

I know you have wallmart in the US but in the EU we do have some variety in supermarket chains (ALDI Süd/Nord, LIDL, Edeka, Rewe, etc.).

[TheOtherHobbes]

Slotting fees are not the same model, and even if they were they're considered questionably ethical.

One difference is the branding. Grocery store products rely far more on branding, and slotting fees are often used for market research.

Stores cannot reproduce the branding, therefore their own-brand products don't have the same competitive appeal.

Amazon actually hides prominent branding. A few big brands have their own mini-stores, but most of the time you can't tell if you're getting a product from Amazon, from the original manufacturer, or from a retailer.

So when Amazon uses market analytics to decide which products to make and sell, it has a huge advantage - and it can and does wipe out existing sellers. Which is something grocery stores don't do.

[JAlexoid]

Retailers most definitely take on the full risk of distribution and storage. Even when there's a buyback agreement.

Retailers are also NOT interested in buybacks, as the cost of shelf life is not cheap(much more expensive, than warehousing)... and white label products are also higher risk(not shared risk) for the retailers and are always lower margin.

There's a very clear difference between financial incentives between traditional retailers and Amazon. Equating them - is ignorance at best.

[alkonaut]

> Is a traditional store also not a marketplace for product manufacturers and distributors to sell their wares?

I think amazon is better compared to the whole street where the stores are, than to any store.