If the argument is that Amazon is a dominant retailer and sells its own brand goods to dominate particular segments then exactly the same applies to, say, Walmart.
How does the "sold by Amazon" contract relate to that?
Because it can create any product that is selling well, and at any price point, because it _also_ has the right to subsequently raise _your_ price.
You're selling dongles for $20. You sign a contract with Amazon. It realizes that dongles are lucrative, and starts getting them manufactured. Hey, it can sell dongles for $20, too. But then they're competing with you, because you both sell $20 dongles. So, solution, they raise the price of your dongles to $25, so yours become instantly less competitive.
Substitute Walmart for Amazon. Substitute corn-flakes for dongles. Substitute Kelloggs for "me".
That is the situation right now at Walmart. Kellogg's Corn Flakes are $3.28 for an 18oz pack. Great Value (Walmart own-brand) Corn Flakes are $1.43 for the same size package.
I think the big difference here is who takes on inventory risk. If a traditional retailer wants to buy something wholesale and then not sell it because their price is too high, then well, they bought the product and it's their problem to deal with.
In the Sold By Amazon program, it sounds like there wasn't a volume minimum or an actual purchase-for-resale going on. The inventory isn't on Amazon's balance sheet at all, if it doesn't sell then that's someone else's problem financially.
Walmart is given a wholesale price by Kellogg’s. Walmart’s choice is to set their markup over that wholesale price. On average, the wholesale price by Kellogg’s cereal would be $1.64 and the wholesale price for the GV would be $0.715.
It’s complicated for Walmart, because there is documented evidence of them telling suppliers what wholesale price they will _accept_, but that does not change that it is ultimately Kellogg’s wholesale price that is being met by Walmart.
Walmart? I mean they're on Walmart's shelves. I'm pretty sure Walmart sets the price for everything that's on its shelves.
I mean, Walmart could just choose not to sell Kellogg's Corn Flakes at all. If that was more profitable, I'm pretty sure they'd do that.
They sell their own brand at a lower price point for price-sensitive customers, they sell the "premium" brand at a higher price for customers who buy on the basis of the name etc.
Yeah. Key difference. If the kellogs flakes don't sell at a higher price then Wallmart loses out. It's on Wallmarts balance sheet.
If Amazon doesn't sell the brand they have a contract with and now compete with they don't lose out. It's not on their balance sheet. They don't buy that inventory, spend on that shelfspace, etc
Additionally I believe Amazon was pricefixing in cooperation with other retailers.
If the argument is that Amazon is a dominant retailer and sells its own brand goods to dominate particular segments then exactly the same applies to, say, Walmart.
How does the "sold by Amazon" contract relate to that?