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Washington state shuts down Amazon price-fixing program nationwide

atg.wa.gov

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Re: Washington state shuts down Amazon price-fixing program nationwide

#301

Post by modo_mario »

NovemberWhiskey wrote: post #112
noizejoy wrote: post #105

Earlier quoted context omitted.

You ignored the key detail: Who set the price for the Kellog’s corn-flakes?

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 bas…

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.

Re: Washington state shuts down Amazon price-fixing program nationwide

#302

Post by AlanYx »

AnssiH wrote: post #248
dannyw wrote: post #103

Earlier quoted context omitted.

To be specific, Amazon co-mingles inventory between Amazon, Sold by Amazon, and its third party sellers that are Fulfilled by Amazon. It doesn't matter who you buy from. The picker at the warehouse picks from the same box, the actual product could come from any seller, even if it's "Sold by Amazon". Who you purchase from is purely an accounting thing, unless they manage their own stock and is not part of Prime. If yo…

> The picker at the warehouse picks from the same box That's not true. Commingled inventory is stored in separate bins so that the original source of the unit can always be determined. This is explicitly said on the Amazon seller help pages for commingling ( https://sellercentral.amazon.com/help/hub/reference/20014148... , https://sellercentral-europe.amazon.com/help/hub/reference/G... ) There is also this Financial…

I may be misunderstanding the links you're providing, but to me they only appear to say that Amazon is aware of the original source of each unit sold. They don't appear to say that a consumer has any control over which bin a product is pulled from. i.e., A consumer may choose to buy a product "sold and shipped by Amazon" and it may get fulfilled from a bin supplied by a third-party. The Financial Times article you linked to seems to confirm this.

Re: Washington state shuts down Amazon price-fixing program nationwide

#303

Post by shadowgovt »

eru wrote: post #265
shadowgovt wrote: post #168

Earlier quoted context omitted.

Bold of you to assume genuine products are coming in through any supply chain that isn't "walk up to the factory and buy wholesale."

It's all a matter of probabilities.

True, but the large volume of reporting on Amazon's issue doesn't imply their probability is higher; they're a larger target for investigation.

https://bestlifeonline.com/walmart-amazon-counterfeit-news/

The issue is that there's huge incentives for vendors to counterfeit and few incentives for stores to deeply spot-check their middle-layer resellers or the stories they're told from wholesale sources, many of whom are in another country (with all the associated barriers of communication, documentation, and even good ol' fashioned "playing the foreign sucker for their money"). When nobody is actually getting hurt, the incentives to make sure everyone is playing by the rules are very low (and the benefits for cheating, i.e. making win-win deals that bring costs down while bringing revenue up for the merchant and some counterfeit outfit at the cost of lost potential sales to the brand owner, are high).

My recommendation would be to treat all stores with a long supply chain as sus until proven otherwise.

Re: Washington state shuts down Amazon price-fixing program nationwide

#304

Post by sfifs »

mFixman wrote: post #284
snow_mac wrote: post #227

One thing everyone is getting hung up on is the fact that Amazon isn't wholesaling the dongle. The contract isn't a wholesale deal, meaning if your widget doesn't sell, it's sitting on your balance sheet, not on Amazon's balance sheet. It would be like if Costco instead of buying 1000 legos, just stocked legos in it's warehouse, then paid Lego company everytime a single unit sold. Then they figured out how to make th…

Just curious: Isn't this exactly what most supermarkets do? Do merchants decide the price at which their product appear in stores?

Yes merchants/retailers almost always decide prices. In fact some variant of "pricing is at the sole discretion of the retailer" is a standard email signature and PPT/Doc footnotes of many sales people in most manufacturers.

Re: Washington state shuts down Amazon price-fixing program nationwide

#305

Post by shiftpgdn »

msrenee wrote: post #293
KingMachiavelli wrote: post #239

Earlier quoted context omitted.

It is exactly how it works for physical retailers. In most cases, they even delay payment for a few months to account for returns and the cost of returning unsold products. Costco, to my knowledge, is actually one of the more strict retailers with IIRC 6 month delay between a product sale and the vendor being played. Mostly due to their generous return policy. I don't know of any large retailer that eats the cost of…

I don't know if JC Penneys counts as a large retailer anymore or if petsmart ever did, but both of those stores do eat the cost of unsold goods to my knowledge. Lowes does as well, except for certain types of products such as live plants from certain suppliers. Clearance is almost always the store trying to recoup any money from a product that they can't sell and is taking up shelf space. That certain suppliers take…

I was under the impression unsold plants were taken out back and destroyed and evidence returned to the vendor (usually a photo and the UPCs). When I worked at a store that sold books and magazines we would rip the covers off and send those back, the rest going into the trash.

Re: Washington state shuts down Amazon price-fixing program nationwide

#306

Post by sfifs »

KingMachiavelli wrote: post #239
Permit wrote: post #231

Earlier quoted context omitted.

> It would be like if Costco instead of buying 1000 legos, just stocked legos in it's warehouse, then paid Lego company everytime a single unit sold. For some reason I was under the impression that this is exactly how it works at some physical retailers? Can someone confirm that this is not the case? Does Costco/Walmart/CVS/etc. eat the cost if the items don’t sell?

It is exactly how it works for physical retailers. In most cases, they even delay payment for a few months to account for returns and the cost of returning unsold products. Costco, to my knowledge, is actually one of the more strict retailers with IIRC 6 month delay between a product sale and the vendor being played. Mostly due to their generous return policy. I don't know of any large retailer that eats the cost of…

> In most cases, they even delay payment for a few months to account for returns and the cost of returning unsold products.

You may be conflating payment terms of trade with sales/revenue recognition.

In general for consumer goods (unless it's a consignment model), revenue is recognized by the manufacturer the day products are billed and shipped to the retailer. In other words Store inventory is usually on the retailers balance sheet.

The retailer may actually pay the manufacturer 30/60/90 days later (I've never heard of 6 months but it's possible) and that's subject to negotiation. But that's cash/working capital management, not P&L.

Re: Washington state shuts down Amazon price-fixing program nationwide

#307

Post by moate »

mFixman wrote: post #284
snow_mac wrote: post #227

One thing everyone is getting hung up on is the fact that Amazon isn't wholesaling the dongle. The contract isn't a wholesale deal, meaning if your widget doesn't sell, it's sitting on your balance sheet, not on Amazon's balance sheet. It would be like if Costco instead of buying 1000 legos, just stocked legos in it's warehouse, then paid Lego company everytime a single unit sold. Then they figured out how to make th…

Just curious: Isn't this exactly what most supermarkets do? Do merchants decide the price at which their product appear in stores?

Many times, yes. "MSRP" stands for "Manufacturer's Suggested Retail Price".

Now, not all products come with MSRPs, and unless there is a contract between producer and retailer on a pricing floor, the retailer is free to set the price of a product as high or low as they want.

But, there is a key difference here. Let's use your supermarket as our example. A supermarket sells both Rao's Pasta sauce (7.99) and MarketBrand Pasta Sauce (2.99). The difference is that the store has paid Rao's 2 dollars to purchase their sauce which they then mark up to 7.99, and had their store band produced for them at a purchase price of 1.25. Both manufacturers have been compensated for their products.

Instead, what Amazon does is take a shipment from Rao's with the promise that they will be compensated 2 dollars for each bottle that is sold (which requires Raos to tie up inventory/money) and then undercuts their price with a product that they produce themselves and list on their page much more prominently, after using Rao's product previously to demonstrate market demand for that type of good in their store.

Re: Washington state shuts down Amazon price-fixing program nationwide

#308

Post by donarb »

granzymes wrote: post #173
fragmede wrote: post #154

Earlier quoted context omitted.

It's more nefarious than simple loss-leadering and undercutting your competitor's margins. That's business 101. Amazon is playing business 201. Amazon took over pricing for the widget, and then undercut that price with their own. Stay with me for a second because 201 is kinda complicated. Widget usually sells for $25. Amazon agrees to buy 1 from you at $20 (you give them a volume discount because it's Amazon buying s…

Is there any evidence this happened? It seems like companies would simply leave the "sold by Amazon" program, and quickly.

Amazon is actually fixing the price that you are selling on Amazon matched to what other sites are selling. There's no point in leaving if you're selling your widget on other platforms for the same price.

Re: Washington state shuts down Amazon price-fixing program nationwide

#309

Post by sgerenser »

Vespasian wrote: post #281
bmitc wrote: post #244

Earlier quoted context omitted.

> Unfortunately if you really need genuine products you simply cannot buy things off Amazon anymore. For whatever reason, I have noticed this getting dramatically worse over the past couple of years. Almost all "5-star" reviewed products are filled with top reviews of 1-star reporting fake products. And because of Amazon's overly generous return policy, there's a lot of used products sold as well. Buying off of Amazo…

Maybe Amazon Germany is different or I've been extremely lucky so far because I've never received a fake (as far as I can tell). I wonder whether fakes are more prevalent in some product categories than in others.

Fakes are definitely more prevalent in certain categories, for sure. Batteries, power adapters, flash drives and SD cards are probably the biggest off the top of my head. Probably because they’re relatively simple devices that are easy to manufacture to a lower quality standard than the genuine item and will usually at least superficially appear to work when received by the average buyer.

Re: Washington state shuts down Amazon price-fixing program nationwide

#310

Post by bytelines »

DannyBee wrote: post #290
bytelines wrote: post #193

Earlier quoted context omitted.

> This is true always, which is why the advice this person got is also commonly given in lots of forms. For example, doctors are often trained in being careful in what they write down for the same reason. Alternative take: it is indeed for the same reason - to avoid incriminating yourself. You carry assumption that the behavior is not incriminating. Doctors do commit in malpractice. Companies do engage in monopolisti…

This argument makes no sense to me. Yes some people and companies break the law. That is completely and totally orthogonal to whether the training exists for a given reason or not. They also train people to not commit insider trading. It still happens. Does that mean the training exists simply to help them figure out how to not get caught insider trading, or to avoid an evidence trail? You aren’t going to successfull…

The insider trading training is an excellent example: it does not benefit the company, and is done at an individual level, so the training reflects what the law says and what is not allowed. Individuals may break that.

Say that you are part of the executive team of Amazon, and want to take some illegal behavior like price fixing. Things that actually happened. You know it is illegal and want to avoid getting caught, so your communications only happen in person, and there's not really a paper trail.

Okay, great, you've set that up now. Now it's the day to day business at your company, and all different departments need to do their basic jobs to support that. You're still doing something illegal, and now it's spread across hundreds of people to support your illegal activity. The last thing you want to do is to have them writing e-mails about price fixing and kickbacks etc. How do you avoid this? Train your people not to mention certain words.

And guess what, that's exactly what they do.

Amazon literally committed a crime requiring many people to conspire. How is it cynicism to say that Amazon can conspire to commit crimes?

Your optimism is impressively high.

> Amazon: commits crimes

> OP: lol when I was at Amazon they told us not to talk about crimes

> You: These are completley unrelated! Let's stop this trope!

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