They take on the vast majority of the inventory risk, which is the fundamental detail everyone seems to miss. They own what they sell.

The complications come from trying to manage that risk - manufacturers who have better products or marketing can afford to pay for prime shelf space which also means it'll move faster.

I don't believe this is true in all cases. Maybe for some products, but at least other commenters here are confirming that some manufacturers refund the grocer for any unsold product. (So, Safeway only pays for the inventory that gets sold.) Seems risk-free for grocers on the products they have those sorts of deals with.

Not only in grocery stores. Bookstores can return books that don't sell, and since the books are heavy, the front page is often stripped only that is returned. That is why some pulp paperbacks have warnings to buyers to not purchase stripped books. In the world of fashion, clothes are often only paid for when they sell, and there are similar arrangements to book stripping.

Really the modern world allows many optimizations and creative contracts.

Yep they do that too but it's not risk free for physical stores because they take up shelf space. Anything that isn't moving off storefront shelves isn't making them any revenue - unlike Amazon they can't present every product through a paginated digital catalog while charging for warehouse storage.

You don't think page space matters? How many people go page 30 of results?

Page space doesn't matter, at all. Anyone can produce more Amazon searches in 5 minutes than there are shelves in a retail store. Amazon makes money no matter which page you buy it from AND they charge all the merchants on page 30 for storing their goods in the Amazon warehouses on top of any commission. That's the exact opposite of inventory risk, that's an inventory gold mine. Retail stores can only sell stuff that is physical within arms reach of a customer.

We're talking about retail vs Amazon, not retail vs Alibaba reseller #39146527.

And also at the end of the day they take on liability for the products they sell. If amazon was liable for its 3rd party garage it wouldn’t be a problem

> They own what they sell.

No they don't. Standard terms are suppliers get paid 90 days after Walmart takes delivery of the product. You also pay rent from the time a pallet arrives until it is broken down for delivery to stores - so if you deliver too many snow shovels in the middle of summer you might end up owing them money.

There is a whole industry of "supplier financing" that helps smaller players with bridge loans until the product sells.

This has been the model traditionally but retailers have been shifting to renting shelf/floor space to wholesalers and manufacturers. You may see certain fully-branded end caps in grocery stores, or kiosks in Best Buy, for example.

It's still not the same as signing up to creating your own store on Amazon though.

What is the difference between selling something on consignment and getting a rebate when the product fails to sell, or only getting paid for those units that do sell? Whatever distinction there is, I don't find it to be a meaningful one.