Yes, this is the crucial difference

Brick and mortar stores are dealers, Amazon is a broker. Dealers have inventories - they purchase items from the suppliers and resell them - if they misjudge demand, they're left off with useless goods. Brokers simply facilitate a transaction between two parties - there's no risk involved. The fact that brokers get to charge a higher mark-up than dealers is just bizarre

> Dealers have inventories - they purchase items from the suppliers and resell them - if they misjudge demand, they're left off with useless goods.

Everything is negotiable. If a retailer has more power than a supplier, then the retailer can demand a guaranteed sale clause in the contract, requiring the supplier to take back unsold goods and refund them.

https://www.comcapfactoring.com/blog/walmart-vendor-financin...

https://factor-this.com/walmart-supplier-financing/

The major brick and mortar stores are not solely dealers, they often have various deals where they sell items on consignment and do not pay for inventory until after they're sold, require payment for "shelf space", etc. That's transparent from a customer perspective, but from a supplier viewpoint they're often quite close to brokers in practice.

The consignment model and paying for shelf space are the exception in retail though, not the rule.

They tend to exist only where there is a huge asymmetry in power between retailer (usually large chains) and suppliers.

Isn't most of retail done by large chains with a huge asymmetry in power?

Depends on (1) what country/region you live in and (2) what brand you're talking about. For example: Yes, Safeway may be huge, but so is Procter and Gamble. Is there an asymmetry there? I'm not sure.

Anyways, large chains don't deal exclusively in consignment either.

Some super markets carry your favorite brand of frozen chicken nuggets, others do not. Makes me think there are agreements between producers and retailers and that those agreements are all about money.

I bet there are clauses in those agreements that state that the retailer should "make my brand of ketchup the first brand that customers see" and that they cater to that clause "for a small fee".

In the UK, the big supermarket Tesco were criticised heavily for how they charged their suppliers for various things: https://www.theguardian.com/business/2015/mar/30/tesco-reduc...

Surprisingly no (or at least not always). Think for example of the displays of idk, stacks of holiday branded coke near the entrance of Walmart. Coca cola pays Walmart for that space and a coke employee likely puts the product there.

Joe's corner store and Walmart work differently, only one negotiates brand deals.