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?
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.
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.
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.
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.
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.
Additionally I believe Amazon was pricefixing in cooperation with other retailers.
If Amazon actually buys your cat mugs, and then prices them higher than its own cat mugs, such that customers buy Amazon mugs and don't buy your mugs, you still sold all your mugs and there would seem to be no problem.
I can see the argument that it's price fixing if Amazon & the 3rd party both agree to sell at the same price, but even then I'm not sure it's anti-competitive or anti-trust when some other 3rd party can come in, see the higher prices, and decide to undercut them. Not unless Amazon get's all sellers of a product to agree, but the article doesn't directly allege that.
- Kroger isn't 50% of all grocery stores on earth
- Kroger paid money up front for your potato chips
- Kroger isn't charging you for storing your potato chips
I agree, the Kroger Purchase Order is currently in bulk infrequently (e.g. 100units once a week), but the Amazon Purchase Order is currently not-bulk frequently (e.g. 1 unit 100 times a week).
Meanwhile, "Kroger makes no representation regarding the maintenance of any specific retail price for Products purchased for resale."[0]. As I understand it, that means it can change the price at any time. If in week 2, Kroger prefers a lower price, it can tell the seller "Last week was $22, but now I'll only buy the potato chips for $20 and no more. Do you still want to keep selling to Kroger?".
I don't see how this is materially different from the case about Amazon. Because the reality is no merchant cares about 1 bulk order, they only care about continuous re-orders.
[0] https://www.thekrogerco.com/wp-content/uploads/2017/09/kro_s...
That's not completely correct.
Kroger will charge you if you want an End Cap display of your chips, and Kroger will charge you if you want additional shelf space for your chips.
I believe it's more limited to things like Chips, Soda, Snacks, etc, but, it does happen in the grocery industry.
Not always. Products can be sold as "pay per scan," where the manufacturer maintains ownership up until the moment the barcode is scanned at checkout. The retail store then instantly purchases the product for an agreed-upon price and turns around to sell it to the consumer.
Well, slotting fees seem pretty close to that:
https://qz.com/807723/inside-the-secret-backroom-deals-big-b...
1) But most supermarkets do this in similar ways. Not quite the same as a single entity, but close enough (more like a cartel?) that I'm not sure I see much of a difference.
2) This is the major difference in my mind, but other vendors can still sell for less, so I'm not sure how much competition is stiffled.
3) Well, they actually are. It's called slotting fees. They can simply be for warehouse storage and a place in the store, or at higher levels can be paid to have products placed in specific locations, e.g., eye-level on shelves. This seems similar to signing up for the program in the OP to have your product highlighted as an Amazon-sponsored product.
I don't like many of Amazon's practices, but I'm not convinced this particular one rises to anti-trust.
The wholesaler still gets the sales contract they signed.
I start manufacturing my own cat mugs, and sell them at a price that undercuts yours. You have no way to change your price, so your mugs no longer compete effectively with Amazon cat mugs. Most of your sales go away, because Amazon is so dominant as an online marketplace (NOT as a cat mug manufacturer).
This is anti-competitive because Amazon used its dominance as an online retailer to become a dominant cat mug manufacturer.