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Other retailers are asking things of vendors that are impossible or violate the law. Walmart, for example, gave a presentation in February in which it outlined its demand that vendors help it be at least 15% less expensive than
competitors at least 80% of the time.
Of course, if Walmart can operate efficiently, is willing to accept lower margins, etc., there is no problem with Walmart pricing as it pleases. But the role of vendors in helping Walmart achieve this goal is literally prohibited by the Robin- son-Patman Act, which requires buyers in the same class of trade to be charged the same prices.
In the famous Federal Trade Commis- sion vs. Morton Salt case, the FTC decided the Act required that discounts reflect actual savings to the vendor, not just arbi- trarily offering discounts to the biggest buyers.
So vendors are legally prescribed from
helping a big retailer such as Walmart
to be cheaper than smaller retailers. So what, precisely, does Walmart think vendors should do? Break the law?
Amazon is making crazy demands on vendors as well. Its
business is driven by technology that focuses on keeping Amazon a bargain for consumers. So, if its algorithms see that Costco is selling a master package of 20 boxes of raisins at $5 or 25
cents each, Amazon will price its raisins at 24 cents each, then ship the raisins for free to households that buy its Prime service. Then Amazon will try to beat up the vendor because Amazon is losing money! This is on top of the fact that Amazon is not buying the wholesale size package that Costco is, and Amazon is shipping a different item to consumers!
Laws such as that proposed in Europe may help on the margin, but, funda- mentally, what really has to happen is that vendors must offer unique prod- ucts that consumers want, branded in an identifiable way. If consumers love a Driscoll’s blackberry and will accept no substitute, then Driscoll’s can say no to retail shenanigans.
Produce vendors who sell undistin- guished product — with common genetics, without consumer brand preference — will soon find that no law can protect them. pb
FROM PERISHABLEPUNDIT.COM
It is one thing to send all vendors a note that they should calculate any future offering prices to include a rebate. But to do it on already negotiated contracts is just unethical business.
PRODUCE BUSINESS / APRIL 2018 / 17