Want to read Slashdot from your mobile device? Point it at m.slashdot.org and keep reading!

 


Forgot your password?
Close
typodupeerror
×
Businesses The Almighty Buck The Internet

Amazon and Walmart Are In An All-Out Price War That Is Terrifying Big Brands (recode.net) 467

Posted by BeauHD from the in-war-everyone-loses dept.
gollum123 quotes a report from Recode: Last month, Walmart gathered some of America's biggest household brands near its Arkansas headquarters for a tough talk. For years, Walmart had dominated the retail landscape on the back of its "Everyday Low Price" guarantee. Walmart wants to have the lowest price on 80 percent of its sales, according to a presentation the company made at the summit, which Recode reviewed. To accomplish that, the brands that sell their goods through Walmart would have to cut their wholesale prices or make other cost adjustments to shave at least 15 percent off. In some cases, vendors say they would lose money on each sale if they met Walmart's demands. Brands that agree to play ball with Walmart could expect better distribution and more strategic help from the giant retailer. And to those that didn't? Walmart said it would limit their distribution and create its own branded products to directly challenge its own suppliers. But this time around, Walmart's renewed focus on its "Everyday Low Price" promise coincides with Amazon's increased aggressiveness in its own pricing of the packaged goods that are found on supermarket shelves and are core to Walmart's success, industry executives and consultants say. The result in recent months has been a high-stakes race to the bottom between Walmart and Amazon that seems great for shoppers, but has consumer packaged goods brands feeling the pressure.
This discussion has been archived. No new comments can be posted.

Amazon and Walmart Are In An All-Out Price War That Is Terrifying Big Brands More

Amazon and Walmart Are In An All-Out Price War That Is Terrifying Big Brands

Comments Filter:

  • As a customer of both Amazon and Wal-Mart (Score:5, Insightful)

    by Anonymous Coward on Thursday March 30, 2017 @11:38PM (#54148355)

    But much more of Amazon (avg maybe $100/month), I hope Wal-Mart at least holds its own. Because Amazon is destroying brick-and-mortar retail across America, which in turn is doing a bad number on both suburban malls and town centers.

    During a boom when nearly everybody has a good job, there's plenty of business for both online and brick-and-mortar retailers. But when times are hard, people are counting dollars and Amazon wins that game. Not because they're always cheaper, but because they're cheaper in tactical ways - for example, they drove Tower Records, HMV, and Virgin Records out of business by discounting most pop music titles by 35 percent, only to jack prices back up to near-list after their competitors went out of business. Amazon is ruthless. They're not the consumers' friend, and they're certainly not the workers' friend. But they are very good.

  • The real reason for H1B1 and automation (Score:4, Interesting)

    by Billly Gates ( 198444 ) on Thursday March 30, 2017 @11:45PM (#54148377) Journal

    Walmart. If the companies cannot undercut themselves then Walmart won't stock their products.

    Guess which department doesn't create value when it comes to making products for the shelf? IT.

    The second is ultra expensive health insurance making robots cheaper

    • It's not the H1B1s, it is the automation. I had the chance to visit a brand new Amazon warehouse. This massive facility, about the size of five to ten walmarts, was staffed by just a handful of people, maybe two dozen I could see altogether. Robots picked up and dropped off all sorts of products to the humans who would put them in a box with stuffing. I can't see how Walmart can compete with that.
    • is what you're referring to, and it's mostly B.S. Papa John's could give every employee usable health insurance for .25 cents a pizza + the cost of their yearly Super Bowl free pizza promo. Giving farm workers a livable wage ($15/hr) would add .06 cents to a pound of potatoes. All that automation means labor isn't as big a part of the equation anymore. It also means we produce more than enough. There's enough food on earth to feed everyone. We don't have a food problem, we have a distribution problem. M

  • Amazon will have the upper hand (Score:5, Interesting)

    by Transist ( 997529 ) on Thursday March 30, 2017 @11:45PM (#54148381)
    I used to be willing to shop at Walmart, but with their race to the bottom it's become an unbearable place to shop. Their rock-bottom pricing gospel has always attracted people who can't afford to pay anything more than that. Of course this includes many decent people of modest means and quite a few thoroughly unpleasant people. It used to work out well enough when the stores were reasonably staffed and they could keep things in check, but now it seems most of them are being run by a skeleton crew and the damages of the resulting circus are being considered just a cost of doing business. With Amazon, you never have to see these people and suffer the misery of queuing for 15 minutes just to check out. With Walmart, the experience is horrible. So if I'm looking to cheap-out on regular supplies, you can bet I'm going with Amazon. That's why I think they will win out in the end.

    • Re:Amazon will have the upper hand (Score:4, Informative)

      by JoeMerchant ( 803320 ) on Thursday March 30, 2017 @11:58PM (#54148441)

      Something else to remember about WalMart (besides the horror of the bathroom, should you need it), is that they have the "lowest price guarantee - in your neighborhood." If you drive 15 miles to another WalMart where there are competitive retailers in the city, you can find prices varying by as much as +50% in the WalMart "conveniently located" in the town where they've driven all their competition out of business, especially on smaller $3-5 items, $2.99 in the city, $4.99 in the country for the exact same item that is available for $3.15 from Target in the city and only available for $6.99 from CVS in the country.

    • Well you are rich if you are the statical IT nerd on /. The average household income is around 55k with 51k being average annual income per person.

      Walmart is a necessity for those in the middle and under. If you can cut your expenses by %20 for groceries and goods saves thousands to tens of thousands a year. When you make 48k a year and have 2 kids in Tennessee with not alot of job opportunities then who cares about Amazon outside of a few speciality Christmas items.

    • Re: (Score:3)

      by Tailhook ( 98486 )

      you never have to see these people

      Online retail has provided the means to avoid contact with the decline that's happening all around us. My parents shopped in downtown Detroit when they were young. Later, after the flight, they shopped in suburbia. Today Walmart, even in the suburbs, is a nut house; even the employees are dysfunctional and, like you and 95% of the people that frequent Slashdot, I do precious little brick and mortar shopping any longer.

      The demographics don't really matter any longer either. In the big cities you have p

  • A race to the bottom in prices is bad for the rank and file employees at Amazon and Walmart and bad for product quality. Corners will be cut in both. We've seen the heart of Walmart and Amazon, and it is us the customers, apparently buying on price alone.

    • Not us. The CEO of Walmart is the one setting the prices. We don't set them. Basically you go into a room and Walmart will say here is the cheapest Chinese competitor and here is what it will cost for us to make. Now tell us why you think you should charge this when we can get it for cheaper?

    • Price alone driving all decisions has been WalMart's creed for decades, and it really does make visible terrible impacts on product quality as products "mature" in their WalMart distribution cycle.

      What's a shame is that so many other retailers follow them - buying from the same suppliers, getting the same cheaped-out products and just selling them in a slightly better smelling store for a few cents more. I really wish that competing retailers like Target would push their suppliers for increased quality at

      • Re:A race to the bottom (Score:5, Interesting)

        by uncqual ( 836337 ) on Friday March 31, 2017 @04:03AM (#54149161)

        It turns out that the vast majority of consumers prioritize cost over quality. This is not irrational and those that have a need can usually do otherwise.

        For example, Harbor Freight tools are generally crap. But they are cheap. Professionals who use them ten hours a day, six days a week are not going to buy them unless they work in an environment where the tools "disappear" after a couple months (both because they fail more often and because they, generally, are not as easy to do quality work with quickly) -- these professionals buy professional tools. The rest of us are well served by buying a $19.99 "sawzall". If it ends up that we wear it out in five years or less than ten hours of "run-time", we will buy another OR a better brand -- but, in reality, most of these tools end up working for the rest of your life (at least as a backup to the better one you bought because you decided you wanted the cool features or smooth operation of the better one). Sometimes, the best tool from 40 years ago is inferior to the Harbor Freight tool (due to technology advances) and it is better to just buy new tools incorporating recent technology every ten years than using "great" tools that are thirty years old but can't hold a candle to the cheap tools available now.

        If you build a new server/desktop, do you buy the "highest quality" bits? If you're wealthy, doing so makes sense for bragging rights. However, for most engineers who are going to toss it in three to four years, it really doesn't matter if the case is plastic or thick steel or flimsy steel -- the resale value of the case is essentially zero and all three types of cases work fine if you don't have a full grown pet gorilla in your household who likes to play "toss the computer against the wall" (in which case, the quality of the case is likely the least of your worries as the gorilla grows up).

        Most of the durable goods bought at Walmart (tools, kitchen utensils, small kitchen appliances etc) probably end up being used a few times over the owner's lifetime. If they are going to bake all day, every day, they will buy a professional mixer instead of the deprecated KitchenAid crap that Target or Kohls or Walmart sells. Generally, why pay for "quality" -- do you really care if the kitchen gadget still works when your great grandchild inherits it and it's completely technologically obsolete anyway? Engineers should understand "cost:benefit" tradeoffs very well.

        I've got a very cool looking meat grinder that got passed down from my grandparents that still works as it did when my grandmother used it. Guess what, I look at it but don't use it. It's not dishwasher proof (my grandmother probably never saw a dishwasher), it's a pain to clean (my grandmother was used to things being a pain to clean), it spews blood around while grinding (my grandmother probably never thought about that - "it is what it is" - as all her friends' grinders did the same), I have to find a place to clamp it and there's no rational place to do so my kitchen (but probably was in my grandmother's kitchen).

        If you care about "quality" (or false pretenses of same), you're not shopping at Walmart, Home Depot, Target, or McDonalds. However, every one of those vendors has multiple competitors who DO offer quality products and better selection (of course at a higher price). For a tiny example, if you want selection and access to quality products, check out McMaster-Carr [mcmaster.com] or similar -- but make sure you've got a high limit on your credit card.

    • Comment removed based on user account deletion

    • Re: (Score:2)

      by rtb61 ( 674572 )

      Suck it up, Amazon will kill Wallmart dead, but not necessarily a bad thing. Basically Amazon delivery will take the majority of Wall mart customers by being the same price or just a bit dearer, they definitely do not have to be cheaper because they deliver and you shop online in your own time at your own pace. I generally shop Sunday afternoons (If something interrupts maybe out to Monday or Tuesday), going through the specials, all online and get delivered latter in the week, when it is convenient (bulk s

  • At what point does this race to the bottom on prices result in nothing but garbage products?

    We're already seeing a major quality drop for a lot of day to day items. I'm all for less expensive products but if they're all junk, what's the point?

    • At what point does this race to the bottom on prices result in nothing but garbage products?

      I think that point came somewhere in the 1990s.

      Today, I go to WalMart to buy disposables, like diapers, sun-screen, branded anti-freeze and motor oil - things that alternate suppliers have jacked up to 2.5x the cost for the same commodity. It's remarkable how much other crap they sell, and how little of it we ever buy.

      • At what point does this race to the bottom on prices result in nothing but garbage products?

        I think that point came somewhere in the 1990s.

        Today, I go to WalMart to buy disposables, like diapers, sun-screen, branded anti-freeze and motor oil - things that alternate suppliers have jacked up to 2.5x the cost for the same commodity. It's remarkable how much other crap they sell, and how little of it we ever buy.

        This... I used to buy my oil there but they dropped the higher end Pennzoil Ultra Platinum from the shelves at my local store. Now I buy it from Amazon. But, yeah, windshield washer fluid, sunscreen, Blu-ray movies (when I don't order ahead on Amazon), travel size shaving cream/shampoo (when I travel), printer paper, and the odd time when I need a new air mattress. That's about it.

    • I'm only speculating, but if I was a manufacturer of a desirable brand of widgets and Wal Mart came to me and demanded some price below which I couldn't make money, I would be inclined to come up with some new sub-brand or SKU that was deliberately cheaper to make and then offer THAT to Wal Mart instead of my "good" brand.

      Or maybe some subversive version of this, where I moved the good product to a new "platinum" SKU and just junked the quality on the old one.

      That way I can preserve my product quality, whic

  • They're driving prices down, mostly. Shipping is always an issue, especially with small items.
    Fresh produce, meats, etc will be the province brick and mortar for the near future.
    The little independent grocery store near me manages to beat the Walmart a mile away on price and quality for meat and produce. But, having seen what's happened elsewhere, they are the exception.

  • No cronyist legal restrictions in retailing (Score:4, Insightful)

    by Applehu Akbar ( 2968043 ) on Friday March 31, 2017 @12:01AM (#54148453)

    If only we could get this kind of competitive pressure to occur in the healthcare market!

    • If only we could get this kind of competitive pressure to occur in the healthcare market!

      Competition (or lack thereof) is not the issue. Countries where healthcare is publicly funded pay less for healthcare. [pbs.org]

      I have lived and worked in different countries with (mainly) public healthcare (Germany, France, Japan), and I cannot say that I felt that healthcare was of lower quality than in the US. But it was cheaper, and simpler.

  • Wal-Mart isn't that cheap, is it? I work close to one, sometimes I drop by because it's convenient or I have a little time to kill. Every single electronics item is going to be cheaper at Amazon, sometimes substantially cheaper. The coffee is cheaper at just a Safeway. The art supplies are somewhat expensive.

    The coffee creamer is at a good price, and they have a bunch of shitty $5 T-Shirts. I didn't realize what the "Everyday Low Price Guarantee" meant...I see now they match Amazon prices, which is a c

  • Lower prices are terrifying? That's one sensational headline. Is Slashdot trying to take over Gawker's business?

    • If only somehow the headline could have made it clear who it might be terrifying to, the consumer or the supplier and barring that maybe if the summary or even the article made it clear.

      Sadly it's apparently left up to people to read one word and speculate from that so we'll never know.

  • We lose money with every sale... (Score:4, Funny)

    by Xoc-S ( 645831 ) on Friday March 31, 2017 @12:10AM (#54148495)
    We'll lose money with every sale, but we'll make it up in volume.

  • I would think that if the big brands are being shut out, isn't this a great opportunity for small, regionally manufactured technology products to be brought in and promoted?

    It would seem that company with a very low-overhead and just in time manufacturing (ordering components when the PO comes in and shipping within the 30-60 days of the contract) could be a viable business. It would be tough for Apple, Sony, and other big brands, but if these companies handle the logistics as well as the promotion, I would think high quality, low cost products which are built in the US (which would make Mr. Trump happy) could be the result of working with them.

    Anybody have any numbers at Amazon and Walmart that I can call?

  • But seriously - the non-brand stuff is just awful quality. Jeans and shirts don't last. Socks fall apart. I got tired of taking stuff back... Who wants a guarantee that they continually have to use?

    If I were running one of these companies that Walmart is leaning on, I'd just say "go ahead and make your own competing products". the more crap Walmart sells, the more their customers will eventually figure out anything they sell is garbage.

    The only thing I go to Walmart for nowadays is glasses and contacts - an

    • I'm pretty disgusted at the quality of the name brand stuff I buy at places other than WalMart.

      Are shoes only supposed to last a few months even if you don't wear them a whole lot?

      Thanks, Kohl's.

      I've heard even Levi's jeans don't hold up like they used to but all my Levi's are at least 10 years old so they're still good. They didn't come from Walmart either. I don't even know if Walmart sells Levi's.

      Walmart is okay for some things. I try to avoid produce from Walmart. It seems to spoil faster and if I o

  • so a good thing for poor people then (Score:5, Insightful)

    by 0111 1110 ( 518466 ) on Friday March 31, 2017 @01:47AM (#54148817)

    You rich people talking about 'ethics' and how employees are being mistreated make me laugh. Only rich people care about such things. The poor people that actually have to work at such shit jobs will be happy that they can buy products cheaply no matter where they come from because otherwise they could not buy them at all. It is amusing to see the astroturfers going to war with each other here. Does anyone else really care about this? It's a good thing and lets hope it continues without either side winning. That would be a win for everyone else. A race to the bottom is really a race to the top for everyone else.

  • Not really new. Walmart squeezes lots of vendors (Score:5, Interesting)

    by RubberDogBone ( 851604 ) on Friday March 31, 2017 @01:59AM (#54148861)

    Walmart is notorious for squeezing vendors to provide goods for a lower price, or more product for the same price.

    This is why you can walk down almost any aisle in Walmart, if you can find one which has actually been stocked, and see what seems like every third product sporting "BONUS! NOW 30% MORE FREE!" stickers and packaging. This is not being done because the vendor is thrilled to give away 30% more for free, but because Walmart has threatened them to either provide a better value in terms of more product for the same price OR pay Walmart to carry the product OR provide some sort of deal on making a private label version of something Walmart needs, OR if none of those work, Walmart will evict them from the shelves.

    If you are a vendor who derives a huge percentage of sales from Walmart, you have to think hard whether it makes sense to throw away all those sales or do as Walmart demands and come up with a bonus package or provide some other service Walmart wants.

    In most cases, Walmart demands sales results from everybody. If you are taking up shelf space, and even if your company paid for it, you better sell product, or Walmart WILL kick you. They may also demand that jobbers be sent in to do stocking, but this mainly happens to soft drink and snack chips. In my area, Utz bought shelf space but the stuff didn't sell and they didn't want to do "Bonus! 90MILLION OUNCES FREE!" bullshit and eventually Walmart kicked them out.

    Which kind of sucks since the stores are supplied by 1099 contractor route salespeople who can't offer better deals to Walmart because those decisions are made at a much higher level, and then they get kicked out and lose what sales they were making there.

    • Re:Not really new. Walmart squeezes lots of vendor (Score:4)

      by bazorg ( 911295 ) on Friday March 31, 2017 @07:00AM (#54149611)

      If you are a vendor who derives a huge percentage of sales from Walmart, you have to think hard whether it makes sense to throw away all those sales or do as Walmart demands and come up with a bonus package or provide some other service Walmart wants.

      With all this cost cutting and pressure on suppliers, I wonder how much of the so called obesity epidemic is due to replacing better ingredients with cheaper, more fattening alternatives.

    • Re: (Score:3)

      by sootman ( 158191 )

      My favorite article on the subject is now almost 15 years old. December, 2003: https://www.fastcompany.com/47... [fastcompany.com]

      Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don't change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

      Of course, U.S. companies have been moving jobs offshore for decades, long before Wal-Mart was a retailing power. But there is no question that the chain is helping accelerate the loss of American jobs to low-wage countries such as China. Wal-Mart, which in the late 1980s and early 1990s trumpeted its claim to "Buy American," has doubled its imports from China in the past five years alone, buying some $12 billion in merchandise in 2002. That's nearly 10% of all Chinese exports to the United States.

      I'd love to see an updated story with new numbers, and that covers Amazon.

  • Real brands stay the hell away from WalMart. You never see NIKEs in them, for instance. They never want to be pressured to lower their quality to make some price target.

    What this hits is the off-brands

  • shoppers (Score:2)

    by Tom ( 822 )

    The result in recent months has been a high-stakes race to the bottom between Walmart and Amazon that seems great for shoppers, but has consumer packaged goods brands feeling the pressure.

    It's never good for shoppers. Prices will drop, but it is highly unlikely the difference comes out of the pockets of the CEOs or the shareholder profits. It will come out of quality, safety, worker sales or worker numbers, all of which sooner or later cycles back to the disadvantage of the shopper.

  • Quality will suffer (Score:3)

    by doug141 ( 863552 ) on Friday March 31, 2017 @07:20AM (#54149683)

    Some brands will cut corners to survive. Those that won't will be offered buyouts from new owners whose whole business plan is to acquire a brand that built a reputation, and liquidate that reputation by cutting corners and slapping the brand label on it.

Slashdot Top Deals

He has not acquired a fortune; the fortune has acquired him. -- Bion

Close