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Comment by toshk | Hacker News Reader

The grocery stores I visit do the same in the Netherlands, maybe even worse, especially the biggest one here, Albert Hein (Ahold), is very skilled at it. They copy the most popular products, sell them slightly cheaper, similar designs as the most popular brand, then go on and display their products at eye height and move the big brands down. Yet every court case against them they've won. And the sentiment is far less negative about them than Amazon. They have a similar significant market share (35% of grocery market) as Amazon here. Maybe in the end, it's slightly more ethical since their strategy is mostly at the cost of the big corporates (Unilever) who can handle and fight them and not the smaller companies; and arguably, the consumer wins in the end.

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Aren't all those products whitelabel and don't all big supermarkets do this nowadays? I'm pretty sure all similarly packaged products from almost all grocery stores' own brands are exactly the same in all grocery stores despite the labeling being different. They all do look like the top-brand ones though.

But how is this different from Amazon?

Most of the products they’re white labeling aren’t new per se. It doesn’t take a genius to white label juice, soap, or butter. While Amazon is copying everything, including novel products.

The supermarket is using its own sales data. Amazon is snooping on the sales data of third parties using their platform.

Stores are increasingly moving away from "their own sales data". Costco, for instance, demands a 6 month payment plan on inventory[0], which effectively means they are following the Amazon route by being a marketplace for inventory which the distributor still owns. Best Buy does this as well.

0: https://youtu.be/mvk5tVMZQ_U?t=7195

The vendors in stores provide that sales data just like with Amazon’s vendors. The store and Amazon have sales data on everything.

In a store there is only one vendor: the store.

For third party sales Amazon insists that they are not the vendor. It's not the same thing.

> In a store there is only one vendor: the store.

By “vendor”, do you mean the one providing it to the customer? Because Amazon does that to with their FBA service.

The vendors I’m talking about are ones like Frito Lay, Nabisco, Coke, etc. The vendors deliver the product and (sometimes) put it out, but the store knows what’s selling and when. If the vendor wanted that information, they’d have to ask the store (through contracts), or watch the shelves themselves.

And despite what Amazon says, they’re a store. They just blur the line between store and marketplace. The “vendors” in Amazon’s case are the third party sellers. They pay Amazon a percentage of their sale for the ability to sell on Amazon.com. At the same time, Amazon sells stuff they buy and markup themselves (books for example).

In both cases, the product is commingled (white label next to name brand), and the customer doesn’t always know if they’re buying a vendor or a store brand. Amazon will tell you “sold and shipped by X”, but you have to know to look for that.

The vendor is the party you form a contract with. They get liability for product problems. In a store that's the store. On Amazon it might be dropshipper748.

This gives stores an incentive not to stock, say, dangerous electronics from untraceable vendors in China. And it gives you someone to sue if the phone charger burns your house down.

Again. I’m not talking about that definition of vendor. But if you insist to use that one, Amazon can be liable for products sold on their marketplace (at least in California).

https://www.theverge.com/2021/5/1/22414185/california-appeal...

The supermarket makes a deal to buy products from the producer that the producer white labels while also selling the normally labelled product. Amazon doesn't work with the producers, they kill the producers, then apply pressure to the suppliers. Their monopoly like power is bad for so many in the supply chain.

I wouldn't call drop-shippers the producer. The producers are the factories. The individual Amazon is cutting out is the middle-man. He tends to get our sympathy because he's smaller than Amazon, but really, he's just a needless step in the process of getting goods from factory to consumer. Amazon isn't stealing IP here, they are cutting out a middle man.

And you and I win when he is cut out of the process.

You and I don't win when amazon becomes the sole supplier and they have no reason to undercut competitor prices anymore and jack up their prices and they no longer have any incentive to innovate. This business practice of theirs is not solely done with resellers, but with manufacturers as well. It is ridiculously unfair that they are the market, they see what products sell quickly and for what prices, and that they are then able to take over the ones that have great margins. The end state is Amazon eats all profitable business lines and everyone else fights for scraps. That will be good for shareholders and no one else.

Amazon is not the sole supplier. Amazon buys from a variety of suppliers and distributes it via their online sales platform. Amazon doesn't have factories. They don't build widgets. They sell them.

How do you distinguish producer and supplier here? I don’t think the producer exists. There is only the supplier and a rent-seeking middle-man.

Assuming there's no legitimate IP infringement going on, then it's not different as far as I can tell. In my view, if the Amazon store is so big that it can use its market power to make the market worse (for buyers, sellers, or both), then make that argument on its own. The specific practice of noticing that popular third-party items can be offered by the store at a lower price isn't a problem in my view. If the convenience store on the corner sells homemade cookies cheaper than the Oreos on the shelf, is that really a problem?

How does that example absolve anyone of any wrongdoing?

It's the scale!

A fire in a trash can is something easy to deal with. If the fire is a whole forest threatening nearby towns then that's a big problem.

> don't all big supermarkets do this nowadays?

That makes the problem worse, not better.

Not defending amazon but the same happens in the UK and has done for at least the past ten years. There is a German chain, Aldi, who's entire business is built around selling knock-off brands and then boasting their products are so much cheaper than the actual branded products sold elsewhere.

The closest comparison to the amazon issue would be Tesco who have a range of budget products that look very similar to the branded alternative.

Aldi absolutely doesn't do this IMO - they have own-brands that they have developed with 'knock off' branding, however almost all of their products are own-brand from the start, rather than working with the 'brand' first to work out it's sales and supplier and then cutting them out.

Aldi's questionable ethics are on the branding-similarity side, rather than the Amazon approach of using marketplace data to cut-out middlemen distributors. I'm not saying if their approach is right and wrong, but it's a different and distinct issue.

Aldi also relies on the "white-label" supplier approaching them to develop a product.

https://corporate.aldi.us/en/suppliers/become-a-supplier/

Working with want-to-be suppliers is a full-time job for a large division of their company (my brother does it).

Yes, it is a slightly different issue, I accept, although the brands copied by supermarkets often have the advantage of also being the manufacture.

One notable element from the article is that Amazon.in was intentionally going to the same manufacturers and plants being used by the 'top' brands they were cloning so they could bring to market products with the exact same dimensions manufactured in the same plants presumably by the same people.

"It's just like $BRAND!" well yeah....

I might be old fashioned, but if your contribution to a product is so little that you just take it from a factory in China, stamp your company's name and hand it to an Amazon warehouse, giving yourself a healthy cut in the process, then I really don't mind if Amazon steps in and pass a portion of those savings to me.

It gets even better when the Chinese have their own online stores so you can then bypass Amazon as well.

Yes! I tinker a lot (3D printing, home automation, drones, etc...) and AliExpress is such an amazing place to buy components for 10% of the price I'd see in hobby shops or Amazon.

Shipping is often 1-2 months out, though, and you often don't get refunds without a return shipping cost (as in, FBA has free returns). It's useful to think that the cost of shipping is built into the price on Amazon.com and not on AliExpress.

True but even then for $2 shipped I get an ESP8266. On top of that most sellers are really accommodating if the package is lost and will send you another (sure that means in total it takes 5 months for the chip to get to you).

This could backfire on amazon though since many of these products are very low quality and this reflects on them rather than the third party seller.

I used to specifically buy AmazonBasics thinking there would be a higher quality threshold. Now I know this not the case why bother?

It would be an interesting court case for sure.

Aldi don't pretend that their brands are the famous brands and they don't stock the expensive ones so making cornflakes look a little like "Kellogs Cornflakes" is probably more about customers spotting them on the shelves than trying to get customers to buy yours instead.

If Kellogs claimed trademark infringement, it would be hard for them to prove that they are losing out since Aldi would simply say that they don't sell Kellogs and people aren't in any way being tricked into thinking any of the Aldi brands are real ones.

caveat: I'm no lawyer!

> is probably more about customers spotting them on the shelves than trying to get customers to buy yours instead.

That's the same thing. They don't put Aldi brand cornflakes on the shelf just to be eye candy.

Maybe the millions Kellogg's spend on branding could be an argument?

Many "white-label" groceries are in fact produced in the exact same factories as the branded ones (and the factories are owned by those brands), often just with slightly changed recipes or cheaper ingredients. It's not simply blatant unauthorized copies of more expensive groceries.

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