Hacker News Reader

Comment by WiSaGaN | Hacker News Reader

This seems similar to Temu, where they exert significant pressure on suppliers and offer customers extremely low prices. Suppliers remain tied to Temu due to its large customer base, often sacrificing margin for volume.

From what I've heard, Apple also exerts tremendous pressure on its suppliers and boasts some of the highest margins in the industry. In return for their association with Apple, suppliers gain reputation.

View on HN

That sounds like Walmart, but not Costco. Costco does have tough buyers who negotiate prices, but they really truly have higher quality standards. This was what I saw being on the other side for a company that sold fruit to both Walmart and Costco. Lower grade fruit was spec'd and sold to Walmart and higher grade fruit was spec'd and sold to Costco.

I think in both cases the supplier would get significant lower margin as a result of providing higher quality goods. Supplier cave to the market power of Walmart and Costco. And Walmart and Costco choose to whether they provide lower prices or better qualities. And they maintain this market power exactly by giving more of the surplus to the customers. In the apple case, the brand and eco-system alone can provide that market power, e.g. people love apple products, thus they can pocket the surplus while still maintaining the position.

For fruit, the price negotiation always tries to drive down the price, but there are something like 10 big buyers of fruit in USA alone, so Coscto and Walmart don't have a monopoly and the fruit sellers go elsewhere when the buyers turn the screws too hard. If Walmart ever becomes the only grocer in the USA, then yes, the farmers are toast. Otherwise, I know of one big fruit grower in my town with a Mediterranean yacht and another that drove in to the office with his Ferrari, inspected fields all day, being flown in the company helicopter, then showed up the next day in his other Ferrari. Huge grower, but then regulation and compliance is killing small growers in USA. Soon you won't be able to farm unless you can have a lawyer on staff.

Reply on news.ycombinator.com