Re: Anyone else concerned about anti-competitive dumping strategies?

Discussion in 'DVD Video' started by Mark Jones, Aug 31, 2003.

  1. Mark Jones

    Mark Jones Guest

    "Rich Clark" <> wrote in message
    news:...
    >
    > "Mark Jones" <> wrote in message
    > news:lmn4b.3135$...
    > > "Rich Clark" <> wrote in message
    > > news:D...
    > > > >, and at the very least it's unethical.
    > > >
    > > > Why is it unethical? In what way is any business ethically obligated

    to
    > > > protect it competitors from legal competition? If customers only care

    > > about
    > > > price, then the retailer that is consisently cheaper will win.

    > > This is only true if the business is profitable. If they are
    > > selling too low, they are either losing money or not making
    > > enough to maintain the business operation.

    >
    > Are you suggesting that Target and Walmart etc aren't profitable?

    I was referring to your comment about "consistently cheaper".

    Sharply reduced prices on individual items does not mean that
    a business is consistently cheaper. I have seen businesses go
    under by reducing prices too far on too many items. You can
    selectively reduce prices to get people in the door, but you
    have to watch out about making the price cuts too widespread.
     
    Mark Jones, Aug 31, 2003
    #1
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  2. Mark Jones

    Rich Clark Guest

    "Mark Jones" <> wrote in message
    news:rIp4b.3302$...

    > > Are you suggesting that Target and Walmart etc aren't profitable?

    > I was referring to your comment about "consistently cheaper".
    >
    > Sharply reduced prices on individual items does not mean that
    > a business is consistently cheaper. I have seen businesses go
    > under by reducing prices too far on too many items. You can
    > selectively reduce prices to get people in the door, but you
    > have to watch out about making the price cuts too widespread.
    >

    Of course. But Circuit City isn't committing corporate suicide by making
    "Two Towers" a loss leader (if indeed they are; I rather doubt that a $15.99
    price is a loss for them).

    Walmart succeeds by volume selling, and carefully matching their pricing to
    beat local competition. The fact that, say, Target can compete with Walmart
    even though Walmart's overall prices are lower indicates that consumers find
    other things to value besides price.

    My overarching point here is only that the "big box" model of retailing is
    part of the evolution of commerce. It has its benefits, and it has its
    drawbacks, just as earlier models have had. e-commerce is another aspect of
    that evolution. I don't hear anyone suggesting that Amazon.com or ebay are
    unethical or otherwise evil because they're displacing the b&m specialty
    stores that used to cater to the collector's market. Those specialty
    retailers who have adapted are surviving, even prospering.

    The OP was complaining about the use of DVD's and CD's as loss leaders,
    suggesting that the tactic is unethical, if not illegal. But it's not; it's
    as old as advertising, and it would be hard to find an ad flyer in any
    Sunday paper in the country that doesn't include some loss leaders (the
    CompUSA "free after rebate" page in their current flyer is a good example).
    And as for the contention that it's unethical because it's
    "anti-competitive," I respond that it just the opposite. It's a time-honored
    competitive tactic.

    RichC
     
    Rich Clark, Aug 31, 2003
    #2
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  3. "Rich Clark" <> wrote in message
    news:...
    >
    > "Mark Jones" <> wrote in message
    > news:rIp4b.3302$...


    > that evolution. I don't hear anyone suggesting that Amazon.com or ebay are
    > unethical or otherwise evil because they're displacing the b&m specialty


    Actually, I dealt with a mom-pop bookseller who hated amazon.com and didn't
    like it that a web site of mine had affiliate links for the same books. I
    spoke to amazon about the situation and they thought that was strange
    because small booksellers were becoming affiliates, setting up PC's to sell
    books they didn't have as a service to customers. So the attitude did exist.

    Steve
     
    Steve Knoblock, Aug 31, 2003
    #3
  4. Mark Jones

    Jason Guest

    > The OP was complaining about the use of DVD's and CD's as loss leaders,
    > suggesting that the tactic is unethical, if not illegal. But it's not;

    it's
    > as old as advertising, and it would be hard to find an ad flyer in any
    > Sunday paper in the country that doesn't include some loss leaders (the
    > CompUSA "free after rebate" page in their current flyer is a good

    example).
    > And as for the contention that it's unethical because it's
    > "anti-competitive," I respond that it just the opposite. It's a

    time-honored
    > competitive tactic.
    >
    > RichC


    After thinking about it, you're right, it's old as the hills, more pervasive
    than I gave it credit for, and ultimately ethical. But you have to recognize
    the impact of this behavior. I have no love for Wherehouse Music (never
    spent a dime there), but this loss-leading tactic is THE reason most small
    business owners can't run a successful music & video store these days,
    unless they plan on specializing in rare titles. CC sold the Two Towers for
    $14.99 this week, at a significant loss. They intend to make their money on
    sales of larger items and accessories. Sooner or later (they are already
    doing it on the internet) these megastores, too, will be undercut on the
    price of their bread-and-butter products in the same way. That's fun to see
    :)

    Dumping laws do exist, but from what I know they may apply to more predatory
    situations, where company A intends to monopolize the market by undercutting
    company B until company B goes belly up. That's all I really know about it.
     
    Jason, Aug 31, 2003
    #4
  5. Mark Jones

    Rich Clark Guest

    "Jason" <jasongst @ flex . com> wrote in message
    news:...

    > After thinking about it, you're right, it's old as the hills, more

    pervasive
    > than I gave it credit for, and ultimately ethical. But you have to

    recognize
    > the impact of this behavior. I have no love for Wherehouse Music (never
    > spent a dime there), but this loss-leading tactic is THE reason most small
    > business owners can't run a successful music & video store these days,
    > unless they plan on specializing in rare titles. CC sold the Two Towers

    for
    > $14.99 this week, at a significant loss. They intend to make their money

    on
    > sales of larger items and accessories. Sooner or later (they are already
    > doing it on the internet) these megastores, too, will be undercut on the
    > price of their bread-and-butter products in the same way. That's fun to

    see
    > :)


    Specialty stores can't usually compete successfully on the basis of low
    price alone; they don't have anything they can sell at a profit if they
    discount their "specialty" too much. That's one reason we saw so many
    e-businesses go under a couple of years ago.

    There's no reason for a consumer to care about anything but price when
    buying current books, music, movies, and such. So yes, the small retailers
    who try to compete in this market will fail, because they can't buy in
    sufficient quantity to keep prices down.

    It sounds cruel to say it, but that's just too bad. Life moves on, the world
    changes, people have to adapt. The former bookstore owner becomes a manager
    at a Barnes and Noble, and probably clears more money and now has a
    retirement plan. The CD store owner becomes an importer of rare progressive
    rock and world-music records, opens an e-business, and maintains his
    storefront as a tax loss while living in the back room. The small video
    chain gets bought out by Best Buy which maintains it so that they can have a
    presence in the mall market.

    And I'm still not convinced that selling The Two Towers for $15 was a loss
    for CC.
    >
    > Dumping laws do exist, but from what I know they may apply to more

    predatory
    > situations, where company A intends to monopolize the market by

    undercutting
    > company B until company B goes belly up. That's all I really know about

    it.

    Predatory dumping is usually an international issue -- Chinese manufacturers
    dumping consumer goods into India to drive Indian manufacturers out of
    business, that sort of thing. Anti-dumping laws operate on that scale. What
    you're talking about on the retail level isn't "dumping."

    RichC
     
    Rich Clark, Aug 31, 2003
    #5
  6. Mark Jones

    Shadowhawk Guest

    >CC sold the Two Towers for
    >$14.99 this week, at a significant loss.


    The local Video Store in my area bought 1,500 copies of Lord of the Rings from
    the distributer for about $9.67 a piece in bulk.

    Since the local Wal Mart is buying at least 5 times as much, I would either
    assume they get a slight price reduction, or the same $9.67.

    A real loss leader is when the Wal Mart and Best Buy sell the DVDs for $8.99
    (Like when they sold Star Wars, and Spiderman).

    Later,
    Shaun!
    --------

    Check out my Homepage
    http://Shadowhawk27.tripod.com/

    delete Nospam from e-mail to reply!
     
    Shadowhawk, Sep 2, 2003
    #6
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