When companies get too large.....

[Norman Bernstein]

OK, I'm going to admit, right up front, that I'm about to engage in speculation, and cannot, and will not, defend this speculation as being true, or even necessarily likely (that should head off the ankle biters, to some degree).

NEW YORK -- Target Corp. is phasing out Amazon.com Inc.'s e-reader Kindle at its more than 1,700 stores and its website.Target spokeswoman Molly Snyder said Wednesday that the decision to stop selling Kindles this spring came after an "ongoing review" of Target's merchandise that evaluates quality and prices of the chain's offerings.The move coincides with the discounter's plan to create mini shops of Apple Inc. products in 25 of its stores this year.Despite competition from cheaper tablet computers such as Amazon's Kindle Fire, Apple's iPad remains the most popular tablet. Apple has sold more than 55 million iPads since the tablet's debut in 2010.Target, which is based in Minneapolis, started selling Kindles two years ago. Target announced in late November that Amazon's Kindle was the best-selling tablet in its stores on the day after Thanksgiving, typically the busiest day of the year.Target will also stop selling Kindle accessories like covers and chargers.Snyder declined to comment further about its partnership with Apple, only saying, "We will continue to offer our guests a full assortment of e-readers and supporting accessories."A spokeswoman for Amazon didn't immediately return calls.Target's decision to phase out the Kindle is also occurring as the retailer, along with other major merchants, are trying to fight a growing practice called "showrooming." That's when shoppers, armed with smartphones, browse products in physical stores and then shop online for a better price. Earlier this year, Target sent out a letter to vendors asking for help in developing exclusive merchandise and matching rivals' online prices.

So, the question is: what is really going on, with this story? Might it be (and here comes the speculative part) that Apple and Target conspired to head off Amazon's Kindle as competiton, by getting Target to dump their product, in return for the 'franchise' of sorts to market the Apple products with a far higher visibility?

Might not some of the justification, on Target's part, be some sort of pricing deal which would make the iPad more profitable than the Kindle, in return for Target dumping the amazon product?

I am NOT suggesting that anything illegal is going on (although there ARE laws about collusion and such which might apply).... but I DO wonder if this isn't a sign of what's to come. Apple now has the largest market cap of any US company... and counts its quarterly profits in the tens of billions. We all applaud 'competition' in the marketplace... but is this really competition? In the early part of the 20th century, the breakup of Standard Oil was recognized as necessary, when a single company, as a consequence of sheer size, wealth and marketplace power, had grown to a size which threatened the marketplace, rather than enhancing it......

...are we nearing the same situation?

[ccmanuals]

I saw this report. On another front MS just signed a deal with Barnes and Noble regarding the Nook. The deal contains the words phone throughout it.

Point is, these types of arrangements between tech companies and resellers are a daily occurance.

[Norman Bernstein]

Point is, these types of arrangements between tech companies and resellers are a daily occurance.

Sure... but at what point do they become illegal restraint of trade? At what point do they damage the open market and fair competition?

[Uncle Duke]

I don't think there is any collusion going on, I think that Target is annoyed at Amazon actively encouraging users to scan prices at physical stores, then use that scan to get a better deal at Amazon:

Like other big retailers, Target has been trying to figure out how to stop Amazon shoppers from visiting Target stores to check out products, and then buy them online from Amazon. It is a practice encouraged by Amazon; over the Christmas holiday, for example, the company offered a promotion on its Price Check app that gave shoppers 5 percent off any item scanned at a store.

Now that retailers like Target are aware of this so-called showrooming, carrying Amazon’s Kindle is a little “like Starbucks selling Dunkin’ Donuts gift certificates,” said Michael Norris, a senior analyst for Simba Information.

Target warned in January that it wouldn’t sit back.

“What we aren’t willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices,” Target executives wrote in a letter to vendors, asking them to think of new pricing and inventory strategies, according to a note that Deborah Weinswig, a Citi analyst, sent to clients.

from the New York Times

[Waddie]

The biggest Chinese retail stores are set up that each manufacturer leases space in the store, hires their own employees, and handles their own pricing, inventory, and customer service. This frees the retailer from having to stockpile large inventories that can go obsolete the minute a newer, fresher product comes out. This is especially true in the consumer electronics sector. Perhaps Target is setting up a similar deal with Apple. That would make a lot of sense.

regards,
Waddie

[ccmanuals]

Sure... but at what point do they become illegal restraint of trade? At what point do they damage the open market and fair competition?

That's a tough question because, as you know, our conservative friends want to remove all regulation, legislation and oversight of business. Remember, it's a job killer.

[Norman Bernstein]

I don't think there is any collusion going on, I think that Target is annoyed at Amazon actively encouraging users to scan prices at physical stores, then use that scan to get a better deal at Amazon:

from the New York Times

I understand the 'showrooming' phenomenon, but it's not restricted, by any means, to Target, Kindle, and Amazon.... this seems like a smokescreen, to me. Brick and mortar retailers of every kind are battling online sellers... and it is rather ironic that both the Kindle, as wll as the iPad, are both tightly price-controlled (as are ALL Apple products)... so showrooming would be far less of an issue to both Amazon and Apple, than would be products of many other companies.

I just don't buy it.

[Waddie]

That's a tough question because, as you know, our conservative friends want to remove all regulation, legislation and oversight of business. Remember, it's a job killer.

Your statement is an example of pure hyperbole. What American businesses are objecting to, in large part, is having competitors with very little regulatory oversight, low to non-existent taxes, no responsibility for having to take responsibility for consumer liability, lax environmental laws which aren't enforced anyway, and almost total disregard for worker safety.

What American companies need is a level playing field, whether it be highly regulated or with very little regulation. Of course any company would prefer less regulation, but above all else, American companies are sick and tired of trying to compete where they have to carry loads that are much more burdensome than their competitors.

regards,
Waddie

[Norman Bernstein]

The biggest Chinese retail stores are set up that each manufacturer leases space in the store, hires their own employees, and handles their own pricing, inventory, and customer service. This frees the retailer from having to stockpile large inventories that can go obsolete the minute a newer, fresher product comes out. This is especially true in the consumer electronics sector. Perhaps Target is setting up a similar deal with Apple. That would make a lot of sense.

The same sort of thing occurs for portions of MANY US retailers, and has, for quite a long time. Health and Beuaty aids manufacturers, for example, have been doing this for decades... assigning what they call 'detail personnel' to check and restock store shelves belonging to their customers. It also happens in supermarkets. A business neighbor of mine operates precisely in this way, setting up displays of discount DVD's and CD's in stores like 'Christmas Tree Shoppes', maintaining inventory, and the like.

[Tall Boy]

I just don't buy it.

Ahh, one of the wonders of free trade capitalism, you don't have to buy anythng Norman..........

[ccmanuals]

Your statement is an example of pure hyperbole. What American businesses are objecting to, in large part, is having competitors with very little regulatory oversight, low to non-existent taxes, no responsibility for having to take responsibility for consumer liability, lax environmental laws which aren't enforced anyway, and almost total disregard for worker safety.

What American companies need is a level playing field, whether it be highly regulated or with very little regulation. Of course any company would prefer less regulation, but above all else, American companies are sick and tired of trying to compete where they have to carry loads that are much more burdensome than their competitors.

regards,
Waddie

Waddie, are you telling me that what was said in the GOP debates was hyperbole?

[bobbys]

That's a tough question because, as you know, our conservative friends want to remove all regulation, legislation and oversight of business. Remember, it's a job killer.

.

You could always time travel and buy Solyndra stock or get a job there secure in the knowledge the Democrats have all regulation, legislation and oversight of business in the proper place..

O wait that was OUR money that disappeared, Never mind....

[skuthorp]

Your statement is an example of pure hyperbole. What American businesses are objecting to, in large part, is having competitors with very little regulatory oversight, low to non-existent taxes, no responsibility for having to take responsibility for consumer liability, lax environmental laws which aren't enforced anyway, and almost total disregard for worker safety.

What American companies need is a level playing field, whether it be highly regulated or with very little regulation. Of course any company would prefer less regulation, but above all else, American companies are sick and tired of trying to compete where they have to carry loads that are much more burdensome than their competitors.

regards,
Waddie

Hah! American Companies never objected when the same circumstances advantaged them, why the State has even gone to war to defend those 'rights' from other countries industries. The biter bit!

[Garret]

What American companies need is a level playing field, whether it be highly regulated or with very little regulation. Of course any company would prefer less regulation, but above all else, American companies are sick and tired of trying to compete where they have to carry loads that are much more burdensome than their competitors.

I'm confused. Aren't Apple, Amazon & Target all American companies? Not sure what you're getting at here.

To Uncle Duke's post about the discount for scanning - this sounds like a real reason & Amazon shouldn't be surprised that there are repercussions to a ploy like theirs.

[mikefrommontana]

I understand the 'showrooming' phenomenon, but it's not restricted, by any means, to Target, Kindle, and Amazon.... this seems like a smokescreen, to me. Brick and mortar retailers of every kind are battling online sellers... and it is rather ironic that both the Kindle, as wll as the iPad, are both tightly price-controlled (as are ALL Apple products)... so showrooming would be far less of an issue to both Amazon and Apple, than would be products of many other companies.

I just don't buy it.

I suspect Target is smacking Amazon down because Target is getting show roomed on everything outside of the Kindle and Apple products. The idea that a person can walk in your store, scan an SKU or UPC code and purchase something from Amazon right then and there is rather annoying to say the least. The only defense to this is to either stock items with good price controls (Apple) or stock items that nobody else has or has made Chinese knockoffs of--rather a difficult thing for Target to do.

[Waddie]

Garret; I'm confused. Aren't Apple, Amazon & Target all American companies? Not sure what you're getting at here.

No, they are global. Global inventories, global production (Apple), global aspirations (Amazon). I think it's important to think globally about everything. There is no such thing as a "mom and pop" business anymore. Every business is affected by globalization, from the products they carry to the markets they serve.

My original statement about American companies wanting a level playing field was in response to a post that accused American business of wanting no regulation whatsoever. The point I was trying to make is that what most American companies want from regulations is a level playing field. (However, their dream scenario is to have the playing field tilted their way).



regards,
Waddie

[Garret]

No, they are global. Global inventories, global production (Apple), global aspirations (Amazon). I think it's important to think globally about everything. There is no such thing as a "mom and pop" business anymore. Every business is affected by globalization, from the products they carry to the markets they serve.

My original statement about American companies wanting a level playing field was in response to a post that accused American business of wanting no regulation whatsoever. The point I was trying to make is that what most American companies want from regulations is a level playing field. (However, their dream scenario is to have the playing field tilted their way).

Gotcha. Afraid that a level playing field in this world is pretty much impossible. Maybe the UN can do something about it....

The more I read & hear though, this Target-Amazon thing is pure & simple "You want to act that way Amazon? Go ahead - but there will be repercussions." Amazon did pull a sleazy move & they deserve to get slapped for it IMO.

[Norman Bernstein]

I suspect Target is smacking Amazon down because Target is getting show roomed on everything outside of the Kindle and Apple products. The idea that a person can walk in your store, scan an SKU or UPC code and purchase something from Amazon right then and there is rather annoying to say the least. The only defense to this is to either stock items with good price controls (Apple) or stock items that nobody else has or has made Chinese knockoffs of--rather a difficult thing for Target to do.

....except that the Kindle is JUST as price-controlled as Apple products. With tightly controlled pricing, 'showrooming' is meaningless; if you want to buy a new iPad, the price is $499, regardless of whether you buy it on-line, or from Target... and the same is true of the Kindle... so, the explanation doesn't wash. Target's motivation to dump the Kindle, in favor of Apple, can't be explained by 'showrooming'.

[Concordia 33]

OK, I'm going to admit, right up front, that I'm about to engage in speculation, and cannot, and will not, defend this speculation as being true, or even necessarily likely (that should head off the ankle biters, to some degree).



So, the question is: what is really going on, with this story? Might it be (and here comes the speculative part) that Apple and Target conspired to head off Amazon's Kindle as competiton, by getting Target to dump their product, in return for the 'franchise' of sorts to market the Apple products with a far higher visibility?

Might not some of the justification, on Target's part, be some sort of pricing deal which would make the iPad more profitable than the Kindle, in return for Target dumping the amazon product?

I am NOT suggesting that anything illegal is going on (although there ARE laws about collusion and such which might apply).... but I DO wonder if this isn't a sign of what's to come. Apple now has the largest market cap of any US company... and counts its quarterly profits in the tens of billions. We all applaud 'competition' in the marketplace... but is this really competition? In the early part of the 20th century, the breakup of Standard Oil was recognized as necessary, when a single company, as a consequence of sheer size, wealth and marketplace power, had grown to a size which threatened the marketplace, rather than enhancing it......

...are we nearing the same situation?

Rumors are that Apple is about to unveil an iPad Mini - about the same size as the Kindle Fire, but faster and with the ability for g4 connectivity. It's price will be slightly higher than the Fire, but it will do so much more. The Fire has been the one place where competitors have wormed into the smartphone/ pad market. Also Amazon is about to open some retail stores in the Northwest thus making them a regional competitor to Amazon. Lastly, Target may be learning the same lesson about Amazon that Best Buy learned - you go into the store to shop, and to Amazon to buy. They may not want to help a business that weakens their retail market.

[Norman Bernstein]

Lastly, Target may be learning the same lesson about Amazon that Best Buy learned - you go into the store to shop, and to Amazon to buy. They may not want to help a business that weakens their retail market.

I fully understand the phenomenon... but it simply doesn't apply to price-controlled products, of which, the Kindle is one, just like the Apple products.

The 'showrooming' excuse makes sense, but not for THOSE products. Why would anyone examine a $199 Kindle Fire in a Target store, and then go online to spend $199 to get one?

[Concordia 33]

I fully understand the phenomenon... but it simply doesn't apply to price-controlled products, of which, the Kindle is one, just like the Apple products.

The 'showrooming' excuse makes sense, but not for THOSE products. Why would anyone examine a $199 Kindle Fire in a Target store, and then go online to spend $199 to get one?

Yes, I know that, what I am referring to is that Amazon and Target are direct competitors for the majority of Target's inventory. People can go there to shop for (as an example) a vacuum, and buy it for less at Amazon. By selling Amazon products, they are aiding a competitor. Apple is not so much a competitor as a business partner. I wasn't trying to say that the competition was in the Kindle area as much as the remainder of the store merchandise. Amazon is a significant threat to virtually every brick and mortar store.

[hokiefan]

I fully understand the phenomenon... but it simply doesn't apply to price-controlled products, of which, the Kindle is one, just like the Apple products.

The 'showrooming' excuse makes sense, but not for THOSE products. Why would anyone examine a $199 Kindle Fire in a Target store, and then go online to spend $199 to get one?

Target could care less about the Kindle, they want to smack Amazon. The part of Amazon that competes with everything else that Target sells. And Apple doesn't compete with Target in the same way.

Cheers,

Bobby

[Norman Bernstein]

Apple is not so much a competitor as a business partner. I wasn't trying to say that the competition was in the Kindle area as much as the remainder of the store merchandise. Amazon is a significant threat to virtually every brick and mortar store.

OK, that makes more sense.

[wardd]

yes

[Waddie]

If the problem is the Amazon bar code reader, why couldn't retailers assign their own proprietary bar codes to every item they carry? Wouldn't that nullify the Amazon reader?

regards,
Waddie

[wardd]

isn't the same bar code used throughout the production distribution chain?

[Waddie]

isn't the same bar code used throughout the production distribution chain?

But couldn't a proprietary bar code be assigned during production if they knew what retailer was going to get the merchandise, which they probably know with the huge orders they get from Target.
In any case, they could make it work considering how high the stakes are.

Of course, I'm no expert at retail, but I would think for something this important they would find a way to circumvent Amazon.

regards,
Waddie

[wardd]

But couldn't a proprietary bar code be assigned during production if they knew what retailer was going to get the merchandise, which they probably know with the huge orders they get from Target.
In any case, they could make it work considering how high the stakes are.

Of course, I'm no expert at retail, but I would think for something this important they would find a way to circumvent Amazon.

regards,
Waddie

would drive up costs in manufacturing and warehousing

[Garret]

I fully understand the phenomenon... but it simply doesn't apply to price-controlled products, of which, the Kindle is one, just like the Apple products.

The 'showrooming' excuse makes sense, but not for THOSE products. Why would anyone examine a $199 Kindle Fire in a Target store, and then go online to spend $199 to get one?

Amazon was discounting even Kindles 5% if you scanned - so customers were paying ~$10 less @ Amazon - plus buying incidental items @ Amazon: cables, books, etc.

[Waddie]

would drive up costs in manufacturing and warehousing

wardd, I asked a friend in the retail business and he said lots of companies slap their proprietary bar code right over the manufacturers bar code, but that doesn't help because the scanning program takes a picture of the actual box (or product) and can identify it that way. All very interesting......

regards,
Waddie

[Peter Kalshoven]

I fully understand the phenomenon... but it simply doesn't apply to price-controlled products, of which, the Kindle is one, just like the Apple products.

The 'showrooming' excuse makes sense, but not for THOSE products. Why would anyone examine a $199 Kindle Fire in a Target store, and then go online to spend $199 to get one?

So, Norm, they got rid of sales tax in Massachusetts? You buy online from out of state, Amazon ships it and doesn't charge sales tax. Plus the 5% discount for showrooming... So, that would explain a lot.

I sell to specialty retail stores. They are all worried about competing with e-tailers. Most of them are fine, as long as the playing field is level. But none of them like to be the showroom for an e-tailer whose best discount is no sales tax. I think that's the next big change in retail, an internet sales tax.

My two cents.