First TVs, now tortillas: U.S. companies set minimum prices to halt discounting

NEW YORK, Nov 17 (Reuters) – Makers of everything from toys to tortillas are scrambling to preserve profits and limit price cuts as retailers such as Walmart Inc ( WMT.N ) and Amazon.com Inc ( AMZN.O ) set minimum prices. set for their goods. ) try to get sales from each other online.

As a result, shoppers face fewer discounts for everyday purchases at a time when inflation is hovering around 8% and as retailers look to unload hundreds of billions of dollars in excess inventory. more

For many years, manufacturers have set the lowest price at which retailers can advertise certain big-ticket items such as televisions. They wanted to deter buyers who found the item on the showroom floor and then went online to find it advertised by another seller at a lower price and buy it from there.

Now, as shoppers follow the pandemic habit of buying more household items online, companies such as Colgate-Palmolive Co ( CL.N ) have in recent months used what they believe is a minimum promotional price policy on cheaper products such as Optic Known as White Pro. Amazon’s toothpaste line, a person familiar with the matter said.

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Pro Series toothpaste, now advertised on Amazon for about $9.96, is a higher-end product that Colgate wants to protect its profits amid rising costs. As a result, consumers would struggle to find lower advertised prices elsewhere.

Toymaker Hasbro Inc ( HAS.O ) is asking retailers to drop any advertised prices from its $6.99 to $33.99 set price on Monopoly, Twister, Chutes & Ladders and 21 other games and toys, except during the holiday shopping season. keep, according to a company. The note was seen by Reuters.

Reuters graphic

Online shopping for consumer staples, combined with Amazon’s fierce competition from Walmart Inc ( WMT.N ), has prompted many consumer goods makers to lower prices on low-cost products, e-commerce consultants said.

Mr. Tortilla, which makes diet-friendly tortillas sold online by Walmart and Amazon, decided to set the minimum price as it expands, aiming to keep prices consistent across e-commerce retailers, said Ron Alcazar, the company’s chief operating officer.

“We’re seeing categories adopt (these floors) that never have before, like food and beverage,” said Jack Gale, an account executive at PriceSpider, which has seen a 120% year-over-year increase in the number of brands using its products. has done which will help to implement these price floors from 2018.

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A shopping cart is seen at a supermarket as inflation affects consumer prices in Manhattan, New York, U.S., June 10, 2022. REUTERS/Andrew Kelly

NOT LEGAL IN EUROPE

Although legal in the United States, these policies are largely illegal in many countries, including across Europe.

Agreements that set the selling price between the seller and the manufacturer are also illegal in some states, including California and Maryland.

Amazon’s share of these pricing floors comes from its promise to offer products that are at or below the prices of competitors like Walmart. This forces brands that sell large quantities of goods on Amazon to set a minimum price and then enforce it. Otherwise, they face diminishing returns.

E-commerce consultants said Amazon’s wholesalers and sellers on its platform could be penalized by improper listings on Amazon.com, among other actions, if the company found lower prices elsewhere.

“We have no role in creating them or continuing to adopt them,” an Amazon spokesperson said when asked about the advertised minimum pricing policy. “Like all stores, we reserve the right not to mark prices that are competitive with other major retailers. We always set our prices independently.”

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California has filed a lawsuit against Amazon that requires suppliers to agree to rules set by Amazon that ultimately force brands to adopt and enforce minimum advertised price policies.

U.S. Representative David Cicilline, who is working on proposed antitrust legislation aimed at lowering prices, said, “Amazon routinely abuses its monopoly power to coerce retailers and suppliers and prevent them from offering lower prices elsewhere.” will be.”

Amazon responded that it does not prevent sellers from offering lower prices elsewhere.

A 2007 United States Supreme Court ruling that allowed sales price agreements between retailers and suppliers paved the way for the expansion of this pricing policy.

Reporting by Jessica DiNapoli; Edited by Vanessa O’Connell and Chris Sanders

Our Standards: The Thomson Reuters Trust Principles.

Jessica DiNapoli

Thomson Reuters

The New York-based reporter covers US consumer products, from paper towels to packaged food, the companies that make them and how they’re responding to the economy. Corporate boards and affected companies have been reported earlier.

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