taking on one sided contract

[e-commerce sale]

What is the name of your state (only U.S. law)? WA
I am an e-commerce seller . I carry two national brands that require I abide by MAP pricing (limits how much I can discount product) for on-line sales.
In both cases it is a signed document.
I sell on Overstock which requires I not be the cheapest price but comparable to other on-line platforms.
These two company's allow Amazon to go below MAP pricing. They say since Amazon buys the product outright rather than drop shipping as I do; that they have no control over their pricing.
In my opinion this is an unfair trade advantage.
I would love a legal opinion.
Thanks

 

[quincy]

What is the name of your state (only U.S. law)? WA
I am an e-commerce seller . I carry two national brands that require I abide by MAP pricing (limits how much I can discount product) for on-line sales.
In both cases it is a signed document.
I sell on Overstock which requires I not be the cheapest price but comparable to other on-line platforms.
These two company's allow Amazon to go below MAP pricing. They say since Amazon buys the product outright rather than drop shipping as I do; that they have no control over their pricing.
In my opinion this is an unfair trade advantage.
I would love a legal opinion.
Thanks

Amazon definitely has an advantage in the marketplace. Amazon has also been sued for unfair competition before.

But ...

Amazon has no need to profit from their sales like other companies so Amazon is able to offer lower prices and free shipping. Amazon shareholders look at stock prices (and how they rise) rather than profit.

You, on the other hand, need to profit to stay in business. You also signed an agreement that requires you sell the brands at MAP pricing, which limits the discounts you can offer.

For additional information on unfair competition laws, here is a link to Cornell University Law School's overview:
http://www.law.cornell.edu/wex/unfair_competition

 

[LdiJ]

What is the name of your state (only U.S. law)? WA
I am an e-commerce seller . I carry two national brands that require I abide by MAP pricing (limits how much I can discount product) for on-line sales.
In both cases it is a signed document.
I sell on Overstock which requires I not be the cheapest price but comparable to other on-line platforms.
These two company's allow Amazon to go below MAP pricing. They say since Amazon buys the product outright rather than drop shipping as I do; that they have no control over their pricing.
In my opinion this is an unfair trade advantage.
I would love a legal opinion.
Thanks

Its not unfair at all. Its the normal advantage given to companies that buy their inventory outright and in volume.

 

[quincy]

Its not unfair at all. Its the normal advantage given to companies that buy their inventory outright and in volume.

Well, Amazon goes a bit beyond "normal advantage."

Amazon consistently reports losses in the multi-millions, which would bankrupt most companies.

Perhaps at some point in time Amazon will self-destruct but, until that time, smaller businesses will find it hard to or will find it impossible to compete. Goodbye to stores like Borders (which I miss terribly).

 

[LdiJ]

Well, Amazon goes a bit beyond "normal advantage."

Amazon consistently reports losses in the multi-millions, which would bankrupt most companies.

Perhaps at some point in time Amazon will self-destruct but, until that time, smaller businesses will find it hard to or will find it impossible to compete. Goodbye to stores like Borders (which I miss terribly).

Yes, I do understand that Amazon makes some interesting choices, but the point I was making is that you cannot expect a mom and pop shop that drop ships, to get the same "deals" from a manufacturer or distributor as a company that buys their inventory and buys it in bulk. Its economies of scale.

We will use the fictional "widget" as an example. One buyer orders one widget at a time, which has to be handled and then shipped to an individual address for each widget. It has to be pulled from the distributor's inventory, which the distributor has paid for in advance, therefore there is the cost of holding inventory. That widget might cost the distributor 10.00 when all is said and done.

The other buyer orders 100,000 widgets from that distributor at a time...with plenty of advance planning. The distributor can order it directly from the manufacturer as a bulk order and receive an excellent discount. They can take it into inventory and ship in right back out that same day, or even re-direct it from the shipping port straight to the customer, with minimal handling...nothing more than fork lifting it from one shipping container to another...and sometimes even just transferring a full shipping container from a ship into a semi or rail car. Those widgets, on a individual basis might cost the distributor 2.00 each on an individual basis. Who do you think gets the better deal?

 

[quincy]

Yes, I do understand that Amazon makes some interesting choices, but the point I was making is that you cannot expect a mom and pop shop that drop ships, to get the same "deals" from a manufacturer or distributor as a company that buys their inventory and buys it in bulk. Its economies of scale.

We will use the fictional "widget" as an example. One buyer orders one widget at a time, which has to be handled and then shipped to an individual address for each widget. It has to be pulled from the distributor's inventory, which the distributor has paid for in advance, therefore there is the cost of holding inventory. That widget might cost the distributor 10.00 when all is said and done.

The other buyer orders 100,000 widgets from that distributor at a time...with plenty of advance planning. The distributor can order it directly from the manufacturer as a bulk order and receive an excellent discount. They can take it into inventory and ship in right back out that same day, or even re-direct it from the shipping port straight to the customer, with minimal handling...nothing more than fork lifting it from one shipping container to another...and sometimes even just transferring a full shipping container from a ship into a semi or rail car. Those widgets, on a individual basis might cost the distributor 2.00 each on an individual basis. Who do you think gets the better deal?

Oh. I understand all that. I imagine e-commerce sale gets that, too.

But Amazon is a whole different beast.

It is not just buying in bulk at a discount that leads to Amazon's advantage in the marketplace. Amazon undercuts its OWN costs. No profit and huge losses of the type reported by Amazon cannot be handled by other companies. Other companies need some sort of a profit from sales to survive.

 

[LdiJ]

Oh. I understand all that. I imagine e-commerce sale gets that, too.

But Amazon is a whole different beast.

It is not just buying in bulk at a discount that leads to Amazon's advantage in the marketplace. Amazon undercuts its OWN costs. No profit and huge losses of the type reported by Amazon cannot be handled by other companies. Other companies need some sort of a profit from sales to survive.

As I said, Amazon makes interesting choices. I have absolutely no idea how they manage to survive making the choices that they make. However, managing to survive they do.

 

[quincy]

As I said, Amazon makes interesting choices. I have absolutely no idea how they manage to survive making the choices that they make. However, managing to survive they do.

Stocks, and bonds, and having shareholders who do not care if Amazon makes a profit or not. That is how they survive. So far, at least.