Author Topic: Tesco to charge suppliers extra to sell online - BBC News  (Read 1813 times)

rcjordan

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ergophobe

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Re: Tesco to charge suppliers extra to sell online - BBC News
« Reply #1 on: March 11, 2023, 02:51:37 AM »
Is it still the practice that supermarkets charge suppliers for shelf space? This seems like the online version

Ultimately, it's no different than what Amazon is doing in their marketplace.

Rupert

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Re: Tesco to charge suppliers extra to sell online - BBC News
« Reply #2 on: March 11, 2023, 07:09:26 AM »
Its supposed to be cheaper selling online. Online has the advantage of no stores.

This seems like the wrong way round.
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ergophobe

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Re: Tesco to charge suppliers extra to sell online - BBC News
« Reply #3 on: March 16, 2023, 06:15:29 PM »
This has nothing to do with what's cheaper. This has to do with advertising.

The grocery store has long been more like Amazon Marketplace than most people realize. As far as Tesco is concerned, this is just taking an important revenue stream and moving it online. Otherwise, from their perspective, brands that do well online are getting a free ride in that they do not have to pay for exposure.

I'm listening right now to a Decoder episode with James Daunt, CEO of Barnes and Noble in the US, Waterstones in the UK and, surprisingly, still owner of his own independent bookshop in London. When he took over in 2019, the first action he took was to end B&N's practice of selling retail space. What few customers realized is that the tables in the center aisle were all for sale, as was the bestseller rack. It cost more to get the #1 spot on the bestseller rack than to get the #2 slot. This, by the way, probably explains why the airport bestseller rack is often full of books you have never heard of and have no desire to read.

These decisions of what went on the aisle tables and what went on the bestseller rack were all made based on very expensive contracts negotiated through the central office in New York and foisted upon every B&N store in the US based on a "planogram" produced at HQ in NY.

He ended that practice right away and very quickly fired the 50-60 buyers at HQ and did away with the planogram. Now HQ is housed in offices above one of the NY branches of B&N and has a buyer and an assistante at HQ and each store functions essentially as an independent bookseller, with store managers deciding what to stock and where to display it.

One of the things he argues is that the reason B&N was failing and he was brought in to fix it, is that it had had a succession of CEOs who came out of big box retailing, not out of bookselling. And they thought the Walmart/Target/Best Buy model made sense - make every store the same so that people can go in find what they want, buy it and leave, with paid product placement throughout the end caps and center aisles. The problem, he says, is that Amazon is much much better at that than any physical store. What a bookstore sells is an experience and a community and when that is dictated from a central HQ based on lucrative product-placement contracts, people have no reason to actually go there anymore and Amazon wins.

Anyway, zooming out, the point being that paying for product placement is standard in big box retailing and Amazon (and other marketplaces like Walmart) have largely brought that model online, so it's no surprise that Tesco would go prospecting for gold in those hills.
« Last Edit: March 16, 2023, 06:19:53 PM by ergophobe »