1. Trends & External Forces

Your Views:  Who Do You Antitrust?

We took note the other day of a Bloomberg story about how on Prime Day Amazon  was “dangling an ‘invite-only’ promotion designed to give customers a better shot at snagging the bargains they want.  Shoppers request an invite for discounted items they see on the site — 32% off an Acer Swift X laptop, for example, — and get an email if the deal is still available.”

I commented:

I wonder how Amazon calculates to whom invitations are sent.  Is it in order of requests?  That’s probably the safest way to do it, though I’d suggest that in certain areas, Amazon would be better served to issue invitations to its best shoppers.

If one customer spends $500 a year on Amazon, and another customer spends $2,000 a year, and both want the same iPad (top use just one example), shouldn’t the latter customer get priority?  Would there be something wrong with such an approach?  (There could be legal issues, I suppose, depending on how the language is written.  But I think retailers ought to reward best customers, in the same way that airlines prioritize best customers for upgrades.)

MNB reader Steve Ham responded:

Intriguing idea & business premise.  Many other industries reward top performers – think frequent flyer & stayer programs, sales organization incentives for top income generators, etc.  Yet it’s also important  to be getting the most out of the effort; where would Amazon gain the most? Would it be their top performers, who have shown their income production yet might already be tapped out?   Perhaps a notch or two down would reach those who are less loyal but have more income gain potential.  If Amazon offered this to a customer who is equally inclined to shop elsewhere, would this generate income not otherwise assured by going after their top tier? They know our buying history & zip code, and it’d be basic to project buying potential using just those. 

Or for sports fans, is a coach’s time & focus best spent on their A performers, or B performers who have growth potential to become A players? 

MNB reader Mike Sommers added:

I’m not sure an airline upgrade list is an exact match to compare who gets put on the ‘Prime Advantage’ list.  I’m all for rewarding high revenue generating customers.  However, airlines don’t have membership fees, so all customers are not ‘equal’, whereas Amazon Prime is a single tier program, thus everyone should be given the same opportunity to purchase.  It would seem Amazon would need to create a tiered program at a higher cost that would provide opportunities to buy exclusive items before non ‘Prime Advantage’ customers can.  Otherwise, customers who are paying for Prime are not all being given the same opportunity, which fees like a lawyer somewhere would find an issue with.  I suppose this is what Southwest customers do, pay to be in Group A or high up on Group B for boarding….that is, when the flights are on time and not cancelled due to aging systems issues (pot shot, couldn’t resist). 

Regarding the continued high price of CPG products, one MNB reader wrote:

My opinion:  The cost of grains (wheat etc.), sugar, and vegetable oils  is responsible for a lot of the increased prices of center store food products.  But if and when those ease I don’t envision CPG companies in any hurry to roll back their pricing.  Eggs are back down. Dairy has remained a bargain but I don’t see that lasting too much longer as farmers are losing money and culling their herds.  Fruits and vegetables look to remain costly due to weather issues likely related to global warming.   Your idea of buying apples and making your own apple sauce to save money doesn’t seem too promising – have you seen the price of apples these days?  The regular price of potato chips and similar salty snacks have got really expensive but are almost always on sale at deep discounts.  Unfortunately the grocery ads I see require a purchase of 3 or 4 units to get the lower prices so the poor get left out.  One way to save on groceries is to eat 10% less.  That would not be a bad option for many of us. 

We reported on how a California judge has ruled against the Federal Trade Commission (FTC), saying that a $69 billion acquisition by Microsoft of Activision Blizzard can go forward.  The FTC apparently did not adequately show that the merger of the two companies would harm competition within the gaming industry.

I brought it up because the FTC also is evaluating the proposed $24.6 billion purchase of Albertsons by Kroger, as well as pursuing a series of moves against Amazon and considering a broader antitrust suit against the company, and wondered if this suggests a general weakness in the FTC’s current approach to antitrust.

One MNB reader wrote:

I’m not a lawyer, but the Microsoft/Activision deal seems different than Kroger/Albertsons. The FTC’s complaint against Microsoft was an overreach in my opinion, as the market for cloud-based gaming is expanding and extremely competitive. The two entities are also more complementary than similar. However, Kroger/Albertsons is on its face about consolidation for profit, potentially impacting physical communities where there is presence of both banners. We have seen how the reduction of physical stores in neighborhoods can reduce choice/quality for residents.  Not sure how it will all pan out but I think this FTC filing might have a bit more justification.

MNB reader Monte Stowell chimed in:

The Albertsons and Safeway comment about why they should merge is to compete with Walmart pricing is laughable. If this is true and the merger goes through, I guess they would have to drop their retail pricing by an average 10-15%, mainly I guess on PL skus. If the merger goes through, it will be interesting to see what really happens to retail pricing. My comments are based on what I see today at Walmart vs. Albertsons and Safeway retails. 

Regarding the big sales growth seen by vinyl albums, one MNB reader wrote:

Amazing right? I was on a Virgin Voyages cruise last month( talk about disrupting the market, I’d think you’d have a field day with the opportunities and amazing customer successes that that company has, I’ve already booked my second) and each stateroom has a record player with a selection of vinyl, and even has a record shop on board. Very cool!

Another MNB reader wrote:

I’ve written to you about this before but aside from the sound quality (and I include scratches on the older/used copies I buy), purchasing vinyl is a great way to support artists who are getting left in the cold by the streaming platforms. Bandcamp in particular connects you directly to the artist/label, so you know your money is headed to the right place.

Also – it’s fun to pick up the record or the sleeve, enjoy the art, read some liner notes, which just isn’t possible w/ digital.

Reacting to various stories about inflation and a possible recession, one MNB reader wrote:

Remember that old saying: Economists have predicted nine of the last five recessions.


And finally, responding to my FaceTime about how retailers ought to use data to be smarter about targeting consumers based on changing behavior – like someone becoming a grandparent, one MNB reader wrote:

Kevin, spot on FaceTime today. As a new grandfather of 3 recent additions to our family, a set of twins and a granddaughter, it is life changing in the best way possible. Grandma and Grandpa have had a learning experience getting back into buying diapers, car seats for us, strollers to have on hand in our home, toys etc. The list goes on and on.

We learned very quickly that we weren’t the pros we once were. Here is what we did, we searched the internet to get some basic information on the items we wanted, and in turn purchased much of the items at retail. We wanted to look and feel the items before we purchased and not based on pictures online. It’s not that we don’t order online because we do, in this case I guess we are old school starting out again.

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