First TVs, now tortilla chips: American companies set minimum prices to stop discounting

NEW YORK, Nov. 17 (Reuters) – Makers of everything from toys to wafers are increasingly placing minimum prices on their items to maintain profits and limit price cuts as retailers like Walmart do so. (WMT.N) and Amazon.com Inc (AMZN.O) Trying to attract sales from each other over the Internet.

As a result, shoppers are faced with Less discounts For everyday purchases at a time when inflation is running around 8%, and as retailers look to offload hundreds of billions of dollars of excess inventory. Read more

For many years, manufacturers set the lowest price at which retailers could advertise certain expensive items such as televisions. They wanted to prevent shoppers who looked for an item on the showroom floor, then went online to find it advertised by another retailer for less, from buying it there.

Now, as shoppers stick to the pandemic habit of buying more household essentials online, companies like Colgate-Palmolive Co. (CL.N) In recent months it has used what are known as lowest advertised price policies on less expensive products like Amazon’s Optic White Pro Series toothpaste, said a person familiar with the matter.

The Pro Series toothpaste, now advertised for $9.96 on Amazon, is a higher-margin product as Colgate wants to protect its profits amid rising costs. Read More As a result, consumers have struggled to find a lower advertised price elsewhere.

Toymaker Hasbro Inc (HAS.O) It requires retailers to keep any advertised prices above set levels ranging from $6.99 to $33.99 on Monopoly, Twister, Chutes & Ladders and 21 other games and toys, except during the holiday shopping season, according to the company note seen by Reuters.

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Online shopping for consumer staples, along with Amazon’s fierce competition with Wal-Mart (WMT.N)has prompted makers of many consumer products to place price floors on low-cost products, e-commerce consultants said.

Mr. Tortilla, which makes diet-friendly tortillas sold online by Walmart and Amazon, said Ron Alcazar, the company’s chief operating officer, decided to set a minimum price as sales increased, with the goal of maintaining a price level across e-commerce retailers.

“We’re seeing categories adopting (these decks) that didn’t exist before, like food and beverage,” said Jack Gill, account director at PriceSpider, which has seen 120% year-over-year growth in the number of brands using its products. Which help enforce these price caps since 2018.

illegal in Europe

While these policies are legal in the United States, they are illegal in many countries, including across Europe in most cases.

Agreements that dictate the selling price between the retailer and the manufacturer are also not legal in some states including California and Maryland.

Amazon’s part in these pricing floors stems from its pledge to offer products at prices as low or lower than competitors such as Walmart. This forces brands that sell large quantities of merchandise on Amazon to set and then enforce a minimum price. Otherwise, they face shrinking profits.

The e-commerce consultants said that wholesalers to Amazon and sellers on its platform could be penalized through poor placement on Amazon’s site, among other practices, if the company finds lower prices for goods elsewhere.

“We have no role in creating them or in their continued adoption,” said an Amazon spokesperson when asked about the announced pricing policies. “Like any store, we reserve the right not to highlight uncompetitive prices compared to other major retailers. We always set our prices independently.”

A lawsuit filed by California against Amazon requiring suppliers to agree to rules set by Amazon that ultimately lead to the adoption and enforcement of minimum advertised price policies.

“Amazon routinely abuses its monopoly power to coerce sellers and suppliers, preventing them from offering cheaper prices elsewhere,” said US Rep. David Cicilline, who is working on proposed antitrust legislation aimed at lowering prices.

Amazon said in response that it does not prevent sellers from offering lower prices elsewhere.

A 2007 United States Supreme Court decision allowing “reasonable” agreements on selling prices between retailers and suppliers helped pave the way for an expansion of these pricing policies.

(Reporting by Jessica DiNapoli). Editing by Vanessa O’Connell and Chris Sanders

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