If it makes you happy we can add in ".. except for soaps" in the ruling... /s
For a real life example, the major grocery chain in Australia (Woolworths) did this with milk, selling their brand for $1 a litre, where everyone else had to do $2+ just to break even.
Effectively selling it at a loss so that they get market dominance. They make up the loss on other products in their big chain.
I think there needs to be a break-up between "the retailer" and their home brand being sold there, because it means the profits made on selling the competition works to the home brand advantage.
Really? Because the reporting I found says that the competition authority cleared the market participants of any wrongdoing in the "milk wars".
>[Chairman of the Australian Competition and Consumer Commission] Samuel said the major impact of discounted milk prices appears to have been a reduction in the supermarkets’ profit margins on house brand milk, rather than a gain.
>The consumer protection body got involved as well as a lot of negative media attention.
>They had to raise their prices so they don't become a monopoly.
You seemed to be suggesting that what was happening with milk was anticompetitive and the consumer protection body got involved to stop it. I pointed out that what actually happened is that the body determined that there wasn't anything anticompetitive going on and that the companies ceased the "milk wars" on their own because they were losing money (which is exactly what I was alluding would happen with soap if one company tried to drive competitors out of the market).
> The Act also bars "loss leader" sales, defined as sales (1) below cost, (2) to induce, promote or encourage the purchase of other merchandise, and (3) with the intent to injure competitors or destroy competition. Business and Professions Code 17044.
If that were not the case, cell carriers couldn’t sell phones below cost to sell service plans and the entire “razor vs razor blades” model would be illegal.
That also means that game console sales would be illegal.
how would you prove intent to injure a competitor? wouldn't all attempts to outcompete a competitor be considered an attempt to injure them?
there is no way Costco isn't losing money on their $4.99 chickens or $1.50 hot dog and drink. and I assume the point is to get you in the door so you will buy other stuff from them and not Amazon or Walmart.
By selling soap for a loss for longer than the competitors can stomach. If you have 10 businesses making $100M/yr, you can lose $1B/yr on soap (by selling a $2 bar for $1) and get a ton of customers who buy your cheaper soap. Eventually, other basic soap sellers will either need to match your prices and take their own losses to match, or hold steady hoping you'll fold.
Eventually, they are either sold to Amazon or fold, and Amazon can increase the price to $2.20/bar and mint another $100M/year for the next industry to attack with $1.1B. Rinse & repeat and eventually the customer is charged some percentage more for the same product once the competition is kowtowed.
That is surely a vast simplification. By sheer operating scale Amazon can ship items at a cost far lower than any brand new “soap company” could. There’s no way you could be competitive on such a low priced item.
And still countless competitors do exist. They must find some other ways to compete, because your point is valid. It's almost like the human ingenuity knows no bounds...
I believe the general strategy for this kind of product is to drive CX conversion. Amazon usually offers auto repurchase too, so if you are going to buy once and Amazon is cheaper, the second time too..., by the third you might actually decide to setup a auto purchase from time to time. if they discount 5 cents from the best competitor initially and in the long run they start to price 10 above, they use this to finance similar strategy to convert more CX and then they keep a more strong market position. In the end you don't push your competitors out of the market, but consolidate a very strong consumer base.
(Confusingly, most of the search results I found point at "customer experience" which doesn't fit as well here. I've definitely seen support write about "the CX has an issue with ..." so I'm pretty sure this is a standard term.)
