Price gouging ailse 5, Price gouging ailse 5

[huckdavidson]

3) Huck, it's the law of the wild. You gotta watch out for wolves when you are on the prairie. The world has a lot of sharp edges but this is not one of them! Vote with your feet/mouse/dollars and move on

I was on Morebeer yesterday ordering a couple of $15 Kegland valves. I thought, I might build a few gain bills to get to the $59 minimum. I started to look at their grain prices and decided against it. Some of the malt was over $3 per pound. They lost my business. Not a national legislative crisis. I will drive to my kind of close LHBS.

Yup we're all forced to "shop somewhere else", which myself and others have already stated many times in this thread.

The whole "shop somewhere else" mantra no longer works to drive change because of the impersonal nature of the online environments upon which these businesses are based. The whole thing can be driven by some AI (not a real AI just some algorithm in the shopping cart and inventory management software).

Enactment and enforcement of such a simple regulation would put an end to such nonsense and level the playing field giving the consumer more options and putting the power and control back in the consumers hands.

 

[Skeeter686]

You'll probably have to take down Amazon. The consensus seems to be that they drive up prices across the board with policies that require merchants to sell on their own sites at a price no lower than what Amazon sells their products at (where Amazon bakes in their own fees).

https://www.ftc.gov/news-events/new...s-amazon-illegally-maintaining-monopoly-power

 

[mac_1103]

The whole "shop somewhere else" mantra no longer works to drive change because of the impersonal nature of the online environments upon which these businesses are based. The whole thing can be driven by some AI (not a real AI just some algorithm in the shopping cart and inventory management software).

Sorry, but this makes absolutely no sense. The example you started this rant thread with conclusively demonstrates that "shop somewhere else" works just fine in terms of allowing consumers to get a better price which is all that really matters. If your agenda is changing predatory corporate behavior then it seems there are much bigger fish to fry than the price of DME online.

 

[huckdavidson]

You'll probably have to take down Amazon. The consensus seems to be that they drive up prices across the board with policies that require merchants to sell on their own sites at a price no lower than what Amazon sells their products at (where Amazon bakes in their own fees).

https://www.ftc.gov/news-events/new...s-amazon-illegally-maintaining-monopoly-power

Definetely a good start.

 

[huckdavidson]

Sorry, but this makes absolutely no sense. The example you started this rant thread with conclusively demonstrates that "shop somewhere else" works just fine in terms of allowing consumers to get a better price which is all that really matters. If your agenda is changing predatory corporate behavior then it seems there are much bigger fish to fry than the price of DME online.

DME is just one example.

It makes perfect sense as in the age of "social media" it would seem only large scale social media based shaming and boycotting works toward change without the enactment of laws.

 

[Bassman2003]

Enactment and enforcement of such a simple regulation would put an end to such nonsense and level the playing field giving the consumer more options and putting the power and control back in the consumers hands.

1) Why does the consumer need "power and control"? I don't want my customers controlling MY business. Why should I control Morebeer's business?

2) Free shipping is not a bad thing. You learn to adjust. Creating a law to stop everything under free shipping from costing too much just seems like an unenforceable and unrealistic expectation. How many online merchants are there in the U.S.? How to police etc...

 

[huckdavidson]

1) Why does the consumer need "power and control"? I don't want my customers controlling MY business. Why should I control Morebeer's business?

2) Free shipping is not a bad thing. You learn to adjust. Creating a law to stop everything under free shipping from costing too much just seems like an unenforceable and unrealistic expectation. How many online merchants are there in the U.S.? How to police etc...

The consumer should have control of the shipping costs for any order amount. The products being sold should not contain markups associated with the false advertising mantra - "free shipping".

 

[Bobby_M]

Forgot to mention that yesterday - hate to admit it, but that has been in my mind as well.

I don't think it's necessary to use cost of doing business as the justification for higher or lower prices but for discussion's sake only;
There are a bunch of reasons why their prices might be on the lower end.

1. We already speculated that their proximity to Briess makes shipping cheaper on the supply side and the possible handshake deal to bypass 3rd party distributor markup. On Briess products, this is a no brainer and I'm further convinced of this possibility due to the relative markup between Briess grains and European (imported) grains.

2. They are also pretty close to Rahr/BSG

3. Low overhead. Industrial area/warehouse leases in that area cost about half what I'm paying in rent. I chose a mixed shipping/walk in retail environment so it had to be somewhat accessible to major roads.

4. Labor costs and cost of living (e.g. how much the business owner needs to pay themselves in order to live in that location).

This one is kind of interesting because one might argue that no one is forced to operate in an expensive geographical area. On the other hand, I'm a person that lives in the state where I was born and I'm not that motivated to find the absolute cheapest place to live so I can out compete other shipping based vendors. I know that option is available to me but you can't make me do that.

The labor cost side of it may also be controversial. NJ also attracts a lot of high value jobs in Pharma and tech so it may skewed, but even wages on the lower end are vastly different. NJ minimum wage is over $13 while WI is $7.

 

[user 246304]

I don't think it's necessary to use cost of doing business as the justification for higher or lower prices but for discussion's sake only;
There are a bunch of reasons why their prices might be on the lower end.

1. We already speculated that their proximity to Briess makes shipping cheaper on the supply side and the possible handshake deal to bypass 3rd party distributor markup. On Briess products, this is a no brainer and I'm further convinced of this possibility due to the relative markup between Briess grains and European (imported) grains.

2. They are also pretty close to Rahr/BSG

3. Low overhead. Industrial area/warehouse leases in that area cost about half what I'm paying in rent. I chose a mixed shipping/walk in retail environment so it had to be somewhat accessible to major roads.

4. Labor costs and cost of living (e.g. how much the business owner needs to pay themselves in order to live in that location).

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View attachment 838441

This one is kind of interesting because one might argue that no one is forced to operate in an expensive geographical area. On the other hand, I'm a person that lives in the state where I was born and I'm not that motivated to find the absolute cheapest place to live so I can out compete other shipping based vendors. I know that option is available to me but you can't make me do that.

The labor cost side of it may also be controversial. NJ also attracts a lot of high value jobs in Pharma and tech so it may skewed, but even wages on the lower end are vastly different. NJ minimum wage is over $13 while WI is $7.

Excellent, thanks Bobby. And no, I agree, it's not necessary to raise Cost of Sales here.

 

[Bassman2003]

The consumer should have control of the shipping costs for any order amount. The products being sold should not contain markups associated with the false advertising mantra - "free shipping".

The first sentence is not the reality as Morebeer has flat rate $8.99 shipping for everything under $59 orders. That is your control - either $8.99 or free.

The second sentence should be the distilled version of this thread. No new laws, shipping police etc... Just call Morebeer and tell them you think. They are nice folks and they might look at some things.

But, do not think that just because it can be done technically that small business can afford or even knows how to accomplish this on their website.

 

[huckdavidson]

The first sentence is not the reality as Morebeer has flat rate $8.99 shipping for everything under $59 orders. That is your control - either $8.99 or free.

That's what they're offering you but that doesn't mean it's the best deal. The consumer should be able to see and control the shipping service no matter the cost of the order.

The second sentence should be the distilled version of this thread. No new laws, shipping police etc... Just call Morebeer and tell them you think. They are nice folks and they might look at some things.

Given the Amazon lawsuits, etc... I would think regulation is coming sooner rather than later.

But, do not think that just because it can be done technically that small business can afford or even knows how to accomplish this on their website.

Not sure what you're referring to but most shopping cart systems, "Shopify", "WooCommerce" etc... already build this logic into their products.

 

[kartracer2]

I'm sorry, I'm starting to lose just what this thread is about. I guess I still feel I can spend my dollar where I want. If that price is higher, for what ever reason, so be it. Price is not the only reason I shop where I do. Processioning time, shipping (cost and again timeliness) and customer service play in to my decisions.
It's called "shopping" for a reason, other wise it's just "buying".
Maybe I missing something here,,,,
Cheers,
Joel B.

 

[MaxStout]

The term "price gouging" is a rhetorical device used by many to complain of a perceived high cost of something. Most of us have used it in that context. "The car dealer gouged me today." I've used the term sometimes. Same for the term "ripoff."

Price-gouging, as a legal term of art is a completely different animal, and it is defined by statute. Proving it involves a very high standard of evidence and a number of elements set out in the statute must be met. It is an anti-competitive behavior, and it gets the attention of authorities like attorneys general or the FTC. Very few cases rise to that level.

Gas stations around here raise their prices before a weekend or holiday and drop it down afterwards. Price gouging? Not in the legal sense. Is it a shiatty thing to do? Maybe. Eye of the beholder. Supply and demand.

Nothing that I've seen in the brew supply system--or this thread--appears to rise to the legal standard of "gouging." If somebody has evidence that one is engaging in genuine price-gouging behavior, I'm all ears.

That said, the best course of action if one is dissatisfied is to vote with their dollars. Go to a different vendor whom you feel better respects your business. Spend your hard-earned money elsewhere. Sounds like a cop-out, but going elsewhere is really the only choice.

Be thankful that we have choices. There are many brewing supply vendors to choose from. It's not a monopoly.

Expecting a business to bend to the whims of a few dissatisfied customers who feel they should have more control over that business is the tail trying to wag the dog. Unhappy? Send them an email, write a review. State your case. Maybe they'll respond in kind, maybe not. Maybe they'll say, "sorry to see you go."

Then move on.

 

[MaxStout]

I think the thread has moved past all of this and is now in the territory of "when will the regulation happen"?

To be fair, the "gouging" angle was your original point.

But yes, this thread, tedious as it may be, has morphed.

 

[Bobby_M]

That's what they're offering you but that doesn't mean it's the best deal. The consumer should be able to see and control the shipping service no matter the cost of the order.

Why should a consumer be guaranteed "the best deal"? Your arguments are out of touch with reality.

The challenges of quoting exact shipping cost is probably 1000x more complicated than you can imagine. I've been trying to improve it for 10 years and it's still obnoxiously inaccurate.

There are items that are tiny and if someone buys only tiny items, they can fit into a small flat rate box and that cost is fixed.

IF that same customer buys mostly tiny items and adds one 24" long autosiphon, flat rate is out the window and the length of the item drives the cost. 24" is significantly more expensive than a 22" long item.

If a customer buys a 6 gallon P.E.T fermenter and a 24" autosiphon, the volume of the box gets very large, especially if you want both items to survive the trip. Most shipping cost calculations between ecommerce and the carrier APIs use weight.

That is precisely why the shipping a customer pays and what the merchant pays are always going to be mismatched plus or minus. Some days end up on the plus but my internal policy is that we do not profit on shipping. If it starts to happen over a long time period, I make adjustments.

 

[huckdavidson]

Why should a consumer be guaranteed "the best deal"? Your arguments are out of touch with reality.

The challenges of quoting exact shipping cost is probably 1000x more complicated than you can imagine. I've been trying to improve it for 10 years and it's still obnoxiously inaccurate.

There are items that are tiny and if someone buys only tiny items, they can fit into a small flat rate box and that cost is fixed.

IF that same customer buys mostly tiny items and adds one 24" long autosiphon, flat rate is out the window and the length of the item drives the cost. 24" is significantly more expensive than a 22" long item.

If a customer buys a 6 gallon P.E.T fermenter and a 24" autosiphon, the volume of the box gets very large, especially if you want both items to survive the trip. Most shipping cost calculations between ecommerce and the carrier APIs use weight.

That is precisely why the shipping a customer pays and what the merchant pays are always going to be mismatched plus or minus. Some days end up on the plus but my internal policy is that we do not profit on shipping. If it starts to happen over a long time period, I make adjustments.

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Oh believe me when I say, I know all about dim weights and shipping box sizes, merchant costs, FedEx and UPS software etc...

You pack your items the best you can then give the system the dimensions and weight. Get quotes from all available vendors USPS, UPS, FedEx, DHL, etc.. and then display them.

Let the consume decide what they want to pay.

BTW, good for you on your shipping policy, you most likely qualify for a significant discount from your shipper of choice.

Then comes the issue of shipper competition and how that can be leverage to your advantage.

 

[DBhomebrew]

You pack your items the best you can then give the system the dimensions and weight. Get quotes from all available vendors USPS, UPS, FedEx, DHL, etc.. and then display them.

That's to be done for each potential order before the customer hits "buy"?!

 

[JAReeves]

I run a small art & collectibles business out of my office at home (P/T); but I have run small businesses of varying types (both P/T & F/T) for the last 40 years or so. Everything @Bobby_M is stating has been my reality as a retail vendor and a manufacturer and wholesale distributor. I price my items where I think it's fair for both the customer and myself. I charge an appropriate amount for shipping because it has to cover costs related to shipping materials. I spend time on customer service/answering questions, even when I don't get the sale. I try to know the lowest I can charge for something and still make something off the exchange, which means I sometimes don't get the sale. I'm transparent and honest, and I still sometimes don't get the sale. I get complaints, returns, and broken items (nothing like UPS putting a forklift through a $100k painting to ruin your day), and I eat some of those costs, but sometimes those customers come back after the issue is resolved.

It's business. At the end of the day, bills have to be paid, employees have to be paid, and I have to be paid. If I'm not doing those things, I'm not in business, it's a hobby.

 

[Skeeter686]

That's to be done for each potential order before the customer hits "buy"?!

Yeah... that's totally unrealistic. I can say that simply based on my own purchases, and I'm not as much of a window shopper as some.

 

[Bobby_M]

You pack your items the best you can then give the system the dimensions and weight. Get quotes from all available vendors USPS, UPS, FedEx, DHL, etc.. and then display them.

Wait, you're expecting a vendor to pack your order, shop for shipping rates and THEN communicate with the customer on which choice they would like? You think DME is expensive now, wait until I tell you what that level of service will cost you.

This was a fun discussion, good thought experiment, and a chance to give people an insight into what it's like to run a business but the frustration of pure disconnect in understanding is wearing my soul thin. Good day.

 

[huckdavidson]

Wait, you're expecting a vendor to pack your order, shop for shipping rates and THEN communicate with the customer on which choice they would like? You think DME is expensive now, wait until I tell you what that level of service will cost you.

In general, inventory management software tracks the size of the items and narrows the selection of boxes, envelopes and tubes down so that they can be submitted to providers for estimates and purchased by retailers for shipping purposes.

 

[bwible]

Lots of emotion and passion in this thread. We get it - we are all invested and enjoy the hobby.

I think at least one of the biggest problems here is the lack of local homebrew shops, which necessitates online buying and the accompanying costs for shipping. Its been a problem for several years and unfortunately its one thats continuing to grow.

Speaking as a former homebrew shop owner whose store didn’t cut it, I can tell you its a tough business. Starting with the fact that brewing is a small niche hobby. Its not like owning a pizza place where the vast majority of the population eats pizza.

A store needs a regular clientelle to survive.
Most of the stores have a club they are affiliated with. But people talk the talk and they don’t walk the walk. When I had my store my club put together pallet orders of grain and stuff on their own. I can’t tell you how many people came in with a morebeer catalog and wanted to beat me up over morebeer prices.

Thats another thing not discussed - Morebeer and the other big stores get better pricing than your local store ever can. Retail pricing is all about volume. Your local shop might be buying airlocks 100 at a time. So say their price is .53. Morebeer is buying airlocks 10,000 at a time, lets say their price is .27 each. Your local shop is selling them for .99 and not making double. Morebeer can sell for .79 and make triple.

People talk but in the end they go buy online or do pallet orders on their own and they don’t support their local shop. Thats been going on for years and years - I closed my store in 2004. Now we’re at this point where we have no local stores and here we all are complaining we now have to buy online and complaining about the prices and the shipping. The old saying - what goes around comes around.

 

[Deric]

That's what they're offering you but that doesn't mean it's the best deal. The consumer should be able to see and control the shipping service no matter the cost of the order.

Define "best deal".

 

[Broothru]

It might be that they don't really want to try and compete on that particular item. If they lower their prices and sell more they'll have to warehouse more. And space in the warehouse might be more desirable to them for other things. Or for a any other number of reason they just don't chose to sell it at a lower price, even if they are able to get it for the same cost as RiteBrew

I don't see it as price gouging since you have the ability to use other less expensive retailers for that item.

“Loss leader”

Offer one produce at a lower price to increase volume sales of other inventory stocks, or to gain new customers. Maybe to gain a reputation as a bargain retailer. It’s a common marketing practice in retail sales.

Try creating a “cart” of a large, broad selection of items from the same vendors, then compare the totals (plus shipping). Then compare the prices. I’d guess they’ll be a bit closer.

If not, maybe there are other factors (lower expense overhead), assuming the same quality of the products and customer satisfaction. If all factors, except price, are equal, then you’re probably found your preferred vendor.

 

[passedpawn]

Lots of emotion and passion in this thread. We get it - we are all invested and enjoy the hobby.

I think at least one of the biggest problems here is the lack of local homebrew shops, which necessitates online buying and the accompanying costs for shipping. Its been a problem for several years and unfortunately its one thats continuing to grow.

Speaking as a former homebrew shop owner whose store didn’t cut it, I can tell you its a tough business. Starting with the fact that brewing is a small niche hobby. Its not like owning a pizza place where the vast majority of the population eats pizza. We won’t even talk about shipping costs these days and why they are so much but everybody knows. Elections have consequences.

A store needs a regular clientelle to survive.
Most of the stores have a club they are affiliated with. But people talk the talk and they don’t walk the walk. When I had my store my club put together pallet orders of grain and stuff on their own. I can’t tell you how many people came in with a morebeer catalog and wanted to beat me up over morebeer prices.

Thats another thing not discussed - Morebeer and the other big stores get better pricing than your local store ever can. Retail pricing is all about volume. Your local shop might be buying airlocks 100 at a time. So say their price is .53. Morebeer is buying airlocks 10,000 at a time, lets say their price is .27 each. Your local shop is selling them for .99 and not making double. Morebeer can sell for .79 and make triple.

People talk but in the end they go buy online or do pallet orders on their own and they don’t support their local shop. Thats been going on for years and years - I closed my store in 2004. Now we’re at this point where we have no local stores and here we all are complaining we now have to buy online and complaining about the prices and the shipping. The old saying - what goes around comes around.

I shop locally at my lhbs. @VetterBrew

 

[hotbeer]

What about price gouging where every retailer has the same prices? Have you ever looked for a mattress? Do you really believe those mattresses cost them even a tenth of that price they want for them?

 

[DonT]

Late to the party here, but I wanted to add my 2 cents...
Every business has it's own "Cost Of Gross Sales". Smart business owners calculate what they need to charge in order to be able to pay their employees, themselves and all costs associated. I own an auto repair shop in one of the most expensive areas in the U.S. I have used a specific formula for setting my labor rate and a matrix for parts mark-up. A lot of thought went into that stuff and I refine it as I see fit.
For all you know, dude at Ritebrew drives his truck over to said supplier, loads up a few pallets on his flat bed trailer and his only shipping cost is a half tank of diesel. What you're nostriling and moaning about is not price gouging. And if you put in some price controls you would likely see Ritebrews price go up.

 

[MaxStout]

Upthread I mentioned loading various online vendors' shopping carts, check shipping, and see which one wins. If price is your main objective.

Every now and then one of the local TV stations here sends out one of their reporters to compare costs at various grocery chains. They have a list of a few dozen typical, commodity items, and they compile the data for the station's feature story. The disparity in pricing is eye-opening, but not terribly surprising.

Point is, it's not unusual to see a significant price spread with any commodity. Too many factors to pin it down.

I'd be more suspicious if everyone had the same price, like @hotbeer mentioned re mattresses.

 

[passedpawn]

Are the other vendors price gouging?

If you're asking "are they selling the same product for more?", then yes. That should end this conversation I'd think.

If you think it should be illegal to sell for more than somebody else, that's not how the free market works.

If you want to apply the legal term "price gouging", well then you don't know the legal definition of "price gouging".