Sears Holdings Corp. said Thursday it was letting third parties — including some competitors — sell things on its Web site.The change added more than 10 million products from 1,500 vendors to those available at the company's Web sites. A spokesman said that will more than double the number of products available on Sears.com.The service, which officially began Thursday, puts Sears in the company of Walmart.com and Amazon.com, which already sells millions of items from third parties.Sears will receive a commission on sales made through the service, which it calls the Marketplace at Sears.com. It will also get a fee for listing the items.
I think that this is an excellent example of how trade can make everyone better off. In this situation third-party vendors will get to pitch sales to a vastly larger buying audience, Sears will significantly increase their revenue at a very small marginal cost (website upkeep), and competition between Sears, Wal-Mart, and Amazon will increase, resulting in lower prices. In addition, Sears' online store will most likely experience an increase in visitors, and as a result more money will be made from advertising and it will give companies a new hot location for placing advertisements on the web.
Reading about the expansion of already large companies such as sears make me worry about the smaller scale businesses. Like when amazon expanded from selling books to selling all sorts of things and thus enabling prices to drop on many items the retail bookshops got hit hard. Even large bookstores such as borders and barnes and noble felt the hit. In Ann Arbor where I live there used to be twice as many independent bookshops as there are today. I know many may champion the drop in prices and the easy access one stop shopping, but I ask myself what are we really giving up to consolidate our market shopping experience? What is the real opportune cost? Personally I would rather go through each independent retailer and spread out my money among businesses than to let a few massive conglomerates collect all.
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I am inclined to agree with what Hannah is saying about the risks of large companies expanding. At home I work at a family-owned picture frame company and it's a constant struggle for them to survive in such a big-box economy. They've managed so far by offering a wide selection of niche products rather than the basic picture frames that can be found at walmart, target or any other big box store. And yet, as these big companies get even bigger it's going to be harder for them to stay afloat. E.
ReplyDeleteThere have been numerous debates on whether or not stores such as Walmart and Cosco are bad for our economy, but I have to say that I agree with the two above me. While these third parties increase revenue for Sears and also competition between other big named stores, it towers over the small businesses and can eventually run them out of business. Because of all the competition, prices in these big stores continue to drop and small business just can't keep up with them. So yes, this is good for Sears, however it is not good for other companies, specifically smaller ones. A
ReplyDeleteI believe this is a very good move on Sears part. They receive a profit from sales made on these third party products. They also receive profit from just putting these profits on their website. Sears is increasing their revenue at a small marginal cost, which would be the website upkeep. Having more products will meet more demands of the people, which will also cause an increase in revenue. Great move on Sears part, but also by the third parties as well, because now their products will get more exposure with this website. So even if they have to pay Sears to have their products on the website and give up a cut of sales, the exposure will ultimately lead to more sales than before, which means in the long run, paying Sears won't effect them at all. (A)
ReplyDeleteI think this will help out sears alot. I know i have gone on their website looking for items i know they have in their stores and not being able to find them. With them expanding the products abailable online i feel like more customers will be more satisfied and able to purchase things without having to make the trip to the store.
ReplyDeleteI agree with Hannah. I always try to go out of my way to shop at smaller, independent stores. With stores like Sears eating up ridiculous amounts of the market share, it helps ease my conscience to shop at smaller places.
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Just like our text book says, trade benefits people. Both Sears and third party companies stand to make larger profits. However, as many people have mentioned above Sears is eating up small companies, this lowers the number of suppliers and thus the supply curve decreases. As these stores continue to increase in size, they move the market from a competitive market towards a monopoly style market.
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This slightly worries me. I can imagine a bad scenario for it's success and failure. This would turn Sears into a competitor of Amazon and other broad internet shopping sites, and in doing so, lead Sears away from it's already successful business model.
ReplyDeleteNew territory is always a bit nerve racking, not to mention risky.
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Diversification spreads risk, which is good for Sears. Furthermore, the low upkeep mentioned in the article seems to make this move very viable. Taking into account that Sears do not lose focus on its original market, which it already has advantage...
ReplyDeleteTaking a third-party perspective, they are able to have more choices, not just Amazon or Walmart, which provides competition. The more competitive, the better the equilibrium price would be set at.
It could also be bad, as large MNC/Oligopoly like this is dominanting markets; and if they Collude, it will be detrimental to the economy.(not for them) We, as the consumer would perhaps suffer. Let's just hope government regulation and business ethics are up to standard.