Tuesday, June 15, 2010

How does Home Depot get away with Predatory Pricing

I just posted a blog about cardboard and how the industry raised prices 20% in a down market,
as I think I am not as smart as them, as this makes no sense to me.

At the same time, we have a relatively new competitor and I wanted to be consistent, as I really think I have enough competitors in the retail moving box business and I have enough competitors in the packaging aspect of my business (crating and soft packing), and I have plenty of competitors in the package shipping business, like the UPS Stores and Kinko's, who happen to be the only tow providers in that industry, besides the United State Postal Service, but lets not go to that non competitive industry, right now.

I was talking moving boxes and cardboard and a new competitor, Home Depot. What I do not know is how the world defines the legal term, Predatory Pricing, anyway? Lets ask Wikipedia:

In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly, and hypothetically could then raise prices above what the market would otherwise bear.

So lets apply the facts, like its done in law school.....You have the world's largest hardware
store chain, and for some reason, they decide to start selling a few moving boxes. It is a free
country, right? So they stock two different main sizes, but check this out, the prices they chose
are less than the prices I pay from my suppliers? Why would Home Depot, price their products
at a wholesale level?

The largest seller of moving boxes in the United States and maybe the world, is U-Haul. This is not because Uhaul is branded for this purpose, it is just when you go to pick up your truck, you might find it convenient to pick up a few boxes, as they are right there. No issues.

Uhaul sells the small book or 1.5 box, a staple of the moving industry, for $1.70 a piece.
the worlds largest mini storage firm, Public Storage, also sells these same boxes, for $2.00 each. However, there are people out there, who sell these boxes for as low as $1.50 each and some even go lower than that.

Well, how come Home Depot is selling these boxes, for $.069? Who are they competing with?
No one in the world sells at their cost, unless they have another agenda. To make this worse,
one fool tends to follow the other, even if the first guy is lost. So, look who is copying Home Depot, Lowes Hardware? Go figure, monkey see, monkey do.

However, this is clearly an instance of predatory pricing as no one can figure out how they can
sell these boxes at retail for less than what we buy them for, today, from our suppliers. Free market, or what?

This is not Target or even Walmart, but Home Depot, you know, the place where you can't find
any help if you need it, the place that put the small appliance guys out of business, the ones who
put out all of the independent hardware stores, that company.

THERE CAN BE NO CLEARER CASE OF PREDATORY PRICING. Where is the government
when you need it to make sure the world or the marketplace is a fair one?

So one the one side, we get hit with 20% increases in a down market, and at the same time, I have to try to compete with the largest hardware store chain in the world, cause they want to
sell and not make a profit. Why? those inefficient bastards would not know how to advise a moving customer if their life depended on it.

I know life is not fair, and if I want fair, I have to go to Pomona or something. But this is not fair to anyone, especially the consumer. Once they have no competition, watch what they do, as all they want is to grow up be the big bully. Ask me, we have had enough of this crap. I was born at night, but not last night.....

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