Cost-Cutting in the Internet Age

There's a difference between pro-business and pro-corporation. The recent Supreme Court decision on wholesale prices clearly falls in the area of pro-corporation. By removing the price minimum ban on wholesalers, the Supreme Court has opened the door to a dramatic increase of prices for consumers. While I do not think that this will happen any time soon I do think you will start to see luxury goods rise in price as well as less necessary items. But to make it clear, the court decision allows for something that hasn't been allowed since the beginning of the last century. Wholesalers are now allowed to set a certain price minimum on their goods. In other words, a wholesaler can tell a retailer that they cannot sell the wholesaler's goods at less than a certain price. Wholesale prices are traditionally much less than retail, that's just the way it works. In the jewelry business we have the term 'triple keystone', meaning that retail prices are triple that of wholesale prices. With the recent rise of precious metal prices the wholesale price rose as well causing the retail price to rise correspondingly. That's the way it works between wholesale and retail. So any push by wholesalers to raise their minimum price will have an effect on the retailer, who is just as concerned with their profit margin as the wholesaler is. Unfortunately, the effect of the wholesaler focusing too much attention on their profit margin will cause the retailer to either raise their prices thus losing customers, or accept a smaller profit margin thus placing the business at risk of closing. Now for internet business the risk is smaller as they are able to reduce their costs through efficiency and coordination. But for the traditional small business owner with a storefront and inventory even a small increase of their wholesale goods can have a serious effect. What this means is that the place you buy your flowers, gas, picture frames, and knick-knack furniture all face the potential of devastating rises in their cost of doing business, which will in turn affect the customers. In other words, removing the price minimum ban is a terrible idea that benefits only the largest of retailers and the wholesalers. This is what I mean by pro-corporation.