Interesting in how it resembles the situation in traditional retail.
FMCG companies typically pay a lot of money in so called trade funds to the likes of Walmart, Tesco, and others. One company I worked for spent Approx 20pct of its topline a year on that - double digit billions. Ostensibly, this is to place the product on the right shelves, run promos and have the products featured in the chains' newsletters.
The real reason is, however, efficient taxation. The "trade funds" make all the profit for legacy retailers. Branded products are sold at near zero, or sometimes - if allowed - negative margins. The operating companies make near-zero taxable profits. The marketing spend is typically channeled to different legal entities than actual sales and taxed "efficiently". I think it might be the same with Amazon.
FMCG companies typically pay a lot of money in so called trade funds to the likes of Walmart, Tesco, and others. One company I worked for spent Approx 20pct of its topline a year on that - double digit billions. Ostensibly, this is to place the product on the right shelves, run promos and have the products featured in the chains' newsletters.
The real reason is, however, efficient taxation. The "trade funds" make all the profit for legacy retailers. Branded products are sold at near zero, or sometimes - if allowed - negative margins. The operating companies make near-zero taxable profits. The marketing spend is typically channeled to different legal entities than actual sales and taxed "efficiently". I think it might be the same with Amazon.
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