MONEY Autos

Toyota Could Ban Dealers From Advertising Below Invoice Price

Toyota Bans Advertising Below Invoice Pricing
Stroshane, Matt—Bloomberg/Getty Images Toyota dealers will no longer be able to advertise cars below invoice price.

Toyota set to follow Honda's lead.

While Lexus tests out a new, no-haggling policy at its dealerships, Toyota is keeping the haggle alive with a plan to prohibit dealers from advertising below invoice price.

Toyota dealers across the country told Automotive News that starting in January new guidelines from the car maker will explicitly prohibit them from advertising vehicles below invoice. They said they learned of the plan from national and regional Toyota sales representatives, who added that Toyota plans to release details at its National Dealer meeting next month. Toyota declined to comment on the plan, saying, “As is customary at our National Dealer Meeting, we will discuss a number of business-related topics, including marketing covenants.”

Since dealers get a check from the manufacturer each time they sell a car, they still make money off cars sold below invoice. For high-volume dealers, selling the majority of cars with a one-price strategy below invoice can make for good business and happy customers, who don’t have to get stressed out haggling. One high-volume dealer in Florida told Automotive News he doesn’t want to stop advertising the below invoice pricing because consumers would have a hard time searching online for cheaper local prices.

Other dealers back the proposed change, saying below invoice pricing encourages a “race to the bottom” and increases risk of bait-and-switch selling practices, when a customer will come in on the strength of an attractive advertisement and find the desired car unavailable and a more expensive option in its place.

Prohibiting the advertising of a below invoice price isn’t new. Honda has a similar ban in place and has implemented severe penalties like withdrawing marketing assistance of $400 per car if dealers break the marketing covenant three times by pricing too low.

Read next: This Car Safety Demo Went Terribly Wrong

TIME CEO pay

These Companies Have the Biggest CEO-Worker Pay Gaps

<> on July 7, 2015 in Sun Valley, Idaho.
Scott Olson—2015 Getty Images Discovery Communications CEO David M. Zaslav.

Glassdoor offers sneak peek into future pay disclosures

Glassdoor released a report Tuesday that shows the average CEO earns around 204 times what the company’s median worker receives.

The SEC adopted a new rule this month that will require publicly traded companies to disclose the ratio of CEO pay to median worker pay. Glassdoor has been ahead of the curve on this pay transparency mission, collecting voluntary and anonymous salary reports from employees since 2008. Glassdoor used the data to compile a report that shows what the ratios might look like once the SEC rule goes into effect in January 2017.

The highest CEO-worker pay ratio was found at Discovery Communications, where CEO David M. Zaslav makes 1,951 times more than his median workers. Zaslav took home $156 million in 2014, while median pay at the media company was $80,000.

Chipotle Mexican Grill came second on the list, with a pay ratio of 1,522, while CVS Health was third with a ratio of 1,192.

Microsoft’s CEO-worker pay ratio of 615 was the highest of the companies Glassdoor measured in the technology sector. Google’s ratio was 0, as CEO Larry Page receives a $1 annual salary. CEOs such as Page often get the vast majority of their income from their large share holdings.

MONEY online shopping

The Reason You First Started Shopping at Amazon Is Disappearing

An employee pushes a cart past bays of merchandise as she processes customer orders at the Amazon.com Inc. fulfillment center in Poznan, Poland, on Friday, June 12, 2014.
Bartek Sadowski—Bloomberg/Getty Images

Amazon's reputation for low-price supremacy is called into question.

First and foremost in its rise to the top of retail, Amazon grabbed the attention of consumers simply by undercutting the competition on price. It started in the mid-’90s with books “priced close to cost, in order to increase sales volume,” as an in-depth New Yorker story about the company put it. In lieu of profits on book sales, the business plan was this: “After collecting data on millions of customers, Amazon could figure out how to sell everything else dirt cheap on the Internet.”

And that’s pretty much what Amazon did. The Jeff Bezos aphorism “Your margin is my opportunity” became the unofficial Amazon mantra, and the world’s biggest e-retailer competed ruthlessly on price. The advent of “showrooming”—in which shoppers scoped out merchandise in stores, then whipped out smartphones to see how much they’d save by purchasing it at Amazon—hammered home the idea that saving money was the biggest reason to do business with the world’s largest e-retailer.

Why, then, does it seem that more and more consumers are grumbling that Amazon’s prices aren’t that cheap lately? In a thread on Reddit posted this week that’s gathering a lot of attention, the initial commenter griped about Amazon’s “pricing getting a little ridiculous,” explaining, “Most of the stuff I’m trying to buy, from clothes to food, is way overpriced, sometimes marked up 100%.”

Many of the 400+ comments that followed were in agreement that Amazon’s prices aren’t as cheap as they used to be. What’s especially frustrating is that shoppers routinely see that prices for many items are higher if they qualify for free two-day delivery via Amazon Prime, which costs $99 per year. So in one way or another, consumers are getting the strong impression that shopping at Amazon isn’t quite the savings proposition it once was.

This is hardly the first time that Amazon’s status as the retail world’s low-cost leader has come into question. During the 2014 winter holiday season, Amazon’s online customer satisfaction ratings dropped significantly, and the overwhelming reason cited for the decrease is that pricing didn’t meet up with consumer expectations. In many instances, Walmart had cheaper prices than Amazon.

Research released just after the holidays revealed some of the strategies behind Amazon prices: While the e-commerce giant tended to have the cheapest prices on the most popular items, prices for many other goods were far higher than what shoppers might find at Walmart and other retailers. What Amazon appears to be hoping is that, after seeing low prices on one or two popular items, customers are lulled into believing that the site has the cheapest prices for everything—and this is just not the case.

Based on the recent discussion at Reddit, though, more and more consumers are becoming aware that the competition may be able to beat Amazon on price. This could be a huge problem for Amazon—after all, low prices were what originally attracted most people to the site—but at the same time, it seems as if shoppers’ main reason(s) for using Amazon are shifting.

Instead of always having the rock-bottom cheapest prices, Amazon now reliably has prices that are decent, if not the absolute lowest available. What keeps Amazon’s sales humming along, then, is that it’s convenient. The site that used to be all about saving money is now the Internet shopper’s “prime”—pun intended—resource for saving time.

The importance of Amazon Prime cannot be understated in Amazon’s quest to increase profits. Early on, Amazon discovered that Prime subscribers overwhelmingly made their online purchases via Amazon, and therefore they stopped shopping elsewhere. Naturally, a customer’s Amazon purchases skyrocket once he or she is signed up for Prime. With the assurance of free two-day shipping on most purchases, and the assumptions that Amazon’s prices are at least in the same ballpark as the competition, it might seem unnecessary for a Prime member to bother taking the time to shop around for a better deal.

What seems to be happening is that as more customers automatically, almost unconsciously turn to Amazon out of habit, convenience, and the desire to get the most out of one’s $99 Prime membership, the door has opened and it has become easier for Amazon to raise prices.

When you look at it this way, that “free” shipping that comes with Amazon Prime might not seem quite so free.

Read next: 5 Ways That Amazon Is Still Far Superior to New Upstart Jet.com

TIME recycling

Got a Great Recycling Idea? H&M Wants To Give You 1 Million Euros

Shoppers And Retail Economy As German Investor Confidence Jumps
Bloomberg—Bloomberg via Getty Images

H&M's chief exec: 'No company, fast-fashion or not, can continue exactly like today'

The world’s second largest fashion retailer, H&M, is offering an annual 1 million euro prize — about $1.15 million — to those who come up with new recycling techniques, Reuters reports.

The move is part of a larger effort by the retailer to reduce its impact on the environment, operate more ethically, and address raw material shortages.

The fast-fashion model that H&M follows, providing good quality products at inexpensive prices, encourages people to buy more clothes than they probably need, likely leading them to throw away a lot of what they’ve purchased. Consumers are starting to become aware of the huge negative impact this has on the environment.

Karl-Johan Persson, Chief Executive of H&M, told Reuters: “No company, fast-fashion or not, can continue exactly like today. The (prize’s) largest potential lies with finding new technology that means we can recycle the fibers with unchanged quality.”

Existing methods of recycling cotton produce low quality material.

The prize is funded by H&M and the Persson family, the retailer’s main owners.

TIME Careers & Workplace

I Learned All of My Business Lessons From Selling on a Street Corner

street-fair
Getty Images

It wasn’t enough that I loved my creations and thought they were clever

For about six or so years, I hocked goods I had made on the street, at state fairs, county fairs, art fairs and festivals up and down the state of California.

It was the late 1970s. I was 21 years old. I had dropped out of college at San Jose State University, needing only three units to graduate. I had loved studying sculpture, but I was dubious, to put it mildly, about my employment prospects. Who was going to hire me?

When I looked in the paper, the only jobs were for graphic artists and art galleries — neither of which I was qualified for. I knew I would not be creating fine works of art, but I decided then that if I could make things with my hands and make a living — I’d be satisfied. I’d be more than satisfied: I’d be rich.

At the time I was living in the Santa Cruz Mountains with a ragtag group of friends. There was a lot of kicking back and hanging out. I was fortunate to cross paths with someone who was extremely creative. As we sat in front of the television watching Dallas (Dallas was always on), I remember watching Marlena make little funny-looking characters out of stuffing a nylon stocking with cotton using a needle and thread. With their wrinkly faces, they looked like little old men.

It seemed fun, so I started to design a few of my own. When some of our friends told us they thought they were cool, an idea dawned on me — could I sell these?

Driving home on Summit Road one day, I noticed a sign advertising an upcoming craft fair at a local elementary school. I took down the phone number, called it, showed up the following weekend with my folding table and soft sculptures, and had an absolute blast. I felt like I had met a community of like-minded people. They didn’t have jobs either. They weren’t mainstream. They caravanned across the state like gypsies, and that appealed to me. What freedom! As I felt the warm sun on my face, I was sure of it: This was the life for me.

There weren’t many vendors, but I could see that some booths were doing a lot of business, because every so often a wad of cash would peak out from someone’s hand. They’d figured out that magical sweet spot, the one that exists when you sell something for the right price point in the right place. You can make it as complicated as you want, but if you’ve made something, brought it to market, and someone has paid you for it, you’ve completed the circle. You’ve done what every major business does. I wanted to duplicate their success.

Later that afternoon, my father stopped by the show to see how I was doing. “Great!” He saw how wide my grin was and asked me how many things had I sold.

Zero. I hadn’t sold anything.

To his credit, and this really was not his scene, he didn’t say or do anything that might have put out my fire. He simply smiled in a way that said, “You’ll figure it out.”

I learned a very important lesson that day. If I was going to make rent and feed myself, I had to come up with ideas that would sell. It wasn’t enough that I loved my creations and thought they were clever. I started thinking, “Who is my audience?”

So I went back to the drawing board to examine why I had failed. The nylons I had used were very plain — you could even see the cotton through them. The characters weren’t very recognizable either. When I reflected on the day, I remembered seeing mostly women, and that the fruit and vegetable stands were a big hit. Fruits. Vegetables. Women. I came to the conclusion that I needed to invent something that was fun, whimsical and for the kitchen.

So I changed directions. I bought colored nylons and formed them into playful fruits and vegetables. I called the tomato “Mr. Tom-a-toe.” The banana’s face peaked out of its peel. There were peas in a pod, each of their three faces silly and cheery. My carrots had shaggy green “hair” that I cut to look like the Beatles.

The next time I set up my table, I smoothed out a red and white checkered tablecloth on top of it. I staged my creations inside a wooden crate. And I waited.

That day, I sold out.

Immediately I thought (like every entrepreneur who has ever lived), how do I duplicate this? How do I scale up? I’ve been trying to do just that ever since.

So what did I learn? Know your audience. Create something they desire. Test it quickly to see if it sells. And by all means, have fun doing it. For me, these lessons are as foundational today as they were then. How could they not be? The path was as plain as day. When I sit in boardrooms with major corporations, I ask myself the same questions. Who is my audience? And how am I going to get them to open their wallets?

You can learn so much from observing successful operations. And I think there’s something to be said for having your back up against the wall. It actually works in your favor. If you have to support yourself, you get darn creative — fast.

This article originally appeared on Entrepreneur.com

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TIME Companies

Amazon’s Newest Feature Is Great If You Need a Drink Right Now

Amazon Prime Summer Soiree Hosted By Erin And Sara Foster
Rachel Murray—Getty Images A general view of atmosphere during the Amazon Prime Summer Soiree hosted by Erin Foster and Sara Foster at Sunset Towers on July 16, 2015 in West Hollywood, California.

Well, an hour from now

Running out of beer or wine for that barbecue you are hosting? If you are in Seattle, and are a member of Amazon.com’s Prime program, you are in luck.

Starting Tuesday, Prime members in Amazon’s hometown of Seattle can get one- and two-hour delivery of beer, wine and hard liquor like whiskey, rum, and vodka with the launch of Prime Now there, making Seattle the first U.S. city to include alcohol in the assortment of products eligible for the quick-delivery service.

Prime Now, which operates via a stand-alone app on iOS and Android devices, already operates in a number of major U.S. cities, including Atlanta, Austin, Baltimore, Chicago, Dallas, Indianapolis, Miami, and New York, where it launched last year.

The program is available to member of the $99 a year Prime membership but offers a more limited assortment than Prime. Still, eligible products can be delivered within two hours at no charge, and in one hour for $7.99. The selection tends to be focused on last-minute needs such as party supplies, cleaning products, electronics and some food.

This article originally appeared on Fortune.com.

TIME Gadgets

Here’s How Apple Is Saving Best Buy

US-ECONOMY-BLACK FRIDAY
Paul J. Richards—AFP/Getty Images A salesperson scans an iPod Touch at the Best Buy store in Fairfax, Virginia on Nov. 27, 2014.

The two companies are getting even closer

Best Buy continued its remarkable turnaround last quarter, with a big assist from Apple.

The largest U.S. electronics retailer reported a rise in domestic comparable sales of 3.8% for the second quarter, well ahead of Wall Street’s expectations, and posted a better than expected profit. While Best Buy has helped its cause by cutting costs and adding floor space to growing categories like smart homes, home theaters, and shops-within-a-shop for top brands, it has also been getting a lot of help from Apple and its roster of red-hot products.

“Demand for Apple Watch has been so strong in the stores and online,” Best Buy CEO Hubert Joly told Wall Street analysts on a conference call. The retailer expects to be selling the device, which hit the market in June, at all of its 1,050 big-box stores by the end of September, he added. Initially, Best Buy had planned to have watches in 300 stores by the holiday season. (It started selling the watches in early August.) Apple did not provide specific sales numbers for the watch in its second-quarter earnings last month, but Best Buy’s comments provide more evidence of the device’s success.

Joly also announced steps that will deepen Best Buy’s relationship with Apple. It is currently updating its Apple shop-in-shops at 740 stores, including new fixtures and more display tables for phones, computers, and tablets. The work is already complete at 350 stores, and will be finished at another 170 in time for the key holiday season. He also said that Best Buy will begin selling AppleCare product service and support this quarter, and will start testing out being an authorized service provider at 50 stores.

Beyond Apple, there was a lot for investors to cheer: e-commerce sales grew by 17%, showing that Best Buy can hold its own against Walmart, Target, and Amazon.com, and suggests it has licked the “show rooming” phenomenon, where shoppers go to a store to browse and try products out, then buy them on Amazon, behavior that a few years ago led many to question Best Buy’s long term viability.

“The company continues to gain meaningful traction online and therefore enhance its formidable competitive position,” said Moody’s analyst Charlie O’Shea in a research note. Moody’s raised its credit rating on Best Buy to Baa1 on Monday.

And in a development that should worry Sears, Best Buy reported strong appliance sales, a key driver of its comparable sales jump.

Still, Best Buy sounded a note of caution about the current quarter, forecasting U.S. sales to be flat or grow by a low single-digit percentage rate.

As for all the stock market drama of late? The jury is still out on whether consumers will pull back.

“It is difficult to know, though, if the recent volatility in the financial markets will affect overall consumer spending,” Chief Financial Officer Sharon McCollam said in a statement. “To date, however, we have not seen a measurable impact versus our original expectations.”

This article originally appeared on Fortune.com.

MONEY

The Next Spirit Airlines May Be No Better Than the Old One

Frontier Airlines Offers Cheap Uncomfortable Flights
Scott, Kathryn—Getty Images Frontier Airlines was bought by Indigo Partners in 2013 and is now planning to double its fleet size.

Frontier Airlines emerges as a copycat to low-cost Spirit Airlines.

How much discomfort is someone willing to endure for a cheap flight?

This is the question travelers must consider when facing the prospect of flying on the new Frontier Airlines. The carrier, reinvented by Indigo Partners, the private equity firm led by Bill Franke who ran ultra-low budget airline Spirit Airlines, has scaled back on basic amenities like legroom and gotten rid of TVs, free carry-on bags, complimentary drinks, free reserved seating, and even its toll-free customer service number.

And, like its highly profitable low-cost rival Spirit Airlines, Frontier’s strategy of cutting costs and airfares while adding fees have yielded great financial rewards for the company. Frontier earned more than $129 million last year, and it plans on a huge expansion that would double its fleet in less than a decade, reports The Wall Street Journal.

Unfortunately, Frontier’s growth and enhanced profits have come at the sake of customer satisfaction and the quality of the service. Delays plague almost a third of Frontier’s flights, and the rate of customer complaints about the airline are second only behind Franke’s former project, Spirit.

What’s more, while Spirit has a long-established reputation for cramped seats and few complimentary extras, the brutally efficient character of Franke’s Frontier Airlines is at odds with the airline’s past reputation of catering to business travelers and special touches like complimentary cookies. This sharp break from the past has especially frustrated passengers in Frontier’s main hub, Denver. But to the airline, that’s the cost of providing an ultra-cheap fare — some as low as $15.

Franke, however, maintains that he isn’t doing things quite like he did at Spirit, which charges for water and doesn’t have reclining seats. He believes plenty of consumers would be happy to pay slightly more than basement prices to get a more humane experience. “I now think there is a kinder, gentler way,” he told the Journal.

TIME cybersecurity

The Guy Who Hacked Jeep’s Truck Just Quit Twitter

Chrysler Issues Recall On 850,000 Sport Utility Vehicles
Joe Raedle—Getty Images

He used to work for the NSA

Last month, Wired magazine filed a report in which two hackers detailed how they were able to take control of a Jeep Cherokee SUV over the Internet. One of the hackers, Charlie Miller, was also an engineer at Twitter.

Not anymore.

Miller, who used to work at the National Security Agency and is considered one of the world’s leading experts on cybersecurity, has left the social media company, according to Reuters. He didn’t comment on what he is planning to do next.

The hack on the Cherokee caused a recall of 1.4 million vehicles. Cybersecurity for connected cars is quickly becoming one of the most important issues facing automakers.

TIME Media

This Is Facebook’s Biggest Problem With Video Right Now

Video creators say it's costing them big bucks

Every year, YouTube creator Devin Graham makes his own version of a summer blockbuster: a live-action recreation of the high-flying parkour jumps in the video game series Assassin’s Creed. The elaborate short films regularly garner tens of millions of views for Graham’s production company, Devin Super Tramp, and can cost upwards of $50,000 each to produce.

This year’s version, set in London and published in July, has only received 2.5 million views on YouTube to date. But that’s not because people have suddenly grown tired of watching acrobats perform heart-stopping leaps across buildings. It’s because many people are seeing Graham’s videos on Facebook first, where they’re often posted without his consent. That’s a big problem for Graham, because unlike the official YouTube clips, the unlicensed Facebook uploads don’t put any money in his pocket.

“It does dramatically affect us as filmmakers, people doing what they love to do and as a full-on film production company,” says Graham.

This practice, which online video creators are calling “freebooting,” is taking off on Facebook, helping spur the site’s massive video growth. The social network is now attracting more than 4 billion video views per day, up from just one billion in September. It’s unclear how many of these views are coming from copyright-infringing content, but a recent study by ad agency Ogilvy and video analytics firm Tubular Labs found that about 72.5% of the top 1,000 Facebook videos in May were re-uploaded from other sources, an easy task with freely-available software.

Online video creators, who make money by selling advertising against their content, are increasingly frustrated with the problem. In June, George Strompolos, CEO of the multichannel network Fullscreen, said on Twitter that pirated versions of Fullscreen creators’ videos were racking up more than 50 million views on Facebook. This month, Hank Green, longtime YouTube vlogger and co-founder of the online video conference VidCon, penned a diatribe against Facebook’s video policies, arguing that the social network’s preference for Facebook-native videos in its News Feed algorithm encourages theft of creators’ YouTube videos.

It’s a little inexcusable that Facebook, a company with a market cap of $260 BILLION [sic], launched their video platform with no system to protect independent rights holders,” Green wrote.

YouTube itself faced similar issues in its earliest days, with users easily able to upload and search for pirated versions of television shows to the site for free. Viacom sued YouTube for more than $1 billion in 2007 for copyright infringement, shorty after the video site had been bought by Google. The case was eventually settled out of court, but it helped spur YouTube to create Content ID, a copyright-flagging system that lets rights holders either remove unlicensed copies of their content or monetize those unauthorized videos by selling ads against them. YouTube has made more than $1 billion in payments to more than 8,000 rights holders using the Content ID system so far.

Green and other YouTube creators are now calling on Facebook to create a similar copyright-flagging system. It’s been the online video natives adept at making viral content who have been most hurt by freebooting, as Facebook Page owners lift videos of adorable animals, extreme sports and other highly-shareable content to boost their own social media audiences. Collectively, these creators helped YouTube generate an estimated $5.6 billion in advertising revenue in 2013, and the biggest stars now rake in millions of dollars per year. But they still lack the clout of the traditional media giants who initially compelled YouTube to clean up its act.

“Facebook pages aren’t stealing content that advertisers would even think of as copyrighted because it’s not made by legacy media,” Green told TIME in an interview. “That’s part of why this has been such an easy thing for Facebook to get away with for so long. It doesn’t feel like copyrighted content. But it is, and it’s a big deal for the creators who do this professionally and have their content being stolen every day and getting tens of millions of views.”

In an emailed statement, a Facebook spokesperson said the company uses a system called Audible Magic to identify copyright-infringing videos. The social network also has a system whereby users can flag individual freebooted videos, though by the time a video has been removed it has often already garnered millions of views. Users who make repeated IP violations may also see their accounts suspended. Facebook also says it’s working on new features “to help [intellectual property] owners identify and manage potential infringing content.” Details could be announced later this summer.

The pressure to create a more comprehensive system is likely to increase as Facebook courts more video creators and begins sharing ad revenue with them. In July the social network announced that it’s launching a revenue-sharing program with select video partners including the NBA, Funny or Die and Hearst. “Media companies don’t create content to have it ripped by somebody else and not receive their rightful share of revenue or data from that,” says Rich Raddon, co-founder of the digital media rights management company ZEFR.

For now, creators are simply waiting for a better solution to arrive as they continue to depend on their fans to help them spot unlicensed copies of their videos. “All of a sudden we’re competing against our own video for views,” says Graham. “It’s a real struggle.”

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