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I was looking recently into how commercial real estate works. Typically when you rent out a space in a plaza, your expenses are very predictable for N years. The typical contract with the plaza owner lasts many years (could even be over a decade). This way you know you're not going to get sudden rent increases, etc. On the flip side the rate of return for the owner is also lower than normal - the risk is lower (guaranteed income for many years) and so is the return.

In that sense, one definitely should not make an analogy with a traditional marketplace. The terms you agree to when selling on the Amazon marketplace is typically orders of magnitude worse than what you'd get at a plaza - imagine Amazon committing not to raise costs for the next 5 years.

Amazon isn't a market place - it's a store. When you sell on Amazon, think of it as selling it at Walmart - you don't get to pick where Walmart will place it on the shelves, and you have no guarantee that Walmart won't drop your product altogether.






This is how 99% of people think about Amazon. Unfortunately, it's not quite correct. The Amazon.com Retail team does, in fact, operate a store. The marketplace is the behind the scenes network for third party sellers that make their catalog seem so large. Most people don't even know the second part exists, but it does. When you buy from Amazon you aren't always buying from Amazon. Sometimes you are buying from some random person that Amazon.com Retail is actually competing with. And sometimes you buy from some random person, although Amazon does the fulfillment. It gets quite convoluted.



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