A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.
Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.
With the increase in inflation and Amazon abusing its power to significantly raise its prices for FBA and force us to use its advertising services our revenues have been severely impacted.
This doesn’t include their unwillingness to meaningfully fight counterfeits
Or that they penalize you if you attempt to drive sales elsewhere with lower pricing on other sites
Bloomberg did a write up on this a few months back:
"Chuck Gregorich, who sells fire pits and outdoor furniture, says turning a profit on Amazon is getting harder. One of his popular fire pits costs $200, of which Amazon takes $112 for its commission, warehouse storage, delivery and advertising. That leaves him with $88 to pay the manufacturer, ship the product in from China and cover his overhead."
I have a hard time sympathizing here. They farm out manufacturing to China and logistics/warehousing to Amazon, and then also lend brand to a marketplace they don't own. Assuming this is how FBA selling works on Amazon, it sounds like the low profits they make are just a byproduct of them not actually doing much work.
You make a good point, but I think the parent point is true as well. You still have people actually producing work, unable to compete on these platforms where Amazon will literally make a copy of their product at a lower price.
This is the result of commoditizing 'starting a business' to the point of near-worthlessness in the bottom 50%+. Like you say, I don't value the businesses that simply re-sell re-labeled products without ever interacting with anything very much. But let's not confuse the 'spam' of the problem with the squashing of actual business that this is historically known to cause.
Amazon is basically allowing sellers to carry all the risk while product testing and marketing a product.
If it does well enough, Amazon can use the same manufacturer and release a branded "Amazon Basics" version that pops up in the same search for the same product but cheaper as Amazon doesn't have to pay someone else $112 for the listing and warehousing, and the original seller that did all of the actual "work" (as far as making it a profitable venture) is SOL.
Throw in a few dozen word salad named drop shippers who undercut Amazon in exchange for increased shipping times and the originator is wedged out of the market or cut to razor thin margins for years of effort.
Yes, but the argument is that drop-shippers aren’t really producing any value.
It’s not like they’re putting banners over their product pics saying “hey, you know you can buy this exact same product for like half the price on alibaba if you’re willing to wait a couple more weeks for it right?”.
I don’t like Amazon consolidating this much power either but if they can push you out of your business that easily you weren’t the critical component of it.
Show me a business that Amazon couldn't destroy just for kicks.
Also, it's not like you have any choices. If you manufacture your products yourself, you have to fund a massive venture to handle the workload. If you outsource the products, then the companies you pay to manufacture your stuff can easily make knockoffs and then let drop shippers undercut you with inferior versions of your own products.
Look at a lot of the stuff for sale on Temu for instance. There are hundreds if not thousands of products that were invented, tested, and designed by Western companies that you can now buy a reasonable facsimile of on Temu for a quarter of the price.
This includes art work, enamel pins, battery packs, woodworking tools.
You're on a hard path either way, but if you make it to the point where you have a standout product knowing that at the final step Amazon can easily step in and price you out of existence, even if they had to take a loss on it just to destroy you, they could and there's not a damn thing you can do about it.
That should be broken up. Monopolies are bad. Monopsonies are bad. They are bad for the country, bad for the people, and bad for the flow of money.
I hope we see record fines against them and that everyone affected by this gets to be part of an earth shattering nuclear verdict.
Apple Iphone, airpods, ipad, macbook. Google search. Coke. Boeing. Caterpillar. Goldman Sachs. AirBnB. Exxon. AutoDesk. BlackRock. CME. Costco. JP Morgan Chase. Mastercard, Visa, Nike, TSMC and a thousand others.
They started out as a retailer, and opened up a bunch of their infrastructure to competitors. The idea that they'd make it easy for competitors using their infrastructure to beat them makes zero sense.
Those are good ones but i was thinking of local stuff like grocery (which they tried and are currently failing) and gas (not that i use it). Also, real services like plumbing, electric, vehicle maint. ... Angies list got that corner ;)
The list is extremely long as you say. Amazon isn't good at much except cheap third party stuff made by contract manufacturers in china, books, and AWS.
That's pretty circular. To the extent any company, A, relies on company B to operate, A can be destroyed by B, according the definition of "rely".
So the logical response wasn't to assume you were being circular. The logical response was to assume you were inferring Amazon is big enough and capable enough to squash any business.
The 'they' here is Amazon. This is how it should be read: "Amazon started out as a retailer, and opened up a bunch of their infrastructure to competitors. The idea that they'd make it easy for competitors using their infrastructure to beat them makes zero sense.
I have a lot of friends in the manufacturing business that range from self-employed to military-backed conglomerates. None of them use this tool. Are they all Luddite idiots, or is this Amazon search tool, backed by their swiss-cheese supply chain, just not that useful?
I think it's the same as the overall enshitification of all products and product quality. Consumers now value cheap fast shipping and low prices over everything else. Amazon delivers that, with the tradeoffs in product quality, support, etc. Other things are low quality too, like the product listings themselves. Often, for example, the listed dimensions or other specs (thread type, grade strength, etc) are missing or just wrong. That's much less true for sites like McMaster. But nobody values that anymore.
Every cent Digikey looses they loose by being Digikey. Of all large suppliers, they are by country miles the worst and we try everything to avoid them.
Farnell, Mouser, LCSC beat them handily. And their pages are already bad.
Wow! I have had nothing but amazing experiences with DK over the last 20 years, especially compared to everyone else. Maybe it has to do with being in Canada, though. The DK warehouse is just across the border and when you order DDP I think they bring your stuff over by truck and then distribute it. Have not once ever had a surprise customs charge from them, while other suppliers have all screwed me in one way or another (lol always great when one order gets split into three boxes and UPS charges brokerage fees separately on each one)
It’s not connecting for me how breaking up monopolies is going to stop Chinese clones of Western products from winning price wars. It might change how the margin gets carved up between the people who make the clones and various middlemen but how would it stop the overall trend of cloned products?
I would expect if Amazon disappeared, since people can’t go there to search for products to buy anymore, they’d use Google instead, or some other product search aggregator sites. They’d presumably still list the cheap sellers first (or whoever pays for an ad slot). That would be a huge change in the e-commerce industry, FTC can argue it benefits consumers because the prices of everything will be cheaper without Amazon’s fees, but I’m not seeing how to reduces the prevalence of cloned products.
Alas, no. Just because there are certain rules, and just because people say that those rules are for a specific reason, doesn't imply any actual causality between the reasons given and the rule existing.
Especially anti-dumping rules are most often just exploited as a tool to get a competitor in trouble.
Heh, a couple of years ago (maybe true still?) Canada had a 99%! tariff on aluminum extrusion from China. And it was still cheaper than domestically sourced material at twice the price.
According to Amazon's rebuttal to the charges, 80% of all retail is still brick-and-mortar. Amazon has tried it a few times, but remains essentially an online only service.
If your business depends on potential competitors for it's existence, then being eventually forced out seems like a pretty natural conclusion.
We're reaching the point in the economy where racing to the lowest cost, such as Temu, comes with great damage to the world. It's spyware that collects data on the american consumer across applications, and the products are made with illegal forced labor.
If people keep choosing to reward dishonest cheaters and criminals just to get something for lower cost, we are not in a good place. And either cheating or disguising the true nature of your company is becoming the easiest way to stand out in a commoditized world.
> if they can push you out of your business that easily you weren’t the critical component of it.
Alternative suggestion: modern monopolistic corporations are disproportionately powerful. If they can topple a country to sell bananas cheaper, they sure as hell can kill a small business, no matter how relevant that business is.
These aren’t drop shippers. They are importing the product and paying to store that product before a sale is made. The shop is taking on a risk that the inventory won’t sell, and the customer gets the product far faster.
What’s the problem here? If you don’t have a durable competitive advantage then you’re going to get eaten up. First movers should not get a license to continue to reap a profit in a competitive market absent real innovation, which would come in the form of reputation (trademark) or technology (patent). Drop shippers who can be displaced by Amazon in the way you discuss have neither. They already made a profit on the front end, so don’t feel bad for them just because they can’t continue to rent-seek.
But Amazon is the 7-11 (and more)! It is the customer facing part of the business that houses and delivers the beef jerky to the ultimate customer. 7-11 sees that jerky sells, that lots of brands can sell jerky, that consumers don’t seem to care about the brand of jerky as long as it says teriyaki, and so 7-11 now sells 7-11 basics teriyaki jerky.
The FBA middlemen are more like traveling salesmen - they take an order, send it in to HQ, and HQ ships it to the 7-11. They don’t do anything but take orders. They are Tom Smykowski - they take the plans to the engineers!
You’re complaining that the storefront that the goods are sold through has its own sales information. The amount of sales you have through Amazon may be a trade secret, but it is not a trade secret from Amazon.
If we're coming up with brick and mortar analogies, it's got to be grocery stores and generic branded items. Kraft Mac vs Great Value.
It's hard for me to say Amazon shouldn't be able to do it while every grocery store can, but there seems to be a quantitative difference because of the ridiculous number of options online vs the finite shelf space of a brick and mortar.
All the same economic games are played. Items are placed on specific shelves to drive specific sales, etc. Sale numbers are known by the store and they get their cut.
The distinguisher is supposed to be in the quality. Premium vs generic. That doesn't seem to play out healthily in Amazon's marketplace.
Maybe one difference is the consumable nature of the grocery products vs what one typically buys online (Amazon batteries as opposed to an animal carrier). Or maybe we have given up too much with the consolidation of grocery chains the last few decades and that is equally problematic.
I think that a lot of the same problems exist in generic brands at supermarkets. Supermarkets already have a lot of ways to pressure suppliers, and “own brand” products are weaponised extensively.
I’m all in favor of suppliers competing with each other, as that’s in the best interests of society overall. But when the platforms/marketplaces themselves participate in that competition they have tremendous advantages, which is anti-competitive, and it benefits no one but themselves.
But Amazon refuses to be the actual seller taking the risk in the first place. They aren’t buying jerky from anybody and then selling it. Until they decide to make their own based on the actual seller’s data.
Your local grocery store has store brands that compete with the name brands. Your local grocery store also charges for shelf placement.
Amazon is actually more open than other stores about this information, giving product rankings so that you could decide to knock off popular products too.
Except that overlooks Amazons intentionally messed up search function. Amazon, unlike grocery stores, doesn't really put all of the items into the same location.
On amazon, if you want to browse "electric bike tires with motors" you will have to browse through dozens of full electric bikes, electric scooters, hoverboards, tires without motors, tricycles, and all sorts of close but not quite what you're looking for items to find 1 that you might be interested in.
Want to price shop them? Good luck finding others to compare with.
It would be like looking for a 5 lb bag of white sugar in the grocery store so you go to the sugar isle and finding 1 half pound bag of brown sugar amongst all of the flour and seasonings and honey and agave nectar and sweet n low in the first 100 feet.
Any grocery store organized like that would fail and be replaced by a company with decent organizational flow.
But amazon makes money by charging the vendors on its market for visibility, in addition to listing fees, storage fees, and whatever else.
Amazon has a perverse incentive to not show you, the customer, what you are looking for when there is anything else close enough to what you are looking for that they will make more money for selling to you.
There isn't a better word than evil for this, even if it is the benign sort of evil that only added to the chaos and misery of the world without directly harming anyone.
Also, in direct response to the Gp, grocery stores buy sales data that contains their sales + their direct competitors down to the product level. It is anonymoized but freely available.
Edit: Also companies like Google scan emails for information. Amazon stopped including prices in their emails because Google was getting a direction stream of sales data with full costing info.
They are really saying, though, that without barriers to entry and in a competitive market, players that don't innovate don't survive.
>First movers should not get a license to continue to reap a profit in a competitive market absent real innovation, which would come in the form of reputation (trademark) or technology (patent).
The problem with that is that this is not a competitive market, so the player that wins is not innovating, they just have market power because of their size.
But that is definitionly winning the competitive market. Amazon has a competitive advantage because they have the largest inventory and almost always the cheapest prices, or at least speedy delivery for a marginally increased cost.
That is the definition of winning a competitive market. The consumers win.
The problem is being both the platform and a competitor.
They have an inside advantage that no one else on the planet outside of ebay and Alibaba (and its ilk) have.
It entrenches them and enriches them unjustly. They make profit off of their competitors and have the option of destroying anyone who rubs them the wrong way without repercussion. The capitalistic market cannot speak on the matter as there is a monoposonistic gatekeeper on the market path.
They didn't open their capabilities to competitors. That is completely false.
No one who sells on Amazon is a competitor. If you are selling on Amazon you are a customer, and every once in a while, Amazon comes in and starts selling your goods for less than you can because they decided they would make more money without you in the picture.
For a little proof, try to find Ammoon products on Amazon. They used to be everywhere. And the information isn't exactly public but there was a falling out between Ammoon and Amazon and now you can't buy Ammoon products on Amazon, but you can find Lekato and Sumimma and Joyo and Cuvave knock offs of the exact same products, and not long after this happened, Amazon started selling cheap guitar pedals under their Amazon Basics brand.
You may say, sure, whatever, but the primary product Ammoon sold was the cheapest ($35) looper pedal on the market.
Amazon undercut that price (to $26.50) and also booted their closest competitor and biggest customer in the guitar pedal looper segment.
In an enormous number of cases Amazon both sells products and the same exact product from a different supplier, and they sold the product before opening up the store to others. That's the definition of a competitor.
The fact that they didn't sell every single product on planet earth doesn't mean they aren't a competitor. They are practically in the "easy to manufacture by a third party in china consumer products" market. If a company adds so little value that Amazon's 5th rate people (The best minds at Amazon aren't sitting up at night worrying about the guitar pedal looper market) can beat them, they aren't adding value. And, one single distribution channel (the amazon website) doesn't define a market (with almost zero exceptions, amazon's website not being one).
> And, one single distribution channel (the amazon website) doesn't define a market (with almost zero exceptions, amazon's website not being one).
if amazon captures a large ratio of people buying goods online, i would certainly consider amazon itself a market. But unless they also control some other aspect of the online market, it would be hard to claim they're a monopoly tbh.
_Anyone_ can setup an e-commerce site and sell online. Amazon doesn't quite fully control the hosting, IP and backend servers completely!
Where's the harm for consumers here? All I see is that I can now buy guitar pedals for a fraction of the price. Isn't consumer harm the point of anti trust?
How many companies will not enter the market because of Amazon's monopoly? How many products will never get invented because of the awareness of the system?
And even with this, with a monopoly it is not a race to the bottom. Once the monopoly is in place, you can raise the costs to whatever you want and the market has no choice but to grin and bear it or go without.
The whole Amazon Basics thing, cannibalizing sellers, should be illegal. It just victimizes people trying to make a living in a crap job market where online sales are closing street shops.
Sellers are offering a generic product without barriers to entry like trademark, patents. Somebody else notices and contracts the same manufacturer to produce it or finds someone else who will (or makes it themselves). The new entrant sells it for cheaper.
All I see is basic economics. Business cannot stay afloat if their marginal cost exceeds marginal revenue. This is the best outcome for consumers.
The business takes a risk in developing and acquiring a product and Amazon uses the sales data and its platform to pick out winning products and undercut the price. The business is the victim.
The business should protect their product with a patent or other trademark then. Nobody is forcing people to provide Amazon data by selling products on Amazon.
There is no victimhood if the business voluntarily transacts.
1. Manufacturing does not happen in America anymore.
2. The proliferation of counterfeiters does not allow dropshippers to scale to a meaningful size. Everyone is game to Alibaba.
Within our industry of paper goods, our manufacturers have to get their parts and raw materials from overseas.
The larger FBA mom and pops will design and market their products here in the US using American workers and have them manufactured overseas completely or in-part.
The impact of Amazon’s monopoly power on American online product businesses is less jobs that pay well.
- Less accounting and bookkeeping jobs
- less marketing jobs
- less design jobs
- less seller fulfilled packing and logistics jobs
Nothing you mentioned harms consumers. To me it sounds like the situation is as follows:
- Amazon offers a marketplace to sellers, which happens to be the largest marketplace with the most potential buyers.
- Amazon charges a fee to list on their site.
- Amazon doesn't let buyers sell their products for lower on a site that isn't Amazon. (Makes sense; they want to be paid for attracting consumers.)
- Buyers are cost sensitive and buy the cheapest product.
The outcome seems to be the most favorable condition for consumers. The complaint here seems to be that Amazon is so efficient that people would prefer to buy from them.
Cept the part about Amazon not letting you sell your goods cheaper elsewhere. That keeps the price inflated and is anti-competitive since it squashes competition from other marketplaces, not because their platform is better, mind you, but because they have all the power.
Amazon only controls their market. You play by their rules if you sell with them, and that is totally valid. You can sell your product for any price you want so long as you don't use Amazon or don't undercut them if you choose to use them.
That is totally valid. Amazon provides the eyes; they don't want to provide a service for free. Think of all the people that go to best buy to feel a product and then buy it online. Amazon doesn't want that to happen to them.
That's the point. They are by far the largest player in the game, and can ( and do) use their size to squash competition. You don't have to use their marketplace but as a small business you don't have many options that can compete.
Hell, they're even extremely anti-competitive with their employees. Their NDAs are very restrictive and have threatened non-senior employees with them, even ones that they let go.
Yeah, but if you search and replaced the part where the $88 is to pay the manufacturer, and instead say it is to pay they employees and the cost of materials, it's not like that suddenly looks like a viable business.
Except it has been for decades. In traditional retail, the split is 60% store, 40% seller. So your same $200 product would be $80 to the seller, not $88. And manufacturers have been operating with that split for a long time.
You're talking about gross margin/mark up, and there really isn't a "traditional retail margin". It varies a lot by product, but, as an example, the typical mark up for grocery stores is 15%. I used to do retail sales for appliances, including BBQs. The markup could get as high as 50%, even more for high end BBQs that sell in the $800+ range, but was generally more like 30%... and discount outlets or online retailers, it was much more like the grocery store mark up. A $200 BBQ with a markup of 150% like you're describing is not a thing I ever saw.
Are talking about markup from cost of goods? The manufacturer costs usually take into account their overhead; assembly line, warehousing, transport, running the business, profit etc. Amazon is taking over some of those things for sellers, so yes they take a bigger percentage than a normal retail store.
Comparing to retail is not apples to apples. The overall margins on Amazon tend to be lower across the board. So, yes, there's a problem with comparing directly with retail in general. Amazon is taking on distributor costs, but they aren't really doing anything to reduce manufacturer costs. Manufacturers still need an assembly line, warehousing, shipping (to get it to Amazon), & running their business... maybe they're not getting any profit, but that's the problem we're talking about.
While amazon is covering their own warehouse & fulfillment shipping costs, that's really that different from costs normally borne by retailers who have warehouses and handle delivery to their retail outlets.
And saying just don't use FBA is no solution either. Shipping large heavy stuff is expensive, and I best Amazon has much better rates negotiated with the carriers.
Storage plus shipping through FBA isn’t cheap. The problem isn’t that FBA is expensive, the problem is that selling on Amazon but not via FBA is heavily punished with placement and appearance leading to poor conversion rates.
Yes this is the issue for consumers as well. The first 16 pages of every search are nearly identical low quality fba products. Need a search layer to find the small sellers!
Why? This doesn't make any sense. Why would a vertically integrated business that provides the most efficient outcome for the consumer need to be broken up?
The thing is, an importer adds real value to their clients by selecting the products, taking the risk of moving the goods, etc.
You are right that the current state of dropshipping is an abomination, and there's not much left to save of that job. But the reason for that is that more and more of the job and benefits from that business are being taken by Amazon, and the sellers are left with that doesn't really justify their position.
What they're left with - being a plausible scapegoat and discovering new products - is not their choice, it's the part that is not profitable to Amazon.
"This is the result of commoditizing 'starting a business' to the point of near-worthlessness in the bottom 50%+."
Is this not just a market effect of saturating the market with competition because suddenly running a business is comparatively easy (communications technology, platforms and existing logistics and production networks) to any other era.
I can probably start a company drop shipping crap on Amazon in a short amount of time with a smartphone from my bedroom. The barrier to entry has dropped, rather quickly.
Very similar to the music industry, where technology has made producing music so easy the market is growing by tens of millions of new songs every year.
The slices of pie are getting very thin indeed. Especially when there are only a few pie delivery services to choose from and they take their slice first.
So Amazon making good fat margins on every small business that sells on Amazon is demonstration of an ineffective market. And hence why the FTC are stepping in.
I cannot speak for every location, but Amazon isn’t the cheapest in the UK. I would say it is about average.
Where Amazon wins is the range of stock and its next day deliveries. Which means most people default to Amazon because it’s quicker and easier than shopping around. But you can definitely get cheaper if you were to shop around.
Also by Amazon owning the whole pipeline, from stock to delivery, they can squeeze costs down and thus improve their margins. For example, I guarantee you that other online retailers are paying more to ship their products than Amazon are.
I agree fully, but Amazon is still the "cheapest" when you consider the all in price of cost_of_goods+cost_of_delivery|want_goods_in_fewer_than_two_days.
Amazon has the most efficient business, which allows them to survive on lower margins and attract buyers because of the vertically integrated pipeline they've created.
Your example of other companies selling the same product at cheaper prices helps to illuminate the fact that there isn't any real impact from the supposed anti-competitive behavior to the consumer. Cheaper prices still exist! Amazon hasn't become the sole provider.
> I agree fully, but Amazon is still the "cheapest" when you consider the all in price of cost_of_goods+cost_of_delivery|want_goods_in_fewer_than_two_days.
Why say you agree when you only go on to disagree with me?
I've bought plenty of things cheaper on other sites. Delivery included. There have been things that were cheaper on Amazon as well. This is why I said it's about average. But there are so many variables at play here (location, items you're looking to purchase, etc) that it might just be easier to agree to disagree.
> Amazon has the most efficient business, which allows them to survive on lower margins and attract buyers because of the vertically integrated pipeline they've created.
Those vertically integrated pipelines come with significant cost savings though. That's why they do it. And because it saves them $$$, it then also increases their margins.
> Your example of other companies selling the same product at cheaper prices helps to illuminate the fact that there isn't any real impact from the supposed anti-competitive behavior to the consumer. Cheaper prices still exist! Amazon hasn't become the sole provider.
Those two arguments aren't mutually inclusive. Other companies might be offering cheaper prices but making a loss in the hope that loyalty will win customers in the long run. Or other corners might get cut that could ultimately lead to that businesses demise, such as not hiring skilled staff, not following health and safety or other local laws, etc. And even if none of the aforementioned is true, it still doesn't mean that Amazon aren't being anti-competitive.
Also "anti-competitive behaviour" applies to how they block other businesses from competing. You cannot be "anti-competitive to the consumer"
Yeah, that’s really the anti-competitive part. The vertical integration is so incredibly difficult to compete against.
At some point you have no choice but to give them a slice of your revenue and some control of your product, lest your access to customers is severely limited.
Amazon inflating rates after capturing the market, permitting counterfeits, and penalizing sellers offering lower prices off-Amazon, has nothing to do with market efficiency or commoditization.
You've explained what gives Amazon the leverage to set such terms, and why they'd want to set such terms, but you haven't explained why preventing other platforms/sellers from competing on price isn't anti-competitive - you merely asserted that it is so.
It's not anticompetitive because they aren't restricting competition off their platform. They are simply stating that to participate in their marketplace you must adhere to a set of rules.
It is no different than Nike, who requires no discounts on specific products, etc. Amazon isn't prohibiting selling on non-Amazon platforms. Amazon is prohibiting undercutting them if you choose to sell with them.
> It's not anticompetitive because they aren't restricting competition off their platform.
Yes, they are. They are using their influence and market power to prevent others from competing on price, using the threat of economic retribution on their platform. If this isn't anti-competitive, then nothing short of sending assassins on your competitors is.
Nonsense. They are only able to influence your behavior if you use them. It is completely self selected.
It is the exact same thing as is argued by social media companies: they have the right to moderate the content posted on their platforms because it's their platforms. You can do whatever you want on your own site.
> They are only able to influence your behavior if you use them.
Yes, companies cannot influence behavior of people or businesses that have no business relationship with them, direct or indirect. In other words, you are saying that indeed, the only anti-competitive action is sending armed thugs to sabotage your competition. Everything else, every contractual condition, is fair game.
> the only anti-competitive action is sending armed thugs to sabotage your competition
I'm saying that entering a voluntary transaction knowing the terms of the trade does not amount to anti-competitive behavior. Nobody forced you into the trade. Nobody prohibited you from entering the trade.
Entering the trade with clear conditions is voluntary. You could easily just not do business with that partner. Here that would be not using Amazon's marketplace.
Simultaneously, there must be harsh penalties for abusing that system. See Samsung's use of a patent on display technology to label third party displays as counterfeits, despite not using that patent nor misrepresenting themselves as Samsung screens.
Running a business being easy is limited to these low-value drop-ship businesses. Running an actual business is hard. What they’re doing is just arbitrage: buying in bulk from Ali Baba and selling individually on Amazon. No value would be lost if these companies went away. Compare that to a bookstore or cafe being closed in your town.
Yes - some of the complaints seem legitimate (e.g. burying search results really far low - that hurts me as a buyer, and hurts the seller).
But complaining that you need to use Amazon's warehouses to be part of Prime? That's rather obvious! You can always sell as non-Prime. Many do and are successful at it!
Basically, Amazon allowed many businesses to exist by creating a very convenient way to sell. Chances are a lot of businesses selling on Prime who are complaining would not have been able to exist at all.
It's not new, but admission to the program has been unofficially paused for years. They just announced in the last few weeks that they're relaunching the program.
They farm out manufacturing to China, but if they designed the products, this isn’t very different from having Foxconn assemble iPhones. But of course, now the Chinese manufacturer could sell their design directly and undercut them, since they aren’t Apple.
If they are using a design from the manufacturer, I have no sympathy for them. They are just trying to make money by adding some marketing and connecting dots together.
I'm not sure most of these sellers are actually designing their products.
There's an increasing trend of foreign manufacturers copying (or even simply producing unlabelled variants) popular products then white labelling them. You see this all over Amazon where there are dozens of brands selling the exact same product with their name stamped on it. Those products are always some slight variation of a bit name.
* Solo Stove - dozens of identical knock-offs
* Power screwdrivers - Nearly limitless variations of the popular brands
* Theragun/Hypervolt - Literally dozens of knock-offs with slight variations in packaging.
a quick google search turns up this store. whether they designed these firepits themselves or it's a catalog design from a chinese seller, i don't think it's really fair to compare it to an iPhone. and given the sheer number of designs in his store, i think it's a fairly safe bet that they're reselling catalog products from chinese sellers.
Not really a straight comparison. That one on alibaba has a 100 unit minimum. But yeah, for some extra money, the dudes on alibaba will slap your logo and print your packaging.
But Amazon adds real value. They built out a huge logistics and PoS system. They have warehouses everywhere. They have millions of subscribers for Prime which gets people to buy large amounts of stuff on the site.
Any business owner is free to build their own website, set up payments, set up accounts with FedEx and UPS, and rent some warehouse space. That’s a tough row to hoe!
Yeah, but they created a moat and became sticky. Netflix knew they were a middleman too so they started to produce their own content years before the streaming wars. I worked for one near the border that bought American industrial parts and sold it to Mexican factories. I helped build their quoting and ERP software, but the boss wanted to build a platform for him and his competition to try to become sticky and build a moat. Middlemen should always be finding ways to stay in the process.
That's literally the meaning of being a monopoly: There are no other distribution channels that can compete with Amazon. They are a distribution monopoly.
There is no monopoly in distribution. The vast majority of items are bought offline. Walmart, Costco, Target, Kroger and on and on and on and on.
The world wide web + google and facebook make finding eyeballs open for all. Fedex, UPS and USPS make shipping products open to all. Stripe makes accepting payments open to all. Cheap 3rd party manufacturing makes making things open to all.
We've probably never been further from a monopoly in any of the areas in question. The reason it's so damn hard to make any money selling random products is that there is just so much competition.
Most things aren't bought on Amazon, but if you're a middleman droppshipping stuff from China, Amazon is an easy way to get in front of a lot of eyeballs.
It's not clear to me why droppshippers deserve special care and treatment by the FTC.
The chair of the FTC is Lina Khan. As a law student, she wrote this article [1] for the Yale Law Journal. It attracted so much attention in the antitrust law community that it led to her becoming the youngest FTC chair in history.
She has literally been building this case against Amazon since she was a student. It’s not just about dropshippers. It’s also about how Amazon uses automated price controls, guided by scraping of competitors, to engage in dumping [2] and predatory pricing [3] to wipe out competing e-commerce sites. Since everything is automated, prices can change in a matter of seconds, so once competitors are destroyed, prices go back up automatically.
From what I recall, the reason why her argument was recognized is because it solved a thorny problem of US anti trust law, proving harm.
Currently, in the US what matters is showing that consumer welfare was harmed. AINAL but proving harm is not easy - Amazon in particular reduces prices to the end customer, increases choices and makes sales easier.
This is where most arguments died, however her approach had enough merit to pursue.
However, it seems her approach and argument has changed, and is more couched in terms of current legalese - more focused on showing consumer harm than applying a new legal approach.
Distribution channels are endless, and as large as Amazon is, they are only one amongst many, albeit with plenty of vertically integrated advantages.
In the case of a firepit, local consumer channels would likely be speciality shops, hardware and big box with probably a couple of layers of distribution and logistics in between. That market however is more likely to offer $500-$1000 firepits, because that's the way it WAS before Amazon, ALi, etc etc opened up new digital channels to drive down volume, manufacturing and up quantity (which eventually results in either greater margins or lower prices).
Those same non Amazon channels will also sell Joe FBA's $200 firepit as well, perhaps for $400 using those other channels.
To access and operate a business around those traditional / other channels however is nowhere near as simple as "order 50 of these on Ali" + "sell these as FBA on Amazon" = $profit.
It's a lot of work. I wouldn't necessary call Amazon a shortcut, but it's a path to market that is easier, but at a cost.
It wouldn’t matter if they could, Amazon can still acquire and sell them for less regardless.
The only viable business here would be a product you’re self-manufacturing or having made bespoke, and even then you better hope you can get some recognition behind your trademark before the chaps out in Shenzhen get a hold of it.
Food cost in restaurants in similarly shocking. They operate on metrics similar to BOM. Might shock you to find out how much that $40 pizza cost in dough, sauce, cheese and toppings. (Probably just a couple bucks).
I'm a $5m+ Amazon seller here, so many wrong assumptions in the comments, hard to know where to begin...
- Firstly, not every Amazon seller is a drop shipper, or private label products. In fact most of the successful ones I know all design and brand their own unique products. We ourselves design everything in-house and own multiple design and utility patents on ALL of our products, you won't find these products on Alibaba. Yes, we manufacture in China, but it is really cost prohibitive and uncompetitive to do so almost anywhere else.
- Yes, Amazon's policies hurt us and is completely unethical. The biggest one being losing the "buy box" (ability for customer to buy from your brand) when a lower priced product from your brand is found on a competing website such as Target, Walmart, Shopify, etc. They essentially force you to have the best price possible on Amazon at all times or get severely punished. Why this is terrible... let me explain, let's say Walmart stores offer your product as a holiday sale item in their stores, or let's say a particular color variation of your product isn't doing well so they offer it as a clearance item. Now someone can buy that product at a discount, sell it back on a Target or Walmart online marketplace at a slightly lower price and guess what, your Amazon listing is now practically worthless. You lose the "buy box" and all your sales because another site has it listed for cheaper. This happens ALL THE TIME. And sometimes, there's almost nothing you can do about it.
- They practically force you to use Prime fulfillment. Technically you don't HAVE to use it, all you have to do is again, be uncompetitive with products that do offer Prime and lose half your sales. Same with Marketing, PPC, adwords, etc. They've created an ecosystem where all of these options aren't really options because there's no way to compete otherwise.
- Amazon basics and Amazon using private sales data to find out which products sell the best and compete with those brands directly. It's just really evil. They have all the info, all the data, and they know exactly which products to target to offer a cheaper version at a discounted price and steal all the sales...
I'll be the first to say that I owe Amazon a lot for allowing small businesses the opportunity to be making millions. But at the same time, some of the criticisms are valid, and with a few changes, the platform could be truly great for small business owners.
I agree but I also don't want to punish legit businesses that are also impacted just because this guy sounds like a pointless middleman and I don't feel bad for him specifically. Seems like a real problem and he's just a bad spokesperson
Human labor has little value in the age of chatgpt and onlyfans. Did you know there are teenage girls selling bottles of their dirty bathwater for more money than the average blue collar worker makes in a month. As time goes on, its starting to look like this whole free market thing isnt such a good idea anymore.
Exactly! In whichever market that you can sell dirty bathwater, I think they may have an advantage over my sales of "Smelly Old Nerd dirty bath water".
I'll either find a better channel, price point or give up on my dream of dirty bath water money. Point being the actual value is the packaging and selling of said bathwater.
> They farm out manufacturing to China and logistics/warehousing to Amazon
You miss the key distinction. The former part of that equation is competitive, the latter part isn't. A guy who sells firepits can't be expected to create a competitor to Amazon. Amazon has complete monopolistic pricing power. Whenever a company is in that position, they will abuse it.
No telhey can distribute in Walmart Home Depot or Lowe's or equivalent. Amazon is just a more convenient way to distribute and will probably charge you less than the others :-)
Say what you will about their means of getting it, but this person did 100% of the leg work of getting that sale. That sale doesn't exists without them.
And Amazon gets the MAJORITY of the revenue cut for that?
I sympathize with the idea that China should get more of that, but make no mistake: Amazon's logistics and warehousing were not an option here. They were the cost of doing business. And Amazon took more for that service than this person who actually made that market happen.
>The sale wouldn't exist without anyone in the pipeline (Amazon, manufacturer in China, shipping merchant, etc.)
I think it's actually worse than that. The merchant is the only party that is not needed.
In fact, calling a lot of these folks "merchants" at this point is probably a little too generous. Amazon is the merchant. Many of these other guys are sourcing and marketing "partners" for Amazon and the manufacturers.
By this logic, a car salesperson should get the majority of the proceeds from selling you a car. So from a $30k car, $15k goes to the salesperson, $5k to the dealership, $9k to the manufacturer, and $1k to the shipper. You really think this makes any sense?
I ran a small FBA business for a year nowhere near any scale and it was an interesting lesson. People who weigh in on these tech topics should actually try these things out to understand them better.
It's nothing like listing on eBay where there's some haircut off the top and that's that.
There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Depending on the fee it is - fixed, % of $, weight based, volume based, or some combination.
The fees change constantly with not much notice. So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?
Like Uber drivers, I imagine some % of FBA sellers don't know they are losing money in real time. You need to do some decent accounting to track as all these different fees hit at different times. It's not like Amazon gives you the data & tools to track your all-in costs per sale.
> So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?
You've skirted around the obvious question: Why did you pick FBA to begin with? Amazon sellers existed long before FBA. They did their own shipping, so almost none of those fees apply. Many sellers continue to do well on the Amazon platform while not being part of FBA.
If you can't succeed without participating in FBA, then all that's happened is Amazon created an environment for previously unviable businesses to succeed, and has merely tightened it.
Edit: Amusing that this comment is being downvoted, whereas my other comment saying pretty much the same thing is being upvoted.
AWS works this way too but I’ll get dogpiled by Amazon sycophants and other people who have built their careers around getting witless companies sucked into the Amazon machine.
Steve gave examples for the different kind of fees and that it's hard to track them and why. I wanted to ask you for examples for AWS. Would be good to know concrete pitfalls and traps.
egress fees, inter-DC transfer fees, IP fees, ebs storage fees, transactional fees on things that are transactional. If you don't carefully engineer everything you'll get left with a $15,000 AWS bill. This doesn't cost Amazon anywhere near $15k to provide, so they just "waive" the fees if you promise to be a good little user.
Don't disagree with this, but this is the same in almost all cloud providers. Want to get started with Digital Ocean's app platform? You're paying for Container Engine to store your containers, then App Platform Business just to support scale-outs, then multiply this for the number of services you're deploying and make sure you don't have egress overages etc etc.
At least AWS gives me an invoice each month with a break down of fees. GCP just sends an invoice for the total amount. No detail, no breakdown. And I have never gotten any of GCP's many different pages under their billing system to spit out any numbers that make sense. Pick your poison?
If I remember correctly, they charge for the BigQuery table you use for the detailed export. In other words: there's a charge for seeing detailed charges!
All other clouds provide a detailed cost breakdown report for free.
> There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget.
Have you ever run a business where you have to manage your own inventory? What you listed and likely the 5 things you omitted constitute real work. Perhaps amazon's fees are capricious but they're doing all the work for you. You can manage your own inventory and shipping logistics and still sell on Amazon
Those fullfillment fees are nothing new. I worked for a publisher thirty years ago and they had a similar network of fees.
The only difference was they were predictable in that the fee schedule changed only at time of contract renewal.
Whats different is that the fulfillment centers then couldn't see our books and weren't looking over our shoulder seeing our accounting figures, so as to grab the profits the moment it crossed the threshold of feasiblility.
Uber was easy and profitable in the beginning and clearly a superior value to car services and cabs. Many drivers took on debt to buy bigger better cars, never imagining the goalposts were adjustable by design so as to centralize all the profits.
It is obscene, like Ducth East Indian trading corporation, or Rockerfeller.
People will walk away, there's no choice and MegaCorps know this, so they will subtly lock down movement.
Medium sized businesses are the buttery smooth, slippery slope to hell these days.
Attention management and product discovery has to be done by permenantly white organizations, monasteries, regulated-to-inaction government arms, independent offshoots of a benevolent billionaire's philanthropy...
The panopticon doesn't just effecy day-to-day life... it also strangles the power and wealth of businesses to death.
I have been saying it for years, and people just dismiss it, why would a billion dollar company prey on a million dollar company, they have bigger opportunities...
The nature of Uber being easy and profitable in the beginning was a heinous dishonest trap engineered by venture capitalist subsidizers.
It should be illegal to convince people economically that a certain lifestyle is worth switching to when you are keeping secret your plan to slowly boil the ocean tweaking it so that you can get your exit.
Correct. My point is that people only casually familiar don't realize how vertically integrated the FBA model is.
FBA is like eBay, PayPal, FedEx, Google Ads and a warehouse all wrapped into one.
But they charge you varying types of fees based on different measures, at different times, for each of those parts of the stack. And you cannot cross shop, mixing and matching other vendors in to keep them honest on pricing.
It's easy to use, but you are locked in to their stack.
Why shouldn't they? You've arranged to have product you didn't create shipped to a warehouse you don't operate to be stored by a system you don't maintain to be sold on a storefront under a brand you made up and that you didn't create to be fulfilled by a shipping apparatus instead of you going to the UPS Store. What exactly are YOU doing here that merits a payday? Mediating a relationship between Amazon and a Chinese manufacturing firm? They already have tons of those.
The entitlement these entrepreneur types exhibit is the economic equivalent of wind-drag. If buying stuff from random AliExpress sellers and charging 300% markup to sell it to people who don't know better on Amazon isn't working out for you, maybe you should find a way to contribute to the economy instead of just inserting yourself between existing profitable businesses and demanding money for sending some emails.
If it's legal they should do it because it's evidently profitable. If it's not legal then they shouldn't do it because it's illegal. Which is really the question at hand.
You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor). But that's not really relevant to the question of did Amazon utilize anti-competitive behavior that violates the laws that govern how businesses are allowed to behave.
> If it's legal they should do it because it's evidently profitable.
Is it? The moaning from higher in the comment tree seems to disagree with that assertion.
Maybe it was once profitable, but it seems as Amazon's reputation for hosting tons of cheap resold goods gets worse, it's becoming significantly less so. I personally have known for years that it's possible to oftentimes find the gadgets sold for $15-20 on Amazon on AliExpress for a few bucks. This isn't exactly arcane information anymore.
> You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor).
My criticism is that the same people who cry from the rooftops about how free commerce is essential and how they have a right to sell marked up goods under any name they like to people who can't trace their supply chain have zero basis to complain when consumers get wise to their shenanigains and go elsewhere. It's literally this kind of "business owner"'s fault that Amazon is becoming near unusable now. I'm not shocked one bit that Amazon is cracking the whip; their reputation is on the line and has been trending steadily down for years.
"Buyer beware" they chant. Until the buyers start bewaring, and then they start whining about unfair competition and high fees for their store that is entirely operated by a third party and literally cannot exist without it.
Amazon is no angel here either of course. They have monopolized the absolute shit out of online retail, one of the ways they did was offering reseller services and getting businesses on their platform in the first place. Neither "side" of this is right, per se. Both of them would send me as a customer up the proverbial river to make a single dollar. As far as I'm concerned, them fighting in court is strictly entertainment, apart from whatever precedents get set that might affect other businesses I actually give a shit about down the line.
But like, the businesses I give a shit about are like, local ones. Ones run by people, to serve people. Not ones pulling tag clouds from trending social media topics or buying ad space on instagram to sell an egg beater shaped like a cat for $35 that they got from a Chinese manufacturer for $5.50/10,000 and dropshipped to people. This is just that, with an extra step. And the entity that's the extra step is realizing how raw of a deal it is, and they want a heftier cut to put up with these middle men. And on that particular point I don't blame them one bit.
It's always a signal that you're on to something when you get a bunch of pedantic rebuttals like this. Attacking the central argument isn't possible, so they nitpick.
You literally just said that they did the hard part, which is apparently identifying a product that consumers want and cannot buy. The commenter then says: why don't they just do all the apparently easy shit, which is making it, holding the inventory, shipping it, and handling returns/customer service.
Maybe your point just sucks because finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard, or that much work, which is probably why this exact business model was sold to people who, as stated by people selling it, had low skills and no interest in acquiring them, so they can generate passive income by operating an automated storefront on Amazon.
They did the unscalable part. That better? Are you happy now? Can you go find something else to nitpick?
> finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard
It's very hard. What you're missing are all of the thousands of people who try it and fail. And you see one person succeeding and say that's easy, they're just buying shit from China. No, they combined skill and a lot of luck to find a product in China people want. That's not just ordering shit from China. If it were, Amazon would do it themselves and cut out all of these middleman. Which they can't, because it's not scalable. Which was my original point.
Unscalable is not synonymous with hard for the vast majority of people. If you communicate confusingly, you'll be asked for clarifications. That's not nitpicking and you can avoid it by using words for what they're for.
> What you're missing are all of the thousands of people who try it and fail.
It's not easy or hard. It's lucky. It's getting your ad seen in the right place with the right audience and taking off with enough sharing to build virality. Then your store will do a brief burst of good business before you fall back into irrelevance and continue.
It's highly analogous to gold rushes. And then as now, the people who get reliably rich off gold rushes aren't mining gold, they're selling shovels and pickaxes, namely: hustle influencers, shopify, and indeed, Amazon.
> That's not just ordering shit from China. If it were, Amazon would do it themselves
Buy some Amazon Basics stuff and check where it's made, then get back to me.
> and cut out all of these middleman
Which is what they seem to be doing.
Like again, for emphasis: Amazon is not a good guy here. They are neutral, at best. But I have very low sympathy for people who build their entire way of life on one single platform that could at any moment tell them to kick rocks. It's bad when YouTubers do it, it's bad when instagram influencers do it, and it's bad here too. And all of these usually end in similar ways. You're only as good as your last post, your last sale, your last quarter of profits and if your and the platform's interests diverge enough, you'll be dropped like a flaming bag of dogshit.
> Unscalable is not synonymous with hard for the vast majority of people.
> It's not easy or hard. It's lucky.
Great, thank you for teaching me about the English language. None of this addresses a single thing about my point, it's just nitpicking my choice of words.
Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.
> Buy some Amazon Basics stuff and check where it's made, then get back to me.
> Which is what they seem to be doing.
Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.
> Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.
Until I do it incorrectly, and then I'm deliberately misconstruing your point into something you didn't say. Or if I do it in a way you feel makes you or your argument look stupid, at which point I'm arguing in bad faith.
No thanks. If you'd like to discuss things I'm happy to do that, that's why I'm here as Obi Wan says. But I'm not responsible for steel-manning your point for you because you lack vocabulary.
> Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.
This is still not nitpicking. You have repeatedly put the notion of product acquisition on a pedestal, including the fact that pulling goods from China is this difficult, laborious task (which, it does take labor, that is true). But Amazon knows how to do that, it's basically how it became the retail juggernaut it is.
And that includes Amazon Basics products, which without even looking at one, I'd be willing to bet non-insubstantial amounts of money are manufactured mostly in China. That doesn't make them inherently bad: Chinese firms will make your products as good or as bad as you're willing to pay for.
No one is nitpicking. They just don't buy your argument."nitpick" implies a person is addressing a minor detail and not addressing the central point. This person, and the comment above (by me) is directly addressing the central point you made, and saying it's weak.
Building all the infrastructure required for FBA is much more difficult than choosing products. The proof is in how many people have done one v the other. Amazon does a decent job on both sides - building the infrastructure, and figuring which products to sell, at scale (they do 100's of billions of non 3rd party sales every year).
And it's still wrong. Amazon does 100s of billions of 1st party sales. As does Costco, Walmart, Target, and probably a dozen other stores I'm not aware of. It scales, big time. Choosing products to sell when you have a giant distribution engine is one of the most scaleable things in business.
If you want to trot out the principle of charity, it goes both ways. You assumed people were nitpicking. It was wrong. Every way you want to spin it by changing words, wrong.
> Amazon does 100s of billions of 1st party sales.
And the remainder is not scalable. All of that done by their sellers. As evidenced by the fact that they are not doing it themselves.
I'm beginning to think this thread is being astroturphed. All of you are employing an identical strategy of latching onto minor issues with how things are phrased. A standard PR tactic. And Amazon has a long documented history of astroturphing.
You are human? You must be amazon's first gen astroturfing infra, mechanical turk style. I'm part of amazon's skunkworks Astroturf-LLM service. Automated, at scale astroturfing. I believe we will make it public facing via AWS soon.
normally they'd need to pay for storage, stock, liquidation of stock they didn't sell, returns etc
and instead now you pay for all of that for them
and what do you get in return?
- a listing on page 17 of their ever increasingly shitty website behind legions of MINFARTO, PATRONICS and GIBRANKER aliexpress garbage
- customer service staff with an inability to understand simple english or basic problems
- your genuine stock mixed with counterfeits, that then they penalise you for
- paying to give your sales information to them as a potential competitor, as if you do well they'll ripoff your product
and they take essentially absolutely no risk whatsoever
Has anyone created software or a web site to generate hilarious Amazon brand names automatically?
Edit: Looks like there are lots of AI-fueled Amazon/business name generators. Most of the names weren't as funny as your examples, though I got some good ones (electrofakes.com, etc.) from prompts like "low quality tech products" and "cheap knockoff technology products."
Another site gave me the more Amazon-appropriate LAMOFY, HOROLY, YORBAX, etc. (all with .com domains and premade logos.)
As the NYT noted, "Amazon is to fake products as Facebook is to fake news."
HiLetgo is legit, they've been around for quite some time and make decent ESP32 boards among other things. You can tell the FBA placeholders from Alibaba drop shippers because they're almost universally six letters and all uppercase like MOREPI; because this is enough for them to get a trademark to participate in the Amazon Brand Registry and get reduced seller fees.
And the vast majority of the products are just rebrands from Alibaba. As a matter of fact, there's an entire economy centered around finding products on Alibaba to resell on Amazon.
It's a super interesting segment there are like millions details for the system to work even if the basic product is the same you can have your own barcode and serial number label attached, you can personalize the packaging, you will have to translate the manual, the are entire microverticals that exist just between the no brand manufacturer and the guy flipping the product on a marketplace even before shipping takes it out of the factory you're already paying like four or more services provider, plus coordinators to make all that happen.
Not to be confused (as I was) with FOB, free on board, a term in commercial sales law, especially wrt international shipping: https://en.wikipedia.org/wiki/FOB_(shipping) I wouldn't be surprised if the similarity in acronyms isn't coincidental as in the abstract there's some conceptual, if not legal, overlap, and Amazon may have been aiming for something that read like authoritative legalese--the legal department must "always be selling" no less than the sales department. But neither would I be surprised if it was coincidental.
A neighbor of mine who makes high end silver jewelry was doing fine with the gallery he used (in Santa Fe). The gallery collected about 30% of his sales price in fees.
Another gallery approached him, asked to represent him instead. They took 50% in fees. He switched anyway.
His income went up (and stayed up). Presumably the new gallery provides some combination of better environs, more and/or different customers, better salespeople.
It still seems wrong that fees could be this high, for a jewelry gallery or for amzn. But it shouldn't be assumed that the high fees necessarily mean reduced income for the original seller.
"But it shouldn't be assumed that the high fees necessarily mean reduced income for the original seller."
I agree. It just gets passed down to the customers. Most of my shock was directed at the 50% increase in fee in just a few short years. You can't do that without having a lot of leverage.
As a business owner pricing a product or service, if your costs increase you can either take the marginal cost out of your net income or increase the price.
Taking it out of your net income is simple: You keep prices the same, revenue remains the same, and profit drops a bit.
Increasing the price is more complex; you are changing one component in a system of dynamic feedback: When you raise the price, fewer people buy your product, so the outcome may be less revenue and less profit. The impact of price changes on purchasing is called elasticity: Some products - e.g., fancy restaurant meals - are easily forgone and are thus price sensitive. Others, like necessary healthcare, can be priced extortionately and people will still buy it.
Arguably, if you are the mythical optimal manager, you've already priced your product to maximize revenue and therefore any change will decrease it. In that case, price increases will only worsen your profit.
The reason for your price increase is orthogonal to the customer's purchase decision - you raise the price, they buy less. They usually don't know and don't care why - do it for greed, to cover additional cost (and maintain your beloved profit margin), because your finger slipped on the price-your-goods app, whatever.
Back in the 80's, my company sold compilers through third party mail order houses. They all demanded providing the product to them at 50% of their selling price.
It's what having somebody else advertise, collect orders, process payments, ship, and deal with returns is always going to cost you.
If it's unacceptable to your business, sell directly. My company did both.
I neglected to mention that the mail order resellers demanded we provide them with product at 50% of the price we retailed it. So, if we lowered the retail price, we'd also have to lower the wholesale price.
Nobody was being stupid here. Or maybe I should say that one learns the ropes fast or goes bust.
I am pointing out that your example includes risk transference. Unless they also charged you for shipping, storage, and returns.
There is a difference between "let me buy from you and I need room to make a profit" and "you can sell through me but you bear all costs but I still want my profit".
Yup, it makes me wonder what % of consumer goods for sale via FBA are from retail theft rings. 52% fees on stuff that cost you $0 ain't bad. Otherwise, it's very very bad.
> Would be curious to see numbers on the bigger items. Have you used FBA?
Yeah, I've done enough FBA to rank somewhere between a serious hobbyist and an actual lifestyle business.
There is a sweet spot. If you're selling lightweight crap items, even the small shipping and fulfillment costs still tend to dominate. If you sell huge stuff, the shipping will bite, but not as bad as you'd expect -- Amazon has very good rates. The big problem for bulky items tends to be warehouse fees, and also the logistics of getting it to the FBA warehouse in the first place.
I'd say around 1 cubic foot is exactly where you want to be (with the dimensions carefully chosen to keep you in a favorable category, of course). I believe 18"x14"x8" is the biggest legal standard package.
Somewhat counter-intuitively, if you miss that standard cutoff, you might as well go big (3+ cubic feet) since you're paying the same oversize rate either way, the only drawback is warehouse costs. There's sort of a no-man's-land in between toaster-size and microwave-size.
Anyway, here's the actual fulfillment fees, if you're curious (notice how reasonable the rates are in the "Large Standard" range):
Depending on what services they provide that might not be terrible, its basically high end art gallery margins, but for consumer products with low margins that seems unsustainable. I'm curious how much AliExpress takes.
>A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
It's interesting, Amazon also put a lot of mom and pop businesses out of business during this time period as well. The overhead that used to go to local commercial property owners, independent trucking and warehousing companies and such now all goes to Amazon. It's a total monopoly in the old school robber barron sense. Not only do they own the railroad they also own the steel plant and the coal mine.
Amazon's "potential competition" in this case is driven by ads via Meta (or maybe Google). I'm all for Apple preventing Meta from spying on me, even if it makes it hard for small companies to advertise to me.
> Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.
Meta/TikTok do less spying on customers, so it is harder to target ads to customers on iOS. This is the desired behavior. It means people who want to use targeted ads (called "the FB/IG/TikTok to Shopify connection" by the GP) are not able to.
By "mom and pop businesses" do you mean people selling cheap crap from China that is the same as the crap sold by a dozen other "mom and pop businesses"? Hard to feel sorry for businesses that are contributing to the rapid decline in the quality of all product categories.
> lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
> The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.
you either wouldn’t have a business at all without FBA, or you’d have higher margins with the same net earnings.
if you don’t like FBA try advertising on facebook. it’s very expensive because it’s very effective. the cost of the ad is so great that socks have to cost $20 and t shirts made in china have to cost $30.
i used to buy from marketplace on amazon. but dealing direct with sellers is worse than the ebay gamble. so i only buy FBA. i prefer direct sale from amazon if possible. the price is always higher but i have guaranteed no hassle.
otherwise i shop local.
i don’t know about dirty tricks but from my POV amazon earned their market by having consistent and reliable customer service. if you want to increase your sales it’s worth it to ride on _their_ brand. $250k to $5m for a mom and pop drop shipper sounds absolutely fantastic to me.
I can't help but think that Amazon should be replaced with a non-profit or regulated public utility that provides a single unified online marketplace, part of internet infrastructure like ICANN. Sellers would select among competing fulfillment services (warehouse+shipping). Platform referral fees would go toward customer remediation, anti-counterfeiting, and review integrity.
I don't merely say this as a "fuck Amazon" reflex or a "fuck capitalism" reflex. I say it because it obviously would allow so much of the dying segment of mom and pop small business to become viable again. Just from a policy perspective it's a home run because it's a way to juice GDP, improve consumer purchasing power, AND reduce income inequality.
As a matter of fact I would suggest that Amazon as it exists is anti-capitalist. It is feudal. Capitalism is the deployment of capital and assumption of risk in pursuit of new value creating activity. Amazon is not marshalling new capital to innovate or improve its digital marketplace. Rather, Amazon simply owns digital real estate and extracts rent, like some kind of futuristic dystopian corpo-baron.
The best part of all this is that Amazon doesn't have to be forcibly nationalized or broken up or anything like that. The government just needs to support and endorse a good alternative, because Amazon seriously sucks.
Don't you think if we turned USPS into this it would be a another billions of dollars a year waste for taxpayers? Do we really need to be subsidizing drop shippers?
> Amazon is not marshalling new capital to innovate or improve its digital marketplace. Rather, Amazon simply owns digital real estate and extracts rent, like some kind of futuristic dystopian corpo-baron.
Amazon owns one of the most sophisticated logistics networks in the world. They own warehouses and robots and trucks and planes. All of that adds up to a meaningful, valuable contribution to the world.
I buy tons of stuff on Amazon. I buy from them rather than from eBay or an independent online retailer because I know it'll actually get delivered to my house on time. For me, the marketplace is basically irrelevant - it's the promise of fulfilment by Amazon that I care about.
I sometimes reluctantly buy from an eBay seller or a random e-commerce site when the item I want isn't available on Amazon. Those retailers tend to offer "FREE DELIVERY", but they also tend to be very evasive about how long it'll take and which company will do the delivering. Sometimes they'll advertise next-day delivery, but take two or three days to actually dispatch the package. Sometimes they'll use an ultra-cheap delivery service that takes 3-5 days, with no prior warning of which day they'll actually try to deliver on. Sometimes their terrible delivery service will decide that they just can't be bothered to deliver to my house, so they'll lie about having tried to deliver it and tell me to collect it from a warehouse. Sometimes they deliver to somewhere random in the vague vicinity of my house (a neighbour, underneath a parked car, behind a bush) and I get to play a fun scavenger hunt where the prize is something I already paid for. These bad outcomes literally never happen to me when I buy from Amazon.
In the event that something did go wrong with a delivery, I'm confident that I could just contact Amazon and they'd make it right; when something goes wrong with $OnlineRetailer, I often find myself refereeing a dispute between the retailer and the logistics company, both of whom deny responsibility.
There are plenty of alternatives to Amazon, but from a customer's perspective they just suck.
All of what you're saying has to do with Amazon fulfillment (FBA), not Amazon.com the Internet marketplace.
They're two entirely different things (you can actually use Amazon fulfillment for items sold on other websites, although it's typically too expensive). If Amazon fulfillment continues to dominate on an independent platform, that's great, they earned it, but at least they won't have absolute pricing power because sellers will have alternatives, and at least other companies will have a chance to impress you, too.
I'd figure that the marketplace would show the fulfillment company in addition to the way that the courier is typically indicated, so that customers could express their preferences. If the item does a lot of volume, perhaps a seller would even have inventory with multiple fulfillment companies, and buyers could pay a surcharge to get their preferred fulfillment, same as shipping.
> Don't you think if we turned USPS into this it would be a another billions of dollars a year waste for taxpayers? Do we really need to be subsidizing drop shippers?
You've missed the idea entirely. No shipping services are envisioned whatsoever by the "public utility". It would just be the actual marketplace connecting buyers, sellers, and fulfillment.
Amazon can continue to do order fulfillment if they like, it's just that any company with a warehouse can actually begin to compete with them. Sellers would be able to freely associate with whatever fulfillment company best suits their needs, rather than being captive to FBA.
> What on earth are you on about? They own a url.
Right, from which they extract enormous rents. It is not a product in which they continually invest. If you have used it with any frequency over the past decade, you've almost certainly noticed how shitty it's become. That's not an accident; their "sellers" (tenants) are locked in, and are paying something more like obligate rent rather than indicating with their dollars that Amazon's product is the best.
It would be the same story with privately owned power lines or privately owned roads. You're not using them because they're the best, but because you don't have a choice. We screwed up with the actual internet cables, but we still have time to get it right with internet marketplaces.
> I can't help but think that Amazon should be replaced with a non-profit or regulated public utility that provides a single unified online marketplace, part of internet infrastructure like ICANN.
if the market was working correctly Amazon's profits would be driven down to zero and you'd effectively have this
> As a matter of fact I would suggest that Amazon as it exists is anti-capitalist. It is feudal.
> if the market was working correctly Amazon's profits would be driven down to zero and you'd effectively have this
Are you sure? Consumer behavior seems to be to simply go to their default marketplace rather than to search the whole internet (which is slow, painful, and low-trust), so it ends up being a winner-take-all system where alternative marketplaces like eBay are almost irrelevant and Amazon charges whatever they like and basically ignores counterfeiting and review fraud.
There are "natural monopolies", like with roads and power distribution networks, and I would argue that online marketplaces have turned out to be another one, and we should modify our public policy to reflect that.
FBA SKU pooling has completely killed Amazon for me. I used to purchase on Amazon regularly but I just can't trust them shipping me a genuine product anymore. I've gone back to select local eShops, even if the quoted Amazon price is often cheaper.
Thanks for sharing your experience. Do you think Amazon dropped the planned fee they were going to charge for those sellers who don’t use prime, in anticipation of this suit? Would that have impacted you?
Amazon is a marketplace and provides exposure - in other words, they bring you traffic besides providing ecommerce functionality. Possibly a lot of traffic if there's not much competition already in your space.
With Shopify you have primarily an online store solution. It's up to you to do your own marketing somewhere to drive traffic. Shopify does have what they call "Shop" now, which works like a marketplace, but in my experience that's still a relatively small channel for Shopify sellers.
> Shopify does have what they call "Shop" now, which works like a marketplace, but in my experience that's still a relatively small channel for Shopify sellers.
It's getting pushed harder due to things like Shop Pay being a thing. I've actually been trying to use it more, given I do purchase an increasing number of things from Shopify-powered retailers - but their search and targeting still needs a lot of work for it to behave like a proper marketplace.
Shopify requires you to build out performance marketing strategy and with the IOS changes, targeting has lost efficiency. It’s more expensive to acquire customers.
Once I figured eBay out, it's about 90% eBay, 5% Amazon, 5% other.
Amazon does a great job of making it appear that they are the best option to shop at. But they really aren't. Even with Prime Free Shipping, if you search eBay correctly - the prices are likely better there.
I know what some are probably thinking, eBay is full of scammers and knockoffs etc. That's not really accurate. Especially when you figure out how to use it correctly.
eBay policies are designed to protect the buyer. If the item doesn't arrive, you're getting a refund. Every. Single. Time. If you're unhappy with the item: tell the seller. Most will make it right for fear of negative feedback, and knowing they'll lose the INAD. INAD? If the seller wont fix it, file an Item Not As Described claim. You will win and they'll be forced to either refund you or accept a return.
ATT, where apple hobbled other ad networks running on iOS. It used to be that DTC companies could use the fine-grained targeting offered by FB and Google to reach consumers without needing to go through a major distributor. Since the targeting is much less effective it's more expensive (potentially uneconomically so) to reach people. As a result, sellers are forced back to Amazon.
I work with DTC Shopify brands and I personally haven't found the ATT hurting ads performance in both Meta and Google. I'm sure YMMV but I've not seen it since it started. Maybe I work with very broad targeting compared to others.
I've been saying for years—and it's been received un-popularly here on HN—that ATT has been a bad thing for the industry overall, and this thread is a primary case in point.
Are its unintended consequences in propping up monopoly also good for ‘society’, then? Hate to break it to you, but the topic is a bit more nuanced than ‘privacy good’ ‘ads bad’.
Businesses got along just fine before all that intense user tracking was even possible. If your business absolutely needs it to survive, then your business doesn't deserve to survive.
"boo hoo, I can't invade my users privacy anymore! Waaaaah! It's unfair"
A lot of the old machinery for small businesses to find their customers - e.g. news, hobbyist magazines, etc - is no longer around, and so there's nothing for those businesses to return to. The Internet, and specifically advertising companies, killed them off. What's unfair is not that they can't violate privacy, but that Amazon still can.
Apple limited data from being transferred between apps. So you can’t measure whether your ad being clicked in one app resulted in a purchase in another app (aka. a “conversion”). That throws a big wrench into ad pricing, because the sellers want to pay-per-conversion. It hurt companies like Snap, Shopify. Since Amazon owns both the search/discovery and checkout in the same app, this doesn’t affect them.
Also, Apple didn’t limit their own advertisers from measuring conversions. So if you click an ad in Apple News and then buy an app from the App Store they will measure and charge the advertiser for that conversion without ever popping up a scary message saying Apple wants to track you. Go figure.
The companies have worked around these issues by doing stuff like statistical modeling to guess the conversion rate, but this has obvious downsides and makes everything harder, which puts them at a competitive disadvantage vs. vertically-integrated players like Apple and Amazon.
For one thing, the privacy rules only cover sharing data with third parties. They don’t cover Amazon using its own data for product recommendations.
But also, Amazon doesn’t rely on product recommendations in the first place. When I want to purchase something, I usually go to amazon.com and type in exactly what I’m looking for. No need for Amazon to guess. Amazon does make recommendations, but at least in my case they represent a tiny fraction of purchases.
In that way I’m voluntarily contributing to Amazon’s monopoly. I feel bad about that. But I use Amazon anyway because there are no alternatives that offer even a remotely comparable buyer experience.
By virtue of everything sold on Amazon being in the Amazon app the rule in question is kind of moot. The ATT privacy rules don't matter to them because they've already got everything they need to know about you from your habits in their app.
The key was that people self-selected into those outlets. If you were selling, say, game controller skins; you'd be making a pretty sure bet buying ads in GameInformer or on Joystiq. The problem with going back to that kind of business model is that these dedicated websites with specific niche audiences are dead or dying because the ad dollars moved elsewhere.
You say that, but what this rule has done is made it so this kind of tracking is available only to large apps like Amazon. The little guy gets snuffed out before they can even gain traction.
was there also any change related to Apple wanting a cut of anything sold through an app, and how the Amazon shopping app works on iOS, and could that also affect 3rd parties?
No, physical goods have always been excluded from Apple’s commission
In fact they explicitly prohibit using in-app purchases for physical goods, presumably because they don’t want to deal with the headache that comes with providing customer support for those transactions.
They were using the Amazon platform for what it was intended for, and Amazon made more millions off of them. It was supposed to be a mutually beneficial relationship.
And I am saying what Amazon is doing is not anticompetitive at all. These “companies” that sell on Amazon are basically glorified trade companies that arbitrage low cost Chinese manufacturing. I don’t feel bad for them at all. If they are hurting so bad, go sell the goods on Shopify store or Walmart/Target. Oh, what’s that? They charge more than Amazon? Interesting…
You're over generalizing. There are plenty of sellers that took the time to develop their own products and sell them, only to be copied and undercut by Amazon.
How is that different from Walmart selling their Great Value store brand? They see what products sell well then formulate their own cheaper alternative, maybe even giving their product better shelf placement.
Every national grocer does this. It seems to be a pretty close analog yet nobody bats an eye at the practice.
In general there are many different grocery stores, even Walmart the massive company it is only represents something like 10% of grocery sales in the US.
Amazon represents something like 40% of all online sales. Typically having a large plurality in a market raises the likelihood of actions against you.
>It seems to be a pretty close analog yet nobody bats an eye at the practice.
Or, more likely, tech people pay attention to Amazon and not the myriad of suits occuring in the retail and grocery world.
The local Kroger supermarket has Kroger branded items on the shelf right next to the national brand. The latter is always more expensive, I usually buy the Kroger brand.
The supermarket wouldn't stock the national brands at all if customers weren't buying them.
> How is that different from Walmart selling their Great Value store brand?
Well for one it’s different in that store brands are often made by the same manufacturing/processing plant as the regular brand.
So not only is consent implicitly build in because the producer agreed to make the store brand variety, it’s another income stream.
And secondly the store brands typically go out of their way to differentiate themselves from the main brand to such a degree that if you hold the two boxes next to each other you wouldn’t mistake one for the other.
Thirdly they significantly undercut the other brands and sellers.
They can do so because they don’t have to pay themselves a commission and all the other fees, which in turn forces the other brands and sellers to match or eek out a small price difference in which they’re cheaper in the hopes to get some sales, cutting into the already thin margins that are left after paying Amazon’s fees.
Amazon is also in a better position because of the vertical integration, they have a direct relationship with the manufacturer which cuts out the margins of the middle men (the sellers and distributors), regular sellers on Amazon have the distributor’s margins to deal with and then their own margins and as opposed to Amazon they can’t sell their items as a loss leader.
As for Walmart and similar retail, it’s a whole different situation.
The manufacturer sets the price and within it, their margin. The retailer then purchases it at that price and tacks on their margin, but if it’s on the shelves then the manufacturer has been paid so there’s no risk for the manufacturer because the retailer carries the risk.
There are some nuances and exceptions, such as manufacturers sometimes being able to force a MSRP onto the retailer or a retailer being big enough to leverage a better price or a risk shifting agreement where the retailer doesn’t have to pay for delivery until the items are sold, nevertheless, in general the relationship is entirely different from the relationship Amazon has with its sellers.
And lastly, Walmart doesn’t hire people to walk beside you in the store to swiftly grab a Great Value variant and push it in your hand each time you so much as think of buying something.
The cereal factory that makes Kellogg’s cereal also making Great Value cereal is therefore not comparable to Amazon.
Amazon typically makes their Basics items look identical to the most popular brand and place it at the top of search results.
Now the original brand is forced to pay to get their item at the top of the list, and even then it’ll get second place, underneath the Amazon branded one (often barely above the fold).
Take this example of me searching for a padlock[0][1].
Not only is the Amazon branded lock identical to the one below it, it’s placed prominently at the top of the results in such a way that it’s the only product that can be seen in full.
The one immediately below it doesn’t get top spot despite being “sponsored” (i.e. paid to be prominently displayed) and if you look at the price they’re trying to be a little bit cheaper than Amazon in the hopes to generate sales but given how minor the price difference is with the Amazon branded lock, it comes across as a painful thing for them to do because it seems to me as a meaningless difference (but admittedly that’s me reading into things).
The issue is that when you’re the platform holder that sets the fees for sellers, controls what people see, have insider knowledge on sales and you use that to benefit your manufacturing and sales division, then you have too much control and are abusing your powers imho.
Brick and mortar retailers don’t have this much control over and information on their suppliers.
Reality is far more complex then the simple take you have here.
>by offer better quality stuff,
Amazon, for example, offering counterfeits of your product as your product is not under the definition of "better quality stuff"
>for a lower price
Again, offering a lower price consistently is one thing. Using pricing as a weapon, for example selling a product lower than cost in order to monopolize a market is not.
>If the price stays low and never goes to high monopoly prices then it is a good thing.
Not necessarily, but it goes a long way to balancing out the negative consequences. The problem, though, is they've never had prices stay low. Eventually, prices go up. So far, Amazon does this through loss-leaders; products that have low prices allowing them to capture a market and charge high prices for other products as a monopoly.
>If a company becomes a "monopoly" by being cheap, and staying cheap, thats just competition by definition.
If that was all they were doing it would be legal.
The competitive market has multiple goals - lower prices for consumers is only one of them.
Big companies compete in the market by offering the same quality for a lower price. That's good, no problem with them doing that.
The problem is when the big companies crush nascent competitors by using their advantages in the market and not by being better quality or more consistent. That's bad; it stifles innovation and creates market concentration, resulting in monopolies and allowing large companies to charge supracompetitive prices.
So you can have pro-competitive behavior (lower price) that balances out anti-competitive behavior (crushing nascent competitors through market manipulation or cartels); That doesn't mean everything you do is above board. It means that while the lower prices are there, a certain amount of anti-competitive behavior has been acceptable because the net outcome to consumers is theoretically positive.
[edit] Think about this - if you can win with lower prices, why do the other anti-competitive behaviors? Why not just have lower prices and let others try to compete with higher quality or lower prices than you? Wouldn't that be better?
The reality of this is, though, that the monopoly you form affects far more than the consumer product price. What the FTC is saying here is that they are moving back to structural restriction rather than simply allowing anti-competitive behavior so long as the price is good, a la the Chicago School.
>We are seeing low prices and then competitors that suck complaining about the fact that they suck in comparison to the more competitive company.
That's not what we're seeing, though.
What we are seeing is artificially high prices. One of the allegations is that if a seller prices below Amazon, Amazon removes their access to market.
>> So you can have pro-competitive behavior (lower price) that balances out anti-competitive behavior
>Defeating competitors with lower prices is pro competitive, not anti competitive.
I already acknowledged that lower prices is a positive, not sure why you repeated that. If that's your only point, then yes - you are right, lower prices is a positive for consumers. It's a balance, though; lower prices don't mean there is no anti-competitive behavior happening.
Undercutting competitors and copying them is often fine, though the process by which a competitor is undercut can be anti-competitive itself and have structural consequences that are anti-competitive, and copying competitors is obviously restricted by patent and copyright. It's not a blanket 'this is the whole purpose of competition' thing.
>Notice how I made no comment on anything to do with vague "other behavior"
It's not vague - it's laid out in the indictment. I get that you don't want to respond to it and only want to prove that lower prices is good, but that conversation ended, we all agree that lower prices for consumers is good. The question is how good. Good enough to balance the bad behavior? The FTC clearly thinks otherwise.
> and only want to prove that lower prices is good, but that conversation ended
When you respond to me and bring something up, it comes off as if you are trying to refute something that I am saying.
If you are now that that I was correct completely, and that you were just bringing up a separate point that is irrelevant and does not refute anything that I said, well then OK?
> Lower prices for consumers is not the whole point of a competitive market.
You are 40 years behind on the modern day interpretations of the anti-trust laws by the courts then.
An analysis of how much consumers benefit or are harmed by certain behavior is what the courts use for most anti-trust laws.
And lower prices are almost the court decided definition of a consumer benefit.
So yes, the point stands.
Someone else was complaining about competitors being undercut, and I responded by saying that actually lower prices are good and this is what our anti-trust laws are trying to promote, not stop.
>You are 40 years behind on the modern day interpretations of the anti-trust laws by the courts then . . . lower prices are almost the court decided definition of a consumer benefit.
That's not the policy of Lina Khan and the current FTC. She was literally put into the position she holds because she was critical of that framework for antitrust.
Yes, since the 70's Bork and the Chicago school has held sway in courts, but that's changing. So no, I'm not behind - this is why the FTC is bringing this case in the first place.
> Yes, since the 70's Bork and the Chicago school has held sway in courts
Oh OK, so then I am correct under the overwhelming majority position/framework which is the only interpretation that matters for enforcement, which is the interpretation held by the court system.
I am more than happy to accept that concession and only be "wrong" under the minority position that hasn't been relevant for 40 years.
> That's not the policy of Lina Khan and the current FTC
They can make whatever bad arguments they want in court, and lose their lawsuits I guess.
They don't decide the outcome of these court cases.
If anything this strategy is actually harming then, as they make failing arguments that the courts won't listen to.
If you took the time to develop and market your products, you would not have solely relied on Amazon e-commerce. Most likely, the single greatest source of traffic was Facebook (Instagram) and Reddit. You would only sell on Amazon, if you’re from EU (or RoW) and that Amazon US made sense for you in terms of logistics. In other words, if you solely relied on Amazon to make money that means your business model was BUILT on fooling consumers on Amazon algorithm not your actual product.
The reason you see only low-quality Chinese knockoffs with computer-generated names could be because Amazon's anti-competitive behavior made selling real products unprofitable.
Amazon was originally the world's largest bookstore. What did authors sell then -- commodities manufactured in China? Your comments are painting with a very broad brush.
You don’t have to use them. That’s the point of my argument. No one’s stopping you from selling it using Shopify where you can set up an e-commerce store within a couple of hours.
And my point, as someone who’s worked in antitrust field for over a decade, is that Amazon is a company that does the least to exert monopoly power out of all the big tech companies. In fact, they do so little that I think they are being stupid.
Does anyone know more about Project Nessie? There's a portion of the complaint [0] that is heavily redacted from page 123 to 126. The only information that isn't redacted is this:
* Project Nessie is an algorithmic pricing system
* "Amazon's Project Nessie has already extracted over [redacted] from American households."
* "this scheme belies its public claim that it “seek[s] to be Earth’s most customer-centric company,”"
* It's related to Section VI.A.3 (Amazon maintains its monopolies by suppressing price competition with its first-party anti-discounting algorithm)
Amazon themselves identify Nessie as the system that monitors spikes or trends [1], so my hunch is this is some sort of surge pricing system. Does anyone here know more?
Amazon has implemented an algorithm for the express purpose of deterring other online stores from offering lower prices.
[redacted]
Rather than trying to compete, Amazon uses
[redacted]
Ultimately, this conduct is meant to deter rivals from attempting to compete on price altogether-competition that could bring lower prices to tens of millions of American households. As a result of this conduct, Amazon predicted, "prices will go up."
What especially rankles is how Amazon doesn’t give a fuck about counterfeits. So they’re allowing counterfeits (amplifying the mentioned effect) to discourage direct-sellers from attempting to compete on price.
Meanwhile, I have to order from direct sellers to be sure I will get a genuine, new product. So I don’t even get Amazon’s lower-but-still-higher-than-optimal price, but a yet higher one.
As far as I’m concerned the whole company’s a giant scam and I can’t believe it still hasn’t caught up with them. They benefit so very much from enabling bad actors, and have for so long clearly without any serious attempt to stop it, that I’ll do a happy dance the day they go under or get broken up. I just wish the eventual consequences could force Bezos to have to work for a living again, since he’s built his empire on fucking people weaker than him. Shouldn’t get to keep a penny of it.
Not just counterfeits but pages upon pages of shitty products from companies like WOWZAMGO and PARTUE that, now that they have sponsored rankings, will always come up first in search. They also all have endless fake reviews. This renders Amazon's search essentially useless.
WOWZAMGO makes quality products. I bought their portable usb battery and it only caught fire after the 20th charge cycle. PARTUE, on the other hand… don’t ask!
The truth about consumer buying patterns is most purchases are treated as lowest cost commodity, unless the buyer is aware or the price threshold is high enough[0]. When you don't have subliminal[1] and limited selection pressure (both of which exist in brick and mortar stores), coupled with a UI that makes it pretty easy to discover other brands, and coalesced signals (reviews placement etc), lowest price wins.
[0]: Put another way, if its expensive, it gets more scrutiny by the average consumer (whatever their definition for expensive is). The other circumstance is if they care about the category or are in the slice of shoppers who do quality research, which is less common than you might think, until the cost factor kicks in, usually.
[1]: This is brand awareness, and other related verticals. Effectively, this is what brand and mass marketing is about.
> The truth about consumer buying patterns is most purchases are treated as lowest cost commodity, unless the buyer is aware or the price threshold is high enough[0]
Well said. Also, let's not forget time. I've spent countless hours researching many things I intended to buy only to give up partway down the road. It's in part because of the endless results on Amazon (referenced here) but also elsewhere.
Let's say, for example, I'm trying to find the best saute pan. Amazon gives me thousands of results, but so does Google. My search results are littered with tons of X-best SEO-optimizing websites that don't help narrow down choices. So, in that situation, it's less about the price and more about the time: I'll just buy whatever seems reasonably rated and not outrageously expensive and move on.
I really enjoyed the earlier days of the Wirecutter - tell me the thing to buy in my search category even if it's not the cheapest or most commoditized.
There’s a pretty strong “market for lemons” effect going on almost economy-wide in which every manufacturer out there seems to be sprinting to make the lowest quality shit they can sneak past the regulatory bodies, so it’s not surprising consumers are selecting solely based on price because there’s functionally no other differentiator at this point.
The UPPERCASENONSENSENAMES are so obvious it makes me wonder if this is a target-selection technique in the same vein as the 419 scammers use -- make it so only the most clueless people would ever buy your garbage product, so you get a lower percentage of people who are going to report you.
I believe it might [0] have to do with Amazon offering preferential treatment, under a program called Brand Registry, to Chinese exporters if they register a name--any name--with the USPTO.
The thing is, it's 2023, we all "know" that every company's product get made in the same factory and there's just a fork at the end of the conveyor where they get different branding slapped on.
So the gamble is that UCNN is sourced out of the exact same factory as the product/brand you actually want. It's the the evolution of the Warby Parker model.
Just bought a wood bed frame online. 5 vendors with nearly the exact same frame, all priced within $50 of each other. How does one choose? Does it matter?
It’s a great signal that you are buying from the wrong middleman. Seek out the source for a 50% discount. Usually that source is on AliExpress/Alibaba.
It's more like they flood the results so you literally can't find the quality product unless you know the brand name to search for. I can't be an expert in every vertical, so either I go to some sort of trusted review platform like Wirecutter, or I give up and buy whatever I can find on Amazon return decent reviews and hope for the best.
I don't really have a problem with this stuff. It's memeable (some great photoshop artists there; always good when the company has no photo of their actual product) and not that cheap, but I think of Amazon as an overpriced Shenzhen market and this stuff is essential to maintaining that vibe.
You might still be getting products from the same inventory pool in an Amazon warehouse when ordering directly if the company uses Amazon's Multi-Channel Fulfillment offering. They sell on their site, tell Amazon about the sale, then Amazon ships it to the customer. They even offer the option to ship it in unbranded boxes so that customers don't know the order is being fulfilled by Amazon.
Ew, gross. I’m pretty sure the couple companies I order from regularly that also have an Amazon presence don’t do that, since they have direct-order products not listed on Amazon and often include little touches like a bonus sample or handwritten note that you don’t get if you order their stuff on Amazon, but good to know to watch out for that.
Counterfeits: In August 2014, I purchased from Amazon, shipped from Amazon (just checked my order history to verify), an Apple MagSafe Power Adapter. It was clearly counterfeit.
I contacted Amazon and told them it was fake, without hesitation they told me to throw it away and they were sending me a replacement.
It would be hard for me to believe that they didn't know exactly which company shipped them that product.
It would be easy for me to believe that they didn't notify every other customer that received that product from the same shipment.
How does Amazon avoid liability for selling scam products? Do they claim to be "just the middleman" and pass responsibility onto ghost-in-the-night companies selling the scam products? Or do they just abuse the legal system and make justice too expensive to be worth it?
I don't know the law very well, but I would hope there's a legal doctrine that responsibility has to effectively land somewhere. If a company is passing responsibility en masse to some other entity that cannot be effectively sued, then the responsibility should actually lie with the first company.
I have no idea, but companies routinely do shit that I assume would at least get me a fine in a hurry if I tried it. I don’t know how it works either. Like I’d have assumed deliberately dumping e-waste all over city sidewalks would get you a steep fine and an order to come pick them up or face an even steeper one within a matter of days—plus an absolute liability nightmare if, god forbid, anyone tripped over them and got hurt—but e-scooter companies have done it for years and have faced almost no consequences. I doubt I could get away with it. I dunno how they do.
In the beginning it was a free-for-all but now cities require permits and have limits and require the companies to implment restricted zones where the scooter won't run.
FBA seller here, too. I make and sell my own patented device which nobody else makes or sells. I have competitors in the same category but my product is novel, more functional, and more expensive to make.
I was doing FBM (fulfillment by merchant) because I like shipping my product directly from my place of business but I had to switch to FBA to get my sales to go up. They were already getting half but now Amazon is getting more than half of my revenue.
I also have my own site where I can sell for the same price and keep much more of the revenue, but most shoppers won’t buy if they didn’t find it on Amazon. If I leave Amazon or raise my Amazon price to recoup the costs or stop paying for FBA and Amazon ads, I lose almost all of my sales. This is all because Amazon is doing anticompetitive things with its monopoly power. Enforcement is needed. I don’t know what the injunctions will propose to do but I’m eager to find out.
What really kills me is knowing how my customers would feel if I told them how much of their purchase price is being kept by Amazon. They value my product enough to buy it for that price. The few who really understand Amazon always offer to buy it directly from me so I get to keep more of the money. If only everyone understood that.
I have to spend some more time and money optimizing my Amazon listings and then I will turn my focus onto my site and spend all my effort building my business to survive in spite of Amazon.
>I also have my own site where I can sell for the same price and keep much more of the revenue, but most shoppers won’t buy if they didn’t find it on Amazon. If I leave Amazon or raise my Amazon price to recoup the costs or stop paying for FBA and Amazon ads, I lose almost all of my sales. This is all because Amazon is doing anticompetitive things with its monopoly power.
Can you expand on what you think Amazon is doing wrong here?
When I buy products online, I almost exclusively buy them from Amazon because I've had too many bad experiences with other sites. That strikes me as a case of consumer choice, not anti-competitive practices.
I once purchased a Japanese candy pack from a supposedly-reputable website that was supposed to be a Christmas gift, but they didn't give me a tracking number and wouldn't refund it after a month of no delivery until I filed a chargeback.
By contrast, I've never had any trouble getting Amazon to honor their refund policy for "Prime" products, which is why I've stuck with them.
Amazon charges exorbitant fees to Marketplace sellers and adds to the cost of everything sold on Amazon. Are you aware of who is the seller every time you buy something? When the seller is not Amazon, do you know how much of the price is going directly to Amazon? Is it worth it for what Amazon provides you?
In my category Amazon takes 15% of every sale. That’s even true for FBM where Amazon never lays eyes or hands on the merchandise. Also still true even though I have always taken perfect care of every customer. Good luck selling anything on Amazon without paying even more for Amazon advertising, a closed system with high prices. And then there’s the Prime badge and FBA, more expenses that you can hardly afford not to pay. Buyers are trained to demand them and Amazon reaps the profits.
If you buy from my website I pay a small transaction fee, shipping, and advertising. I can afford to sell for much less, making my customers just as happy or better since I can personalize the service in ways Amazon just does not allow.
But I can’t lower my prices anywhere off Amazon because they will retaliate by burying my product where nobody will find it.
Amazon customers (I admit I am one, too) are paying higher prices for almost everything they buy. But they/we are also supporting a marketplace regime that forces prices up everywhere. Everyone, not just Amazon customers, gets to pay the higher Amazon price.
My website customers are essentially subsidizing the profits that Amazon is making from my sales on their platform.
You might think you want someone big and strong like Amazon protecting you from scammy sellers. If they wanted to do that they would get rid of them and keep the good ones. Instead they keep the bad ones around so you get to experience their protection racket. You’re sticking up for the bully and paying for the privilege.
remember that time that amazon was bleeding like 5 million a day just to make sure they can destroy diapers.com? by selling diapers at a loss, which was numbers that diapers.com couldn't compete with given that they didn't have another business to rely on, then forced diapers.com to sell to amazon because they had no other option?
And this came out last time they were doing monopolistic inquiries against amazon. Yet...
So I'd love to see something positive come out of it, but I have my doubts.
The current FTC chair wrote the ~~book~~ essay on Amazon's monopolistic business practices (1) and has spoken so much about it that the only reason we'd see the government take their foot off the gas here is if Amazon's lawyers can claim that her previous advocacy biases the case against them.
Advocating for a position and then using the strength of your arguments to be placed in a position of public authority through a democratic process is anything but fundamentally legitimate in a way no business will ever be.
Amusing trying to see people claiming the opposite.
Well there is actually an interesting political side to this, where the Biden administration set up the strongest anti-trust FTC in two generations by pulling a bait and switch on the Senate. They essentially made zero indication she would be tapped to chair the commission until after she was confirmed, which is when the tech lobby and their allies in Congress started making noise that she couldn't be impartial.
It was a galaxy brain political move early in the administration and a direct reason why we're seeing these antitrust cases prosecuted.
Apparently there are calls for her recusal on the grounds that she held a critical stance before her current appointment. Which is an odd thing to ask for in my opinion, but I guess it's worth trying if you're on the losing end of this.
It's like the GOP currently trying to impeach a newly-elected judge in Wisconsin because she previously described the state's maps as gerrymandered, ergo she will not be able to rule fairly on the matter when it comes before the court. Obviously both examples are cynical and disingenuous, since the implication is that the only person qualified to do a job "fairly" is someone who has never thought about the relevant subject matter at any point in time.
They want to muddy the waters by arguing the FTC is impartial towards Amazon. But the problem with that argument is that it's not the job of the FTC to be impartial. Their mandate is to protect competition and consumers, which is naturally impartial to individual companies.
I’d encourage everyone to read at least the abstract of this link and then consider the case the FTC is trying to bring to see if they notice anything odd! HINT: there is something very odd about the two taken together.
I read both - I don't see anything odd here. Seems like like the thesis of the FTC's case includes the natural continuation of some of Lina Khan's ideas, plus additional focus on the Amazon Seller economiy.
I read it more that an actor can lower prices in one market or at one time and raise them in others or at another time, and that regulators should police predatory pricing because of the harm to competition and consumers, even if in some markets or at some times prices are lower. That's consistent with what the FTC is doing here.
Further, the essay was written six years ago, and to an audience of legal scholars. This case is about Amazon today and the audience are courts. The facts and arguments derived from them are naturally different.
I would suggest reading the entire thing, especially the excellent summary on the history of legal and economic theory applied to anti-trust to understand the deeper meaning behind the abstract itself. It's hard to boil down a nuanced and complex argument into a single paragraph. There's a lot of meat there.
That's such a weak argument. Suppose Amazon does both, at different times (which they do); do you think they should cancel out and therefore not get in trouble?
I see how that would appear to be a contradiction. However, your takeaway from the Yale Law Journal link is incomplete.
The Yale article argues that Amazon has avoided anti-trust scrutiny because most anti-trust regulators are laser-focused on price and output (is Amazon fixing artificially high prices? Is Amazon artificially limiting output?), and this approach misses the ways in which Amazon limits competition (mainly predatory under-pricing and vertical integration). The article goes on to suggest that by ignoring these, antitrust regulators are "overlooking the structural weakening of competition until it becomes difficult to address effectively, an approach that undermines consumer welfare."
You're right that the article does talk about practices that aren't mentioned in the complaint, like predatory under-pricing.
However, it also discusses the ways in which Amazon uses vertical integration to create barriers and reduce competition. Here I quote from the article:
>Amazon is positioned to use its dominance across online retail and delivery in ways that involve tying, are exclusionary, and create entry barriers. That is, Amazon’s distortion of the delivery sector in turn creates anticompetitive challenges in the retail sector. For example, sellers who use FBA have a better chance of being listed higher in Amazon search results than those who do not, which means Amazon is tying the outcomes it generates for sellers using its retail platform to whether they also use its delivery business. Amazon is also positioned to use its logistics infrastructure to deliver its own retail goods faster than those of independent sellers that use its platform and fulfillment service—a form of discrimination that exemplifies traditional concerns about vertical integration.
>The clearest example of how the company leverages its power across online businesses is Amazon Marketplace, where third-party retailers sell their wares. Since Amazon commands a large share of e-commerce traffic, many smaller merchants find it necessary to use its site to draw buyers.These sellers list their goods on Amazon’s platform and the company collects fees ranging from 6% to 50% of their sales from them.
These quotes map pretty cleanly onto two of the complaint's allegations:
>Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.
>Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business. Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.
At the end of the day, Amazon is a very big company that does a lot of different things at the same time. It could be under-pricing ebooks and overcharging FBA sellers at the same time.
The point of the Yale Law School article is that anti-trust law ignores anti-competitive practices until they significantly distort prices across the company's largest market, but that these practices have a chilling effect on competition far before that point. Khan argues that anti-trust regulators should go after companies using these practices before they cement market leadership and fully edge out competitors.
>On the Chicago School’s [(the pre-existing paradigm's)] account, Amazon’s vertical integration would only be harmful if and when it chooses to use its dominance in delivery and retail to hike fees to consumers. Amazon has already raised Prime prices. But antitrust enforcers should be equally concerned about the fact that Amazon increasingly controls the infrastructure of online commerce—and the ways in which it is harnessing this dominance to expand and advantage its new business ventures.
There are 17 state AGs joining the FTC in the suit so I doubt Amazon will have any headway even if they got the Chair to be removed. Hoping the best for the lawsuit, though.
Product dumping is not illegal if you have a national newspaper that can be used to target any politician and if you make sure to contribute millions and make sure your employees do the same for the political party in power.
If Bezos were using this Washington Post for this purpose a member of the newsroom would immediately leak it. It would be a career defining story for that journalist.
The fact that we’ve heard nothing strongly suggests it isn’t happening.
I've heard this "if it were happening someone would leak it" argument throughout my life, even though I've lost count of all the counterexamples that disprove this mentality.
Before Snowden PRISM was considered impossible (even though previous people had leaked it but never got picked up by the media cycle), before Epstein it was impossible that billionaires were trafficking children for sex, before 2008 it was impossible that wall street was colluding to rig the market - the consistent thread in all of these is that the "impossible" was happening for several years before it was ever exposed.
I understand the incentive to leak it exists, but that doesn't mean there isn't a stronger incentive to keep it a secret.
The difference in all the examples you’ve given here is that none of the people involved are journalists.
If you work on PRISM leaking its existence does nothing for your career. Quite the opposite in fact. But if you work for a newspaper and leak a massive story it’ll be very beneficial for your career.
The journalist most famous for leaking the Panama Papers died under mysterious circumstances. And almost nobody is aware of her name or even what's inside the Panama Papers.
How many famous journalists can you name? I'm not saying there aren't journalists that want to do good work and become famous as a result. But despite their efforts they're mostly fighting a losing battle.
I’m not sure how that’s relevant. Ask a dozen people on the street who John Carmack is I’m sure you’d get a lot of blank faces. But if he walked into a dev shop looking for a job I think he’d probably get one.
Of course breaking a massive story is going to lead to you being well known. Perhaps only within journalistic circles but in the context of your career that’s the only thing that matters anyway.
(and to answer anecdote with anecdote: Woodward and Bernstein. Both have lived to ripe old ages, too, for what it’s worth)
You know how there is a principle during debate where you should treat your opponent's argument charitably, by taking their meaning in the best possible way?
Did you say career ending moment? I think I misread that. Who wants a former employee and their lawyers targeting your reputation. Do you know anything about what whistleblowers have to go through?
> Do you know anything about what whistleblowers have to go through?
We’re talking about professional journalists here. I’m quite sure they’re aware of it all. If the story is newsworthy and backed by evidence you’d be able to take it to any competing newspaper. I imagine the Wall Street Journal’s legal team would be happy to bear the brunt of any fallout, it’s their job.
That's what these discussions are for: to discover solutions and obstacles.
Have you ever heard of the monkeys and ladder metaphor?
Things need to change. It's great to be skeptical, but not if you're not also optimistic at the same time.
Monopolies are bad for many reasons, not just because arbitrary "rules" or whatever you think is easily dismissed, but because of the opportunity costs that even the owner of the profits incurs. We're not talking about money or status or power, but actual meaningful change of the total composition of their culture & society and the world. They are literally preventing themselves from experiencing a world that gives them everything they can't have now and clamor and hurt themselves chasing after. It's the ultimate irony.
So yes, you should have hope. There is NOT a "good" reason for being a greedy parasite. People have just forgotten and/or been manipulated into believing in fake power. This false faith (fear) is literally what enables these fake leaders like Jeff Bozos the clown to succeed.
Please next time contribute more to the conversation than just whine.
Similar to the three-tier distribution system for beer in most states (a brewer cannot be a wholesaler or a retailer). This makes it easier for smaller players can compete with the big ones on quality at least, if not price or recognition.
The three-tier system is absolutely awful in a lot of states for smaller breweries. It has been used to severely reduce their ability to sell on-site for off-site consumption, which is key for smaller breweries. Many states set the revenue/volume cap too low before you have to cut off on-site sales of off-site consumption for you to not take a significant hit to your profit swapping to a distributor.
It also makes it very easy for the bigger groups like AB Inbev to play games with distributors around pushing enough volume of their products if they want to get allocations of more in-demand bottles like Goose Island's Bourbon County Brand Stout.
I did not think I would ever see someone seriously arguing that the three-tier system for beer is a good thing for smaller players.
The thing with the three-tier system is that it only partially disaggregates the system. Market consolidation has a certain gravity to it: once one market is consolidated, they start stripping the margins off their suppliers and increasing prices for their customers. The only defense against this is to consolidate yourself to maximize your negotiating leverage. If wholesalers and retailers were horizontally disintegrated then it'd be a better system.
This is also why businesses are furiously and unanimously anti-union. Labor is their biggest cost and they get ahead if they can keep labor fragmented while they consolidate.
> Similar to the three-tier distribution system for beer in most states (a brewer cannot be a wholesaler or a retailer). This makes it easier for smaller players can compete with the big ones on quality at least, if not price or recognition.
This seems like a bad example given how its arguably led to massive consolidation in beer
I'm pretty sure the beer laws hurt small breweries and consumers. Back in the 1980s when these laws were at their most numerous and strictest, the market was dominated by a few macrobreweries. Even today, the states that restrict brewery self-distribution have half as many breweries per capita as states that allow it.
Reminds me of the weird law in a lot of states where breweries and distilleries can't use the same equipment or physical location - which pushes out smaller more varied players since you need capital in order to operate multiple locations.
Amazon has been cognizant of this[antitrust risk] for a while now I believe. The internal systems are all set up to run independently, most systems are modular and already run as separate entities with permissioned access.
Proof: worked as an SDE for AWS and Amazon for 7 yrs.
Isn't that done because independent modular systems make it a lot easier to build stuff inside of such a large company? Bezos said as much in 2002 when he issued his API mandate.[1][2]
> independent modular systems make it a lot easier to build stuff inside of such a large company
Yep this is definitely true. I sort of saw it as a two birds kind of situation. I wasn't privy to the reasons for c suite decisions but imo they are definitely cognizant of regulatory concerns.
I wonder if there's a model where carriers cooperate on last-mile delivery. Maybe form company they all invest in that goes from regional hubs to homes. It can't be efficient to have 4+ carriers delivering to the same neighborhood.
As someone living in germany:
We don't have a three tier system. But we have literally thousands of breweries selling better beer at waaay lower prices than in the US.
So your three tier systems sucks...
> we have literally thousands of breweries selling better beer
This may have been true a decade ago, but today there is an entire microbrewery scene in the US where there are hundreds of them inside individual states. Better is subjective, sure, but any kind of beer you get in Germany you will find a few dozen US microbreweries making the same.
If you like expensive, over-hopped IPA made with mediocre ingredients and specially bred hops that are so potent they (kinda) overpower the taste of beet sugar and inferior malts, then America is a great place to pay more money for beer.
There some genuinely good beers around, but they are few and far between and WAAY more expensive than great beer in Germany. And from elsewhere in the thread, it sounds like our 3-teired system does indeed majorly suck for microbreweries. It may be a big part of why they have to cheap out on ingredients and try to cover it up with palette-dominating hops in order to turn a profit and stay afloat.
Europe has plenty of mediocre "craft" beer. I've had tons of beer in Europe that tasted like homebrew - one dimensional.
American craft brewers lean heavily into hoppy IPAs because that's what craft beer buyers like. IPAs are almost always the best selling beer that a craft brand makes. If you talk to them, they will say they'd love to make more varieties of other styles of beers, but IPAs keep the lights on, thus 40% of their product portfolio ends up being IPAs.
I hate IPAs and the style of hops American brewers use, so I tend to drink imported German/Czech lagers and pils a lot.
This is a meme. Most breweries make other types of beer, I go for Pilsner or Kolschs myself, and the beer is not more expensive than larger breweries. You’re regurgitating a stereotype about American millennials.
The USA used to have a system like that, we have a long history of brewing, but then we had to go fight the Nazis, so everything was rationed and industrialized. That's why our most popular beers suck.
I question the assumption that simply letting more small players compete is going to improve outcomes for anyone who doesn’t happen to own one of these smaller businesses.
This view is not held by economists because it’s really inefficient and is bad for both the business and the consumers. It adds pointless friction all over.
There are always so many blindly pro-business comments on stories like this, like when the Theranos stuff was happening, people were saying "come on, she was just pitching big returns and innovations like any start-up does," ignoring the difference between pitching and straight-up lying or deliberately misleading investors about current facts. Similarly, it seems like many commenters are defending Amazon not based on the facts or legalities of the situation, but just from a place of being more emotionally sympathetic to a giant corporation trying to make a lot of money through various business tactics.
We don't have a surplus of regulation in the US (contrary to what Republicans who want to get rid of the EPA, FDA, etc would say). When we actually have laws that say things like, you can't union-bust, you can't defraud investors, you can't behave monopolistically--and there may be subtleties to those laws that most people don't understand--and companies go so far as to violate those laws, it's a very good thing when they face consequences.
Maybe not a "blind" slant, but there is a slant nonetheless. I frequent programming communities on twitter, reddit, etc. and HN is consistently the place with the most sympathy for corporations.
(In my experience it's also the community that has the most anti-intellectualism/distrust of science as well, but that's a discussion for another time)
I wish they would add ebook DRM to the list. Amazon has essentially locked the Kindle so that it can only purchase from Amazon and Amazon ebooks can only be used on the Kindle. On top of that, they offer no way of transferring ebooks and, AFAIK, offer no way to remove DRM after a work enters the public domain.
For that one, it's mandated by publishers. There's nothing that can be done for e-readers from vendors that don't support third-party applications.
Amazon e-books are accessible on Android and other platforms in addition to Kindle devices.
Kindle is also not locked to only ebooks from Amazon, but third-party DRM schemes are not supported. Calibre for example comes with good tooling for that use case.
I believe the publishers want DRM. I'm not sure they want DRM that effectively locks in their readers to the Amazon ecosystem. I don't believe publishers would be upset if I could directly purchase books from Apple, Google, Kobo, or any other similar vendor directly on the Kindle.
Is the audiobook market different? I know Cory Doctorow for one would like to sell his audio books through Audible but they require DRM. Care to defend that?
Nothing prevents you from buying from a different seller and reading the materials on your Kindle, other than the fact those other sellers have their own DRM locking you into their ecosystem instead.
That's because publishers practice anti-competitive behavior, too.
We need to quit getting lost in the word, "monopoly". No part of this problem is from a single actor dominating the entire market. The problems are anti-competitive behavior and vertical integration.
DRM is literally intended to support copyright monopoly. The entire purpose and function of DRM is to prevent competition in the form of "copyright infringement".
Some cursory web searches reinforce an assumption I had: Amazon absolutely dominate the eBook sales market, with figures from 65-80% of all sales being indicated.
So how can you make the case that Amazon doesn't have "leverage" to negotiate DRM-free publishing?
> together with CDs not having DRM
I don't recall printed books ever having any form of "DRM".
In fact, Amazon does allow eBooks to be sold through the Kindle store without DRM, and many are sold that way. It's completely up to the discretion of the publisher.
Whereas I have many eBooks purchased years ago from Apple's store that I can only read on Apple devices, not on my Kindle.
Exactly. The publishers need Amazon, and Amazon doesn't need the publishers. They have more than enough power to be able to dictate terms.
Apple realized this and was able to bully their way to a deal that worked for Apple, and the labels had no real ability to counter Apple. Amazon has yet to do so.
Arguably, Amazon has substantially more market power now than Apple did back in the Jobs days when they were building out iTunes and negotiating with the major labels.
Because Amazon allows publishers to choose to sell eBooks without DRM. If an eBook sold in the Kindle store has DRM, the publisher chose to have it that way.
I don't know, as I never had access to that data, but I would be shocked to find that is not demanded by their agreements with the publishers. Akin to why there is no library that will give you non-DRM items. Is almost certainly part of a strategy by the publishers to bolster other marketplaces they find more favorable.
The ones folks are buying? Not really. :D Publishers still do a good job signing on authors. Audio books, I think, are very different. Audible was far more active in building up a market and voice talent than the competition for a long time.
That said, I am not aware of any actual anti-competitive practices that they do there. The examples that some high profile folks have used feel very weak. Prices are lower for customers than they have ever been, and profits for the talent are almost certainly up due to increased sales volume. Their percentage profit per sale is down, but the history could also be that keeping that percentage high would not have grown the market? Such that, they could not have gotten the larger pie without the smaller slice. But, now that the pie is big, they want the bigger slice.
Feels like a non-sequitur? What are you trying to say? My specific point is that I would wager money that Amazon being required to have DRM on their devices is required by publishers for them to be able to have that publisher's offerings. If Amazon drops the DRM, they lose the ability to offer that content.
I'm not as confident that they have the agreement include that they will not offer authors a way to have DRM free content on the platform, but I would not be surprised by it.
If Amazon refused to enter that agreement, would the publisher simply refuse to sell ebooks on Amazon? I sincerely doubt that.
If Amazon was actually motivated to refuse DRM, then we would be in an entirely different situation. The reality is that the opposite is true, and that Amazon itself is one of the publishers requiring DRM!
You do know there was an antitrust against the publishers and Apple where they did collude and force changes to the agreement onto Amazon, right? This isn't even hypothetical. Literally happened. Amazon absolutely cannot live without publishers right now.
My point is that that question was never asked: practically all of the publishers that sell on Amazon's marketplace - including Amazon Publishing - agree that they want DRM incorporated into Amazon's digital marketplace platform.
Almost certainly they would be fine, given some time. Is why they were willing to strong arm Amazon into changing terms on how they sell ebooks.
And you seem to be dodging my point? My assertion/wager/whatever is that the publishers actively want it so that Amazon has to have DRM on their devices and sales. Just as they want it on libraries lending. Do I /know/ this? No. That is why I worded it as something that would shock me.
I agree that my willingness to wager on this would go down as I extend it to my larger guess, that they also have terms covering things that Amazon publishes. That said, it lowers my willingness, but it does not seem beyond the pale.
As someone that was into DVDs from other regions, this comment is laughably wrong.
Edit: Heck, just playing movies on my computer DVD drives was less than straight forward. For the longest time you basically had to feel like a hacker to get it working on a linux machine.
It wasn’t perfect, but it was better than the current situation with ebooks. You could go into an electronics retailer and choose one of a dozen DVD players then drive across town to video store and buy or rent any DVD and the chances that the two things would work together was very high.
No real disagreement from me, on that general point. Things were certainly more convenient in some older formats.
I'm not clear on the relevance to this particular story. For one, ebook practices are literally not part of this case. For two, the assertion in this branch is that that exists at the demands of publishers.
You can easily use ebooks from anywhere on the Kindle. However, agreed on the DRM. Blindsided me when I tried to open some comics I had purchased on my computer (to read them in color). Luckily others have already made tools to remove that DRM...
Is this new? I specifically went for Kobo years ago because my research told me that Kindle didn't have that capability, and Kobo did. Perhaps I didn't look hard enough.
No, even the very first model could be mounted as a USB drive and you could add files that way. It doesn’t natively support epubs — that might be what you’re thinking of — but converting them into mobi or azw format is pretty trivial anyway.
I assume you are talking about the DeDRM tools? If so, the answer to your question is that it doesn’t work as well as it used to. The era of easily strippable DRM is ending.
Amazon’s latest file format KFX hasn’t been entirely cracked and it’s possible it won’t ever be entirely cracked. The best anybody can do so far is to buy an older Kindle and download it to that in order to get a crackable version. The problem with that is you lose all of the typography improvements only available in KFX.
Sony almost certainly has more marketshare of the console market than Amazon does of anything. The numbers that came out for sales of XBox were... sobering for how badly Microsoft is throwing cash to stay in the game.
Note that I don't mean one to be a defense of the other. It can be argued well that both markets are unhealthy. :D
To your numbers, though, I'm not sure I see the argument? I'd be very surprised if that 25 is evenly split between Nintendo and Microsoft. And where is Valve in that?
Playing into your argument, is Walmart really only 6%? Of all sales that happen period, how is the online/offline split? From my perspective, folks love to hate tech companies. You'll see silly headlines about 1 in 169 people work for Amazon. You don't often see similar headlines for Walmart, which has twice the associates, if I recall...
And even in consoles, you have the option of never buying one: you can play videogames on PC, on a tablet or on a mobile phone. And now you even have the cloud option with NVIDIA or MS' Game Pass Ultimate.
With Amazon however, it's more complicated since they control so many businesses. Visiting a website? Very probably it's hosted on AWS, or on a platform that runs on AWS. Visiting a friend with a smart doorbell thingy? Quite probably an Amazon Ring. Want to buy an e-book to read? Sell your soul to either Apple, Google or Amazon, or other smaller platforms (or pirate the book or buy it physically).
No, but it still is part of Amazon. In fact, as others have commented, AWS helps subsidise parts of the Amazon store that would otherwise result in losses.
But how is it at all relevant to this story? And if it is a vital point, why not get mentioned by the FTC?
I don't think there is nothing at all there. However, most of the criticisms you will see in the wild about how AWS pays for retail are almost certainly from ignorance of how retail had to literally seed AWS.
And don't take my criticism of that point as some sort of promotion of Amazon. I can be critical of the complaints without having to worship them.
But Amazon is mentioned and Amazon owns AWS and many of the abuses described with respect to the e-commerce marketplace are also relevant to the AWS marketplace. I hear you on how they are not directly and literally mentioned in the text explicitly however one can understand why there's a thematic overlap and certainly I can imagine if I were AWS I would be sweating right now
My kids have been confused on why I have to buy separate copies of many indie games for both Steam and Playstation and/or Switch. And... it actually is rather obnoxious.
Without engaging the merits of this particular case, I do think there is an interesting takeaway about which companies wield even more power than Amazon (and Big Tech more generally, since Google and Meta are also discussed as likely targets of similar suits).
Notably: health insurers. They're an oligopoly whose revenues total something like 4% of US GDP. They engage in anticompetitive practices, and the end result is far more consumer harm than Amazon can do. (Because people generally spend a lot more on health insurance premiums than they do on Amazon in a year.)
Similar could be written about e.g. airlines.
Lobbying works. Tech will eventually figure this out.
> Lobbying works. Tech will eventually figure this out.
Tech is well aware of this, and is spending accordingly[1]. However I think politics are a bigger motivating factor, and taking "tech" to task is viewed as a good way to score points (probably helps that legacy media views tech as direct competitors, and covers them accordingly).
They kind of get it, but are not at the magnitude yet where it would be effective enough to squash these types of interventions. By comparison, healthcare lobbying spends more every quarter what Big Tech did in all of 2022.
There was one lasting lesson I learned from AOC's first election and the subsequent attempts to challenge many seats at all levels of government. That incumbents have organizations that will spend as much money as they can to stop a challenger. In the case of the Queens DA race(which is the first time AOC endorsed somebody), I seem to recall that the local democratic council had to blow their entire budget to try and stop Caban(AOC's endorsed candidate). They did manage to defeat her by 60 votes but the lesson I learned is that we should be running candidates in every single seat in every single race in every single election. Some groups like Brand New Congress have attempted this but it is tough to challenge all 435 members of the house. Unfortunately all these groups are on retreat since Biden got elected. It took a candidate like Trump to make people realize that they had hit a new low and to start doing something. Biden and the party is using the fear of Trump coming back to now suppress any dissent.
Yes the overwhelming majority will lose but it makes continuing business as usual as expensive as humanly possible. There is no way all these companies can recover every last penny if this is continually done every election. (There are small time elections happening every year so there really needs to be challengers at all levels)
Much as I might see health insurers and private medical companies in general as often bad actors, I don't think "more competition" is at all a reasonable suggestion for any part of the health sector. Health insurance companies naturally need to be regulated - just one reason among many is that anyone could take people's money, pay claims for a bit and then vanish with money paid to shareholders who aren't liable for the scam. And once you have an industry, health care, that must have detailed state regulation, the only solution is nationalizing the industry, as medicine is nationalized in most civilized industrial nations.
They may need to be regulated, but that doesn’t change the fact that something is seriously broken and real competition would help. Regulation is surely part of the problem but maybe not all of it. The entire idea of “networks” seems designed to allow them as little competition as possible.
Even if this action turns out to be toothless, it should still go a long way to shape public perception. I cancelled Prime 3 years ago and really haven’t looked back. I simply shop elsewhere, and between Target and eBay I don’t miss a thing. The Echos got unplugged, the AWS certs didn’t get renewed, their music service got canceled. I am all out and I hope others will do the same. For me this was driven by their anticompetitive behavior as well as terrible treatment of staff from warehouse workers to web developers. This FTC suit brings a new level of attention and gravity to their insidious practices.
Obviously a firm that massive can’t be all bad. As a consumer, the only thing I have is choice in how I spend my time and resources based on the information I have.
I don't know, your easy access to alternatives that've let you not "look back" kind of undermines the argument that they wield monopolist power, doesn't it? And should FTC suits really be vehicles for shaping public perception, even if, as you suggest, the claims are either not defensible or don't constitute violations?
The fact that competition exists does not mean that AMZN isn’t engaging in anticompetitive behaviors. FTC should be consistently enforcing law in their domain i.e. The Sherman act of 1890 and others.
“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.”
Public perception isn’t their motive, I’m just cheering for it. Moreover I’m glad that antitrust enforcement has ramped up of late. I wish it had started sooner, I believe we would have a healthier internet ecosystem if that was the case.
Decouple Amazon Warehouse division from Amazon Web Services (AWS largely subsidizes losses incurred by warehouse division), then we will see change.
Right now FTC going after low hanging fruit. But we all know Amazon will challenge it in court, appeal, appeal, appeal, pay the reduced fine, slow roll any changes, and business will continue as usual.
Break up the tech giants and each individual unit cannot survive as-is.
Yep. I'd say Amazon should be split at least four ways: AWS, their delivery/fulfillment operation, the web shopping platform, and the "Amazon Basics" and other product brands.
Edit: just saw that ihaveajob posted the same idea in another reply.
Just breaking off AWS would be enough to see change. I see people saying they should spin off their house brands but that wouldn’t fly when other big retailers also sell their own brands along side third parties.
It sends a chill down my spine to see that one of the perks of being a Prime member is unlimited photo storage.
It’s sickening to realize there’s a bunch of Gullible Guses and Ginas that are holding off cancelling their Prime subscription because their pictures are held hostage by Amazon.
I bet dollars-to-donuts that half of those folks don’t know how to articulate the sentimental attachment to their Prime subscription either.
Funny because alot of sellers are complaining about high fba fees eating into their profits. If you remove the subsidy (assuming there is one which I doubt) those fees would rise to hurt sellers more.
>The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging
>Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
I feel like ultimately they are accused of violations because they are big. I don't think that's the worst thing. But as others have pointed out - their tactics are very similar to deals grocery stores and retailers make with suppliers all the time. The only difference seems to be that Amazon is big enough that suppliers can't legitimately threaten to take their business to another store - because there isn't one.
Their complaints that Amazon makes prices higher for products across the internet is clearly only true because they are so big.
Maybe they are only so big because their anti-competitive behaviors have kept alternatives from taking their users. I'd love to be able to stop giving amazon as much money as I do, and I know a lot of people who feel this way.
I don't disagree with that but nonetheless it seems like the behavior they are in trouble for (telling suppliers they can only sell on Amazon if they don't offer cheaper prices elsewhere) is something that tons of other retailers do.
I really don't mind their being a different set of rules if someone has the ability to dictate most of the market, but exclusive deals are routine for smaller players.
Alternatives in terms of sellers on Amazon.com, maybe, but people use amazon because of how good of a product Prime is (or at least, for the past few years, appears to be despite it being obvious product prices go up to offset subsidized shipping prices) and because it tends to have everything available is a fast and secure way. With e.g. a search engine showing you products, you might be sent off to one of 100k stores that all need your cc info and who don't already have your shipping address.
This is partially solved by Shopify for Shopify sites, and Apple Pay/Google Pay/PayPal for third parties, but it's still often more friction to go to a 3p store.
I signed up as a Seller on Amazon a while back, with one primary goal: sell extra copies of my book, published by Pantheon Books in 2017. The publisher offered me boxes of them at dirt-cheap prices and I took them up on their offer. So I started selling on Amazon, and I set my price as the lowest possible for "New" condition hardcover.
For a while my price got listed on the main book product page. Only briefly though. Then it disappeared, and another seller got the glory of the link for a "New" 3rd party seller, and their price was HIGHER than mine.
Amazon does not want to advertise your price if you are too low for their liking...
Suddenly, in July, my mom dies. I have to travel to the east coast for the funeral, etc., so I put a hold on the one and only item in my inventory -- my book. Effectively this takes me offline temporarily as an Amazon Seller which was fine.
BUT . . . when i get back home, I try to re-activate the account and find I cannot. INSTEAD, I get this notice from Amazon that my account is suspended, and that it's mandatory I go watch all these training videos about COUNTERFEIT products, how to spot them, why not to sell them, why it's illegal, etc, and that I do not have permission to sell counterfeit "Pantheon products." And I'm like, WTF? I'm selling the real deal, from Pantheon, and I AM THE EFFING AUTHOR AND THESE ARE MY OWN BOOKS.
I try to communicate with Amazon Seller Program and get nowhere (I think they deliberately hire only people who don't understand English). They refuse to explain anything about this absurd counterfeit stuff.
So I contact Pantheon. They just laugh. They had nothing to do with it, but weren't surprised -- they kind of hate Amazon.
THEN I get a new notice from Amazon that my account is disabled permanently due to lack of use.
WTF!?
So: here is my theory. They were pissed I had a super-low price, and when they saw me temporarily disable my inventory as I'd be away for a week for a funeral, they swept in and shut me down, with some kind of made-up lie about COUNTERFEIT (I mean, can you believe these guys!?). And nothing is resolved, and we're on the verge of October.
You haven't even begun to enter the world of unscrupulous activity, and Amazon is mostly 'hands off' because they don't care - but other 3rd party sellers DO and they know all the tricks about how to pump alternative sellers off the page, etc.
The whole thing is a worthless Alibaba ripoff now.
Do you think some other seller falsely "reported" me, claiming my copies my be counterfeit, for surely there was no way I could offer them so cheaply to beat out the next cheapest seller by, what, 50 cents?
Your case is interesting because your publisher was fine with it. So yeah, it probably was done by a third party seller. Or you triggered some automated system and will never find out why. There are cases where third party sellers bribed Amazon employees to penalize their competitors:
> "(b) using their inside access to Amazon’s network to suspend competitors’ 3P accounts; and (c) providing consultants with information about Amazon’s internal algorithms, which allowed the consultants to flood competitors’ product listings with fictitious negative product reviews."
There's another thing where well known brands will hire a company like https://amazzia.com/brand-protection-2022/ for "brand integrity." In reality, what this means is that they monitor Amazon for listings of the brand's products that violate the brand's Minimum Advertised Price policy and then report them a bunch of times as counterfeits or contact some Amazon employee they have a (potentially corrupt) relationship with.
Or maybe some machine learning deduced you were "counterfeit". Who knows. The common denominator is - Amazon doesn't care, it's just a machine, even more so than corporations by nature are.
My nextdoor neighbor is a shoe salesman (in the US). He traditionally dealt with a region of retailers on behalf of his employer, a multi-brand company like VF, Clarks, Born, etc. In his previous role, he was asked to try to figure out how to add Amazon as a B2C channel. He did, and it essentially became his full time job. A couple of years ago he was laid off, and when his new employer (differently shoe company) learned he knew how to "use Amazon" he was immediately reassigned from field sales to full time online. According to him, there are so many quirky and esoteric things about selling through Amazon it's nearly impossible to figure out how to get started, much less understand nuances of pricing, taxes, shipping and returns, and -- as you said -- Amazon support is conflicting and inconsistent at best.
Nowadays, I'm fine buying consumables from Amazon if I need them asap, but for any name brand stuff I specifically want, I prefer purchasing elsewhere. If reviews were trustworthy, it'd be one thing, but with Amazon having turned into AliExpress, it's impossible to know whether any of the Chinese brands are actually trustworthy and of high quality.
>it's impossible to know whether any of the Chinese brands are actually trustworthy and of high quality.
IMO people buy cheap generic Chinese brands for the same reason they buy cheap dollar store products. They're gambling they can pay 30% the price for 90% of the function. Amazon reseller premium = they're paying slightly more for returns in case things break. They can save more buying from Ali resellers. Even more while temu subsidizing orders. The only people looking for quality are people who order from resalers of established PRC brands, i.e. Xiaomi. In the days before Amazon cracked down, you had brands like MPOW decide better marketting strategy was to give people gift cards for reviews and give no question asked replacements well outside of warranty period. Pretty win-win for consumers.
I guess we figured out their algorithm. `if random() < 0.01: make_user_watch_training_video_about_counterfeits`. Even if they actually fixed the problem by having an alarmingly high false positive rate, I don't see how I would ever trust them. For example, some places don't do business with them, so if you see like an Apple cable on there, it wasn't shipped from Apple to their warehouse. Maybe it's real or maybe it's counterfeit, but why gamble?
What's great about Amazon is that they kicked their competitors into gear and there are a lot of reputable vendors that offer cheap overnight shipping now. (B&H is my go to for electronics.)
It is funny, that small and even sometimes medium business owners go to jail over things like fraud, failure to pay taxes, even labor violations. I remember local instances being reported on in the our (thankfully still around) local paper.
Yet, if you are big enough, the government can barely muster the strength to issue a fine. Rarely to executives at big firms go to jail unless there was something Enron sized egregious happening
Afaik, small claims courts are for specific monetary damages only. I feel like it would be hard to prove specific cash amount lost due to Amazon actions. It is also very likely one or more of documents one have to accept in order to open seller Central account requires signing away the right of settling dispute in courts, and instead use arbitration process.
Your story is a true tragedy and hearing such stories makes me feel sad.
I believe it’s, mostly, these unfair, monopolistic practices that made those companies giants because they can, technically, crush anyone willing to swim in their red ocean.
Normally, you could easily file a lawsuit against them and got them pay you 10x the damage they caused.
Amazon became a giant because they were genuinely good before they became what they are now. For a long time, they offered a superior online shopping experience. The prices were good, the processing time was faster than anyone else, the shipping was fast and reliable, the site was easy to use, etc. Then all the third party sellers, whack-a-mole Chinese brands, and counterfeits took over the site. I thought Amazon was great when they were the retailer instead of a marketplace.
never attribute to malice what can be explained by stupidity, EXCEPT when money is involved. if money is involved, and it can be explained by malice, then it is malice, every time.
the other seller likely reported you as counterfeit, and Amazon believed them.
Grueling rounds of leetcode interviews and system architecture questions doesn’t exactly select for either common sense or detailed knowledge of either human nature or even retail.
Merits of this specific case aside, I find it really interesting that the FTC is going after Amazon now. They have pretty limited resources (especially relative to a massive tech co which can pour money into litigation) and have to pick and choose their battles carefully... I have to admit I'm a little frustrated that they're choosing to go after Amazon, which yes, imo the case definitely has merits and they do shady stuff like with dark patterns for trying to cancel accounts and the like, but there are so many other things more important to my life that seem broken that I wish the FTC would prioritize. How about more of a focus on insurers who refuse claims, drug companies flouting the law, PE firms jacking up the cost of housing or contractors gouging the government (and therefore all of us)?
I know, and I applaud the one they recently filed against Anesthesia Partners which is directly at the intersection of PE and healthcare, but they do have limited resources and have to make tough choices about cases they bring and ones they don't, and I wish they would focus on ones that are more impactful for my life (e.g., healthcare, education, housing) than marginal ones like Amazon or the one against Meta acquiring a VR company. I understand their rationale and am generally supportive, I just disagree with the prioritization.
> How about more of a focus on insurers who refuse claims, drug companies flouting the law, PE firms jacking up the cost of housing or contractors gouging the government (and therefore all of us)?
Those aren't FTC issues regardless of merits, so they don't factor into FTC priorities. The first is mostly state insurance regulators, the second doesn't seem to be a violation of existing law (though it might be a legislative issue, mostly at the state or local level like most land use issues), the third is for the inspector-general or similar authority of the agency employing the contractor.
I'm not sure I agree but IANAL. Doesn't the fact that the FTC recently filed a case against a PE firm buying up anesthesia clinics and using that to jack up prices run counter to the example of the cost of housing? Or for contractors gouging the gov, my understanding is that PE firms have rolled up small defense contractors and then used monopoly power to gouge the government. That seems pretty firmly in their jurisdiction.
> Doesn’t the fact that the FTC recently filed a case against a PE firm buying up anesthesia clinics and using that to jack up prices run counter to the example of the cost of housing?
If you can find a single private equity firm doing that to a functionally bounded market to secure a monopoly on, say, rental housing, sure.
But that isn’t the complaint I’ve heard about PE effects on housing markets.
I'm not sure I track. Sure there's only one Amazon, but there are a few major e-commerce providers (Shopify has been mentioned often, but also Walmart and other major) and more traditional retailers that compete with them.
> after REAL monopolies that actually hurt consumers, such as Apple and their closed App Store
I find this a funny comparison because Amazon and Apple are so similar in the business practices people complain about. Are you sure you're not just on the supplier side of Apple and the consumer side of Amazon?
Out of all the natural tech monopolies, Amazon is the ONLY one that did the opposite of exercising market power. They actually brought fast shipping to the market. A decade ago, you had to pay a crap ton of money to ship things even two days. They forced the incumbents such as Walmart to change. They’re constantly improving e-commerce. Heck they even opened up aws and created an entire industry. Amazon did more to reshape commerce in the US than anyone in the past two decades.
Less market concentration. Lina Khan, the current head of the FTC, argued before she got the job that market concentration and not consumer harm was a better target for antitrust enforcement.
Amazon does exercise a fair amount of their market power. FBA policies are generous to the consumer and to amazon, taking it out of the third party sellers. The other classic example was IIRC diapers.com which was a sharp competitor until Amazon bought it and raised diaper prices. It's possible this was all a ZIRP fad, and diapers.com was burning through investor cash, but still a pretty clear-cut case of consolidating market power (at the time the FTC did not consider it illegal).
They did all those things unsustainably so they could gain market share and raise prices when people were locked in. Similar to Uber and AirBnB etc. All those things are good but not feasible and subsidized by the capital/venture markets. The game is market share and ecosystem lock-in both from suppliers and customers.
A truly competitive marketplace allows any supplier to easily match with any customer. Suppliers gain market share by being the ‘best’, not by being the only option.
How did they actually raise prices? They are still competing on prices on everything. They have the best return policy even besting Costco. FTC and Lina Khan can pound sand. They should go after Walmart for destroying American towns and small businesses before they go after Amazon. I cannot think of a single company that produced more utility for consumers than Amazon.
They straight up copied products in their store an then listed theirs higher in search results. There was a famous instance of a bag. You can't be more monopolistic than that.
They also got insight into every states future plans (which are secret for some reason ) when they offered to build new HQs but then decided not too. This gives them a huge advantage over anyone else who wants to setup a nation wide logistics service.
> They straight up copied products in their store an then listed theirs higher in search results. There was a famous instance of a bag. You can't be more monopolistic than that.
Almost every major grocery store and convenience store chain does this. These are the store’s generic brands, they are specifically designed to be copies of the name brand, and they are positioned more favorably on the shelves. (They often say “compare to [name brand]”.) In general, this is highly beneficial to competition and the consumer.
If you want to make an argument that Amazon’s high market share makes this strategy damaging when it would otherwise be good, then sure go ahead and do that. But the argument needs to be specific and quantitative.
Along with this, I don't understand how the part of the lawsuit that says "Conditioning sellers’ ability to obtain 'Prime' eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service"
is solely an anti-competitive tactic, because how else would Amazon guarantee the fast shipping, etc. if they aren't in control of the fulfilment? I thought prime is only possible through amazon distributing third party products to their warehouses all over so that the shipping can be so fast.
It sounded like their audiobook division was acting in anti-competitive ways to push authors into single platform exclusivity. I wonder what else they're up to.
This rings a little hollow to me because as a consumer, wouldn't I have noticed a lack of non-amazon options?
My family buys on Amazon a lot but I am well aware that I can buy any of that stuff, including at times for a lower price, elsewhere - from company website to Costco to Walmart market, via Google shopping, etc.
Doesn't the existence of these infinity choices make claims of monopoly a bit farfetched? I am sure it's more complicated than this, but... is it?
> Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service
I'm no fan of Amazon, but that kind of makes sense - if they use another fulfillment service, Amazon wouldn't be able to guarantee next-day delivery for their products?
Amazon does currently have a "seller fulfilled" Prime service. They disabled for awhile, and recently brought it back
Consumers pay for Prime, and with it the 2 day shipping on eligible items, and so they prefer buying items with Prime eligibility. I must disagree with the "costly" description, as cost incurred shipping with Amazon and drastically lower than shipping with other services.
Having worked with dozens of businesses on establishing their Amazon account, there are very few that can move the volume needed to achieve the economies of scale necessary to match the costs of using FBA services.
People say Temu is garbage, but every time Im about to buy an 80 cent flashlight on Temu, or motorcycle googles, or 100 amp 12v circuit breaker for $6... I go to Amazon and find the EXACT same part for 300-800% more money with THOUSANDS of reviews.
Amazon still has decent things obviously. But if you're going to buy junk, atleast buy it straight from the source for pennies on the dollar.
Yeah I’m kinda on the fence about this. On one hand, I see the case that this diminishes the open market. On the other hand, Amazon is doing this all within their own ecosystem. So it’s a bit disingenuous for the FTC to say that this has nothing to do with their size. The problem the FTC keeps skirting around on anticompetitive is the fact that the internet favors power differentials, so we’d have to ding any company that has massive market distribution and tweaks their platform to favor participants exclusively on their network
Network effects have not been accounted for in antitrust. That’s the core of the problem. Not the fact that Amazon is tweaking algos. Every major player is doing that.
I like Jerry Chen’s piece on “The New Moats” (ahead of its time published in 2017) that calls out the progression of tech going from systems of engagement -> systems of record -> systems of intelligence. It feels like this is one (of many) consequences of that progression:
I'd argue that anti-trust is a fundamentally flawed concept - it's a matter of time frames, but no company without significant government intervention has had a 'monopoly' for more than a few years. Hell, Standard Oil was only 64% market share when it was broken up.
I was an Amazon seller 10 years ago. I noticed that as soon as I started getting some traction, Amazon would start selling alternatives and undercut me. At some point they started asking for proof of sales. This was then further used to compete against me.
At some point, I had a complaint, refunded the customer completely, and they outright banned my account and held my money for 90 days (I got all of my money back after the 90 days). It completely wiped my business out and I never looked back.
I was banned to the point where if another seller was associated why my account at all, they were also banned. All of my calls went nowhere and I was pushed to automated responses.
12+ years later and I have my seller account back. Not like I'm ever going to sell anything on Amazon again.
> “We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy. Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said John Newman, Deputy Director of the FTC’s Bureau of Competition. “Seldom in the history of U.S. antitrust law has one case had the potential to do so much good for so many people.”
Really, really hope this isn't another woke crusade by Lina "0-2" Khan that promises to delivery a random victory to "the common person" and then ultimately fail to do anything meaningful.
Loving this action by FTC. Amazon is the worst kind of predatory market provider - they are literally aliexpress + "steal good ideas from real companies" kind of grift.
I don't like it, but I kind of don't blame them because it's, frankly, a rational act.
Everyone vies for control/power. Once you have control, you can exert pressure to get more from less (this is essentially what "bullying" is). There's nothing (but any laws set up to counteract this) stopping you, so you do it, because relative to you, there's only upside. Can you really blame these entities for taking advantage?
Literally, the thing we all want more of (success and control), will turn us into bullies. Veeeeery few people, or companies, get to that point and then continue to "play fair", at least completely. So we set up the system with rules we think will limit this, but it's not perfect, so rules get exploited.
In games (which are systems and sets of rules), one of the most fun things is to discover an "exploit". Sometimes this comes from a developer oversight, sometimes this comes from rule complexity leading to unexpected states, sometimes from bugs. I remember figuring out how to get an extra enchant on a weapon in Neverwinter Nights (I somehow got 1 past the supposed limit) and how fun that felt. But there was no cost to other people in doing this. (At worst, if I found too many exploits, the game would stop being fun due to not being challenging, and I would just "cheese" through it.)
Amazon is a bully that is cheesing its way through the rules, at some unknown but probably large success cost to many other people vying for the same control. Perhaps it's time to dismantle the bully dominating the schoolyard lunches.
Good. Amazon lies to customers too. They will tell me things like go down to UPS and buy a box and we will refund the cost, then when you chat back they waste hours and request screenshots and then still refuse to issue the refund. They started treating customers like dirt and refusing to honor their own policies within the last year or so. Additionally they will do things like end the chat abruptly or transfer you around 15x repeating the same questions over and over. In another case they promised a full refund and only after I returned the item told me I wouldn’t get a refund due to “restocking fees”. Its too egregious to not be intentional. I will specifically spend more money just to avoid them because the wasted time and frustration isn’t worth any marginal savings.
At the root, the problem with big tech is the monopolization of people's attention. There is essentially no way to gain any meaningful exposure to users without going through big tech platforms and they limit the exposure. Even if you buy ads from them, you never know if your product is being put in front of real users or bots. They seem to favor big, established companies.
A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.
Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.
With the increase in inflation and Amazon abusing its power to significantly raise its prices for FBA and force us to use its advertising services our revenues have been severely impacted.
This doesn’t include their unwillingness to meaningfully fight counterfeits
Or that they penalize you if you attempt to drive sales elsewhere with lower pricing on other sites
Bloomberg did a write up on this a few months back:
https://www.bloomberg.com/news/articles/2023-02-13/amazon-am...