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.
(Source: I'm a former FBA seller).
Wonder what additional fees are associated with it.
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.
For all of history we've known that this would lead the least competitive to liquidation.
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.
That’s a hell of an assumption.
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
- 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.
There's a reason for struggling artists: nobody demands their product, so they end up in different occupations that actually provide value.
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.
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.
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.
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.
Rinse and repeat.
Go ahead, call up your local 7-11 and ask them what their sales were for the quarter. They'll tell you to fuck off.
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.
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’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.
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.
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.
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.
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.
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.
Who would defend that kind of scummy action?
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 market for "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).
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!
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.
Monopolies are never good for the consumer.
For example, Amazon cannot swoop in and sell a cheaper Amazon Basics version of a product to which you own a critical patent.
They are really saying, though, that without barriers to entry and in a competitive market, players that don't innovate don't survive.
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.
That is the definition of winning a competitive market. The consumers win.
You don't need to have lower prices long term if you control the market.
I get the argument, but it's a grim reaper strategy taught in econ 101. It's a well known strategy and completely valid.
Consumers win in the short term but lose in the long term. Except they can just consume different products or wait for someone to re-enter the market.
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.
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.
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.
Semantically, what company that (Relies on Amazon to operate) couldn't they destroy on a whim?
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.
Aramco? Air Canada? Samsung? Memory Express? Digikey? McMaster Carr? McDonald's? The Big R? Cantillion? Texas Instruments?
"Show me a business" is quite vague
I’m sure Amazon has put a sizable dent in their sales without even really trying.
Amazon now has special search tools for buying fasteners that make it easier to find exactly what you need.
Prices are cheap, risk is high, but prices are cheap.
Easier but they are no McMaster, by a long shot.
Then I still got the wrong part delivered. It doesn’t matter how great the selection tool is, the rule is always: garbage in, garbage out.
Unless, if the price wars are never over.
Almost never happens like that.
Especially anti-dumping rules are most often just exploited as a tool to get a competitor in trouble.
If your business depends on potential competitors for it's existence, then being eventually forced out seems like a pretty natural conclusion.
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.
More important than how you vote is how you buy.
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.
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.
How does it victimize?
There is no victimhood if the business voluntarily transacts.
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.
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.
Good fat margins are a result of an ineffective market.
If other competitors could get their costs as low or lower than Amazon's, then they could enjoy those margins themselves.
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.
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.
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"
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.
Kinda like app stores.
Why shouldn't they be allowed to do this? If you want to sell on their market, you promise not to undercut them.
Amazon exists as a discovery tool for consumers. They don't want third party sellers to get free advertising. That isn't anticompetitive.
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.
How is that anti-competitive?
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.
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.
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.
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.
You do realize that, by this definition, nothing short of fraud or forcing someone into a contract at gunpoint, could qualify as anti-competitive?
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!
Is there such a rule for fulfillment and delivery?
Of course, 56% seems monstrously high to me, but then again, so did 5x BOM cost before I had that explained.
Perhaps selling a higher priced product would find a lower share going to Amazon?
I don't know myself
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.
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.
Newegg Best Buy Walmart Home Depot bh photo wayfair webpage that takes you to shoppay or something else
It's not clear to me why droppshippers deserve special care and treatment by the FTC.
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.
[1] https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p...
[2] https://en.wikipedia.org/wiki/Dumping_(pricing_policy)?wprov...
[3] https://en.wikipedia.org/wiki/Predatory_pricing?wprov=sfti1
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.
How is this different than a grim reaper strategy taught in econ 101?
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.
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.
What leg work? Customer acquisition? They paid amazon for that. Delivery? They paid amazon for that. Manufacturing? They paid China for that.
I don't really see it that way. 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.
https://www.sellerapp.com/blog/how-to-get-your-shipments-fro...
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.
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.
https://www.alibaba.com/product-detail/Black-Crossweave-Larg...
alibaba unit price(list): $40.00 amazon seller price: $199
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.
This continues for nearly every single category.
What you don't seem to understand is that they "let" Amazon handle warehousing and logistics because Amazon has in many ways forced this.
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.
The girls here actually have a competitive advantage! They have a time limited product (beauty, youth) that is not easily replicable.
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.
It seems like he's expecting some sort of crazy margins selling a commodity.
- 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.
"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.