Why sell on Amazon instead of your own site? Can’t competitors to FBA spring up that have great logistics? Are there any? Can anyone link me to them?
You don't need to boil the ocean in order to serve a single community. For example, Facebook started in Harvard and its value to everyone in Harvard was based on how many people in Harvard used it, not how many people in the world used it.
Similarly, if a single product vendor and their customers form a community, then a free market of fulfillment companies can spring up to stock that specific product, and then partner with the delivery companies (who have their own networks) to deliver the package. You might say that the delivery infrastructure is a cartel, but they're open to everyone and Amazon has been relying on them until finally spinning out their own. Same goes for CPU chips that Apple relies on etc.
Look at IPFS for example, competing with AWS for storage. It is growing every year and now powers 1% of all storage worldwide! And there is a free market.
Whereas these platforms are all centrally controlled by some billionaire (Zuck, Musk, Bezos) and his crew. You don't need to have their scale because you don't need to serve ALL COMMUNITIES IN THE WORLD on day one. If you have an open source software like Wordpress or Magento, you can serve your customers with web hosting instead of Shopify or Amazon. Now the only question is, who would do fulfilment.
When there's a better alternative customers are less likely to try out your new, less good idea.
Can you give an example of someone serious using IPFS instead of S3? I don't really get what "all storage worldwide" means.
MySpace
Friendster
Whimit - Russians online (LOL)
The only reason that FB, Google and yes Amazon were even able to launch, is because the open permissionless web disrupted AOL, MSN etc. Imagine them allowing Amazon to launch on top of them. They’d cannibalize them just like Amazon cannibalizes sellers.
Scale matters. You seem to be a programmer, you should know that.
Quantity has a quality all its own.
One thing that gets overlooked in this is returns.
One of the big draws of Amazon is easy returns.
Whenever you have decentralized fulfillment centers, returns become a huge pain, because the fulfillment center that is happy to take your money and ship you the product, doesn't want the liability of dealing with returns.
This gave them a pricing advantage which drove more customers to them which they intelligently plowed back into the business in building out their own network, no small feat of course.
A newer competitor would no longer have access to that simple sales tax advantage, and so would have to find something else to compel customers with. Barring that, Amazon/Walmart/Costco/Target/Home Depot/Lowes/Best Buy are tough to compete with because they already offer rock bottom pricing and they don’t have to invest in a ton of new infrastructure for logistics.
Actually, the first thing to break their stranglehold is to have open source software that replicates their back-end and not just their front end. Such software could federate across many instances, therefore being decentralized. I remember Magento being such a software, I'm just wondering how it's been growing over the last decade.
The other part is fulfillment and advertising, each of which are also served by giant centralized corporations. The giant corporations pit advertisers against each other (e.g. YouTube encouraging people to buy advertisements on each other's videos).
Open sourcing the code is step 1 because it allows people to set up their own shops on their own sites, and not be subject to anyone else's rules, leading to a free market instead of feudalism.
Then what you want is a decentralized ecosystem of service providers that create infrastructure that is accessible over a standard protocol. Like IPFS has with storage infrastructure.
Otherwise, at best, you are just reduced to begging Daddy Government to force these corporations to break up. How well did that work for Ma Bell? The pieces were still a cartel, still charged $3 a minute. What the government couldn't do in a decade, open source technology and open protocols did in a few short years ... VoIP dropped the price to practically nothing. Now we have videoconferencing all over the world. Because once we decoupled the software (AOL, MSN, etc.) from the infrastructure via open protocols, the infra providers became a dumb pipes competing in a free market.
You can't open-source marketing and the insane delivery network Amazon has. Those, among other things, are the reason they are successful. They could release all of their software completely open source and literally nothing would change.
What you want here is an open source replacement for Amazon's product search that will find products from multiple independent sellers. The hard part is probably how to curate it; you want to allow legitimate small sellers without allowing the thing to be filled with scams. But Amazon hasn't done a very good job here either, so maybe it's not a high bar.
And then a payments system which is something in the nature of GNU Taler.
Amazon's logistics is an advantage, but is it an advantage that can overcome the need to pay them a vig instead of having the product shipped directly from the manufacturer? Lots of people willing to wait a week for shipping if the price is 10% lower.
Shopify as the front end
CargoWise for transportation, warehousing and everything logistics
Which leaves some of the more sophistiticated stuff like demand ballancing across the network, but that is doable by either developing something in-house or throwing an ERP system into tue mix.
All available off the shelf as we speak. There are other reason why nobody manages to seriously challenge Amazon.
I find most of your content here to not have any good follow-through.
Amazon isn't just some software on a few servers. It's a whole vertical enterprise. Suggesting that some front-end and back-end servers can take the place of warehouses, delivery people, fleets of machines (served by AWS no less), payment companies, 3rd party billing is just laughable, and shows the naivete of a sw engineer.
However, that last paragraph is terrible and absolutely true...
> Otherwise, at best, you are just reduced to begging Daddy Government to force these corporations to break up. How well did that work for Ma Bell? The pieces were still a cartel, still charged $3 a minute. What the government couldn't do in a decade, open source technology and open protocols did in a few short years ... VoIP dropped the price to practically nothing. Now we have videoconferencing all over the world. Because once we decoupled the software (AOL, MSN, etc.) from the infrastructure via open protocols, the infra providers became a dumb pipes competing in a free market.
I remember Ma Bell. Charged stupid prices for long distance, but was a good service. And then, the splitup happened. Did we get better services? Nope. We just got dozens of smaller monopolies all engaging in the EXACT SAME SCAMS that Ma Bell was broken up for.
It was when we started pushing data around and got away from POTS lines did we finally break the stranglehold of the baby bells. Even DSL has been basically thrown away, given how little the RBOCs dont want to advance and grow. Monopolies are like that.
Yep, I think we are in agreement. My point is that for many decades, the government was barely able to make the prices drop. And then open protocols like VoIP did it in a couple years.
I am a libertarian and believe that good open-source software and open protocols cause the centralized services to face a free market of incumbents. Much of the vertically integrated systems can be unbundled.
Another great example is how the Web (HTTP was the open protocol) disrupted AOL, MSN, CompuServe etc. Or how Wikipedia disrupted Britannica and Encarta. How Apache and NGiNX disrupted IIS. And so on.
Basically, we need standardized, open protocols. Maybe one day OpenStreetMap and Mastodon and BlueSky will disrupt their centralized alternatives. In any case, the first step is to have open source software and federation. I'm not saying it's the only thing that needs to happen, but FBA and many other services can be done "sharded" per-product. We can do the same for other marketplaces, like Uber, Fiverr, etc.
Youve got 7k karma so you should also be able to vouch. Just make sure "showdead" is on in your settings.
As to the subject matter:
> Yep, I think we are in agreement. My point is that for many decades, the government was barely able to make the prices drop. And then open protocols like VoIP did it in a couple years.
Mostly, but probably not on the actual mechanisms. I do agree that government's breakup of Ma Bell really made everything worse. And how it was broken up went from 1 monopoly to 20+ monopolies. The end user really just saw stuff stay bad or worse. Now, myself being an anti-capitalist, would have looked at this situation, and go "Well, communication networks are an integral part of national security, and should be nationalized, since this company was abusing the people", and would have federalized it under a nonprofit charter.
As to claiming that VoIP helped supplant - nah. People got their taste with dialup of the internet, and at a whole 4.3KB/s , and wanted faster. A 3 minute (3MB) song was 11 minutes to download... and Napster. Dialup was stagnating, and the telcos were being slow about DSL. I saw DSL eventually, cable networks, and WISPs pop up like weeds everywhere, because more and more killer apps were showing up. And frankly, at the time, Piracy was the killer app. Bittorrent, Kazaa, Gnutella, Napster.
> I am a libertarian and believe that good open-source software and open protocols cause the centralized services to face a free market of incumbents. Much of the vertically integrated systems can be unbundled.
That's the problem with the unbundling. That's not a software or code issue. That's a money issue, primarily with folks who have piles of money can force things others dont want.
And with vertical industries, it's never been a user-level experience in unbundling. To really force the issue, it goes back to the government to force it. And the US doesnt have a good track history in doing that well. This problem is always been a coordination issue, where larger monoliths can do well from a dictatorial governance (companies).
> Another great example is how the Web (HTTP was the open protocol) disrupted AOL, MSN, CompuServe etc. Or how Wikipedia disrupted Britannica and Encarta. How Apache and NGiNX disrupted IIS. And so on.
It's disingenuous to lump all those together.
The "Web" was a group of academics and governments, that finally agreed to let capitalist and commercial groups in on 1993. And those groups also included corporate private networks like the ones you listed.
Wikipedia was the first real test of anonymous and user-level editing across a website, under newly created Wiki software. Sure, the 2 encyclopedias were killed by Wikipedia, but Wikipedia only hastened their death. Bulk books like encyclopedias were already declining. However, we learned a great deal about the ills of letting users edit webpages like encyclopedias realtime. And we're still fighting with those problems. (for example, you'd never see the "lists of Jews", aside a few high profile people in a proper encyclopedia, but here it is.. https://en.wikipedia.org/wiki/Lists_of_Jews )
You mention "disrupt IIS"... and I'm here on my work laptop with 2 IIS consoles open. Free is going to win out cost-wise, for things like startups and hobbists. But there's lots of industries who've developed and maintain in IIS. And in my industry, I'm not permitted to use NGiNX.
> Basically, we need standardized, open protocols. Maybe one day OpenStreetMap and Mastodon and BlueSky will disrupt their centralized alternatives. In any case, the first step is to have open source software and federation. I'm not saying it's the only thing that needs to happen, but FBA and many other services can be done "sharded" per-product. We can do the same for other marketplaces, like Uber, Fiverr, etc.
First, BlueSky is closed source proprietary spun off from Xwitter's former CEO.
I'm not seeing it. Well, a part I do. Having the software to start doing stuff your own direction is a good start. But much of this isn't a software problem. Its a logistics and integration problem, with a massive vertical integration across the whole thing.
Amazon's probably too big to break up. The individual pieces don't make that much sense individually. That's why I'm for taking control of said organization at the C level and BoD level, and start disassembling the illegal parts from the top down under full transparency and oversight. Maybe that'll be enough to scare other companies engaged in extreme monopolistic practices that thhink they are "too big to fail", will just be eminent domained.
Cool example you chose there. 99% of VoIP is actually closed source, proprietary solutions.
WhatsApp, Facetime, Skype, Telegram, Google Whatever, Slack, Teams, ...
It was like a group of Java developers decided to write PHP code and it was horrific. I would estimate 80% of the classes in that codebase didn't have any implementing code in them.
Literally the only thing I liked about Magento was it's ability to outline everything that was being rendered to make it easier for you to identify the changes to templates you needed to make.
in a lot of countries it would save a lot of money if the tax office had direct access to the product and purchase database. Thousands of people could move to more useful jobs.
You are sold "the dream" by showing top sellers / influencers / etc. and told you can be like them. Kevin O'Leary became a meme for promoting this bullshit: https://www.youtube.com/watch?v=AuqemytQ5QA
In fact, even the top influencers can be deplatformed in an instant, and their speech is controlled. And same with Amazon. But the thing is that the people you never hear about, the "middle class", are far more controlled and the "long tail" produces all that free content that basically gets almost new views / buys but all that free sharecropper content is then used to train AI models or provide proof of large available inventory / product / content BY THE PLATFORM that pits them all against each other in a zero-sum game.
https://www.reddit.com/r/quotes/comments/117oh1m/the_upper_c...
The women is Amanda Lang,[1] and the two were a 'duo' for many years with a business/finance reporting show. I'm not sure how she managed to put up with him for so long. :)
That actually adds to the problem: If you put effort and money into brand recognition you need to provide best prices on amazon, but Amazon is easier to game if your brand is xyxxy12345.
So the item price matches Amazon's, but you pay less in the end, if you're even remotely paying attention.
At least for the $200-300 items I've seen (like dehumidifiers, fancy computer accessories).
That's actually kinda disappointing. I'd always assumed those flyers were pieces of trash (at best, something I'd need to put in a recycling bin) which I don't want but now I'll be more tempted to take them when offered on the chance that I otherwise accidentally avoid the sales price.
It's still good to know that such coupons are likely just attempts by the retailer to circumvent the manufacturer's... ahem suggested price.
Since none of their lumber should ever be in the same building as the word "straight", I made a joke to a nearby employee that we should get a discount at how warped the wood was. He very seriously told me to separate the warped wood on my cart, and he'd mark them down. Got to the register, and they were marked down 40%.
Second instance was after spending time chatting with an employee in the appliances department, he pulled out a pre-printed, handcut piece of paper from his apron pocket, wrote 10% on it with his sharpie, and i got 10% off at the register.
Oh, and of course the Guitar Center stories of "you're a cool dude, and since I like you, let me knock of X%" are infamous
Apparently this violates the content monopoly KU is supposed to have.
Demanding the lowest price does not harm consumers. Overstock, Wayfair, Walmart and others do the same thing. The result is the lowest price for a given product on all sites. This is unquestionably good for consumers.
If the price is higher than the fault is simply that of the seller for raising it. All e-commerce sites want the lowest price for their customers.
Dictating how retailers can interact with your competitors is anti-competitive. Dictating what prices they can offer when they put up listings is a part of that, it is anti-competitive.
It's annoyingly a pretty standard practice. And they will see through the "different SKU" trick simply by comparing the product images.
Customers are so lazy they want the government do everything for them. If you don't like Amazon, close the tab and go to eBay.com or Walmart.com. It's very easy, and can be done in seconds. This isn't like telecom monopolies where you can't actually switch.
Downvotes don't mean anything. Most of the folks on here have no idea how e-commerce works. Amazon will win. It's simple to see - them losing would imply they are obligated to feature higher prices, which is clearly worse for customers and inherently at odds with what the FTC is supposedly trying to accomplish.
A company makes a product - it costs $10 per unit to make. To list and sell with Amazon, they are charged $12 per unit. To make a profit the company adds and additional $1 per unit. They sell the product on Amazon for $23 per unit.
Online retailer Foo also has a store, and provide the same services that Amazon for their online shop at $5 per unit. The online retailer adds a profit of $2 per unit. Total price $17 per unit. Retailer Foo is more $ efficient for those services as a result customers price compare. Foo is rewarded for their effi with higher volume, manufacturer is rewarded with higher profit and consumer is rewarded with lower prices. Enforcing market competition led to all 3 parties involved being rewarded. Retailer Foo over time grows a larger customer base as people learn to price compare with them and forces Amazon to stop rent seeking.
But the above doesn't happen in the real world. Amazon enforces that the retailer lower their price on Amazon to $17, while still collecting $12 per unit. The company now can sell on foo, but only by selling on Amazon at a loss. They can't afford that amount of loss from Amazon and stay in business. So Amazon avoids competition. They can't pull their product from Amazon because not enough customers vist Foo retailer yet to make up the volume.
So in the end Foo retailer is more dollar efficient, but is prevented from growing and benefiting the marketplace. Amazon leverages its outside market size to avoid competition. Market participants preventing competition is against the benefits of capitalism and harms the consumer. So, it benefits the consumer to ensure Amazon has to actually compete with the more efficient competitor and stop rent selling behavior.
Furthermore, again, no one is obligated to sell with Amazon. There are thousands, if not tens of thousands of sellers who do not sell their stuff on Amazon. It's not some requirement to do business in the 21st century.
In any case, we can come back to this case a year from now, and we can pretend to be shocked when nothing meaningful happens to Amazon.
Yes I'm the short term Amazon's customers don't get the discount they could get om Foo retail. Bit then they become Foo retailer customers and they benefit. Too many things optimize for the small scale.
Similarly Amazon's upon losing customers to Foo retailer has to become more efficient overall (or reduce its rent seeking fee) to stop losing customers. So now all of Amazon's customers for that product benefit, even those that didn't move. And potentially even those customers for other Amazon products.
This is the purpose of capitalism - marker competition. Nobody wins with laisse-fair capitalism except rent seekers. Society benefits from market competition in capitalism and this is pushing for it.
If I make light bulbs and sell them to customers through my own channels – exactly who is the rent seeker?
In my industry there are actors that are as dominant as Amazon are in retail, but there's also a huge part of the industry who just sell directly to the customer. It's your own choice. If you don't accept Amazon's terms, you don't have to do business with them. And vice versa.
For me the last straw was when Amazon Prime deliveries stopped arriving in two days despite being claimed to arrive in two. It made a difference because in two days it could be a hassle to drive to the store but in five days I can easily find the time.
Not long after that, Prime service became officially five days at my location while Amazon was shouting to the rooftops that other people were getting one day. Around this time it seemed every other retailer was trying to impress me with fulfillment and often shipping is free if you buy $200 of camera equipment or $80 worth of games, even when it isn't it isn't very expensive but it is always faster than AMZN, I even get Ebay packages from Japan faster than AMZN gets me packages from the next state.
There was also the rising problem that the quality of the listings was going down on AMZN; I'm not so concerned that the $24 product is crowding out the $17 product but rather that there are so many junk products that crowd out good products. On top of that there are many product listings that make no sense at all and it all adds up to a stressful process of sifting through a lot of junk and then not knowing if some absolute garbage is going to show up at my door.
So I went from buying something on AMZN probably several times a week to now less than once a month... I canceled my Prime subscription because I couldn't have any self respect if I was paying a subscription for something that was worse than average as opposed to better than average. And boy is it annoying to shop on AMZN now. The only thing you have to click more times than to cancel AMZN Prime is to order something from AMZN without signing up for a free trial of Prime.
https://www.law.cornell.edu/wex/monopoly "For instance, the term monopoly may be referring to instances where: [...] There are many buyers or sellers, but one actor has enough market share to dictate prices (near monopolies)"
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I'm not replying to anything you might reply with because the rest of your comments in this thread have clearly been in bad faith. But this was one of the few smoking gun comments betraying either a biased position you hold or your lack of background on the topic, so it was easy enough to just post a link to an authoritative source + definition and just move on.
If it has “significant and durable market power” [0], it is by the only definition that matters.
[0] https://www.ftc.gov/advice-guidance/competition-guidance/gui...
What's your move in this position?
You can't just imagine all companies as perfect frictionless spherical interchangeable cows. In reality companies as large as Amazon can have significant market distorting effect, while much smaller companies might have to choose between their principles and going out of business.
What I'm describing is already what happens, by the way. Look at Anker for an example.
Which is why your scenario here wont happen. Thanks for clarifying so well why your argument "there is no consumer harm" is bullshit, what you said here means you know that what Amazon does here increases prices.
Prices then rise back up as your nearest competitor was smart enough to not lower price below their cost.
Or do you somehow believe that price competition currently only exists everywhere EXCEPT on Amazon's platform?
What about taking out an ad to let people know where to buy your cheaper item? People didn't know walmart.com existed until a tv ad told them. Doesn't seem unreasonable to take some of the saving from not selling on Amazon and use it for services the platform was providing (discoverability).
Nothing changes until it changes.
It does, since losing sales on Amazon costs them more than raising the price on other platforms then that is what they will do, since companies are motivated by profit. Amazon knows this, that as a dominant market player if they add this rules the vendors will have to abide it since they will lose more from not using Amazon.
This is how anti-competitive practices works and why we have laws against them.
If they decide to raise prices, then that has more to do with the seller than Amazon.
You are right that this policy is very simple, it's very clear both mathematically and logically. Companies cannot lower their prices lower than their costs. If costs are variable across platforms but prices are fixed to a single value than this will de-facto result in INCREASED prices. If this policy causes someone to leave a platform, that STILL doesn't result in prices any lower than they would absent the rule.
In fact, the sheer existence of the rule is a clear statement from Amazon that they believe they have significant and durable market pricing power, since if they didn't, this policy would clearly lead to sellers and buyers leaving their platform.
In a free market sellers will leave the Amazon ecosystem and move to a platform with less restrictive agreements, resulting in lower consumer prices (albeit with less availability). That’s exactly what GP is arguing. Obviously GP believes in a free market.
Amazon’s belief in their own market power is irrelevant.
No seller is obligated to sell on Amazon to begin with, so this entire premise is false.
Clearly the FTC disagrees with your logic, and I'm glad they do. FedEx, UPS and USPS should be sued too if they did what Amazon is doing.
If the FTC fails to implicate them, rest easy. At least Europe knows how to keep their market on a leash.
It is literally Amazon’s business to offer pricing at equal to or better than their competitors.
> …the only reason they care is that they want to crush the competition.
Every company wants to beat their competition, and many (most?) want to “crush” their competition. Don’t you think Target wants to crush Amazon? Don’t you think Google wants to crush Apple in smartphone sales? Don’t you think a local retailer would love to crush Amazon for products in their niche?
The only question here is whether Amazon is doing this in an abusive way and/or a way that negatively impacts consumers.
We’ll find out in the trial…
For their own products they can.
For third-party items, Amazon is free to lower their margin.
I have personalky spoken to wholesalers who sell widgets X (lighters etc) to retail stores.
If the retail stores undercut everyone else and drop the price below MSRP, they will exclude them in the future. There is centralized price control even though the retailers are free to do what they want.
That is done by auto dealers and anyone else who does MSRP. The difference is that they are still competing in that product category. Amazon on the other hand is a platform that stands BEHIND them. This leads to an emergent price cartel, just like in the propu lica piece on NYC real estate:
And as you've stated, it's done by anyone who publishes a MSRP.
https://www.deltafaucet.com/for-professionals/product-resour...
https://assets.ctfassets.net/zlhl2y58oyef/3wENIXr7qvqyOoVD6R...
This is no different than what non-e-commerce stores (such as Walmart) have been doing for years.
As a simple practical manner a small manufacturer can more cheaply sell products at their factory than the overhead of selling through Amazon or anywhere else. You often see this where mid sized brewery offers beer kegs more cheaply on location.
Amazon’s policy simply increases prices without any benefit to consumers or the overall economy.
The move that Amazon's price be no higher than offered elsewhere is the most pro-consumer move possible. Hilarious people are complaining about it. Any second-order effects of this are on the actual seller, not Amazon.
Your conclusion that this increases end pries for consumers has nothing to do with Amazon, but the sellers themselves.
Yes, but at the end of the day Amazon to remove the seller for any reason, so even if the FTC succeeds here, Amazon will simply purge those sellers who are not offering the best price, even if not explicitly stated.
There is no reality where Amazon allows their site to be inundated with higher priced goods compared to competitors.
Dictating how you sell elsewhere is a clear step beyond that.
There is no obligation to sell on Amazon, nor a requirement for them to raise prices on other platforms. They could simply offer the lowest price everywhere. The result? Lower prices for Amazon customers. If they raise the price, then that's the seller's fault, not Amazon.
While true, this ignores the important point that Amazon is only able to do this anti-competitive practice due to their market dominance that effectively forces many sellers to sell on Amazon.
> nor a requirement for them to raise prices on other platforms.
That is what this whole thing is about. Sellers that sell on Amazon aren't allowed to sell for lower prices on other platforms that are cheaper to sell on.
If Amazon was able to offer lower prices for its customers by offering sellers a marketplace with lower costs compared to competitors that would be great. Instead, they abuse their market dominance to prevent any competitors from offering lower prices by being more cost efficient for sellers. This is extremely nasty as it effectively prevents any competitors to Amazon from building a market share since consumers will have no price incentive to switch and sellers will not want to switch due to the smaller market share on those competitors' platforms.
It could not be more clear that this is anti-competitive behavior achieved through abuse of a dominate market position.
Yet here we are with sellers WANTING to sell their items at a lower price on places other than Amazon, but if they do, they'll go out of business. That doesn't sound pro-consumer.
I'm a consumer. I'd like to be able to buy items for the lowest price the seller wants to offer me. That's not happening in some cases because if they do, Amazon will exclude them and they'll go out of business. Yeah, definitely not pro-consumer. Pro-amazon, sure.
Do you agree with the look and feel lawsuit that Apple had against MS? Or think that Roku, Amazon, Google , etc did something untoward because they came after Apple with set top boxes?
As far as Amazon copying others as a marketplace owner, ever heard of the Kirkland’s brand? Store brands have been around forever.
https://www.reuters.com/legal/litigation/amazon-copied-produ...
> thousands of pages of internal Amazon documents examined by Reuters – including emails, strategy papers and business plans – show the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India, one of the company's largest growth markets.
A big company can stall a copyright lawsuit for as long as it wants. Small companies cannot win against Amazon in court.
https://www.latimes.com/archives/la-xpm-1986-07-14-fi-19337-...
Small victories like the chain wrench lawsuit against Sears happen. But they are rare.
https://www.chicagotribune.com/business/ct-bionic-wrench-sea...
And CVS follows the formula of name brand OTC drugs down to the very ingrediant to make house brands. You can’t copyright a shirt measurement.
And before you call me an “Amazon shill”. I got PIPed from Amazon less than two months ago. I’m the last person who has any love for Amazon. Honestly I don’t have any feeling either way. It was just my 8th job over 25 years, they gave me a nice check and I had a comparable offer within two weeks.
Like with the sears example, large 'mall' like organizations do outright steal designs and stonewall the original copyright holder.
A random housebrand does not have access to Amazon's statistics, logistics or reach. Amazon is looking at stats that they hide from their providers, to choose who to copy, then out-price the original seller. (Due to inhouse logistics)
They are not even remotely the same thing.
And Walmart sells a lot more than Amazon.
You don’t think that every store knows how to undercut other products in its own store with house brands?
People act as if you have to sell on Amazon. You don't. That assumption and expectation is why Amazon is dominant to begin with. Sellers should leave if they don't like it, and that will naturally soften Amazon dominance.
Imminent collapse and bankruptcy when they leave due to Amazon's dominant market position. That you can set up a shop anywhere does not mean anything when all of your potential customers are only going to the Amazon digital strip mall.
37% is not a monopoly. If you have a differentiate product, you can set up your own website through Shopify or any number of places.
And if you haven’t been paying attention, the FTC has been laughed out of court for the last five years every time it has gone after BigTech
The government has a “monopoly on the legal use of force”.
Look no further than Florida to see what an overzealous government can do when you disagree with them or the police that raided a newspaper office because they reported on police corruption.
I’m much more worried about when the police are behind me because “I don’t look like I belong” in my own neighborhood than the Google car mapping my street.
The government at least has the obligation to appear as if it's beholden to your will and rights. Corporations have no such qualms.
Also please tell me a scenario where Amazon takes over all retail?
If you haven’t been paying attention, the justice system and political parties gerrymandering hasn’t even been trying to act like they are behaving fairly.
The governor of Florida has actively been punishing companies both big and small that have been speaking out against him.
But that's not how this works.
It's technically true that fiber has competition if another ISP is offering dialup in the same area. No one in their right mind would agree that's actually a competitor in anything but name.
And so it is here.
If not selling on Amazon is an existential risk for your company, Amazon is effectively a monopoly, and THAT is what the law cares about.
Amazon is not exactly cheap for sellers, so the price has to go up everywhere.
You right now can set up a site on Shopify and sell your goods.
If you are selling a differentiate product instead of cheap crap imported (or drop shipped) from China, you can create demand without going through Amazon.
For instance, I was specifically looking for Samsonite zipper less luggage because I trusted that brand and it wasn’t available on Amazon. They chose not to sell on Amazon and I bought it directly
I'm not going to bother explaining further, but thanks for confirming you don't understand the issue. It's not my job to educate you.
Amazon is saying that sellers cannot offer a fair low price to customers on other platforms if the seller can't also offer it on Amazon. This is 1) anticompetitive, 2) anticonsumer, and 3) insane.
Consider this test:
- Seller buys a crappy LED bulb from China for $0.80
- Seller is happy to list the bulb on Walmart, Target, etc, for $2.00. Net of fees and shipping and stuff they make enough money
- Amazon charges $3 in fees. Obviously the seller can't afford to sell for $2 on Amazon. They sell for $5 instead.
- However, now the seller also can't sell for $2 on competing sites. Amazon, leveraging its market share, has dictated that the seller must price Amazon's fees into pricing on non-Amazon sites, so consumers pay $5 to Target for something the seller would have been happy getting $2 for.
This is insane.
Let's use your example. The sellers should stop selling that item on Amazon, and sell their light bulb on Walmart, or where-ever. Customers who really need that will go find it at Walmart, or where-ever. This strengthens the competitors to Amazon, which is bad for Amazon and good for the consumer. The consumer also find the lower price that they wanted. Alternatively, they buy the alternate product on Amazon which would be cheaper than the inflated price (per your example). Again, good for the customer. Everyone wins in every scenario except for the seller, which is how Amazon and every wholesaler operates.
Suppose the FTC wins this case and sellers can put whatever price on whatever site. Amazon, like any store wants the lowest price. Not to mention there are only some many items you can show on the first page of results. They will find some other reason to remove these sellers and/or their items.
Now maybe there's another case to stop that behavior too. The result is that companies are not obligated to let sellers on their site. That is insane.
In summary, there will never be a scenario where Amazon allows sellers to sell the exact same item for more than Amazon's competitors, unless the government forces Amazon to let sellers sell whatever on their site.
Math doesn't check out. Not to mention that if sellers stopped selling on Amazon they wouldn't control so much. How exactly is making everyone sell on Amazon going to solve everything?
Sellers should stop using Amazon if they don't like their policies, and the issues will correct themselves.
Your 'feelings' about how this works only matters to you. The US branch of oversight for trade has declared (with a lawsuit) that this behavior is unconscionable and either is or will be illegal by the time this suit is finished.
You're welcome to dispute the FTC and the crowd here on HN, but you need to provide some sort of data to back up your claim of: Sellers should just stop using Amazon...the issues will correct themselves.
The FTC's suit alleges the exact opposite of what you allege. The FTC states that there is harm to the entire economy if Amazon is allowed to continue this practice.
Please cite the studies, data, or metrics you used to claim '...will correct themselves."
Thanks @endisneigh.
> the study corroborates the general sentiment
Seems fishy ... Good thing that even corporations like Amazon get a day in court.
(and I'll be generous and I'll pretend Walmart has zero fees)
Amazon: ($5 selling price - $3 fees - 0.80 COGS) * (100k * 35%) = $42,000
Walmart: ($2 selling price - $0 fees - 0.80 COGS) * (100k * 7%) = $8,400
And even if they price the same on Walmart as they would on Amazon: ($5 selling price - $0 fees - 0.80 COGS) * (100k * 7%) = $29,400
See the issue? The problem is that one seller on Amazon moving to another platform won't change the fact that Amazon has the majority market share. That's how market momentum works and it's why we have antitrust laws.
Even with exorbitant fees, they are still where sellers need to be. And they are using this market share to force sellers into overpricing on other platforms so that they maintain this unfair position.
If Amazon's market share is 35%, then the non-amazon customers comprise the other 65% (which, being greater than 50%, constitutes "most").
Amazon: ($5 selling price - $3 fees - 0.80 COGS) * (100k * 35%) = $42,000
Not-Amazon: ($2 selling price - $0 fees - 0.80 COGS) * (100k * 65%) = $78,000
If a seller raises prices to match Amazon, they can be undercut elsewhere by those willing to forgo Amazon for the larger overall market share.
Amazon is convenient to small sellers in that they offer more customers on a single site than any other, and with limited bandwidth sellers logically want to minimize how many different sites they need to interact with, but charging for convenience is not inherently anticompetitive behavior. Amazon may have abused it's position in the particulars of its MFN implementation, but MFNs in general are fine.
1. We're ignoring fixed costs associated with onboarding with an ecommerce platform. Selling on one website has significantly lower fixed costs than it is to sell on every ecommerce site on the internet minus one. We're talking thousands upon thousands of retailers, not a handful.
2. Not all ecommerce sites represented in that 65% permit third party sellers.
This is a problem in terms of organisation. If lots of people stop selling on Amazon this would be true. The problem is individually each seller is motivated to deal with Amazon so long as lots of other sellers are. A mass exodus from Amazon would in short order make the Amazon store far less relevant, but nobody wants to leave before everyone else is doing it because until then it costs them
It's probably an impossiblity if your business model is selling cheap imported Chinese garbage at a profit, but that's the businesess you chose. Others have chosen to sell quality items on their own terms. Those are the businesses I want to reward.
So here's a weird externality. As a decently well off tech-worker, I don't care if I'm paying 5$ or 2$ for lightbulbs, even if I'm re-lighting my whole house. The seller will sell on Amazon, because it is the largest market and will set their prices on other markets to match Amazon. I'll buy on Amazon, because it isn't worth my time to check multiple websites to get the best price (especially when SKUs differ and I have multiple other items I'm buying, etc). And now people who do need to save money, can't also find this lightbulb at a cheaper price on competing marketplaces, even if this lightbulb is actually the best quality.
It's the opposite of what you're saying. Sellers not selling particular items on Amazon is good for consumers who are price conscious, because if they need that particular item they will search for it and find it cheaper on another store, strengthening that one and hurting Amazon.
And if they don't care they will find cheaper items on Amazon. Everyone wins except for the seller, which is Amazon's MO.
Sellers don't just 'not sell this item on Amazon', because it is the largest single market. This is like, the whole issue in question.
> because if they need that particular item they will search for it and find it cheaper on another store, strengthening that one and hurting Amazon.
This is the exact thing that isn't happening, because Amazon is abusing its market position.
But, even if this was the case and the seller chose to sell on a different marketplace and take the Amazon ban, then it still wouldn't be as good as having just having the item listed on both marketplaces at two different prices. Because then I wouldn't be able to buy the best lightbulbs in one convenient location.
That's be much harder work, though, so regulation might well still have the intended effect.
Either their reason will need to be through their seller terms and conditions, or it'll have to be done on an individual seller basis.
Amazon relies on scale, and therefore standard terms and conditions for all sellers that can be scrutinized by regulators.
If it's done on an individual seller basis, I don't think they'll be able to do it while having the same effect in practice.
Online retailer Foo also has a store, and provide the same services that Amazon for their online shop at $5 per unit. The online retailer adds a profit of $2 per unit. Total price $17 per unit. Retailer Foo is more $ efficient for those services as a result customers price compare. Foo is rewarded for their effi with higher volume, manufacturer is rewarded with higher profit and consumer is rewarded with lower prices. Enforcing market competition led to all 3 parties involved being rewarded. Retailer Foo over time grows a larger customer base as people learn to price compare with them and forces Amazon to stop rent seeking.
But the above doesn't happen in the real world. Amazon enforces that the retailer lower their price on Amazon to $17, while still collecting $12 per unit. The company now can sell on foo, but only by selling on Amazon at a loss. They can't afford that amount of loss from Amazon and stay in business. So Amazon avoids competition. They can't pull their product from Amazon because not enough customers vist Foo retailer yet to make up the volume.
So in the end Foo retailer is more dollar efficient, but is prevented from growing and benefiting the marketplace. Amazon leverages its outside market size to avoid competition. Market participants preventing competition is against the benefits of capitalism and harms the consumer. So, it benefits the consumer to ensure Amazon has to actually compete with the more efficient competitor and stop rent selling behavior.
I think this speaks to the nut of the problem. Unless there is an incentive upstream of the misalignment of parties, then any number of lawsuits after the fact will have a "war on drugs" level of futility.
What to do then? In an alternative universe perhaps the FTC was implemented to improve trade by promoting standards, ontologies and authenticity verification that lead to greater freedom of trade and less gatekeeping.
Amazon demands that sellers increase their prices on selling platforms with lower overhead. A demand to increase prices does harm consumers.
Note, there is still a valid question on whether or not companies with enough exposure should be held to higher standards. Consider, we hold pro players to tighter requirements than we do local leagues. They both have basically the same rules, of course, but not fully identical. And enforcement is, of course, largely at the discretion of the agencies enforcing them.
The last is obnoxious, if you view the entire field as a homogeneous thing. And I do get the impression that there is something more going on in this case. That said, it is not abnormal to rank ROI on what gets enforced. I wish it was framed directly in those terms, though.
I think that in either Finland or Iceland people receive traffic fines that are a percentage of their income. They would never fly in the US.
There are almost certainly low key levels of bad practices in small shops. But it would cost more and take more out of the economy to enforce them than it is to just not care.
Now, that bar is rising, of course. Things that used to not matter years ago are easily enforced today.
I can’t imagine how this could be abused.
Similarly, mens rea is a thing. Such that statutory enforcement of rules is often a regressive policy that isn't necessarily a good idea.
My point was that many rules get enforced on a cost benefit based system. Especially in business where enforcement is necessarily an expensive undertaking. Ideally, part of enforcement will include evolution of the rules so that people don't grow into a situation where what they are doing is suddenly illegal. That said, many of the rules we are looking at here are more along the lines of "you left interstate driving and are now in a city." That is, the landscape and situation pretty much has to factor into the rules. Is why you would be an asshole for worrying about the kid's lemonade stand down the corner. Any grandstanding on how the rules apply universally is... well, just not useful.
That is to say, I also expect clarification and evolution of the rules during this enforcement action. Such that I would be most happy to have some of these arrangement flat out illegal. That said, https://www.ftc.gov/advice-guidance/competition-guidance/gui... was linked on Matt Levine's email today. And... "Our company monitors competitors' ads, and we sometimes offer to match special discounts or sales incentives for consumers. Is this a problem?" is answered with a no. Such that, this is a tough field to litigate right now.
And, what is it you are advocating for? That we only have rules that we can universally enforce? That would require that we know all of the ways that they can be broken from the beginning, so that we can encode those in law.
Maybe the US doesn't have a lot of laws that specifically target large organizations, but they have a ton that specifically exempt small ones.
For example, let's say I independently decide to import an item from company X and sell it only on a Shopify site for a lower price than company X's items listed on Amazon. Will Amazon exert pressure on company X to stop shipments to me or impose a minimum sale price policy simply because company X's products are available elsewhere cheaper than on Amazon?
They're not saying amazon committed a crime by doing this, they're saying that it's evidence of amazon abusing their market position to create a monopoly. "most favoured nation" status is legal, creating a monopoly isn't.
Amazon's practice is bad because it anchors pricing to their mandated cost structure. That the US government engages in similar practices should at least raise questions, because it has the same effect on the marketplace.
It's true that the US government does make those demands, but it's very important to note that the US government organization is not a reseller of goods. It is almost exclusively a consumer. It is not in direct competition in the same marketplace with private industry outside of a few select industries (e.g., USPS, limited healthcare).
Next, MFN tariffs kind of by definition only affect international commerce. For Amazon, a 100% domestic manufacturer producing goods would need to comply.
Finally, MFN is something defined by WTO treaty. If you have to abide by MFN when importing goods into the US, it's almost certainly because your nation is also a WTO member. Because almost all of them are. The General Agreement on Tariffs and Trade requires WTO members to extend MFN treatment to like products of other WTO members. It's literally the the first article of the treaty agreement. [0]
[0]: https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm
You are the only person that introduced the notion that this had anything to do with the WTO, international treaties, etc.
This "rules for thee but not for me" behavior is why trust in government institutions has been eroding. It is difficult to give good and necessary actions the aura of legitimacy required for democratic institutions to function when the hypocrisy is obvious.
(In a way it's amazing how shouting whataboutism is now more often used to deflect or excuse double standards and unfairness than whatboutism itself.)
That's one of the main cases of sticker shock in the healthcare industrial complex. Price a cancer treatment that would still be profitable at $10k/month at $125k/mo and offer sweetheart discounts to insurance companies (and treat self-pay patients as charity case writeoffs).
Is it possible the loophole here is to provide discount codes at checkout for “20% off” on website only, and now magically it’s cheaper than Amazon?
Shell companies are for more than just tax evasion!
DC AG Karl Racine filed a lawsuit over this in May 2021. The judge threw it out, supposedly for lack of evidence that it actually raised prices: https://www.jurist.org/news/2022/03/dc-trial-court-dismisses... I can't find details; it's unclear what the evidence or lack thereof was.
CA AG Rob Bonta filed another lawsuit over the same issue in Sept 2022. Some juicy quotes here (although only one side of the story): https://oag.ca.gov/news/press-releases/attorney-general-bont... The CA lawsuit is set to go to trial in 2026.
The FTC alleges that this simply reconstitutes the MFA since most sales on Amazon take place from the buy box. Amazon responds that it is within its rights to not promote uncompetitive offers that make its site look bad for not having the lowest available price.
Amazon is not a neutral entity or a public space. It's a private platform with its own interests that are very often in conflict with sellers.
There is this weird cultural expectation of platforms and platform-like applications (social media, multiplayer video games, online stores, proprietary libraries/engines, even entertainment media "universes" and franchises etc.). Participants and consumers seem to think that these platforms are somehow public spaces that they partially own, or at least they act that way.
But you only own what you actually own.
There are legal instruments and structures that actually let you partially own things and/or grant you rights so you can act on these kinds of expectations: coops, open source and other such licenses etc.
When internet culture and commerce wants to mature, then maybe we should start focusing more on building on _legally_ trustworthy foundations.
https://www.statista.com/statistics/274255/market-share-of-t...
https://www.amazon.com/Pilot-Retractable-Rollerball-Extra-Re...
Compare it to this listing for a very similar product:
https://www.amazon.com/Pilot-Retractable-Rollerball-Ultra-0-...
You'll see that in the FTC's example, you need to click to see more buying details and that at the time of this comment the lowest price is $14.28 with free shipping (on October 12th for my location).
In the other example, the "buy box" highlights the best offer of $9.99 with free shipping (on October 5th for my location).
In this example, the pens with the buy box are 50% cheaper and have much faster shipping.
I can understand why the FTC is concerned. This has the potential to be worse for competition than MFN agreements, because it forces any supplier whose products might end up on Amazon to police its entire distribution network for minimum pricing. It also forces suppliers to crack down on (legal, authentic) grey market imports, even if those are never sold on Amazon, or risk losing the ability to effectively sell on Amazon.
The fact that one product has the buy box at $9.99 and 1-day shipping and the other product does not have the buy box at $14.28 and 8-day shipping lets us infer that $14.28 is not a competitive price for these pens and there may be a cheaper price elsewhere (likely closer to $9.99).
It doesn't let us infer that there is a cheaper cost somewhere, it lets us infer that Amazon has a low confidence that someone will buy it. That or they have such a low inventory of it that they are not confident showing it on the buy box without more engagement from the users.
To be clear, I'm ok with the idea that this is getting investigated. I have low confidence of finding smoking gun reasons to punish sellers on this. I am far more confident that Amazon is optimizing to convert sales.
Of course, without access to Amazon's systems I can't say for sure why any individual listing is or is not promoted. I'm just making an educated guess based on what the FTC put in its complaint.
As a consumer I definitely avoid products with no buy box. I thought it was only related to Amazon fulfillment (which in turn I use as a proxy for being likely to receive the product on time and undamaged)
Their logistics are utter garbage for me - part of it is an urban setting with nowhere to leave things, part of it is that they don't give a shit, and leave things.
Sounds to me like Amazon has found a loophole in the law. It agrees to list anything for sale, with no anti competitive conditions, but then only recommends customers buy things that it believes are in the customers best interests.
The FTC will struggle to argue that is illegal. Amazon can't be compelled to recommend stuff. (free speech etc). Also, what they recommend is in the consumers immediate best interests.
It will be hard for the court to argue that amazon should start recommending more expensive items to consumers, just to push consumers into looking for a cheaper platform.
Yes, 100% this. That's why I said that this lawsuit has a major remedy problem. Even if the court agrees this is anticompetitive, how do you fix it?
Now if Amazon wants the MFN clause, no problem -- but it's the wholesale price they can't sell to someone else below, not the retail price. If Amazon wants the lowest retail price, that's up to them.
The fact that the product exists $1 cheaper on another site does not make it not the best recommendation for the customer’s need. If I search “tablet” are you saying I should be recommended a cheap off brand tablet promoted to me because Amazon has the cheapest price or an iPad even though I can buy an iPad on apple.com for $10 cheaper?
I think you are misunderstanding the issue. Amazon is selectively determining to show the "buy box" on a specific product page based on whether the prices for that SKU on Amazon are competitive with prices for the same SKU on other websites.
In your example, Amazon might not have a buy box for a given iPad model if the same model was available on apple.com for less. The presence of cheaper non-iPad tablets would not impact the iPad buy box.
> Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."
No, not necessarily. This is just what companies always do. As long as it looks like they're "trying" to comply, they don't get in big trouble. In the meantime, they get to make microadjustments to their policy and find out exactly how far they have to comply until they're legally in the clear.
If the vendor for the $9 offers it for $8.50 elsewhere and Amazon starts focusing on a $9.50 offer is that "better for the consumer"?
If the $9 doesn't exist and there are two vendors at the $9.50 price and one has a higher review history but offers it lower elsewhere is Amazon making things better by focusing on the other one?
If another site starts selling the same product for $8.50 (regardless of who the seller is), Amazon may hide the buy box and put all the offers in the "other offers" section to avoid advertising an offer that isn't the best price available online.
Consumers price compare across sites, and Amazon wants to maintain its reputation for low prices (and in truly egregious cases prevent sellers on Amazon from price gouging).
If I don't see a price I assume it is out or they only have used ones. Certainly occasionally I have seen scalpers when I double checked anyway to see what the price would be if it returned but generally Amazon caught maybe half the scalpers in my experience.
Having a signal that means "you could get it less elsewhere" be the same signal as "I only have scalpers" isn't exactly good for consumers.
Also this implies that Prime shipping is worthless given they exclude it from the calculation...
Is buying from the buy box ever to the customers advantage?
How? Amazon routinely recommends products to me that are objectively inferior compared to other products. For example, I just searched for "peak design travel tripod" and the number one result, which is also marked with "Overall Pick", is a tripod made by a company with the name of KINGJUEEQUESTER that looks like it's made out of cardboard tubes, but at least comes with a free 21 piece lens filter set and selfie stick for $18.99. And it has 3000+ 5 star reviews that are almost nearly identical. "Edward Von McTavish: The KINGJUEEQUESTER tripod arrived. It is of the most impressive quality. The Leg Lock feature fulfills my needs. I recommend for you."
The thing I'm actually searching for isn't even on the first page of results. It's on page two, under "More Results" and has a title of "Peak Design Travel Tripod (Carbon Fiber)" and is priced at $599.95 (the same price you'll find on Peak Design's site).
How is it that showing me anything other than what I searched for supports me as a consumer?
You mean like this outright scam with an "Amazon's choice" label on? https://news.ycombinator.com/item?id=34588734
Amazon scours the web to make sure their products are competitively priced. So if a Western Digital external hard drive is $99 on NewEgg, then Amazon wants to sell it for $99 or lower. If it's a 1P product (i.e., Amazon is the seller), they can easily price match in real time. But if it is a 3P (third party seller) product then Amazon cannot take that action unilaterally take that action since it is the seller setting the price. So the best they can do to protect their customer in real time when their crawlers detect a lower price elsewhere is to hide the buy box behind the "see all buying options" button.
I'm sure when this feature was rolled out, Amazon's sales must have dropped. They are taking that short term hit in order to protect customer trust in the long term.
“By using this site, you agree you are not an agent of Amazon. You also agree that you will not use pricing information except as allowed herein.”
Those costs are Amazon specific... Way to shoot oneself in the foot.
Why should Amazon get to offload their own uncompetitiveness onto sellers?
Market share => market power => different regulations.
(Of course, I would personally prefer to ban this behavior across the board; I just wanted to also point out that treating Amazon differently could plausibly be reasonable)
Different regulations => market power => market share.
Although I guess not everyone actually reads the articles so reiterating in the comments is useful.
> Still, why can’t a third-party seller offer a lower price outside of Amazon? Good question! That’s where the scheme gets very clever. Originally, Amazon imposed contracts, as the FTC noted, “barring all sellers from offering their goods for lower prices anywhere else.” But Europeans, and Senator Richard Blumenthal, complained about these price parity agreements, so Amazon dropped its explicit contractual requirements in 2019.
> However, this change was a farce. The firm simply did through code what it couldn’t do through contract. "Amazon,” claims the FTC, “has implemented an algorithm for the express purpose of deterring other online stores from offering lower prices.
> Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."
Tangential, but out of context quotes used in your sentence makes me think you're lying no matter what you're saying. Or else you would have kept it in context and used the whole quote.
Not to defend Amazon in the slightest. Just tired of seeing Breitbert quality clickbait OOC quotes everywhere.
Is there a way to get around this by having the list price higher than Amazon but run specials for most weeks of the year that undercut Amazon? Could that only be a viable strategy if Target is the final merchant but not on the manufacturer's website?
Amazon binds its sellers over to something called Most Favored Nation status. That means that sellers can't offer their goods more cheaply than they do on Amazon – even if it costs them (lots) less to sell in Target or direct from their websites. This means that every time a seller adds a dollar to their Amazon sale price, they have to add a dollar to the price of their goods everywhere else, too.
After a bunch of state AGs filed lawsuits against Amazon over this, the company promised to cut it out.
They lied.
A new filing in California's suit against Amazon reveals that sellers live "in constant fear" of retaliation from Amazon if they allow their goods to be sold more cheaply elsewhere.