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Amazon's game is pretty clear: 1) under price to get market dominance, 2) then increase prices higher than competition 3) before customers realize they're ac
by assblaster 8y ago
Amazon's game is pretty clear:
1) under price to get market dominance,
2) then increase prices higher than competition
3) before customers realize they're actually more expensive than the competition.
I stopped trusting Amazon at step 3 and only shop there if they actually have the cheapest option. They act like grocery stores: advertise a low price on one item to get you in the door, but profit off the other items.
- the_cat_kittles 8y agoone of capitalism's greatest hits
- ekianjo 8y agoAt least in capitalism you have choice and stores full of items. Beats living in Venezuela any day.
- quadrangle 8y agoAt least we don't have to spend lots of time worrying about different economic and political systems since the only choices are capitalism or Venezuela. /s Seriously, the idea that capitalism = choice is bullshit, as is the idea full stores is a capitalist quality or that the problems with Venezuela are all caused by being non-capitalist (implied that Venezuela is the inevitable outcome of any non-capitalist approach).
- the_cat_kittles 8y agowasnt passing judgement, just waxing poetic
- deleted 8y ago[deleted]
- whb07 8y agoYou did not mention the consequences of Amazon’s actions which are a net positive for people. Amazon underprices and offers a better service like Prime with 2-day delivery. Competitors start freaking out and begin launching responses to tackle this. Industry changes for the better. So yes. Capitalism at its finest. Offer a better price or a better product to compete in a marketplace. Without Amazon, the brick & mortars would have never begun to think about such things like a better online experience, online-to-store pickup, etc.
- hedora 8y agoFrom personal experience a decade or so ago, Kroger charged much higher prices for substandard goods in poor/minority, transit-dependent communities, and used the result to subsidize stores in well-to-do areas. This helped them gain market share in competitive neighborhoods. Amazon certainly engages in price discrimination, but I’d bet its algorithms weigh race much less than the incumbents. Also, the studies I’ve seen suggest amazon charges rich people more, which is a lot less slimy than systematically overcharging poor minority groups.
- assblaster 8y ago>Kroger charged much higher prices for substandard goods in poor/minority, transit-dependent communities Kroger isn't a monopoly. If Kroger was truly price gouging as you're alleging, then any other company can just sweep into that neighborhood and take all of Kroger's business. As Black economist Thomas Sowell notes: "despite higher markups in prices in low-income neighborhoods, there is a lower than average rate of return for businesses there — one of the reasons why businesses tend to avoid such neighborhoods." In other words, the cost of doing business in poor neighborhoods is higher. You can attribute this to higher taxes in urban areas, higher cost of transporting goods to the area (increased traffic leading to longer duration supply routes, higher insurance requirements for transporters), higher cost of securing the business due to higher crime levels.
- sureaboutthis 8y agoThen you distrust grocery stores, too?
- mhh__ 8y ago> I stopped trusting Amazon at step 3 and only shop there if they actually have the cheapest option. This should be the default whenever/wherever possible.
- matte_black 8y agoUnless I’m saving at least 10% off or at minimum $20 by not buying an item at Amazon, I don’t really give a shit if I pay more. It’s just too convenient. I always laugh when people say “It’s cheaper!” somewhere else and then it turns out it’s only by like 4 bucks.
- B0btheBuilder 8y agoOn top of the convenience, I don't have to risk putting my credit card information into random websites. My parents dislike online shopping because they're fearful of getting credit card information lost or stolen online. Amazon is one of the few places they trust online.
- wtvanhest 8y agoEver since I bought fraudulent eclipse glasses I pretty much dont buy any high margin products on amazon and Im canceling prime this July. It has been a fun 7 or 8 years, but if they can't sell real merchandise, it is not interesting to me. I'll shop at wholefoods, but goodeggs is also about the same price (post delivery) and is better quality.
- toomuchtodo 8y agoI don’t understand this. You’re never liable for fraudulent credit card transactions, therefore this is irrational behavior.
- MiddleEndian 8y agoThe time, anxiety, and exhaustion of dealing with fraudulent charges outweighs the abstract concept of liability in this case.
- DrScump 8y agoLots of retailers accept payment via PayPal. (PayPal has its own negatives, but it protects against this particular scenario).
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- smaili 8y agoI think that much is clear but I would take it one step further and ask: how to counter this effort so less businesses and customers fall victim to Amazon’s game?
- chillingeffect 8y agoLately I've been buying things from non-amazon stores. price difference has been negligible for me.
- assblaster 8y ago1) Cancel Prime membership, which is their hook on customers, since customers feel obligated to use Amazon even if it's not the cheapest option. 2) Find online retailers that focus solely on the item categories you need, and shop those specifically. I find General Stores (aka Amazon) have less breadth of selection than online retailers who focus on a single domain. 3) Buy in bulk from Costco. I describe Costco's product sourcing as providing 90% of the items that 90% of the population needs for daily living. The rest can be purchased from specialty stores. And since Costco prices items to break even, you have a pretty good indication that you're not getting "screwed" on most of your purchases.
- oppositelock 8y ago#1 is great for customers. #2 may not be possible, since Amazon still has lots of competition. They'll have to stop doing #1 or subsidize it with money from elsewhere. Read the story of Henry Dow about how price dumping can fail. https://www.investopedia.com/ask/answers/09/dow-chemical-bromine-monopoly.asp https://www.investopedia.com/ask/answers/09/dow-chemical-bro...
- ekianjo 8y ago> 2) then increase prices higher than competition The most ludicrous thing is people falling for the Prime membership. Why lock yourself in their system? It only encourages abuse.
- jonathanyc 8y agoIs it really “ludicrous” that I want to pay less for shipping than I otherwise would have? I think you’re being very uncharitable with your assumptions about other people’s rationality. Are Prime memberships valuable for Amazon? Certainly. Do they lock you in? Not really; that’s assuming you could have spent less without a Prime membership, which might be true for many people but is certainly not true for all people. Is it “the most ludicrous thing”? Not at all.
- assblaster 8y agoThe price of Prime goods is higher to build in the cost of "free" shipping. Most websites either have free shipping and higher prices, or non-free shipping and lower prices. Take your pick. But with Amazon, you're giving an extra $120 per year for the privilege of paying a higher price for that "free" shipping.
- jonathanyc 8y agoYou’re oversimplifying—Amazon definitely has higher prices on many items, and I know this because I comparison shop, but in the end it appears to me that I am still saving money. You’re making a lot of uncharitable assumptions about other people.
- hackerman12345 8y agoBecause it's cheap enough nobody is actually locked in. The membership price is easily made up within 10-20 small purchases - since shipping is so expensive from many other sites (unless you order more than $50 or whatnot).
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- codingdave 8y agoYou are correct, but that model is hardly unique to Amazon. Costco, Walmart, Grocery stores... they all do the same thing. If you want to save money, you need to be an educated consumer, at any store.
- Declanomous 8y agoCostco doesn't do this as far as I'm aware. I think their only profit comes from their membership fees, they intend to break even on everything else. That doesn't mean they are always the cheapest option, but they aren't messing with prices to gain customers and then making a profit, since they aren't pricing things to make a profit in the first place.
- jonathanyc 8y agoI didn’t know that Costco broke even on most sales— that was interesting to learn. It sounds like Costco also makes a profit of Kirkland Signature sales, though. I suppose if you didn’t like generic drugs you could apply a similar argument here. Costco’s loss leaders (e.g. the hot dogs) are also arguably instances of “messing with prices to gain customers.” https://www.investopedia.com/articles/investing/070715/costcos-business-model-smarter-you-think.asp https://www.investopedia.com/articles/investing/070715/costc...
- deleted 8y ago[deleted]
- mmt 8y ago> Costco’s loss leaders (e.g. the hot dogs) are also arguably instances of “messing with prices to gain customers.” Except the article was a bit confusing on this point: The biggest Costco loss leaders in America right now are rotisserie chicken, the hot dog & soda combo and gas. A Bloomberg article has calculated that Costco earns only $14 million in profit a year on its sale of 70 million chickens. How is something a "loss leader" if it makes a profit of "only" $14 million? However, as a consumer, I do agree with you in principle that they are messing with things, including pricing and placement of products, mostly to get people to buy more (possibly even to get customers in the doors), just to a lesser degree. OTOH, the magnitude of that lesser degree is so great that it makes a difference. I know I'm not always getting the best deal if I buy any particular item at Costco, but I can be reasonably confident I'm not paying a huge markup. In fact, I find Costco so reliable for fair pricing, I consider them my benchmark for seeing if other stores' discounts are really deals or just borderline scams like doubling the base price but offering an evergreen "sale" that's around 50% off. (Mostly only relevant to items with widely fluctuating prices or ones I buy so infrequently inflation is a factor).
- thaless 8y agoI would say that they mainly focus on 1). Best analogy I have heard is think of the surface of the ocean as the equilibrium price for a good or entire market. Amazon forces their competition to dive down underneath the surface. The difference is Amazon has 10X as much oxygen (capital) as the rest. They simply wait for their competition to drown. They don't necessarily care about profit or raising prices, just market share at this point. Their stock price being so high makes it that much easier for them to have cheap access to capital.
- xfitm3 8y agoI suspect the most interesting side effect of Amazon’s move to buy Whole foods is the potential impact to transportation. Quote from the Washington Post[0]: “while Winn-Dixie and Harvey’s are far from mom-and-pops, a number of those stores slated for closure are in areas where it’s a 15- or 20-minute drive to the next-closest grocery store.” [0] https://www.washingtonpost.com/news/wonk/wp/2018/03/22/the-amazon-whole-foods-era-of-grocery-just-claimed-its-first-victims/ https://www.washingtonpost.com/news/wonk/wp/2018/03/22/the-a... Edit: typo
- nugget 8y agoAmazon is so convenient and has such good customer service that they've made me care less about pricing. On the other hand, they've made me care more about counterfeit goods. I've received a few this year already. What's scary is that on some health items - like vitamins - if you're ordering for the first time, how would you even know what the real thing is supposed to look like? I now try to order items directly from the manufacturer or authorized distributor whenever possible, simply to avoid counterfeit risk. Kohl's for clothing and LifeExtension for vitamins. Ironically I have more faith in these retailers because their traditional single-source supply chains are less efficient than Amazon's crowd-sourced/FBA model. Less efficient and therefore more trustworthy. Maybe this is one of the few ways David can beat Goliath. There also seems to be broader opportunities in this area around supply chain integrity that's transparent to and verifiable by end consumers.
- dominotw 8y agoYeah me too. I got knockoff shoes last month. And they rejected my review saying so
- CamelCaseName 8y agoDid you file an A-z claim? This is the best way to trigger the suspension of a fraudulent seller and the review of an ASIN.
- dominotw 8y agooh interesting. Didn't know this exists. thank you.
- mrsteveman1 8y ago> On the other hand, they've made me care more about counterfeit goods. This is the one that's starting to really surprise me. You generally expect there to be counterfeit versions of items that are expensive or easy to replicate, but I've now received counterfeit: * Burts Bees face wipes * 3M command strips * Curad alcohol prep pads ... and quite a few others. The alcohol prep pads were the most unexpected, but also the easiest to spot because I buy them all the time at Costco and other stores.
- pteredactyl 8y ago1a) Not charge sales tax ( Which I'm not complaining about.. but it does seem unfair to brick and mortar ) 4) Pollute the world over with cardboard boxes and single serving deliveries
- xapata 8y agoThe pollution aspect for online shopping is tough to calculate, because it avoids the environmental cost of running a retail outlet.
- whatyoucantsay 8y agoThis is, in effect, an exploit against vulnerabilities in US anti-trust law. Using dominance in online commerce and computing infrastructure to undercut food sellers is exactly the kind of problem anti-trust laws are meant to stop. Amazon isn't actually monopoly in any industry, yet, but it's difficult to see how this is different to the approach a monopolist takes in entering a new market.